OREANDA-NEWS. Silver Wheaton's (SLW's) Q216 earnings were within 2.5% of our forecast and almost 50% better than the previous quarter (Q116). Performance was buoyed by record gold sales, driven by the continued ramp up at Salobo, a record production performance at Sudbury (which was almost 6,000oz ahead of our expectations), continued outperformance at Antamina (for a third consecutive quarter) and inventory drawdown (for a second consecutive quarter). As a result of increased precious metals' prices, as well as the purchase of an additional gold stream at Salobo (see below), we have increased our earnings expectations for Q316, Q416 and FY16 by 60.0%, 46.7% and 27.3%, respectively.

Assuming no material purchases of additional streams (which is unlikely), we forecast a value per share for SLW of US$40.81, or C$53.21, in FY19 (at prices of US$26.57/oz Ag and US$1,483/oz Au). This compares with an estimate of US$37.62, or C$48.27, at the time of our last note in May. The 25% Salobo gold stream acquisition (plus the PLP) is responsible for adding US$3.19 per share to SLW's value in FY19 money terms. In the meantime, SLW is trading on near-term financial ratios that are cheaper than those of its royalty/streaming 'peers' on at least 79% of valuation measures and the miners themselves on at least 38% of measures considered, despite being associated with materially less operational and cost risk.


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