The commensurate wheeler and dealer of the silver industry has dealt its way into a fortune.

In a most astonishing spurt of reserve growth, Silver Wheaton (NYSE: SLW) promptly doubled its silver reserves during 2009 through a spate of transformative acquisitions. According to updated resource and reserve estimates released Monday, the silver stream specialist now lays claim to some 875 million silver equivalent ounces (SEOs) in proven and probable reserves. Toss in some 366 million SEOs of measured and indicated resources, and Silver Wheaton's full profit potential begins to come into view.

By the time Barrick Gold's (NYSE: ABX) giant Pascua Lama mine enters production in 2013, Silver Wheaton's targeted annual production above 40 million ounces is enough to place BHP Billiton (NYSE: BHP) on notice that its days as the world's leading silver producer may be numbered. Unlike the miners that Silver Wheaton will collect this treasure from, however, Silver Wheaton boasts the added comfort of a fixed cost structure that permits Fools to reliably calculate future profitability under multiple silver price scenarios.

With an all-inclusive cost basis for silver of about $5.82 per economically viable SEO, the 1.24 billion SEOs that I believe Silver Wheaton investors can reasonably anticipate being unearthed would imply cumulative net profit of about $13.7 billion at today's intraday silver spot price of $16.90 per ounce. To adjust these profit expectations to your own expectations for long-term prevailing silver prices, Fools can easily adjust their calculations accordingly. I happen to think silver will average at least $25 per ounce over the coming decade as persistent fiscal imbalances and failing derivatives continue to prompt rampant currency devaluation, but $25 silver is not required to render the present market capitalization of just $5.28 billion an unmistakable bargain. On that basis, Silver Wheaton was an easy choice for my top pick of 2010.

As terrific as Silver Wheaton's reserve expansion was, the treasure has already grown considerably beyond the stated year-end result. The company's latest resource estimate does not include:

  • 63 million SEOs acquired through a silver stream agreement with Augusta Resource (AMEX: AZC) for the Rosemont copper project in Arizona.
  • 19.8 million SEOs acquired last week by converting a debenture with Pan American Silver (Nasdaq: PAAS) into a silver stream agreement for 12.5% of production from the Loma de la Plata zone of the Navidad project in Argentina.
  • 3 million SEOs added to the attributable Cozamin 2009 resource estimate by operator Capstone Mining … subsequent to Silver Wheaton's update.

Even without those 3 million SEOs added to Cozamin, Silver Wheaton's suppliers replaced 2009 production through organic reserve growth. The capacity for additional organic reserve expansion from projects like Goldcorp's (NYSE: GG) Penasquito mine can scarcely be overstated, which highlights another oft-overlooked aspect of Silver Wheaton's phenomenal strength.

I remain doggedly bullish on Silver Wheaton, but if anyone out there can present a well-researched bearish case for this stock, I'm all ears.