The First Silver Medalist of the Summer Games

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Birthdays are a double-edged sword. For the kid inside, a day of ice cream and salutations can't come fast enough. The more grey hair I get, though, the more tempting it becomes to slow the hands of time. But when it comes to awaiting the growth I see in the pipeline for Silver Wheaton (NYSE: SLW), I say, "Bring it on, Father Time."

Judging by the 5% sell-off in shares Wednesday, it appears that investors are not delving beneath the surface of the flat earnings Silver Wheaton reported for the second quarter. The company experienced a 6.2% decline in silver sales volumes from the prior year to 2.9 million ounces, due in large part to lower-grade ores encountered at Goldcorp's (NYSE: GG) Luismin mine in Mexico. The setback was more than offset by a 27.8% year-over-year increase in the realized silver price from to $17.35 per ounce. Sales revenue climbed nearly 20% to $49.7 million.

The company continues to guide silver production of at least 13 million ounces in 2008, 19 million ounces in 2009, and 25 million ounces in 2010. Even if silver prices were to remain flat, which I don't believe they will, that is some serious organic growth.

Building from a core that began with the Luismin mine and Lundin Mining's (NYSE: LMC) Zinkgruvan project in Sweden, the company purchased four new silver stream contracts during the second quarter. All but one of these carries the typical contract purchase price of about $3.90 per ounce of silver. At a time when mines are struggling to bring new production online because of huge cost increases, Silver Wheaton's semi-fixed purchase agreements provide enviable cost stability.