09-01-19 slw presentation final · a unique silver company largest pure silver company...
TRANSCRIPT
J 2009January 2009
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 United States Private Securities Litigationof historical fact contained herein, the information presented constitutes forward-looking statements within the meaning of the United States Private Securities LitigationReform Act of 1995 and applicable Canadian securities legislation. Such forward-looking statements, including but not limited to those with respect to the future price ofsilver, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs ofproduction, reserve determination and reserve conversion rates, involve known and unknown risks, uncertainties and other factors which may cause the actual results, levelof acivity, performance or achievements of Silver Wheaton to be materially different from any future results, level of activity, performance or achievements expressed orimplied by such forward-looking statements. Such factors include, among others, risks related to the completion and integration of acquisitions, the absence of control overmining operations from hich Sil er Wheaton p rchases or e pects to p rchase sil er or sil er in concentrates and risks related to these mining operations incl ding risksmining operations from which Silver Wheaton purchases or expects to purchase silver or silver in concentrates and risks related to these mining operations, including risksrelated 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 SilverWheaton’s Annual Information Form for the year ended December 31, 2007 available on SEDAR at www.sedar.com and incorporated by reference into Silver Wheaton’sForm 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C. Although Silver Wheaton has attempted to identify important factors that couldcause 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
i t d d Th b th t h t t t ill t b t t l lt d f t t ld diff t i ll f th ti i t d ior 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 insuch statements. Accordingly, readers should not place undue reliance on forward-looking statements. Silver Wheaton does not undertake to update any forward-lookingstatements that are contained 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 byCanadian regulations, the United States Securities and Exchange Commission does not recognize them. “Inferred Mineral Resources” have a great amount of uncertaintyas 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 ahigher category. Under Canadian rules, estimates of Inferred Mineral Resources may not form the basis of feasibility or other economic studies. U.S. investors arecautioned 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 alsocautioned not to assume that all or any part of an Inferred Mineral Resource exists, or is economically or legally mineable.
Full details on Silver Wheaton reserves and resources for Luismin Zinkgruvan Yauliyacu Peñasquito Stratoni Mineral Park Campo Morado La Negra and Keno Hill
1
Full details on Silver Wheaton reserves and resources for Luismin, Zinkgruvan, Yauliyacu, Peñasquito, Stratoni, Mineral Park, Campo Morado, La Negra, and Keno Hillcan be found on the Company website at www.silverwheaton.com.
A Unique Silver Company
Largest Pure Silver Company
Best leverage to silver price Best leverage to silver price• 10% increase in silver price results in a 26% increase in 2009 cash flow
Very strong growth potential Very strong growth potential• Significant stake in 6 of the top 35 silver deposits in the world• +100% organic sales volume growth by 2010
Sound financial position• Bank debt fully repaid on time below $8 long term silver price
Si ifi t d id t ti Significant downside protection• Model eliminates many key risks faced by traditional companies
Experienced management team with demonstrated track record of
2
Experienced management team with demonstrated track record of success
Largest Pure Silver Company
100% of revenue from silver production
Very high Net Profit Margins
• +50% for the 9 months ended September 30, 2008
+100% organic sales volume growth by 2010
Nine long term agreements with established producers:• Goldcorp, Glencore, Lundin Mining, European Goldfields
Reserves and resources of more than 1 Billion silver ounces• P&P reserves totaling 382 million ounces of silver• P&P reserves totaling 382 million ounces of silver• M&I resources totaling 230 million ounces of silver• Inferred resources totaling 448 million ounces of silver
No hedging
3
Mine Locations
S i
Zinkgruvan
Mineral Park
Keno Hill
Stratoni
PeñasquitoLuisminCampo MoradoLa Negra
Yauliyacu
Development Projects
Operating Mines
4
Development Projects
100% of Revenue from Silver Production
100%100%
76%
64%70%
80%
90%
of T
otal
60%55%
42%38%40%
50%
60%
venu
e as
a %
o
20%
30%
40%
Silv
er R
ev
0%
10%
Silver Wheaton**
Coeur D'Alene**
Hochschild* Fresnillo* Pan American Silver**
Hecla** Silvercorp***
5Source: Company Reports
* For 6 Months ended 06/30/2008** For 9 Months ended 09/30/08*** For 6 Months ended 09/30/08
Net Profit Margin – Third Quarter 2008/Precious Metal Companies
50%60%
10%20%30%40%50%
40%‐30%‐20%‐10%0%0%
‐40%
lden
Star
orthgate
r d'Alene
AMGOLD
Hecla
American
New
mont
Average
Centerra
Kinross
Barrick
Agnico
ilvercorp
o‐Nevada
Eldorado
oyal Gold
Wheaton
Goldcorp
Go N
Coeu
IA
Pan
A N S
Franco Ro
Silver W G
Silver Companies Gold Companies Royalty Companies Silver Wheaton
6
Source: Thomson One
Silver Sales Growth No Further CAPEX To Be Paid1
30
33
21
24
27
30
oz) +100%
9
12
15
18
duct
ion
(M o
0
3
6
9
Silv
er P
rod
2004 2005 2006 2007 2008E 2009E 2010E 2011E 2012E 2013E
Luismin Penasquito Yauliyacu Stratoni Zinkgruvan Mineral Park, Campo Morado,La Negra, Keno Hill
7
1. A US$35M payment is due to Alexco once project permits are received
Current Attributable Reserves & Resources
16001800
120014001600
ver
(M o
z)
P & P Reserves
600800
1000
ntai
ned
Silv
M & I Resource
0200400C
on
Inferred
0Hecla Pan
AmericanCoeur Fresnillo Silver
Wheaton*Silver
Standard
8
Source: Company Reports, all R&R Estimates are as of Dec 31, 2007 except Silver Wheaton is as of Oct 2008 and Silver Standard is as of July 16, 2008
Best Leverage to Silver Price Performance Since Inception (Oct. ’04)
600%
300%
400%
500%
SLWSil
100%
200%
300%
Silver
PAASHL
SSRI
CDE-100%
0%
-200%
Oct
-04
Jan-
05
Apr
-05
Jul-0
5
Oct
-05
Jan-
06
Apr
-06
Jul-0
6
Oct
-06
Jan-
07
Apr
-07
Jul-0
7
Oct
-07
Jan-
08
Apr
-08
Jul-0
8
Oct
-08
Jan-
09
9
Source: Thomson One
Silver Wheaton vs Silver ETF
SILVER WHEATON Silver ETF
Pure Silver
Best Leverage toSilver Price
Organic Growth
Further GrowthPotential
10
Top 35 Silver Deposits in the WorldProducing Mines and Development ProjectsProducing Mines and Development Projects
1 800
2,000 Silver Wheaton Relationship (6)Sil St d d (2)
1,200
1,400
1,600
1,800
rves
(Moz
)
Silver Standard (2)
25% of Peñasquito
600
800
1,000
1,200
urce
s &
Res
er
0
200
400
P P R M P G L P N C T A C 2 M S F U O D B C C Z S S P M J H M R V G ER
esou
Penasquito
Pascua-Lam
a
Rudna
Mt Isa
Polkow
ice
Grasberg
Lubin
Pitarrilla
Navidad
Cannington
Toromocho
Antam
ina
Codelco
5% of P
enasquit o
Mehdiabad
San C
ristobal
Fresnillo
Udokan
Olym
pic Dam
Dukat
Baw
dwin
Cerro del G
allo
Corani
Zhezkazgan
Sunshine M
ine
San D
imas
Pirquitas
McA
rthur River
uanicipio
Hackett R
iver
Montanore
Rock C
reek
Veladero
Garpenberg
East R
egion
o
11
Source: Intierra
Significant Downside Protection
Operating costs are essentially fixed:• US$3.90/oz silver with small inflationary adjustmentUS$3.90/oz silver with small inflationary adjustment
Revenue derived from low cost and long life mining operations
No ongoing capital expenditures or exploration costsNo 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
12
Very low political risk
Fixed Operating Costs – Significant upside potential
$18 00Silver Wheaton's Realized Silver Price vs. Cash Costs
$12 00
$14.00
$16.00
$18.00
$8.00
$10.00
$12.00
US
$
Cash Margin Per Ounce
$2.00
$4.00
$6.00
$0.00
Q4'
04
Q1'
05
Q2'
05
Q3'
05
Q4'
05
Q1'
06
Q2'
06
Q3'
06
Q4'
06
Q1'
07
Q2'
07
Q3'
07
Q4'
07
Q1'
08
Q2'
08
Q3'
08
Realized Silver Price Total Cash Cost (US$'s per ounce) (US$'s per ounce)
13
Revenue Derived from Low Cost and Quality AssetsAssets
2009 Forecast Silver Sales 2013 Forecast Silver Sales
Luismin36%Zinkgruvan
12%
Stratoni11%
Other8% Luismin
32%Zinkgruvan8%
Stratoni7%
Other11%
Penasquito13%
Yauliyacu20% Penasquito
28%
Yauliyacu14%
Greater than 80% of 2009 revenue derived from four mines – Luismin, Peñasquito, Yauliyacu and Zinkgruvan
• Luismin, Yauliyacu and Zinkgruvan have been in continuous production for over 100 years and are low cost producers
14
Peñasquito to become next ‘flagship’ asset – adds significant growth
Commodity Exposure – Well Diversified
2009 Commodity Exposure 2013 Commodity Exposure
Gold49%
Zinc48%
Zinc34%
49%48%Gold61%
Silver
Copper3%
Copper2%
Silver3%
With its current contracts, Silver Wheaton is well diversified and its exposure to gold increases over time
15
Figures are based on Silver Wheaton’s Forecast Silver Sales
Very Low Political Risk
Geographic Distribution of Reserves and Resources
6%2% 6%
13% MexicoPeru
73%
SwedenGreeceUSACanada73% Canada
16
Track Record of Success
Premier vehicle for investors seeking leverage to silver prices
65% annualized growth in earnings per share and 73% annualized growth in cash flow per share for period 2005 through 2007
% & % 56% annualized growth in P&P reserves and 46% annualized growth in total reserves and resources since inception
Share price has significantly outperformed peers since inception in Oct of Share price has significantly outperformed peers since inception in Oct. of 2004
Significant portfolio growthg p g
• Nine silver stream agreements completed in four years
• Further growth anticipatedg
17
Financial Performance
$0.60
$0 40
$0.50
SD)
$0.30
$0.40
S/EP
S (U
S
$0.10
$0.20
CFP
S
$0.002004 2005 2006 2007 Q1-Q3 2008
18
EPS CFPS
Growth in Reserves and Resources- since inception (Oct 2004)
1200
800
1000
400
600
200
400
0
2004 2005 2006 2007 Current
P&P Reserves Measured & Indicated Inferred
19
As of Dec 31 for each year, Current is as of Aug 20, 2008
Growth in Reserves and Resources Per Share - since inception (Oct 2004)
4.50
3 00
3.50
4.00
are
1 50
2.00
2.50
3.00
lver oz/sha
0.50
1.00
1.50Sil
0.00
2004 2005 2006 2007 CurrentP&P Reserves Measured & Indicated Inferred
20
As of Dec 31 for each year
Projected EBITDA Existing Agreements
$20/oz$500
$600
s)
$15/oz
$200
$300
$400
$ (m
illions
$10/oz
$0
$100
$200
US
$0
2009 2010 2011 2012 2013 2014
21
Debt Sensitivity
22
Debt Servicing and Covenants
Silver Wheaton’s financial position remains strongg
Sustained silver price below $8/ounce = bank debt fully repaid on time
Sustained silver price of greater than $10/ounce = all covenants met Sustained silver price of greater than $10/ounce = all covenants met
Sustained silver price of greater than $7/ounce = no covenant challenges before mid 2009challenges before mid-2009
Management will be proactive to ensure no covenant issues arise
23
Unparalleled Growth
24
Peñasquito
Goldcorp’s world-class gold-zinc- Positive deep drilling shows silver-lead deposit in Mexico
Largest silver deposit in the world
underground potential
Heap leach operation commenced
Reserves and Resources (June 2007)• P&P Reserves: 864 M oz
production in Q2 2008
Initial mill production expected in id 2009• M&I Resources: 413 M oz
Updated reserve/resource estimate anticipated in early 2009
mid-2009
30% boost in mill throughput over 2006 f ibilitanticipated in early 2009
Continued excellent potential for exploration growth
2006 feasibility
26
exploration growth
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
million
100% debt financed; no h h ld dil ti
25% interest in Peñasquito would rank as one of the top 15 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
27
Peñasquito First Gold/Silver Pour May 13, 2008
Silver Wheaton will receive 25% of ALL silver produced
28
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 413 M 67%M&I Resources 247 M oz 413 M oz +67%
LOM Silver Production Attributable to SLW (25%)* 92 M oz 140 M oz* +52%Attributable to SLW (25%)
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 +%??
29
g Not contemplated Yes +%??* Does not include resource conversion potential
Peñasquito Production
45
30
35
40
z
20
25
30
ilver
M o
z
5
10
15S
0
5
2008 2010 2012 2014 2016 2018 2020 2022
30
Total Production 25% of Production 2006 Feasibility Production
WHERE ARE WE GOING?
31
Where Are We Going?
Silver price is expected to strengthen over the long term
• Strong cash flows
• Best leverage
Debt repayment is a top priority
Ensure compliance with debt covenants
• Leverage ratio, debt service coverage ratio, tangible net worth
Further acquisition opportunities
• Focus is on operating assets
Minimum of 2-4 new deals per year should be achievable
32
Further Acquisition Opportunities
Several acquisitions completed in 2008
• Mineral Park, Campo Morado, La Negra, Keno Hill
Significant silver stream opportunities going forward:
• Operators and developers facing growing capital requirements
• M&A activity resulting in financing needsy g g
• Challenges in securing traditional sources of financing
O t iti i t t l id d ll it li ti Opportunities exist amongst large, mid, and small capitalization companies
33
By-Product Silver Production
Silver Output By Source Metal*
29.7%
9.9% 2.0%
26.7% Primary SilverLead/ZincCopperGold
31.7% Other
70% of mined silver is produced as a by-product = significant growth potential in the silver stream space
34
*GFMS & The Silver Institute
potential in the silver stream space
SLW Equity Investments
Property of Interest
Corani Rock Creek Hackett River Montanore
Ownership 16% 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
+10 M oz/yr 6 M oz/yr 12 M oz/yr N/A
35
Source: Company Reports
Near-term Catalysts
Greater than 100% organic sales volume growth by 2010: Goldcorp’s Peñasquito project• Goldcorp s Peñasquito project
• Mercator’s Mineral Park mine• Farallon’s Campo Morado project
Aurcana’s La Negra mine• Aurcana’s La Negra mine
Turnaround at San Dimas in H1/2009
Reserve and resource expansions from existing projects
Mill expansions and project optimizations leading to increased silver sales
Strengthening silver prices
Growth opportunities
36
pp
Relative Valuations – Undervalued?
37
Source: Bank of America Securities - Merrill Lynch, January 19, 2009
Capital Structure As of Dec 31, 2008
Shares Outstanding 251.5 millionShares Outstanding 251.5 million
SLW.WT Warrants 2.9 million(1) exercise @ C$ 4.00
SLW.WT.A Warrants 0.6 million(1) 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 269.0 million3 Month Avg. Daily Volume
TSX: 2.1 million sharesNYSE: 7.4 million shares
38
1. Consolidated based on 0.2 SLW.WT and SLW.WT.A for every common share of SLW
Summary
100% Pure Silver
Established, long life, low cost mines with considerable upside potential
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
39
Well positioned for further growth
Appendix
40
Silver Stream Agreements
Luismin Peñasquito Zinkgruvan Yauliyacu Stratoni Mineral Park
CCompany
Status ProducingProducing
(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
oz/yr
Mine Life 25+ yrs 19+ yrs 25+ yrs 25+ yrs 7+ yrs 21+ yrs
C h C t $3 95/ 1 $3 90/ 1 $3 96/ 1 $3 90/ $3 90/ 1 $3 90/ 1Cash Costs $3.95/oz1 $3.90/oz1 $3.96/oz1 $3.90/oz $3.90/oz1 $3.90/oz1
Annual Ag Production
7-12 M oz 2-10 M oz 2 M ozUp to 4.75 M
oz1-2 M oz 0.4-0.65 M oz
41
Production oz
1 SLW pays the lesser of $3.90/oz or spot price on these contracts
Silver Stream Agreements
La NegraCampoMorado
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/oz1 $3.90/oz1 $3.90/oz1
Annual AgAnnual Ag Production
0.5-0.7 M oz 0.8-1.2 M oz 0.8 M oz
Date of expected prod ction
2010
42
production
1 SLW pays the lesser of $3.90 and spot price on these contracts
Reserves and Resources (as of August 2008)
Silver Wheaton’s Portion of Proven & Probable Reserves (1,4,5,6,11,12)
PROVEN PROBABLE PROVEN & PROBABLE
Tonne Grade Contained Tonne Grade Contained Tonne Grade Contained
Silver Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz
San Dimas 1.60 387.1 19.9 3.08 378.2 37.5 4.68 381.2 57.3San Dimas 1.60 387.1 19.9 3.08 378.2 37.5 4.68 381.2 57.3
Los Filos(13) 33.71 3.4 3.7 55.31 2.9 5.2 89.02 3.1 8.8
San Martin 0.32 32.7 0.3 0.71 47.8 1.1 1.03 43.2 1.4
Peñasquito (25%)
Mill(9) 106.72 34.0 116.7 95.06 27.2 83.1 201.78 30.8 199.9
Heap Leach(9) 10.53 20.9 7.1 17.08 16.4 9.0 27.61 18.1 16.1
Yauliyacu(8) 1.41 89.0 4.0 2.30 135.7 10.0 3.72 117.9 14.1
Zinkgruvan (Zn) 8 31 114 0 30 4 2 25 62 0 4 5 10 56 102 9 34 9Zinkgruvan (Zn) 8.31 114.0 30.4 2.25 62.0 4.5 10.56 102.9 34.9
Stratoni 1.90 193.3 11.8 0.31 190.0 1.9 2.22 192.8 13.7
Mineral Park(10) 315.88 2.9 29.0 81.33 2.4 6.4 397.21 2.8 35.4
La Negra(9) (50%) 0.14 76.9 0.3 0.10 69.5 0.2 0.24 73.9 0.6
43
Total 223.3 158.9 382.3
Reserves and Resources (as of August 2008)
Silver Wheaton’s Portion of Measured & Indicated Resources (1,2,3,4,5,7,11,12)
MEASURED INDICATED MEASURED & INDICATED
Tonne Grade Contained Tonne Grade Contained Tonne Grade Contained
Silver Mt g Ag/t M oz Mt g Ag/t M oz Mt g Ag/t M oz
Los Filos(13) 6.25 3.4 0.7 12.66 3.0 1.2 18.92 3.1 1.9Los Filos 6.25 3.4 0.7 12.66 3.0 1.2 18.92 3.1 1.9
Peñasquito (25%)
Mill(9) 24.78 22.4 17.8 134.19 19.3 83.1 158.97 19.7 100.9
Heap Leach(9) 1.97 6.8 0.4 8.67 7.1 2.0 10.64 7.0 2.4
Yauliyacu(8) 0.46 90.9 1.3 4.67 247.6 37.2 5.13 233.7 38.5
Zinkgruvan (Zn) 0.55 24.0 0.4 3.68 109.0 12.9 4.23 97.9 13.3
Zinkgruvan (Cu) - - - 3.10 32.0 3.2 3.10 32.0 3.2
Mineral Park(10) 54.33 0.9 1.5 126.71 2.9 11.6 181.04 2.3 13.1
Campo Morado(9) (75%) 0.37 257.9 3.1 9.67 169.8 52.8 10.04 173.0 55.9
La Negra(9) (50%) 0.20 127.0 0.8 0.09 128.0 0.4 0.29 127.3 1.2
44
Total 26.1 204.4 230.4
Reserves and Resources (as of August 2008)
Silver Wheaton’s Portion of Inferred Resources (1,2,3,4,5,7,11,12)
INFERRED
Tonne Grade Contained
Silver Mt g Ag/t M oz
San Dimas 17.55 324.4 183.0
Los Filos(13) 2.39 2.9 0.2
San Martin 3.01 120.3 11.6
Peñasquito (25%)
Mill(9) 294.75 13.0 122.8
Heap Leach(9) 10.25 13.1 4.3
Yauliyacu(8) 11.62 216.7 80.9
Zinkgruvan (Zn) 4.32 67.0 9.3
Zinkgruvan (Cu) 0.77 20.0 0.5
Stratoni 0.64 203.4 4.2
Bellekeno (25%) 0.13 1015.8 4.4
Mineral Park(10) 198.4 2.3 14.9
Campo Morado(9)
(75%) 2.33 149.4 11.2
La Negra(9) (50%) 0 11 75 3 0 3
45
La Negra( ) (50%) 0.11 75.3 0.3
Total 447.5
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, or the AusIMM JORC equivalent.2 All Mineral Resources are exclusive of Mineral Reserves2. 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, 2007, with the following conditions or exceptions:
a. Reserves and Resources for San Martin are reported as of December 31, 2006 with the exception of the San Pedrito project, which is reported as of December 31, 2005.
b. Reserves and Resources for Penasquito are reported as of August 9, 2007.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 for the G-9 deposit and October 13, 2005 for all other deposits on the property.e Resources for La Negra are reported as of February 15 2008 for the Alacran deposit and March 14 2008 for the Monica deposite. 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 Bellekeno are reported as of November 10, 2007.
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 – Reynaldo Rivera, MAusIMM (Chief Geologist), Luismin S.A. de C.V., the Mexican operating subsidiary of Goldcorp Inc.b. Los Filos – Reynaldo Rivera, MAusIMM (Chief Geologist), Luismin S.A. de C.V., the Mexican operating subsidiary of Goldcorp Inc.c. San Martin – Reynaldo Rivera, MAusIMM (Chief Geologist), Luismin S.A. de C.V., the Mexican operating subsidiary of Goldcorp Inc.d. Zinkgruvan – Per Hedstrom (Senior Geologist) and Lars Malmstrom (Chief Geologist), both employees of Lundin Mining Corp.e. Yauliyacu – Velasquez Spring, P.Eng. (Senior Geologist) Watts, Griffis and McOuat Limited.f Peñasquito - Bob Bryson P Eng (Vice President Engineering) Goldcorp Incf. Peñasquito Bob Bryson, P.Eng. (Vice President, Engineering), Goldcorp Inc.g. Stratoni - Patrick Forward (General Manager, Exploration), European Goldfields Ltd.h. Campo Morado (G9) – 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 (Manager of Resources) 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.
i. Campo Morado (Other Deposits) – Daniel B. Kilby, P.Eng, Hunter Dickenson Gold; David Dreisinger, Phd, P.Eng (President) Dreisinger Consulting Inc.; P. Taggart, P.Eng(Principal) P.Taggart & Associates Ltd.; 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.
j Bellekeno - G David Keller P Geo (Principal Resource Geologist); Jean-François Couture Ph D P Geo (Principal Geologist); and Lars Weiershäuser Ph D P Gj. Bellekeno G. David Keller, P.Geo, (Principal Resource Geologist); Jean François Couture, Ph.D, P.Geo, (Principal Geologist); and Lars Weiershäuser, Ph.D, P.G,(Consultant Geologist) are all from SRK Consulting.
k. La Negra – Thomas C.Stubens, MASc, P.Eng (Senior Geologist) Wardrop Engineering Inc. and Ronald G. Simpson, P.Geo (President), GeoSIM.l. Mineral Park – Jim Tompkins (Independent Mining Engineer), Mercator Minerals Inc.m. Overall Corporate Review - Randy V.J. Smallwood, P.Eng. (Executive Vice President of Corporate Development), Silver Wheaton Corp.
46
Resources and Reserves - Disclosures
6. Mineral Reserves are estimated using appropriate recovery rates and US$ commodity prices of $10 per ounce of silver unless otherwise noted below:a. San Martin Reserves – US$7.00 per ounceb. Yauliyacu Reserves – US$13.00 per ouncec. La Negra (Alacran) Reserves - US$12.00 per ounced. Mineral Park Reserves - 0.237% Cu equivalent cut off grade (hypogene), 0.283% Cu equivalent cut off grade (supergene), silver was not included.
7. Mineral Resources are estimated using appropriate recovery rates and US$ commodity prices of $13 per ounce of silver, unless otherwise noted below:a. San Martin Resources – US$8.00 per ounceb. The San Pedrito project Resources at San Martin– US$5.50 per ouncec. Zinkgruvan Resources – US$10.00 per ounced. Stratoni Resources – US$12.00 per ouncee. Campo Morado (G9) Resources - 5.0% Zinc only cut off grade, silver was not includedf. Campo Morado (Other Resources) - US$5.50 per ounceg. Bellekeno Resources – US$8.00 per ounceh. La Negra (Alacran) Resources - US$12.00 per ouncei. La Negra (Monica) Resources - US$13.50 per ouncej. Mineral Park Resources - 0.3% Cu Equivalent cut off grade, 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 silverproduced 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. Peñasquito, Campo Morado and La Negra reserves and resources reported represent the share attributable to Silver Wheaton.10. The Mineral Park Reserves do not include the Leach material.11. 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.12. 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.13. Los Filos reserves and resources are reported without the Bermejal deposit, as Bermejal is not subject to the silver sales agreement.
47
Keno Hill Alexco Resource Corp.
Keno Hill is one of the highest-grade historic silver producing districts in the worldsilver 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 Bellekenoproduction scheduled for 2010 from Bellekeno project
Anticipated low cost producer Anticipated low cost producer
Immense exploration potential and future production upside planned
48
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 guaranteeCompletion guarantee
Silver Wheaton forecast to receive +800,000 ounces of silver annually with very significant upside potentialwith very significant upside potential
49
Keno Hill – Historic Silver Production
50
Keno Hill – High Grade/Vast Potential
50 0
Global Silver Deposits - Grade Comparison
40.0
45.0
50.0
on)
Martha
25.0
30.0
35.0
(oun
ces
per t Keno Hill Historic Resource
Juanicipio Platosa‐Saltillera
Ying
Bellekeno
Goltsovoye
10.0
15.0
20.0
Silv
er G
rade
SilvertipGreens CreekCannington
San JoseTopia
Lucky Friday
UchucchacuaPrognoz
Dukat
Fresnillo
PallancataLa ColoradaGuanacevi
Yauliyacu
-
5.0
- 5.0 10.0 15.0 20.0 25.0
AresCaylloma
Hacket River
Morococha
San Cristobal
Palmarejo
Rock Creek
PitarillaFuwan
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 forArizona in continuous operations for more than 30 yrs
Commissioning of 25,000 tpd mill g , punderway with first silver bearing copper concentrate produced in December 2008December 2008
Current Silver Reserves & Resources:• P&P Reserves: 35 M oz• M&I Resources: 13 M oz• Inferred Resources: 15 M oz
Anticipated mine life of at least 21 c pa ed e e o a easyears
52
Mineral Park - Transaction Terms
100% of LOM silver production
Silver Wheaton forecast to receive 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
53
Campo Morado - Farallon Resources
Farallon’s volcanogenic massive sulfide district in Mexico
Production underway at high grade G 9 deposit Production underway at high grade G-9 deposit• 1500 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: 56 M oz
• Inferred Resources: 11 M oz
54
Campo Morado - Transaction Terms
75% of LOM silver production in the entire 116km2 propertyentire 116km2 property
Silver Wheaton forecast to receive 700,000 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 priceUS$3.90/oz or spot silver price
Completion guarantee
55
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
• 1,000 tpd mine increasing to 1,500 tpd
Series of 23 massive sulfide orebodies
Silver Reserves and Resources:• Reserves: 1.2 M oz• M&I Resources: 2.4 M oz• Inferred Resources: 0.6 M oz
Excellent potential for exploration growth
Significant additional historic Reserves and
56
Resources by Peñoles (not 43-101 compliant)
La Negra - Transaction Terms
50% of LOM silver production from La Negra mine
Silver Wheaton forecast to receive 600,000 ounces of silver annually for at least 10 years
Upfront cash payment of US$25 millionp p y $
Purchase price is the lower of US$3.90/oz or spot silver price
Completion guaranteep g
Agreed to complete a LOM silver stream agreement on recently acquired Shafter Silver Mine in Texas
57
WHY SILVER?
58
Silver Demand
What is silver used for?
24%
9%
53%
24% Industrial
De-hedging
Photography
Jewelry & Silverware13%
Jewelry & Silverware
Coins and Investment
2008 Demand Forecast
1%
59
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 EnvironmentalZpower 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
60
Source: CPM Group, RBC Capital Markets
Industrial Demand
500
300
400
n ou
nces
)
100
200
Silv
er (m
illio
n
Electrical and Electronic
Other
I i d d f th l t 7 d it i i i (7% i 2007)
01997 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
61
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 250$25
Silver Price and iShares Silver Trust Holdingsexpected to increase
• iShares growing; applied for +360 M oz
100
150
200
250
$10
$15
$20
$25
PM Fix in
USD
)
• New ETF’s emerging
• Increased investment demand expected to offset
0
50
100
$0
$5
$10
1/3/
2/14
3/28
11/5
6/23
7/8/
9/19
10/3
12/
1/30
3/14
4/26
8/6/
7/23
7/9/
10/
3/1 2
1/16
2/29
4/14
5/27
7/14
8/25
10/7
11/
1/2/lver Price (LME P
decreased industrial demand
C i d d h i fl ti i i t i t t/2006
4/2006
8/2006
5/2006
3/2006
/2006
9/2006
31/2006
13/2006
0/2007
4/2007
6/2007
/2007
3/2007
/2007
19/2007
2/2007
6/2008
9/2008
4/2008
7/2008
4/2008
5/2008
7/2008
18/2008
/2009
Sil
• Coin demand has risen reflecting a growing investor interest
62
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 ppreviously forecast (due to impact of lower metals prices, project delays, etc)
GFMS revised 2009 mine production forecast is 700m oz in 2009, down from
63
Source: GFMSthe 730m oz previously forecast
Changes in Government Stocks
40
-20
0
20
Oun
ces)
-60
-40
20
Silv
er (M
illio
n
-100
-80
S
Government inventories declining since 1999 to make up for supply deficits
64
Source: GFMS
Silver Inventories are at a Historical Low
2,400
1,600
2,000
z)
1,200
1,600
vent
ory
(M o
z
400
800Inv
050 55 60 65 70 75 80 85 90 95 00 05
65
Source: CPM Group, 2008
From “Deficit” to a Balanced Market
950
850
900
es)
700
750
800
(mill
ion
ounc
SupplyD d
600
650
700
Silv
er Demand
500
550
600
66
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/ozg p $
67
Source: GFMS