Image: Silver Wheaton.
Silver and gold prices have headed downward in 2015, and streaming specialist Silver Wheaton (SLW 0.49%) has seen its stock follow suit. Yet even though the bullion markets didn't cooperate with the industry this year, Silver Wheaton has nevertheless enjoyed some good news during 2015. Let's take a look at some of the best headlines for the company this year.
Record quarters of silver equivalent production and sales volume
The best news for Silver Wheaton from a fundamental perspective is that its production and sales volumes have continued to move in the right direction. Back in May, the streaming specialist announced that it had hit a new record level of more than 10 million silver-equivalent ounces of production, up 15% from the year-ago period. Silver made up roughly 60% of that figure, with 55,000 ounces of gold production making up the rest.
Silver Wheaton followed that performance up with even better figures later in the year. In August, Silver Wheaton said it had produced 10.9 million silver-equivalent ounces and had also hit a new record for sales volumes of 10 million ounces, up a third from the year-ago quarter. The company then topped those figures in November, hitting 11 million ounces of production and 10.2 million ounces sold. Silver Wheaton hopes to keep that streak alive in 2016.
Streaming deals are streaming in
Much of what's fueling Silver Wheaton's growth is an influx of new partnerships with miners. In March, Silver Wheaton acquired an additional gold stream from Vale (VALE +2.52%), taking a 25% interest in gold production over the life of the Brazilian Salobo mine. That doubled Silver Wheaton's interest in Vale's Salobo property and added about 70,000 ounces of gold per year to Silver Wheaton's coffers from Vale's production there.
In November, Silver Wheaton added a silver deal from Glencore, giving it about a one-third interest in silver production at Glencore's Antamina mine in Peru up to the 140 million ounce mark. After that, Silver Wheaton will get a 22.5% interest in silver production. The deal involves variable pricing for the silver stream equal to 20% of spot price at the time of delivery. Quarterly production of 1 million to 1.5 million ounces will continue to boost Silver Wheaton's ability to grow.
Successful secondary offering
In order to provide financing to its mining partners, Silver Wheaton needs access to capital. The company did a good job of anticipating its needs as it made an offering of common shares in March to raise money. Silver Wheaton priced its deal to sell almost 39 million shares at $20.55 per share to produce about $800 million in capital. The company used the money to fund the purchase of the Vale Salobo streaming interest, and that proved to be well-timed given the stock's nearly 40% drop since then.
In April, Silver Wheaton added to its ability to obtain cash from the capital markets by filing a shelf offering with regulatory authorities in the U.S. and Canada. The move will allow Silver Wheaton to offer as much as $2 billion in common shares, preferred shares, debt securities, warrants, or other similar securities over roughly a two-year period. By filing necessary paperwork ahead of time, Silver Wheaton will be able to take advantage of market conditions as they arise, whether it be particularly advantageous timing for selling securities or an immediate need for capital in conjunction with a new acquisition.
Silver Wheaton had plenty of challenges in 2015, and shareholders weren't happy with the streaming company's stock performance. Nevertheless, with these positive moves, Silver Wheaton is setting itself up to take maximum advantage of better conditions whenever they come in the future.
