GMP Gold Roundtable 2009 May 2009 M Cautionary Statements - - PDF document
GMP Gold Roundtable 2009 May 2009 M Cautionary Statements - - PDF document
GMP Gold Roundtable 2009 May 2009 M Cautionary Statements CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS This presentation contains forward-looking statements within the meaning of the United States Private Securities Litigation
Cautionary Statements
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
This presentation contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include but are not limited to statements with respect to the future price of silver the estimation of mineral reserves and resources the realization of mineral Forward looking statements include, but are not limited to, statements with respect to the future price of silver, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reserve determination and reserve conversion rates. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “intends”, “anticipates”
- r “does not anticipate”, or “believes”, or variations of such words and phrases or state that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be
achieved”. Assumptions upon which such forward looking statements are based include that Silver Wheaton and Silverstone will be able to satisfy the conditions in the definitive agreement, that the due diligence investigations of each party will not identify any materially adverse facts or circumstances, that the required approvals will be obtained from the shareholders of each of Silver Wheaton and Silverstone, that all third party regulatory and governmental approvals to the transactions will be obtained and all other conditions to completion of the transaction will be satisfied or waived. Many of these assumptions are based on factors and events that are not within the control of Silver Wheaton and Silverstone and there is no assurance they will prove to be correct. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Silver Wheaton and Silverstone to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions, the absence of control over mining operations from which Silver Wheaton and Silverstone purchase silver and gold and risks related to these mining operations, including risks related to international operations, actual results of current exploration activities, actual results of current reclamation activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in the section entitled “Description of the Business – Risk Factors” in Silver Wheaton’s annual information form for the year ended December 31 2008 incorporated by reference into Silver Wheaton’s Form 40 F on file with the U S Securities and Exchange Commission in Washington D C and form for the year ended December 31, 2008 incorporated by reference into Silver Wheaton s Form 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C. and although Silver Wheaton and Silverstone have attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results 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 could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Silver Wheaton and Silverstone do not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.
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 by Canadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an Inferred Mineral Resource will ever be upgraded to a higher category. Under Canadian rules, estimates of Inferred Mineral 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 of Measured or Indicated Mineral Resources will ever be converted into Mineral Reserves. U.S. investors are also cautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
1
Full details on Silver Wheaton reserves and resources for Luismin, Zinkgruvan, Yauliyacu, Peñasquito, Stratoni, Mineral Park, Campo Morado, La Negra, and Keno Hill can be found on the Company website at www.silverwheaton.com.
A Unique Silver Company
- Largest silver streaming company in the world
- Recently announced acquisition of Silverstone Resources Corp. solidifies this position*
- Significant leverage to silver price
- 10% increase in silver price results in a 16% increase in 2009 cash flow**
- Very strong growth potential
Very strong growth potential
- +100% organic sales volume growth by 2010 (not including Silverstone acquisition)
- Significant stake in 6 of the top 35 silver deposits in the world
- Well positioned to make further accretive acquisitions
Well positioned to make further accretive acquisitions
- Strong financial position
- Recently completed a C$287m equity financing
- US$400m undrawn debt facility available
US$400m undrawn debt facility available
- Significant downside protection
- Model eliminates many key risks faced by traditional mining companies
- Experienced management team with demonstrated track record of
2
- Experienced management team with demonstrated track record of
creating shareholder value
* Scheduled to close in the second quarter of 2009 ** Assumes a silver price of $13/oz
Largest Silver Streaming Company
- Unrivaled growth profile
- Forecast annual silver sales of 15 to 17 million ounces in 2009, increasing to
approximately 30 million ounces by 2013 (not including Silverstone acquisition)
- Very high Operating Margins
- Very high Operating Margins
- >60% for the year ended December 31, 2008
- Nine long term agreements with established producers:
- Nine long term agreements with established producers:
- Goldcorp, Glencore, Lundin Mining, European Goldfields
- Reserves and resources of more than 1 Billion silver ounces*
Reserves and resources of more than 1 Billion silver ounces
- No hedging
3
* P&P reserves totaling 430 million ounces of silver, M&I resources totaling 214 million ounces of silver, Inferred resources totaling 393 million ounces of silver
Mine Locations
S i Zinkgruvan Mineral Park Keno Hill Stratoni Peñasquito Luismin Campo Morado La Negra Yauliyacu
Development Projects Operating Mines
4
p j
* Not including Silverstone acquisition
100% of Revenue from Silver Production
100% 100% 78% 78% 61% 70% 80% 90%
- f Total
61% 57% 51% 42% 40% 50% 60% venue as a % o 20% 30% 40% Silver Rev 0% 10% Silver Wheaton* Coeur D'Alene* Pan American Silver* Hochschild* Fresnillo* Silvercorp** Hecla*
5
* For Year ended 12/31/08 ** For 9 Months ended 12/31/08 Source: Company Reports, Not including Silverstone acquisition
Silver Sales Growth - No Further CAPEX To Be Paid*
30 20 25
+100%
- z)
15
er Sales (M o
5 10
Silve
2004 2005 2006 2007 2008 2009E 2010E 2011E 2012E 2013E
Luismin Penasquito Yauliyacu Zinkgruvan Stratoni Mineral Park, Campo Morado, q y g , p , La Negra, Keno Hill
6
* A US$35M payment is due to Alexco once project permits are received ** Not including Silverstone acquisition
Best Leverage to Silver Price - Performance Since Inception
500% 600% 300% 400% 500%
SLW
Silver PAAS SSRI
0% 100% 200%
PAAS HL CDE
- 200%
- 100%
0% 4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9
- Share price has significantly outperformed peers since inception in Oct. of
2004
Oct-04 Jan-05 Apr-05 Jul-05 Oct-05 Jan-06 Apr-06 Jul-06 Oct-06 Jan-07 Apr-07 Jul-07 Oct-07 Jan-08 Apr-08 Jul-08 Oct-08 Jan-09 Apr-09 7
Source: Thomson One, as of May 1, 2009
2004
Silver Wheaton vs Silver ETF
SILVER WHEATON Silver ETF Pure Silver Better Leverage to Silver Price Exploration Upside Acquisition Growth Potential Expansion Upside
8
Potential
Top 35 Silver Deposits in the World
Producing Mines and Development Projects
1 800 2,000
Producing Mines and Development Projects
Silver Wheaton Relationships (6)
1,200 1,400 1,600 1,800 erves (Moz)
25% of Peñasquito
400 600 800 1,000 sources & Rese 200 400
Penas Pascu Pitarri Glogo Rudna Polko Grasb Lubin Canni Navid Dukat Mt Isa Georg Antam Torom Codel 25% o Mehd Fresn Udoka San C Olymp Bawd Coran Malku Maver Zhezk Velad Hacke Sunsh Pirqui McArt Monta Rock San D
Res
squito ua-Lama illa
- w
a wice berg ngton ad t a ge Fisher mina mocho co
- f Penasquito
iabad illo an Cristobal pic Dam win ni u Khota rick Springs kazgan ero ett River hine tas thur River anore Creek Dimas
Si ifi t t k i 6 f th t 35 il d it i th ld
9
Source: Intierra
Significant stake in 6 of the top 35 silver deposits in the world
Significant Downside Protection
- Operating costs are essentially fixed:
- US$3.90/oz silver with small inflationary adjustment
US$3.90/oz silver with small inflationary adjustment
- Revenue derived from low cost and long life mining operations
- No ongoing capital expenditures or exploration costs
No ongoing capital expenditures or exploration costs
- Yet SLW benefits from production/exploration growth
- Structured to minimize income taxes
- No environmental/closure responsibilities
- Structured not to lose cash flow
- Silver purchase price is the lesser of the spot price or US$3.90/oz
- No currency risk
10
- Very low political risk
Fixed Operating Costs – Significant Upside Potential
$16.00
Silver Wheaton's Realized Silver Price vs. Cash Costs
$12.00 $14.00 $8.00 $10.00 $'s per ounce $4.00 $6.00 US$
Cash Margin Per Ounce
$0.00 $2.00 2004 2005 2006 2007 2008 2004 2005 2006 2007 2008 Realized Silver Price T
- tal Cash Cost
11
Revenue Derived from Low Cost and Quality Assets Assets
2009 Forecast Silver Sales 2013 Forecast Silver Sales
Luismin 33% Zinkgruvan 7% Stratoni 6% Other 11% Luismin 37% Stratoni 10% Other 11% Penasquito Yauliyacu 14% 7% Penasquito 9% Yauliyacu Zinkgruvan 12%
- 79% of 2009 revenue derived from four mines – Luismin, Peñasquito,
Penasquito 29% Yauliyacu 21%
Yauliyacu and Zinkgruvan (not including Silverstone acquisition)
- Luismin, Yauliyacu and Zinkgruvan have been in continuous production for over 100
years and are low cost producers
12
- Peñasquito to become next ‘flagship’ asset – adds significant growth
Very Low Political Risk
Geographic Distribution of Attributable Reserves and Resources
8% 6% 2% 13%
Mexico Peru USA
71%
USA Sweden Greece Canada
13
* Not including Silverstone acquisition
Financial Performance
$0.60 $0.40 $0.50 $0.20 $0.30 $0.00 $0.10 2004 2005 2006 2007 2008 EPS CFPS
- 52% annualized growth in cash flow per share for period 2005 through
2008
14
- 2008 adjusted EPS before non-cash write-down of long-term investments
2008
Growth in Attributable Reserves and Resources Per Share*
4.50 3.00 3.50 4.00 hare 1.50 2.00 2.50 Silver oz/sh 0.00 0.50 1.00
- 29% annualized growth in reserves and resources per share since inception
2004 2005 2006 2007 2008 Reserves Measured & Indicated Inferred 15
* Not Including Silverstone acquisition
29% annualized growth in reserves and resources per share since inception
Projected EBITDA Existing Agreements*
$20/oz $400 $500 ns) $10/oz $15/oz $200 $300 S$ (million $10/oz $0 $100 US 2009 2010 2011 2012 2013 2014
16
* Not including Silverstone acquisition
Debt Sensitivity*
Debt Repayment By $15/oz
)
Debt Repayment By $10/oz
Price (US$)
$8/oz
Silver P
Dec-08 Dec-09 Dec-10 Dec-11
17
* Not including Silverstone acquisition
Capital Structure - As of March 31, 2009*
Shares Outstanding 287.5 million g
SLW.WT Warrants 2.9 million** exercise @ C$ 4.00 SLW.WT.A Warrants 0.6 million** exercise @ C$ 5.50 SLW.WT.B Warrants 7.8 million exercise @ C$10.00 SLW.WT.U Warrants 2.7 million exercise @ U$20.00 Options 3.6 million avg.exercise @ C$10.48
Shares Fully Diluted 305.1 million 3 M h A D il V l 3 Month Avg. Daily Volume TSX: 2.8 million shares NYSE: 8.8 million shares
18
* Not including Silverstone acquisition ** Consolidated based on 0.2 SLW.WT and SLW.WT.A for every common share of SLW
Relative Valuations – Undervalued?
NAV Multiple
Royalty-type Structure Senior Gold Mid-Tier Gold Silver/PGM Averages
19
Source: Bank of America Securities - Merrill Lynch, April 27, 2009 g
Unparalleled Growth
20
Peñasquito
- Goldcorp’s world-class gold-zinc-silver-lead deposit in Mexico
- Largest silver deposit in the world
- Continued excellent potential for exploration growth
- Positive deep drilling shows underground potential
- Heap leach operation commenced production in Q2 2008
- Initial mill production expected in mid-2009
- 25% of silver production for the life of mine
25% i t t i P ñ it ld k f th t 20 il d it i th ld
- 25% interest in Peñasquito would rank as one of the top 20 silver deposits in the world
- Purchase price is the lower of US$3.90/oz or spot silver price
G ld l ti t
22
- Goldcorp completion guarantee
Peñasquito Project Growth - Since Our Acquisition, April 2007
April 2007 Current* Growth Silver Reserves/Resources**
P&P Reserves
575 M oz 1,046M oz +82%
M&I Resources
247 M oz 370 M oz +50%
M&I Resources
247 M oz 370 M oz +50%
LOM Silver Production Attributable to SLW (25%)
92 M oz 159 M oz +73%
Average Annual Silver Sales Attributable to SLW (25%)
5.4 M oz 7.2 M oz +33%
Anticipated Mine Life
17 yrs 22 yrs +29%
Underground Potential
Not contemplated Yes +%??
23
* Reserves and Resources as of Dec 31, 2008, remaining data based on March 2009 Technical Report, ** Silver Wheaton’s portion is 25%
WHERE ARE WE GOING?
24
Additional Acquisition Opportunities
- Significant silver stream opportunities going forward:
- 70% of mined silver is produced as a by-product
- Operators and developers facing growing capital requirements
- M&A activity resulting in financing needs
- Challenges in securing traditional sources of financing
T i i i i i i i h ff
- Targeting accretive acquisition opportunities that offer:
- Immediate cash flows
- Low risk
asset quality and location
- Low risk – asset quality and location
- We are delivering - recently announced Silverstone acquisition is
accretive on all major metrics and anticipated to close in the second quarter
25
Silverstone Resources – Announced Acquisition
- Friendly acquisition of Silverstone through Plan of Arrangement
announced in March 2009 announced in March 2009
- 0.185 Silver Wheaton shares per Silverstone share
- Approximately 24 million Silver Wheaton shares to be issued to
- Approximately 24 million Silver Wheaton shares to be issued to
Silverstone shareholders representing a 7% pro forma interest (fully diluted)
- Lock-ups from Capstone Mining and Silverstone insiders totaling 24%
- Unanimous support and recommendation of Silverstone Board of
Directors Directors
- Expected to close in May 2009
26
Transaction Rationale for Silver Wheaton
- Transaction is accretive on all key metrics
- Consolidates the silver streaming industry, solidifying Silver Wheaton’s
status as the largest silver streaming company in the world
- Aligned with business strategy
immediate production and cash flow Aligned with business strategy immediate production and cash flow
- Positions SLW for additional significant accretive acquisitions
- Three new silver stream agreements from low cost copper mines
Three new silver stream agreements from low cost copper mines
- Minto + Cozamin + Neves Corvo = 4.5 million oz of silver equivalent in 2009*
- Low political risk and significant exploration upside
Low political risk and significant exploration upside
- Diversifies Silver Wheaton production to 11 operating mines and 8
- perating partners
27
* Assumes a Au/Ag ratio of 70:1
Value for Silverstone Shareholders
- Substantial premium to recent SST trading price
- 18% spot premium and 40% premium based on 20-day volume weighted average prices*
- Significant ownership stake in the silver stream leader
- Highly liquid shares with average daily trading of approximately $81 million**
- Strong growth profile and increased diversification
- Geography
- Geography
- Counterparty
- Primary Metal
- SLW share price upside
- Proven ability to fund strong pipeline of significant opportunities
28
* As of March 12, 2009 **2009 YTD trading on TSX and NYSE
Mine Locations - Pro Forma
Zinkgruvan Mineral Park Keno Hill Minto Stratoni Peñasquito Luismin Campo Morado La Negra Neves-Corvo Aljustrel Yauliyacu Cozamin
Development Projects Operating Mines Silverstone – Core Operating Mines
Navidad 29
Silverstone – Other Assets (Growth Upside)
Strong Production Profile
- Increase from 100% to 140% growth in silver equivalent sales by 2010*
- Significant additional upside from the Neves-Corvo Zinc Aljustrel and Navidad
30 35
Significant additional upside from the Neves Corvo Zinc, Aljustrel and Navidad projects
20 25 30
Ag eq.)*
+100% +140%
10 15
ales (M oz
5 2008 2009E 2010E 2011E 2012E 2013E
Sa
Silver Wheaton Silverstone (Core Assets)
30
* Assumes a Au:Ag ratio of 70:1
Increase in Reserves and Resources
- Pro forma reserves greater than 500 million oz silver equivalent and total
resources of ~ 1.3 billion oz silver equivalent
1400 1600 g Eq.)*
P&P Reserves
Pro Forma
800 1000 1200 lver (M oz Ag + 27%
P&P Reserves M&I Resources Inferred Resources
Pro SLW
400 600 800 Contained Sil + 38%
SLW Pro Forma
200 C
Total Reserves d R
+ 38%
P&P Reserves
31
* Assumes a Au:Ag ratio of 70:1, Silverstone resources include Minto, Cozamin, Neves-Corvo and Aljustrel
and Resources P&P Reserves
Attributable Reserves & Resources*
1,800 1 200 1,400 1,600 (M oz) Pro Forma 800 1,000 1,200
Inferred M&I Resource
ned Silver 200 400 600
P&P Reserves
Contain 200
Hecla** Pan American** Coeur** Fresnillo** Silver Wheaton Silver Standard***
32
* Including Silverstone acquisition ** As of Dec 31, 2008 *** As of Feb 3, 2009 Source: Company Reports, Not including Silverstone acquisition
Silverstone Resources – Adding Immediate Value
Silver Wheaton (Before Acquisition) Silver Wheaton (After Acquisition)* Growth Silver Reserves & Resources
P&P Reserves
429.7 M oz 594.0 M oz 38%
P&P Reserves/share
1 49 oz/share 1 91 oz/share 28%
P&P Reserves/share
1.49 oz/share 1.91 oz/share 28%
M&I Resources
213.5 M oz 305.2 M oz 43%
M&I Resources/share
0.74 oz/share 0.98 oz/share 32%
Silver Equivalent Sales – 2009**
15-17 M oz 17-19 M oz 13%
2010**
21-23 M oz 25-27 M oz 18%
Sil E S l /Sh 2009**
0 054 / h 0 058 / h +6%
Silver Eq. Sales/Share – 2009**
0.054 oz/share 0.058 oz/share +6%
2010**
0.079 oz/share 0.086 oz/share +9%
Increased Diversification
33
* Acquisition anticipated to close in May 2009 ** Based on Silver Wheaton silver equivalent sales forecast using a Au/Ag ratio of 70:1
Silverstone – Core Operating Assets
Minto
Ag Eq*
Cozamin Neves-Corvo Cu Totals
g q
Cu Primary Metal Copper Copper Copper Location Canada Mexico Portugal Mi C h C t ($/lb C ) $1 09 $1 00 $1 07 Mine Cash Cost ($/lb Cu) $1.09 $1.00 $1.07 Terms 100% of silver and gold production for 100% of silver production until 2017 100% of the silver production for production for the life of mine** 2017 production for the life of mine 2009 Forecast Annualized Silver Equivalent Production (Moz)* 2.5 1.5 0.5 4.5 Silver Wheaton Cash Cost ($/oz Ag) $3.90 & $300/oz Au $4.00 $3.90
34
* Assumes a Au/Ag ratio of 70:1 ** If production exceeds 50,000 ounces of gold per year in the first two years of the agreement, or 30,000 ounces of gold per year thereafter, Silver Wheaton is entitled to 50% of the amount in excess of those thresholds
Silverstone – Further Upside Opportunities
Neves-Corvo Zinc
- Owned by Lundin Mining and covered by existing silver stream agreement
- World-class Lombador zinc-lead-silver deposit adjacent to copper deposits
- Zinc expansion project will re-commence once zinc prices improve
Aljustrel
- Silver stream agreement with zinc-lead-silver Aljustrel mine in Portugal
- Under care and maintenance until base metal prices improve
Navidad Project
- Convertible debenture with right to convert into 12.5% LOM payable silver
f f
35
from a portion of the Navidad silver project in Argentina
Debt Sensitivity Benefits*
- Further strengthening of Silver Wheaton balance sheet and cash generation
Debt Repayment By:
$15/oz $10/oz $10/oz $8/oz Dec-08 Dec-09 Dec-10 Dec-11
36
* Assumes a Au:Ag ratio of 70:1
= SLW = Pro Forma
Silverstone Acquisition Summary
Accretive Transaction - Immediate Production and Cash Flow
Consolidates the Silver Streaming Industry
Diversifies by Counterparty, Geography and Primary Commodity
Quality Operators and Low Cost Copper Mines
Low Risk Jurisdictions
Strong Exploration and Growth Potential
Pro Forma Share Price Upside
Further Strengthens Balance Sheet
Positions Silver Wheaton for Additional Accretive Transactions
37
Summary
- Largest silver streaming company in the world
Sil t i iti lidifi thi iti
- Silverstone acquisition solidifies this position
- Robust organic growth profile
- Greater than 100% organic sales volume growth by 2010 (not including Silverstone acquisition)
Greater than 100% organic sales volume growth by 2010 (not including Silverstone acquisition)
- Established, long life, low-cost mines with considerable upside potential
- Reserve/resource additions, production expansions
- Strong cash flow & earnings
- Significant leverage to increases in silver price
- Downside protection
- Very low political risk profile
38
- Well positioned for further growth
Appendix
39
SLW Equity Investments
Property of Interest Corani Rock Creek Hackett River Montanore Ownership 16% 12% 11% 11% Stage Pre-Feasibility Pre-Feasibility Pre-Feasibility Advanced E l ti g y y y Exploration Resource (Ag M oz) M&I 327
- Inf. 35
- Inf. 229
- Ind. 200
- Inf. 64
M&I 166
- Inf. 65
- Est. Annual Ag
Production +10 M oz/yr 6 M oz/yr 12 M oz/yr N/A
40
Source: Company Reports
By-Product Silver Production
Silver Output By Source Metal*
29.7% 9.9% 2.0% 26.7%
Primary Silver Lead/Zinc Copper Gold
31.7%
Other
- 70% of mined silver is produced as a by-product = significant growth
potential in the silver stream space
41
* GFMS & The Silver Institute
potential in the silver stream space
Silver Stream Agreements
Luismin Peñasquito Zinkgruvan Yauliyacu Stratoni Mineral Park Company Status Producing Producing (heap leach) Producing Producing Producing Producing Contract Length 25 yrs LOM LOM 20 yrs LOM LOM Ag Prod. 100% 25% 100% up to 4.75 M / 100% 100% g
- z/yr
Mine Life 25+ yrs 19+ yrs 25+ yrs 25+ yrs 7+ yrs 21+ yrs C h C t $3 95/ * $3 90/ * $3 96/ * $3 90/ $3 90/ * $3 90/
*
Cash Costs $3.95/oz* $3.90/oz* $3.96/oz* $3.90/oz $3.90/oz* $3.90/oz Annual Ag Production 7-12 M oz 2-10 M oz 2 M oz Up to 4.75 M
- z
1-2 M oz 0.4-0.6 M oz 42 Production
- z
* SLW pays the lesser of $3.90/oz or spot price on these contracts
Silver Stream Agreements
La Negra Campo Morado Keno Hill Company Status Producing Producing Development Contract Length LOM LOM LOM Silver Production 50% 75% 25% Mine Life 10 + yrs 6+ yrs 5+ yrs Cash Costs $3.90/oz* $3.90/oz* $3.90/oz* Annual Ag Annual Ag Production 0.5-0.7 M oz 0.8-1.0 M oz 0.8 M oz Date of expected prod ction 2010 43 production
* SLW pays the lesser of $3.90 and spot price on these contracts
Reserves and Resources (as of December 31, 2008)
Proven & Probable Reserves Attributable to Silver Wheaton (1,4,5,6,10,12)
PROVEN PROBABLE PROVEN & PROBABLE Tonnag e Grade Contained Tonnag e Grade Contained Tonnage Grade Contained Silver Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz San Dimas 1.69 381.3 20.7 3.40 362.2 39.6 5.09 368.5 60.3 Los Filos(11) 28.10 4.4 4.0 42.16 3.3 4.5 70.26 3.7 8.4 San Martin 0.32 32.7 0.3 0.71 47.8 1.1 1.03 43.2 1.4 Peñasquito (25%) Mill 140.30 33.9 152.9 111.93 25.2 90.5 252.23 30.0 243.4 Heap Leach 14.45 18.4 8.6 31.16 9.4 9.4 45.61 12.3 18.0 Yauliyacu(8) 0.77 138.7 3.5 1.28 174.4 7.2 2.06 161.0 10.7 Zinkgruvan Zinc Ore 8.76 112.0 31.6 2.00 56.0 3.6 10.76 101.6 35.2 Copper Ore 2.90 28.0 2.6 2.90 28.0 2.6 Stratoni 1.90 193.3 11.8 0.31 190.0 1.9 2.22 192.8 13.7 Mineral Park(9) 315.88 2.9 29.0 81.33 2.4 6.4 397.21 2.8 35.4 La Negra (50%) 0.14 76.9 0.3 0.10 69.5 0.2 0.24 73.9 0.6 Total 262.6 167.1 429.7
44
Reserves and Resources (as of December 31, 2008)
Measured & Indicated Resources Attributable to Silver Wheaton (1,2,3,4,5,7,10,12)
MEASURED INDICATED MEASURED & INDICATED Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained Silver Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz Los Filos(11) 0.20 5.1 0.03 7.38 4.8 1.1 7.58 4.8 1.2 Peñasquito (25%) q ( ) Mill 27.81 18.5 16.5 125.93 18.4 74.5 153.74 18.4 91.0 Heap Leach 1.44 4.1 0.2 7.60 5.0 1.2 9.04 4.9 1.4 Yauliyacu(8) 1.20 149.7 5.8 5.36 260.1 44.9 6.56 239.9 50.6 Zinkgruvan Zinc Ore 0.55 24.0 0.4 3.79 105.0 12.8 4.34 94.7 13.2 Copper Ore
- 0.46
30.0 0.4 0.46 30.0 0.4 Mineral Park(9) 100.97 2.6 8.4 175.63 2.7 15.2 276.60 2.7 23.6 Campo Morado (75%) 0.37 257.9 3.1 4.97 173.4 27.7 5.33 179.2 30.7 La Negra (50%) 0.20 127.0 0.8 0.09 128.0 0.4 0.29 127.3 1.2 Total 35.2 178.3 213.5
45
Reserves and Resources (as of December 31, 2008)
Inferred Resources Attributable to Silver Wheaton (1,2,3,4,5,7,10,12)
INFERRED Tonnage Grade Contained Silver Mt g Ag/t M oz San Dimas 15.14 316.4 154.0 Los Filos(11) 6.02 8.1 1.6 San Martin 3.01 119.0 11.5 Peñasquito (25%) Mill 176.40 17.0 96.2 Heap Leach 9.91 7.9 2.5 Yauliyacu(8) 11.41 207.9 76.3 y Zinkgruvan Zinc Ore 4.20 68.0 9.2 Copper Ore 0.55 42.0 0.7 Stratoni 0.64 203.4 4.2 Keno Hill (25%) 0.13 1015.8 4.4 ( ) Mineral Park(9) 320.15 2.3 23.8 Campo Morado (75%) 1.38 174.5 7.7 La Negra (50%) 0.11 75.3 0.3 Total 392.5
46
Resources and Reserves - Disclosures
Notes: 1. All Mineral Reserves and Mineral Resources have been calculated in accordance with the standards of the Canadian Institute of Mining, Metallurgy and Petroleum National Instrument 43-101,
- r the AusIMM JORC equivalent.
2. All Mineral Resources are exclusive of Mineral Reserves. 3. Mineral Resources which are not Mineral Reserves, do not have demonstrated economic viability. 4. Reserves and Resources are reported as of December 31, 2008, with the following conditions or exceptions: a. Reserves and Resources for Stratoni are reported as of December 31, 2007. b. Reserves and Resources for San Martin are reported as of December 31, 2006. Reserves and Resources are expected to be updated in Q2 2009. c. Reserves and Resources for Mineral Park are reported as of December 29, 2006. d. Resources for Campo Morado are reported as of February 29, 2008. e. Resources for La Negra are reported as of February 15, 2008 for the Alacran deposit and March 14, 2008 for the Monica deposit. f. Resources for Keno Hill are reported as of June 30, 2008. 5. Qualified Persons for the Mineral Reserve and Mineral Resource estimates as defined by the National Instrument 43-101 are as follows: a. San Dimas, Los Filos – Reynaldo Rivera, MAusIMM (Chief Geologist), Goldcorp Mexico, the Mexican operating subsidiary of Goldcorp Inc. b. San Martin – Velasquez Spring, P.Eng. (Senior Geologist) Watts, Griffis and McOuat Limited. c. Zinkgruvan – Per Hedstrom, AusIMM (Senior Geologist) and Lars Malmstrom, AusIMM, (Chief Geologist), both employees of Zinkgruvan Mining AB d. Yauliyacu – Neil Burns, M.Sc., P.Geo., (Director, Geology), Samuel Mah, M.A.Sc., P.Eng., (Director, Engineering), both employees of Silver Wheaton Corp. e. Peñasquito - Bob Bryson, MMSA, (Vice President, Engineering), Goldcorp Inc. f. Stratoni - Patrick Forward, AusIMM (General Manager, Exploration), European Goldfields Ltd. g. Campo Morado – Stephen J. Godden, F.I.M.M.M., C.Eng. (Director) S. Godden & Associates Limited; P. Taggart, P.Eng. (Principal) P.Taggart & Associates Ltd.; David Gaunt, P.Geo. and Qingping Deng, Ph.D., C.P.Geol. (Vice President of US Operations and Global Director of Ore Reserves and Mining Planning) Behre Dolbear & Company (USA), Inc. h. Keno Hill - G. David Keller, P.Geo. (Principal Resource Geologist) SRK Consulting (Canada) Inc.; Gordon Doerksen, P.Eng. (Principal Consultant - Mining) SRK Consulting (Canada) Inc.; Josef Sedlacek, P.Eng. (Principal Consultant) SRK Consulting (Canada) Inc., Hassan Ghaffari, P.Eng. (Manager of Metallurgy) Wardrop Engineering Inc. and Diane Lister, P.Eng., (Consulting Environmental Engineer and Principal) Altura Envinronmental Consulting. i. La Negra – Thomas C.Stubens, M.A.Sc., P.Eng. (Senior Geologist) Wardrop Engineering Inc., Barnard Foo, M.Eng., P.Eng. (Senior Mine Engineer) Wardrop Engineering Inc. and Ronald G. Simpson, P.Geo. (President), GeoSIM. j. Mineral Park – Gary Simmerman, FAusIMM (Vice President, Engineering and Mine Manager), Mercator Minerals Inc. k. Overall Corporate Review – Neil Burns, M.Sc., P.Geo., for Resources (Director of Geology), Samuel Mah, M.A.Sc., P.Eng. for Reserves (Director of Engineering), both employees of Silver Wheaton Corp.
47
Resources and Reserves - Disclosures
6. Mineral Reserves are estimated using appropriate recovery rates and US$ commodity prices of $12 per ounce of silver unless otherwise noted below: a. San Martin Reserves – US$7.00 per ounce b. Yauliyacu Reserves – US$10.00 per ounce c. Mineral Park Reserves - 0.237% Cu equivalent cut-off grade (hypogene), 0.283% Cu equivalent cut-off grade (supergene). Copper equivalent considers only copper and molybdenum c. Mineral Park Reserves 0.237% Cu equivalent cut off grade (hypogene), 0.283% Cu equivalent cut off grade (supergene). Copper equivalent considers only copper and molybdenum values (silver was not included). 7. Mineral Resources are estimated using appropriate recovery rates and US$ commodity prices of $14 per ounce of silver, unless otherwise noted below: a. San Martin Resources – US$8.00 per ounce b. The San Pedrito project Resources at San Martin– US$5.50 per ounce c. Zinkgruvan Resources – US$10.00 per ounce d. Stratoni Resources – US$12.00 per ounce e. Campo Morado (G9) Resources - 5.0% zinc only cut-off grade, silver was not included f. Keno Hill Resources – US$8.00 per ounce e o esou ces US$8 00 pe ou ce g. La Negra (Alacran) Resources - US$12.00 per ounce h. La Negra (Monica) Resources - US$13.50 per ounce i. Mineral Park Resources - 0.225% Cu Equivalent cut-off grade. Copper equivalent considers only copper and molybdenum values (silver was not included). 8. Silver Wheaton’s purchase agreement with Glencore provides for the delivery of up to 4.75 million ounces of silver per year for 20 years so long as production allows. In the event that silver produced at Yauliyacu in any year totals less than 4.75 million ounces, the amount sold to Silver Wheaton in subsequent years will be increased to make up the shortfall. 9. The Mineral Park reserves and resources do not include the SX/EW leach material since this process does not recover silver. 10. The Company considers the San Dimas, Yauliyacu and Peñasquito operations to be Material Assets, and has technical reports filed and available on www.sedar.com on each of these assets. 11. Los Filos reserves and resources are reported without the Bermejal deposit, as Bermejal is not subject to the silver sales agreement. p j p , j j g 12. Silver is produced as a by-product metal at all operations; therefore, the economic cut-off applied to the reporting of silver reserves and resources will be influenced by changes in the commodity prices of other metals at the time.
48
Keno Hill Alexco Resource Corp.
- Keno Hill is one of the highest-grade historic
silver producing districts in the world silver producing districts in the world
- 217 million ounces of silver produced over 75 years
- Average grade in excess of 40 ounces per ton silver
- Silver grade in top 3% of global silver producers
- Resumption of high grade silver-lead-zinc
production scheduled for 2010 from Bellekeno production scheduled for 2010 from Bellekeno project
- Anticipated low cost producer
- Anticipated low cost producer
- Immense exploration potential and future
production upside planned
49
production upside planned
- Several near term production targets being advanced
Keno Hill – Transaction Terms
- 25% life of mine silver production over entire 240km2 Keno Hill property
- Upfront cash payment of US$50 million in two tranches:
- US$15 million already paid to fund ongoing underground development
- US$35 million payment once permits received and construction underway
- Purchase price is the lower of US$3.90/oz or spot silver price
- Silver Wheaton has no ongoing capital expenditures or exploration costs
- Completion guarantee
Completion guarantee
- Silver Wheaton forecast to receive +800,000 ounces of silver annually
with very significant upside potential with very significant upside potential
50
Keno Hill – Historic Silver Production
51
Keno Hill – High Grade/Vast Potential
50 0
Global Silver Deposits - Grade Comparison
40.0 45.0 50.0
- n)
Martha
25.0 30.0 35.0
(ounces per t Keno Hill Historic Resource
Juanicipio Platosa‐Saltillera Ying
Bellekeno
Goltsovoye
10.0 15.0 20.0
Silver Grade
Silvertip Greens Creek Cannington San Jose Topia Lucky Friday Uchucchacua Prognoz Dukat Fresnillo Pallancata La Colorada Guanacevi Yauliyacu
- 5.0
- 5.0
10.0 15.0 20.0 25.0
Ares Caylloma Hacket River Morococha San Cristobal Palmarejo Rock Creek Pitarilla Fuwan Piriquitas Corani San Bartolome Yauliyacu
Base Metal + Gold in Silver Equivalent Ounces per Ton*
* Calculated using $12/oz Ag, $650/oz Au, $0.75/lb Zn, $0.45/lb Pb, $2.50/lb Cu (100% metallurgical recoveries) Source – Company reports
Mineral Park - Mercator Minerals
- Cu-Mo-Ag open pit mine in northwest
Arizona in continuous operations for Arizona in continuous operations for more than 30 yrs
- Commissioning of 25,000 tpd mill
g , p underway with first silver bearing copper concentrate produced in December 2008 December 2008
- Current Silver Reserves & Resources:
- P&P Reserves:
35 M oz
- M&I Resources:
24 M oz
- Inferred Resources:
24 M oz
- Anticipated mine life of at least 21
c pa ed e e o a eas years
53
Mineral Park - Transaction Terms
- 100% of LOM silver production
- Silver Wheaton forecast to receive up to 600,000 ounces of silver
annually for at least 21 years $
- Upfront cash payment of US$42 M
- Purchase price is the lower of US$3.90/oz or spot silver price
- Completion guarantee
54
Campo Morado - Farallon Resources
- Farallon’s volcanogenic massive sulfide district in Mexico
- Commercial production underway at high grade G 9 deposit
- Commercial production underway at high grade G-9 deposit
- 1,500 tpd mine
- Ultra low cash cost zinc mine
F h hi h d d i i hi 116 k
2
i
- Four other high grade deposits within 116 km2 concession area
- Excellent potential for exploration growth
- Silver Resources:
Silver Resources:
- M&I Resources: 31 M oz
- Inferred Resources: 8 M oz
55
Campo Morado - Transaction Terms
- 75% of LOM silver production in the
entire 116km2 property entire 116km2 property
- Silver Wheaton forecast to receive
800,000 to 1,000,000 ounces of , , , silver annually
- Upfront cash payment of US$80
million
- Purchase price is the lower of
US$3 90/oz or spot silver price US$3.90/oz or spot silver price
- Completion guarantee
56
WHY SILVER?
57
Silver Demand
What is silver used for?
24% 9% 53% 24% Industrial De-hedging Photography Jewelry & Silverware 13% Jewelry & Silverware Coins and Investment
2008 Demand Forecast
1%
58
Source: GFMS
Demand From Industrial Applications
Primary Uses:
- Electrical & Electronics
Positive Trends:
- Growth in Middle Class in
- Electrical & Electronics
- Chemicals
- Brazing Alloys
- Growth in Middle Class in
China & India
- Growing use of Mobile
Phones
New Areas of Growth:
- Silver-zinc batteries – “If successful,
Zpower could significantly increase Phones
- Computerization in Third
World
- More Stringent Environmental
Zpower could significantly increase demand for silver from around 2011 on.”
(Brook Hunt - ‘Silver, The Outlook to 2020’)
- Solar
More Stringent Environmental Laws
- LCD/Plasma Screens
- Medical Instruments
- Biocides
59
Source: CPM Group, RBC Capital Markets
Industrial Demand
500 300 400
n ounces)
100 200
Silver (million Electrical and Electronic Other
I i d d f th l t 7 d it i i i (7% i 2007)
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008F
- Increase in demand every year for the last 7 years despite rising price (7% in 2007)
- Demand is relatively inelastic to the price of silver (low proportion of input cost)
- New record levels expected in 2008 but decline forecast in 2009
60
New record levels expected in 2008 but decline forecast in 2009
Source: GFMS
Investment Demand A Major Catalyst of Silver Price
- Demand for silver ETF’s
t d t i
300 $25
SD)
Silver Price and iShares Silver Trust Holdings
expected to increase
- iShares growing; applied
for +360 M oz
150 200 250 300 $ $15 $20 $ 5
- ns of oz
- ndon Fix in US
- New ETF’s emerging
- Increased investment
demand expected to offset
50 100 $0 $5 $10 1/ 11 9/ 1/ 8/ 10 2/ 7/ 11 4/
Millio Silver Price (L
decreased industrial demand in 2009 C i d d h i i ifi tl fl ti i
/3/2006 1/5/2006 /19/2006 /30/2007 /6/2007 0/19/2007 /29/2008 /14/2008 1/18/2008 /1/2009
- Coin demand has risen significantly reflecting a growing
investor interest
61
Source: GFMS & iShares
Silver Supply
2008 Supply Forecast
20% 2% Mine Production 78% Scrap Government Sales
- Mine production growth in 2009 still expected but much slower than
p g p previously forecast (due to impact of lower metals prices, project delays, etc)
- GFMS revised 2009 mine production forecast is 700m oz in 2009, down from
62
Source: GFMS
the 730m oz previously forecast
Changes in Government Stocks
40
- 20
20
Ounces)
- 60
- 40
20
Silver (Million
- 100
- 80
S
Government inventories declining since 1999 to make up for supply deficits
63
Source: GFMS
Silver Inventories are at a Historical Low
2,400 1,600 2,000
z)
1,200 1,600
ventory (M oz
400 800
Inv
50 55 60 65 70 75 80 85 90 95 00 05
64
Source: CPM Group, 2008
From “Deficit” to a Balanced Market
950 850 900
es)
700 750 800
(million ounc Supply D d
600 650 700
Silver Demand
500 550 600
65
1992 1994 1996 1998 2000 2002 2004 2006 2008F Source: GFMS
GFMS Silver Price Outlook - Conclusion
- Silver’s supply/demand fundamentals (excluding investment) turning
- Silver s supply/demand fundamentals (excluding investment) turning
negative in 2009 due mainly to lower fabrication demand, though supply side less threatening than formerly expected
- Silver market will therefore move back into surplus but this metal will
be absorbed by investors
- Silver prices will be volatile but tend to increase from current levels
- Silver prices will be volatile but tend to increase from current levels
- GFMS under its base case scenario currently forecast a calendar
2009 average silver price of around $13/oz g p $
66
Source: GFMS