Is Silver Wheaton Turning Into Gold Wheaton?

Silver Wheaton (NYSE: SLW  ) , the world's largest silver streaming company, recently announced that it has joined the World Gold Council. Does this mean the company's gold operations will make up a higher portion of its sales in the coming years? In other words, is Silver Wheaton about to turn into Gold Wheaton?

Turing silver into gold
In the past several years, the company has increased its exposure to gold, mainly with the purchase of streaming rights from Vale's Salobo and Sudbury mines back at the beginning of 2013. This has led to a shift in which gold took a more prominent role in the company's total operations.

Data from Silver Wheaton .

As indicated in the table above, in the past several years the amount of silver production as a percent of total silver equivalent ounces dropped from 97% back in 2012 to nearly 75% in 2013.

Despite this rise in the company's gold operations to 25%, it's still well behind other royalty companies such as Royal Gold (NASDAQ: RGLD  ) and Franco-Nevada (NYSE: FNV  ) , which have a much higher ratio of gold to other precious metals. In 2013, for Royal Gold the yellow metal gold accounted for 80% of its total precious metals operations. For Franco-Nevada, gold accounts for roughly 68% of its total revenue in the past year.

Will Silver Wheaton's silver-to-gold ratio continue to fall in the coming years?

Outlook for 2014-2018
Based on Silver Wheaton's projections, in 2014, its attributed gold production is likely to reach 155,000 ounces, which accounts for nearly 74% of its total operations. Looking even further, the company expects its gold operations to rise by over 60% in the next four years, as seen in the table below.

Data from Silver Wheaton

Alternatively, its attributed silver production is projected to increase by "only" 24% by 2018. Despite this higher growth rate in gold compared to silver, gold will only account for 31% of Silver Wheaton's total attributed precious metals production. Therefore, even though its gold operations are expected to substantially rise in the coming years, it will still make up a small portion of Silver Wheaton's attributed production.

In terms of revenue, the picture isn't much different, and Silver Wheaton's gold-related revenue isn't likely to rise much higher than 33% of its total revenue, assuming the relationship between gold and silver prices doesn't change, as presented in the table below.

Data from Silver Wheaton

Foolish bottom line
Silver Wheaton is likely to keep increasing its gold operations in the coming years at a higher pace than its silver operations. But the company's silver streaming sales will still dominate and remain the lion's share of its revenue in the near future.

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