08-06-04 slw...
TRANSCRIPT
June 2008
Cautionary Statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
Safe Harbor Statement under the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation: Except for the statementsof historical fact contained herein the information presented constitutes “forward looking statements” within the meaning of the Private Securities Litigation Reform Act ofof historical fact contained herein, the information presented constitutes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of1995 and applicable Canadian securities legislation. Such forward-looking statements, including but not limited to those with respect to the price of silver, the estimation ofmineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reservedetermination and reserve conversion rates involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance orachievements of Silver Wheaton to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements.Such factors include, among others, risks related to the integration of acquisitions, the absence of control over mining operations from which Silver Wheaton purchasessil er and risks related to these mining operations incl ding risks related to international operations act al res lts of c rrent e ploration acti ities act al res lts of c rrentsilver and risks related to these mining operations, including risks related to international operations, actual results of current exploration activities, actual results of currentreclamation activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in the sectionentitled “Description of the Business-Risk Factors” in Silver Wheaton’s Annual Information Form for the year ended December 31, 2007 incorporated by reference intoSilver Wheaton’s Form 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C. Although Silver Wheaton has attempted to identify importantfactors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that causeresults not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate as actual results and future events coulddiff t i ll f th ti i t d i h t t t A di l d h ld t l d li f d l ki t t tdiffer materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements.
CAUTIONARY NOTE TO U.S. INVESTORS CONCERNING ESTIMATES OF MEASURED, INDICATED AND INFERRED RESOURCES
This presentation uses the terms “Measured”, “Indicated” and “Inferred” Resources. U.S. investors are advised that while such terms are recognized and required byCanadian regulations, the Securities and Exchange Commission does not recognize them. “Inferred Resources” have a great amount of uncertainty as to their existenceand as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred resource will ever be upgraded to a higher category. Under Canadianrules, estimates of Inferred Resources may not form the basis of feasibility or other economic studies. U.S. investors are cautioned not to assume that all or any part ofMeasured or Indicated Resources will ever be converted into reserves. U.S. investors are also cautioned not to assume that all or any part of an Inferred MineralResource exists, or is economically or legally mineable.
Full details on Silver Wheaton reserves and resources for Luismin, Zinkgruvan, Yauliyacu, Peñasquito and Stratoni can be found on the Company website atwww.silverwheaton,com. Full details on the reserves and resources for Rosemont, Mineral Park, Campo Morado and La Negra can be found in Silver Wheaton newsreleases dated December 22 2007 March 17 2008 May 13 2008 and June 3 2008 respectively
2
releases dated December 22,2007, March 17, 2008, May 13, 2008, and June 3, 2008, respectively.
A Unique Mining Company
Largest Pure Silver Company
Simple investment model
Very strong growth potentialy g g p• Significant stake in 6 of the top 30 silver deposits in the world• +100% organic sales growth by 2010• Well positioned for further growth
N h d i• No hedging
Best leverage to silver price• 10% increase in silver price results in a 15% increase in 2008 cash flow10% increase in silver price results in a 15% increase in 2008 cash flow
The best downside protection…
3
The Best Downside Protection…
Costs are essentially fixed
Structured to minimize income taxes
No ongoing CAPEX or exploration costsg g p
• Yet SLW benefits from production/exploration growth
No environmental/closure responsibilitiesNo environmental/closure responsibilities
Structured not to lose cash flow
No currency risk
Very low political risk
4
Mine Locations
S i
Zinkgruvan
Rosemont Mineral ParkStratoni
PeñasquitoLuisminCampo MoradoLa Negra
Yauliyacu
Development Projects
5
Operating Mines
Peñasquito First Gold Pour May 13, 2008
SLW will receive 25% of ALL silver produced
7
Peñasquito
Goldcorp’s world-class zinc-gold- Positive deep drilling shows silver-lead deposit in Mexico
Largest silver deposit in the world
underground potential
Construction on schedule; initial
Reserves and Resources (June 2007)• P&P Reserves: 864 M oz
production expected in 2008
30% boost in daily tonnage over 2006 f ibilit• M&I Resources: 413 M oz
Continued excellent potential for l ti th
2006 feasibility
exploration growth
8
Peñasquito Transaction Terms
25% of silver production for the lif f i
Goldcorp completion guaranteelife of mine
Upfront cash payment of US$ 485 illi
No significant tax is to be paid by Silver Wheaton
485 million
100% debt financed; no h h ld dil ti
25% interest in Peñasquito would rank as one of the top 10 il d it i th ldshareholder dilution
Purchase price is the lower of US$3 90/oz or spot silver price
silver deposits in the world
US$3.90/oz or spot silver price
9
Peñasquito Project Growth Since Our Acquisition, April 2007
April 2007 Current Growth
Silver Reserves/Resources
P&P Reserves 575 M oz 864 M oz +50%M&I Resources 247 M oz 413 M oz +67%
LOM Silver Production Att ib t bl t SLW (25%) 92 M oz 140 M oz +52%Attributable to SLW (25%) 92 M oz 140 M oz +52%
Average Annual Silver Sales Attributable to SLW (25%) 5.4 M oz 7.8 M oz +44%
Anticipated Mine Life 17 yrs 19 yrs +12%
Underground Potential Not contemplated Yes +%??
10
Underground Potential Not contemplated Yes +%??
Peñasquito Production
11
Mineral Park Mercator Minerals
Cu-Mo-Ag open pit mine in northwest Arizona in continuous operations forArizona in continuous operations for more than 30 yrs
Currently going through an expansion y g g g pto produce a silver bearing copper concentrate
Current Silver Reserves & Resources:• P&P Reserves: 35 M oz• M&I Resources: 2 M oz• Inferred Resources: 15 M oz
Expected to produce 600,000 ounces of silver per year for at least 21 yearso s e pe yea o a eas yea s
12
Mineral Park Transaction Terms
100% of LOM silver production
Upfront cash payment of US$42 M
Purchase price is the lower of US$3.90/oz or spot silver price
Completion guarantee
13
Rosemont Augusta Resources
Cu-Mo-Ag porphyry deposit in Arizona owned by AugustaArizona owned by Augusta Resources
August 2007 Feasibility Study:g y y• 75,000 tpd mill• Avg. 2.7 M oz/year silver production• Minimum mine life of 18 years
Silver Reserves and Resources:• Reserves 62 M oz• M&I Resources 5 M oz• Inferred Resources 9 M oz
Permitting in process and commercial production expected to commence in 2011
14
Rosemont Transaction Terms
Augusta to sell 45% of LOM silver production to SLW for upfront cash of US$165 million
SLW does not pay any ongoingSLW does not pay any ongoing payment for the silver delivered
• Cash costs for silver are $0 for LOM
Completion guarantees
No payments untilPermits are in place• Permits are in place
• Adequate financing in place• Construction has begun
15
Campo Morado Farallon Resources
Farallon’s volcanogenic massive sulfide district in Mexico
Production beginning at high grade G 9 deposit in Q3 2008Production beginning at high grade G-9 deposit in Q3, 2008• 1500 tpd mine• Ultra low cash cost zinc mine
Four other high grade deposits within 116 km2 concession areaFour other high grade deposits within 116 km concession area
Excellent potential for exploration growth Silver resources:
M&I Resources: 41 M oz
Inferred Resource: 10.4 M oz
Expected to produce 1 p pmillion ozs of silver per year
16
Campo Morado Transaction Terms
75% of LOM silver production in th ti 116k 2 tthe entire 116km2 property
Upfront cash payment of US$80 illimillion
Purchase price is the lower of US$3 90/ t il iUS$3.90/oz or spot silver price
Completion guarantee
17
La Negra Aurcana Corporation
Discovered, developed and operated for 30 years by Peñoles, starting in 1970Peñoles, starting in 1970
Aurcana purchased an 80% interest in 2006 and mine has been operating since July 2007
• 1000 tpd mine increasing to 2000 tpdp g p
Series of 23 massive sulfide orebodies
Excellent potential for exploration growth
Expected to produce up to 1.5 M ozs per year
Historical silver reserve and resource by Peñoles(not 43-101 compliant):(not 43 101 compliant):
• Historical Reserve: 6.3 M oz
• Inferred Historical Resource: 10.5 M oz
18
La Negra Transaction Terms
50% of LOM silver production from La Negra mine
Upfront cash payment of US$25 million
Purchase price is the lower of US$3.90/oz or spot silver pricep $ p p
Completion guarantee
Agreed to complete a LOMAgreed to complete a LOM silver stream agreement on soon to be acquired Shafter Silver Mine in Texas
19
WHERE ARE WE NOW?
20
Silver Sales Growth No Further CAPEX To Be Paid1
135%108%
135%
21 1. SLW has not yet made upfront cash payments for Mineral Park, Campo Morado and La Negra totaling US$117 M. A further US$165 M is due for Rosemont once they receive permits.
Very Low Political Risk
GeographicGeographic Distribution of R&R
22
Attributable Reserves & Resources
290%323%
61%PeñasquitoStratoni
LuisminMi l P kStratoni
ZinkgruvanYauliyacu
Mineral ParkRosemontCampo MoradoLa Negra
23 Does not include non NI 43-101 compliant reserves and resources at La Negra
Current Attributable Reserves & Resources
1800
1400
1600
1800
(M o
z)
1000
1200
ned
Silv
er
P & P Reserves
400
600
800
Con
tai
M & I Resource
0
200
400Inferred
24
Pan American
Apex Coeur Silver Wheaton
Silver Standard
Source: Company Reports
2007 Value Accretion
Assuming ssu g$17/oz Ag
25
Projected EBITDA Existing Contracts
26 Does not include Rosemont
Debt Sensitivity1
Debt Repayment By
$20/oz
S$)
$15/oz
r Pric
e (U
S
$10/ozSilv
e
Dec-08 Dec-09 Dec-10 Dec-11
Assuming in-the-money warrants are exercised in 2009 and proceeds are
27
Assuming in the money warrants are exercised in 2009 and proceeds are applied to debt
1 Does not include US$165M for Rosemont
Reserves & Resources per Share
5213%
4
5
Ozs
213%
3
Resource O
1
2
Reserve & R
‐
1 R
Today12/31/200712/31/200612/31/200512/31/2004
28
Capital Structure As of May 2008
Shares Outstanding 223.7 millionShares Outstanding 223.7 million
SLW.WT Warrants 23.3 million(1) exercise @ C$ 4.00
SLW.WT.A Warrants 7.7 million(1) exercise @ C$ 5.50
SLW.WT.B Warrants 7.8 million exercise @ C$10.00
Options 3.6 million avg.exercise @ C$6.15
Shares Fully Diluted 266.2 million
3 Month Avg. Daily VolumeTSX: 3,397,000 sharesNYSE: 4,095,000 shares
29
1 Consolidated based on 0.2 SLW.WT and SLW.WT.A for every common share of SLW
Top 30 Silver Deposits in the WorldProducing Mines and Development ProjectsProducing Mines and Development Projects
2,000Silver Wheaton Relationship (6)
1,200
1,600
ourc
es (M
oz) Apex Silver
Silver StandardCoeur d’Alene25% of
Peñasquito
800
serv
es &
Res
o e asqu o
0
400
to ur dz
ma sa ad rg ho bal
as to kat
po lla ala er ani
on oe am do es er ver
er ea un as re ek ns
Res
Pena
squi
t
Bols
hoi K
alim
ansu
GH
M P
olsk
a M
ied
Pasc
ua L
am
Mt I
s
Nav
ida
Gra
sber
Toro
moc
h
San
Cris
tob
Las
Min
ita
25%
of P
enas
quit
Duk
Oca
mp
Pitta
ril
Toqu
epa
Que
Riv
e
Cor
a
Can
ning
to
Khol
odni
nsko
Oly
mpi
c D
a
Cer
ro C
olor
ad
Met
ate
Roc
hest
e
Hac
kett
Riv
Mac
Arth
ur R
ive
Can
ane
Xiac
u
San
Dim
a
Mon
tano
r
Roc
k C
ree
Reg
ion
Ope
ratio
n
30
B KG 2
East
Source: Metals Economics Group
Leverage to Silver Price Performance Since Inception (Oct. ’04)
500%
600%
SLW400%
500%
SLW
200%
300%
SilverPAAS
HLSSRI100%
CDE
-100%
0%
04 05 05 05 05 06 06 06 06 07 07 07 07 08 08
31 Source: Thomson
Oct
-0
Jan-
0
Apr
-0
Jul-0
Oct
-0
Jan-
0
Apr
-0
Jul-0
Oct
-0
Jan-
0
Apr
-0
Jul-0
Oct
-0
Jan-
0
Apr
-0
Financial Performance
$0.60
$0 40
$0.50
SD)
$0.30
$0.40
S/EP
S (U
S
$0.10
$0.20CFP
S
$0.002004 2005 2006 2007 Q1 2008
32
EPS CFPS
Net Profit Margin – 12 months/2007 Precious Metal Companies
33 Source: Thomson One
Change in Total Cash Costs – Precious Metals Companies
9 Months ’07 vs. 9 Months ‘06A
gnic
o
Eldo
rado
Cen
terr
a
Kin
ross
Bar
rick
Aver
age
eck
Gol
d
Mer
idia
n
Nor
thga
te
New
mon
t
den
Sta
r
AMG
OLD
Hec
la
34
E C Te N N
Gol IA
Source: Michael Jalonen, Merrill Lynch Research
Silver companies 2007 Full Year
35 Source: Company Reports* For 9 Months ended 12/31/07
Silver Contracts Producing Mines
Luismin Zinkgruvan Yauliyacu Stratoni Mineral Park La Negra
Company
Contract Length
25 yrs LOM 20 yrs LOM LOM LOMLength
Ag Prod. 100% 100%up to 4.75 M
oz/yr100% 100% 50%
Mine Life 25+ yrs 25+ yrs 25+ yrs 7+ yrs 21+ yrs 10 + yrsMine Life 25+ yrs 25+ yrs 25+ yrs 7+ yrs 21+ yrs 10 + yrs
Cash Costs $3.95/oz1 $3.96/oz1 $3.90/oz $3.90/oz1 $3.90/oz1 $3.90/oz1
Annual Ag Production
7-12 M oz 2 M ozUp to 4.75 M
oz1-2 M oz 0.6 M oz 0.7 M oz
36
1 SLW pays the lesser of $3.90 and spot price on these contracts
Silver Contracts Development Projects
Peñasquito25%
RosemontCampoMorado25% Morado
Company
Contract Length LOM LOM LOM
Ag Prod. 25% 45% 75%
Mine Life 19+ yrs 19+ yrs 6+ yrs
Cash Costs $3.90/oz1 $0.00/oz $3.90/oz1
Annual Ag Production
Up to 10 M oz Up to 1.3 M oz Up to 0.8 M ozProduction
Date of expected production
Q4 2008 Q1 2011 Q3 2008
37
1 SLW pays the lesser of $3.90 and spot price on these contracts
SLW Equity Investments
Property of Interest
Corani Rock Creek Hackett River Montanore
Ownership 18% 17% 12% 11%
Stage Pre-Feasibility Pre-Feasibility Pre-FeasibilityAdvanced E l ti
g y y yExploration
Resource (Ag M oz)
M&I 327Inf. 35
Inf. 229Ind. 205Inf. 52
M&I 164Inf. 65
Est. Annual Ag Production
15 M oz/yr 6 M oz/yr 12 M oz/yr N/A
38
Source: Company Reports
Silver Wheaton vs Silver ETF
SILVER WHEATON Silver ETF
Pure Silver
Best Leverage toSilver Price
Organic Growth
Further GrowthPotential
39
WHY SILVER?
40
Silver Supply & Demand
1000
700Moz
400
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
E
2009
E
41
2 2
Demand Supply (mining & scrap)Source: GFMS & RBC Capital Markets
Silver Inventories are at a Historical Low
2500
2000
oz)
1000
1500
vent
ory
(M
500
Inv
0
950
960
970
980
990
000
42
19 19 19 19 19 20
Source: CPM Group, 2006
Demand For Industrial Applications
Increase in demand every year for the last 8 years despite rising price (7% in 2007)in 2007)
Demand is relatively inelastic to the price of silver (low proportion of cost)
Primary Uses• Electrical & Electronics• Chemicals
Positive Trends
• Growth in Middle Class in China & India
• Brazing Alloys
New Areas of Growth
India• Growing use of Mobile Phones• Computerization in Third World• More Stringent Environmental Laws
• Solar• LCD/Plasma Screens• Medical Instruments
More Stringent Environmental Laws
43
• BiocidesSource: CPM Group, RBC Capital Markets
Investment A Major Catalyst of Silver Price
• Demand for silver 180$20
Silver Price and iShares Silver Trust Holdings
ETF’s expected to increase
• iShares growing; 100
120
140
160
$12
$14
$16
$18
M Fix in
USD
)
ver T
rust
(M o
z)
applied for +360 M oz
• New ETF’s emerging
• Increased mine 40
60
80
100
$4
$6
$8
$10
Silver Price (LME PM
ces
in iS
hare
s S
ilv
Increased mine production expected to be offset by increased industrial demand
0
20
$0
$2
1/3/2006
2/14/200 6
3/28/2006
11/5/2006
6/23/2006
7/8/2006
9/19/200 6
10/31/20…
12/13/20…
1/30/2007
3/14/2007
4/26/2007
8/6/2007
7/23/200 7
7/9/2007
10/19/20 …
3/12/2007
1/16/2008
S
Oun
c
• Silver demand for ETF’s expected to result in a tightening of the silver market
6 6 6 6 6 … … 7 7 7 7 … 7 8
44
Source: GFMS & iShares and Bloomberg
Where Are We Going?
Further growth opportunities• Production• Development• Strategic investmentsStrategic investments
Silver price is strong and is expected to remain soCash flo for acq isitions and debt repa ment• Cash flow for acquisitions and debt repayment
• Minimize equity dilution• Best leverage
Minimum of 2-4 new deals per year should be achievable
45
Top Ten Silver Producing Companies
4550
30354045
15202530
M o
z
05
1015
0
Pen
oles
KG
HM
BH
P
azak
hym
s
Pol
ymet
al
nave
ntur
a
o M
exic
o
Rio
Tin
to
Coe
ur
Gol
dcor
p
46
Ka P
Bue
n
Gru
p G
Source: The 2007 World Silver Survey
Near-term Catalysts
Sale of Goldcorp’s entire 48% interest in Silver WheatonSale of Goldcorp s entire 48% interest in Silver Wheaton
H2/2008: Peñasquito heap leach operation commences
Strengthening silver prices
Growth opportunities
47
Summary
100% Pure Silver
Established, long life, low cost mines
Strong cash flow & earnings
Strongly leveraged to increases in silver priceStrongly leveraged to increases in silver price
Downside protection
Very low political risk profile
W ll iti d f f th th
48
Well positioned for further growth