"With Antamina representing a significant proportion of SLW's production profile, the tour highlighted the opportunity for substantial mine life extension, including the potential to upgrade material and add additional ounces through exploration," analyst Andrew Kaip noted in a March 7 report for BMO Capital Markets.
"We see Antamina as representing a meaningful proportion of SLW's production profile," Kaip stated.
Production from Antamina totaled 431kt of copper in 2016, Macquarie analyst Michael Siperco wrote in a March 6 report. In addition, guidance from Silver Wheaton and Franco-Nevada "implies total silver production averaging 14–16moz over the next 20 years." Macquarie considers Antamina a "top ten global producer of copper, zinc and silver," with the site encompassing "a polymetallic skarn deposit containing copper, zinc (together ~90% of mine value), silver, molybdenum, lead and bismuth."
Silver Wheaton Corp. (SLW:TSX; SLW:NYSE), like Franco-Nevada Corp. (FNV:TSX; FNV:NYSE), has "multiple multi-decade streams on high quality mines with high quality counterparties," Siperco continued. "These are the type of assets that have set SLW and FNV apart from their competitors, and should support cash flow generation and dividend increases for decades to come."
According to Macquarie, "both FNV and SLW will continue to be core holdings for investors looking for low-risk exposure to precious metals in growing, dividend-paying vehicles."
Kaip noted "SLW has a stream to acquire an amount of silver equal to 33.75% of the silver production from the Antamina mine until delivery of 140Moz of silver and 22.5% of the silver production thereafter for the life of mine. SLW will make payments of 20% of spot price per silver ounce delivered."
Prior to the Antamina tour, a Feb. 28 research report from BMO commented on the strength of Silver Wheaton's portfolio, noting the company's "current cornerstone assets include Salobo, which produced record gold production in 2015 of 126koz; Penasquito, where silver grade is expected to climb through 2019; Antamina, the eighth-largest copper mine in the world; and San Dimas, SLW's first stream."
The Feb. 28 report also stated that Silver Wheaton "provides more leverage to commodity prices relative to investing directly in bullion, as well as acquisition growth potential, exploration potential, and a dividend yield linked to operating cash flow."
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1) Tracy Salcedo compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. She owns, or members of her immediate household or family own, shares of the following companies mentioned in this article: None. She is, or members of her immediate household or family are, paid by the following companies mentioned in this article: None.
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BMO Capital Markets, Silver Wheaton, Feb. 28, 2017 and March 7, 2017
Analyst's Certification: I, Andrew Kaip, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
Analysts who prepared this report are compensated based upon (among other factors) the overall profitability of BMO Capital Markets and their affiliates, which includes the overall profitability of investment banking services. Compensation for research is based on effectiveness in generating new ideas and in communication of ideas to clients, performance of recommendations, accuracy of earnings estimates, and service to clients.
Company Specific Disclosures
Disclosure 1: BMO Capital Markets has undertaken an underwriting liability with respect to Silver Wheaton within the past 12 months.
Disclosure 2: BMO Capital Markets has provided investment banking services with respect to Silver Wheaton within the past 12 months.
Disclosure 3: BMO Capital Markets has managed or co-managed a public offering of securities with respect to Silver Wheaton within the past 12 months.
Disclosure 4: BMO Capital Markets or an affiliate has received compensation for investment banking services from Silver Wheaton within the past 12 months.
Disclosure 5: BMO Capital Markets or an affiliate received compensation for products or services other than investment banking services within the past 12 months from Silver Wheaton.
Disclosure 6A: Silver Wheaton is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: A) Investment Banking Services
Disclosure 6C: Silver Wheaton is a client (or was a client) of BMO Nesbitt Burns Inc., BMO Capital Markets Corp., BMO Capital Markets Limited or an affiliate within the past 12 months: C) Non-Securities Related Services.
Disclosure 8A: BMO Capital Markets or an affiliate has a financial interest in 1% or more of any class of the equity securities of Silver Wheaton.
Disclosure 8C: BMO Capital Markets or an affiliate has a financial interest in 0.5% or more in the issued share capital of Silver Wheaton.
Disclosure 9: BMO Capital Markets makes a market in Silver Wheaton.
Disclosure 16: A BMO Nesbitt Burns Inc. research analyst has extensively viewed the material operations of Silver Wheaton.
Disclosure 17: Silver Wheaton has paid or reimbursed some or all of the BMO Nesbitt Burns Inc. analysts travel expenses.
Macquarie Research, Precious Metal Royalties/Streams, March 6, 2017
SLW CN: MACQUARIE CAPITAL MARKETS CANADA LTD./MARCHÉS FINANCIERS MACQUARIE CANADA LTÉE. or one of its affiliates managed or co-managed a public offering of securities of Silver Wheaton Corp in the past 12 months, for which it received compensation. The primary analyst for Silver Wheaton has visited its material operations and development assets within the past year; the company has furnished local transportation and accommodations as part of these site visits.
Analyst certification: We hereby certify that all of the views expressed in this report accurately reflect our personal views about the subject company or companies and its or their securities. We also certify that no part of our compensation was, is or will be, directly or indirectly, related to the specific recommendations or views expressed in this report. The Analysts responsible for preparing this report receive compensation from Macquarie that is based upon various factors including Macquarie Group Ltd total revenues, a portion of which are generated by Macquarie Group’s Investment Banking activities.