"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."
Source: Streetwise Reports