credit suisse presentation final (silverwheaton)_v001_q538j7
TRANSCRIPT
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CREDIT SUISSEGLOBAL STEEL & MINING CONFERENCE
SEPTEMBER 2011
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A WIN-WIN MODEL
WHY IT WORKS
Silver streams create shareholder value for both the purchaser and the
Silver produced at base metal or gold mines is given a lower valuationby the market than if it had been produced by a silver company
m Arbitrage opportunity exists
fSilverStre
llustrative)
Silver Wheatons and thePartners Shareholders
Value of FutureSilver Stream
NPV
(I
Value of FutureSilver
Production
3
Base Metal or GoldProducer
Silver Wheaton
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WHO IS SILVER WHEATON?
4
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THE LARGEST MARKET CAPITALIZATION
OF ALL..
Metals Streaming andRo alt Com anies
North American SeniorSilver Producers
9%($2.1B)
10%
($4.4B)
($2.5B)
($2.2B)
58%14%
58%24%($14.1B)($5.7B) ($14.1B)($3.5B)
Silver Wheaton Pan AmericanSilver Wheaton Franco-Nevada Ro al GoldCoeur d'Alene Silver Standard
Hecla
5
* As of Sept 9, 2011, exchange rate of C$1=US$1 in calculating Franco-Nevada
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MORE SILVER RESERVES AND RESOURCES
THAN ANY OTHER SILVER COMPANY IN THE WORLD
ozs) 2,000
Inferred
esources(
1,400
1,600
,M&I
Reserves
erv
esand
800
1,000
1,200
SilverRe
200
400
600
0Silver
WheatonSilver
StandardResources
Fresnillo PanAmerican
Silver
Polymetal Bear CreekMining
Coeurd'AleneMining
PretiumResources
HeclaMining
SouthAmerican
Silver
6
* Source: Company Reports, Metals Economics Group data for Fresnillo and Polymetal
any other silver company in the world
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HIGH QUALITY ASSET BASE
LONG-LIFE MINES*
2011 Forecast ProductionBy Mine Life**
2015 Forecast ProductionBy Mine Life**
4%13%
50%27%
79%
10%
Mine life:
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HIGH QUALITY ASSET BASE
LOW-COST MINES*
2011 Forecast ProductionBy Cost Quartile**
2015 Forecast ProductionBy Cost Quartile**
8.4%10.8%
22.8%
48.2%
68.9%41.1%
- -
First Second Third Fourth
9
* Silver Wheatons core assets which include Pascua-Lama, Peasquito, San Dimas, Yauliyacu, Zinkgruvan, Minto, Cozamin, Pierina, Veladero, Lagunas Norte, and assumes
Rosemont becomes a core asset in 2015; ** Based on Wood Mackenzie estimates of 2010 by-product cost curves for gold, zinc and copper mines
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WORLD-CLASS CORNERSTONE ASSETS
-
Operator
Location Mexico Chile/Argentina
Av. Annual Silver Production* 28Moz 35Moz (first 5 years)**
P&P Silver Reserves * 1,105Moz 671Moz
*
By-product Cash Costs
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PEASQUITO
GROWTH ENGINE UNTIL 2013
Key driver of growth until Pascua-Lama commences production in 2013
Silver Wheaton to receive 25% of silver production for the life-of-mine
Commercial production achieved in 2010
Full production capacity of 130,000tpd anticipated in early 2012
Upside remains
success
mining studies underway could add
11
Average annual production of approximately 7Moz Ag to Silver Wheaton over life-of-mine
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STRONG PRODUCTION GROWTH
WITH EXISTING ASSET BASE
45
z)*
~80% Production Growth
30
35Pascua-Lama
Barrick Other*duction
(M
20
25Peasquito
San Dimas**
Rosemont
Yauliyacuuiv
alentPr
5
10
15 Zinkgruvan
Minto (gold)***
Cozamin
Other
SilverE
0
2008A 2009A 2010A 2011E 2015E2011E 2015E
13
* Comprised of the Veladero, Lagunas Norte and Pierina mines; **Production inlcudes Goldcorps four year commitment to deliver to Silver Wheaton 1.5Moz of Ag per annumresulting from their sale of San Dimas to Primero; ***Silver Eq. production assuming Au:Ag ratio of 50:1
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WHY INVEST IN SILVER WHEATON?
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SIGNIFICANT MARKET SHARE
INVESTMENT IN THE SILVER INDUSTRY
100%
Percentage Allocation of Investment Dollars*
70%
80%
90% 16%
40%
50%
60%62%
10%
20%
30%
23%
0%2004 2005 2006 2007 2008 2009 2010
= Silver Wheaton = Silver ETFs** = Senior Silver Producers***
Twelve MonthsEnding Aug 23,
2011
15
* Measured by average daily trading volume in US dollars, source is Bloomberg market data as of Aug 23, 2011, Data from US and Cdn exchanges except for Fresnillo andHochschild which trade on LSE, ** Includes iShares Silver Trust, ETF Securities Silver ETFs, ZKB Silver ETF and Sprott Silver Trust; *** Includes Coeur dAlene, Hecla,
Pan American Silver, Silver Standard, Silvercorp, Fresnillo and Hochschild
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SILVER WHEATON VERSUS SILVER PRODUCERS
Pure upside to increases in the silver price
Operating costs are essentially fixed*
No ongoing capital expenditures or exploration costs
o env ronmenta or c osure respons t es
Greater diversity of assets
No exchange rate risk
16
* Ongoing delivery payments are fixed at approximately US$4/oz with an inflationary adjustment of approximately 1% per annum after the third year of production
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FOCUSED ON SILVER
Silver revenue as a percentage of total revenue*
96% 95%
80%
90%
100% Width of bars based on relative 2011 forecast silver production**
69% 68%63%
57%
48%50%
60%
70%
20%
30%
40%
0%10%
SilverWheaton
SilverStandard
Pan AmericanSilver
Hochschild Coeur D'Alene Fresnillo Hecla
25-26Moz 8.5Moz 23-24Moz 16.5Moz 19.5-20.5Moz 44Moz 40.5Moz
17
* Source: Company Reports, six months ending Jun 30, 2011, Hochschild is year ending Dec 31, 2010; ** Source: Company guidance to market
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EXPANDING CASH OPERATING MARGINS
FIXED OPERATING COSTS
Realized Silver Equivalent Price/oz$40
.
$25
$30
$35
e(US$/
oz)
$11.10
$16.63
$31.25
$11.72
$13.42$14.97 $15.13
$20.67
$15
$20
ilve
rEq.Pri
$3.40 $3.41$7.82 .
.$7.30 $7.31
$3.90 $3.90 $3.90 $3.91 $3.94 $4.03 $4.04 $4.10$0
$5
Cash Operating Margins*Total Cash Cost/oz*
Fixed cash costs** provide shareholders with significant leverage to
18
* Refer to non-IRFS measures at the end of this presentation; **Operating costs are fixed at approximately US$4/oz with an inflationary adjustment of approximately 1% per
annum after the third year of production
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SILVER WHEATON VERSUS SILVER ETF
Silver Wheaton Silver ETF
Primarily Silver Exposure
Leverage to Silver Price
Exploration and Expansion Upside
Acquisition Growth Potential
Dividend Yield
19
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SILVER WHEATON VERSUS SILVER ETF
Silver Wheaton Silver ETF
Primarily Silver Exposure
Leverage to Silver Price
Exploration and Expansion Upside
Acquisition Growth Potential
Dividend Yield
20
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LEVERAGE TO SILVER PRICES
(06/30/2008 06/30/2011)
Three year growth
125%
120%
80%
100%
$35.02/oz
$33.00/share$1.40/share
40%
60%
$0.59/share
0%
20% $17.65/oz
.
ver r ce ver eaton are r ce as ow are
21
* Source: LBMA Silver Fixings;** Refer to non-IRFS measures at the end of this presentation
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SILVER WHEATON VERSUS SILVER ETF
Silver Wheaton Silver ETF
Primarily Silver Exposure everage o ver r ce
Exploration and Expansion Upside
Acquisition Growth Potential
22
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GROWING RESERVES AND RESOURCES
FOR A SIXTH CONSECUTIVE YEARIncrease in total attributable reserves and resources since inception*
1,4001,600
,
oz)
800
1,000
,
ilv
erR&R(
200
400
2004 2005 2006 2007 2008 2009 2010
Inferred Measured & Indicated ReservesReserves Measured & Indicated Inferred
50% annualized rowth in roven and robable reserves since ince tion
23* Reserves and resources are as of Dec. 31
st
for each year and does not include gold reserves and resources, see appendix for reserve and resource tables
35% annualized growth in reserves and resources since inception
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GROWING RESERVES AND RESOURCES
THROUGH ACQUISITIONS AND EXPLORATION
Silver Reserves and Resources (in Moz)*
432 494(Inf)
365(M&I)
142
1,262942
(P&P)
4(M&I)173 (Inf)
2004 R+R Total Mined Total Acquired Total Exploration 2010 R+R
24% of Silver Wheatons total reserves and resources is the result of
69 (P&P)
24
* Reserves and resources are as of Dec. 31st for each year and does not include gold reserves and resources, see appendix for reserve and resource tables
exp ora on success a our par ners m nes
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SILVER WHEATON VERSUS SILVER ETF
Silver Wheaton Silver ETF
Primarily Silver Exposure everage o ver r ce
Exploration and Expansion Upside Acquisition Growth Potential
25
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CREATING SHAREHOLDER VALUE
RESERVES AND RESOURCES PER SHAREIncrease in total attributable reserves and resources per share since inception*
6.0
4.0
5.0
are
2.0
3.0
Silveroz/s
0.0
1.0
Inferred Measured & Indicated ReservesReserves Measured & Indicated Inferred
33% annualized growth in proven and probable reserves per share since inception
26
* Reserves and resources are as of Dec. 31st for each year and does not include gold reserves and resources, see appendix for reserve and resource tables
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LARGE TARGET MARKET
900
Silver Wheaton vs. Global Silver Productionz)
l)*
700
800
oduction(M
Source
Met Traditional
SilverCompanies
400
500Primary Silver Mines
Gold Mines
Base Metal MinesbalSilverP
utbyMines
PotentialTarget Silver
100
200
ForecastGl
(SilverOutp Market
3% 4%
ea on ver ea on sForecast Production(% of potential targetmarket)
02010A 2011A 2012E 2013E 2014E 2015E SLW
2011SLW2015
>70% of mined silver is produced as a by-product from base metal or gold mines
27
* Source: CPM Group silver production forecasts, based on 2010 estimates of silver production by source metal
= Significant growth potential in the silver stream space
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STRONG BALANCE SHEET
TO FUND FUTURE GROWTH$701M
$400M
$275M
Cash and cash Undrawn credit Forecast Q3-Q4*
Silver in terest**
Total debt Forecast Q3-Q4
$137.5M
$14.3M
$22M
Payments***
Strong balance sheet leaves us exceptionally well-positioned to pursueadditional accretive silver stream o ortunities
($137.5M duein 2011)
.
Q3-Q4 2011)(as of 06/30/11)
28
* Assumes analyst consensus 2011 silver and gold prices of US$33.59/oz and US$1,458/oz, respectively, for Q3-Q4 2011; ** Includes remaining upfront cash payments ofUS$275M for Barrick transaction, additional payments of US$230M for the Rosemont transaction and US$32.4M for Navidad transaction are contingent upon receipt of key
operating permits; *** Assumes current quarterly dividend rate of US$0.03/share
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SILVER WHEATON VERSUS SILVER ETF
Silver Wheaton Silver ETF
Primarily Silver Exposure
Leverage to Silver Price
Exploration and Expansion Upside Acquisition Growth Potential
Dividend Yield
29
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DIVIDEND YIELD
SIGNIFICANT GROWTH POTENTIAL
Commenced inaugural quarterly cash dividend of US$0.03/share in Q1 2011
Industry Leading Cash Operating Margins (> 80%)*
2011 Forecast Free Cash Flows of approx. US$635M**
Industry Leading Long-term Production Growth
Significant Dividend Growth Potential
30
* Based on 2010 and H1 2011 cash operating margins. Cash operating margins defined as average realized selling price less cash cost per silver equivalent ounce; ** Assumesactual results for H1 2011 and analyst consensus 2011 silver and gold prices of US$33.59/oz and US$1,458/oz, respectively, for the balance of 2011
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SILVER WHEATON VERSUS SILVER ETF
Silver Wheaton Silver ETF
Primarily Silver Exposure
Leverage to Silver Price
Exploration and Expansion Upside Acquisition Growth Potential
Dividend Yield
31
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THE PROOFIS IN THE PRICE PERFORMANCE
1400%
SLW
800%
1000%
Silver
PAAS
400%
600%
HLCDE
-200%
0%
4 5 5 5 5 6 6 6 6 7 7 7 7 8 8 8 8 9 9 9 9 0 0 0 0 1 1 1
SLW share price has significantly outperformed the price of silver and the share price
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
Jul-0
Oct-0
Jan
-0
Apr-0
Jul-0
Oct-0
Jan
-1
Apr-1
Jul-1
Oct-1
Jan
-1
Apr-1
Jul-1
32
Source: Thomson One, As of Aug 23, 2011
of its silver producing peers since the Companys inception in October 2004
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IF YOU LIKE SILVER.
SILVER WHEATON PROVIDES:
os cer a n y
Leverage to increasing silver prices
Industry-leading growth profile
Dividend yield
33
AND REMAINS STRATEGICALLY POSITIONED FOR FURTHER GROWTH.
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Tel: 604-684-9648Toll Free: 1-800-380-8687Email: [email protected]
TRANSFER AGENTCIBC Mellon Trust Company- - -
Email: [email protected]
NYSE: SLW TSX: SLWwww.silverwheaton.com
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LIQUID STOCKCAPITAL STRUCTURE AS OF JUNE 30, 2011
Shares Outstandin 353.3 million
Warrants Outstanding (in-the-money) 2.7 millionOptions Outstanding (in-the-money) 2.3 million
Shares Fully Diluted 358.3 million
3 Month Average Daily Trading Volume:
: . m on s aresNYSE: 13.4 million shares
36
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SILVER STREAM AGREEMENTS
San Dimas Peasquito Pascua-Lama Yauliyacu Zinkgruvan Cozamin
ompany
Status Producing Producing Development Producing Producing Producing
Contract
LengthLOM LOM LOM 20 yrs LOM 10 yrs
Ag Prod. 100%* 25% 25% up to 4.75 M 100% 100%oz yr
Mine Life 20+ yrs 22+ yrs 25+ yrs 10+ yrs 10+ yrs 7+ yrs
Cash Costs $4.04/oz $3.90/oz $3.90/oz $3.98/oz $4.08/oz $4.04/oz
Annual Ag
Production5+ M oz 7 M oz 9 M oz**
Up to 4.75 M
oz2 Moz 1.5 Moz
38
* Silver Wheaton will receive 100% of first 3.5Moz Ag produced plus 50% of excess plus 1.5Moz of Ag from Goldcorp until Aug 2014 after which Silver Wheaton will receive100% of first 6Moz Ag produced plus 50% of excess; ** 9Moz for first 5 years and approx. 5.5 M oz over LOM.
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SILVER STREAM AGREEMENTS(CONTINUED)
Minto Stratoni Campo Morado Lagunas
NortePierina Veladero
Company
Status Producing Producing Producing Producing Producing Producing
Contract
LengthLOM LOM LOM to 2014** to 2014** to 2014**
Ag Prod. 100%* 100% 75% 100% 100% 100%***
Mine Life 10+ yrs 6+ yrs 10+ yrs 9+ yrs 4+ yrs 21+ yrs
Cash Costs$3.90/oz Ag
$3.90/oz $3.90/oz $3.90/oz $3.90/oz $3.90/oz
Annual Ag
Production0.2 Moz Ag
20,000 oz Au1+ Moz 1+ Moz 0.5 Moz 1+ Moz 1+ Moz
39
* Includes gold production, If production exceeds 30,000 ounces of gold per year, Silver Wheaton is entitled to 100% of the gold produced up to these thresholds and 50% of theamount in excess of these thresholds; **100% Ag Prod. effective September 2009 until end of 2013; During 2014 and 2015, Silver Wheaton will be entitled to the silverproduction from the Lagunas Norte, Pierina and Veladero mines to the extent of any production shortfall at Pascua-Lama until Barrick satisfies a Completion Guarantee;***SLWs attributable silver production is subject to a maximum of 8% of the silver contained in the ore mined at Veladero during the period
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SILVER STREAM AGREEMENTS(CONTINUED)
Neves-Corvo Mineral Park Los Filos Keno Hill Aljustrel
Company
Status Producing Producing Producing Producing Producing
Contract
LengthLOM LOM 25 yrs LOM LOM
Ag Prod. 100% 100% 100% 25% 100%Mine Life 10+ yrs 23+ yrs 18+ yrs 4+ yrs 10+ yrs
Cash Costs $3.90/oz $3.90/oz $4.04/oz $3.90/oz $3.90/oz
Annual AgProduction
0.5 Moz 0.5+ Moz 0.2-0.3 Moz 0.5+ Moz 0.1Moz
40
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SILVER STREAM AGREEMENTS(CONTINUED)
Rosemont Navidad
Company
Status Development Development
LengthLOM LOM
Ag Prod. 100%* 12.5%***
Mine Life 21+ yrs 15+ yrs
Cash
Costs$3.90/oz Ag$450/oz Au
US$4.00/oz
Annual AgProduction 2.4 Moz Ag15,000 oz Au** 1.0-2.0 Moz
41
* Also includes 100% of the future gold production; ** Based on a Jan 2009 Feasibility Report, Augusta forecasts that up to 15,000 ozs of gold may be produced annually;*** Silver Wheaton has converted a debenture to acquire an amount equal to 12.5% of the Loma de La Plata zone of the Navidad deposit
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PEASQUITO PROJECT GROWTHSINCE APRIL 2007 ACQUISITION
April 2007 Current* Growth
Silver Reserves/Resources**
P&P Reserves (100%) 575 M oz 1,105 M oz +92%
LOM Silver Production
Attributable to SLW (25%) 92 M oz 159 M oz +73%
Average Annual Silver Production
Attributable to SLW (25%) 5.4 M oz 7.0 M oz +30%
Anticipated Mine Life 17 yrs 22 yrs +29%
Underground Potential Not contemplated Yes +%??
42
* Reserves and Resources as of Dec 31, 2010, remaining data based on March 2009 Technical Report, ** Silver Wheatons portion is 25%
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DEVELOPMENT STAGE ASSETS
Entitled to 100% of life of mine silver and goldproduction from Augusta Resources Rosemont Project
Anticipated to be a very long-life, low-cost Cu-Mo-Ag-Au mine
Forecast to increase long-term annual production by approx.2.4Moz of silver and up to 15,000 ozs of gold*
Once permits finalized, SLW to make upfront cash paymentsof US$230 million plus ongoing production payment
Entitled to 12.5% of life of mine silver production from
Rosemont Project in Arizona
e oma e a a a zone o an mer can ver sNavidad project
One of the largest undeveloped silver deposits in the world
-
2Moz per annum** Once permits finalized, SLW to make upfront cash payments
of US$32.4 million plus ongoing production paymentNavidad Project in Argentina
43
* Based on Augusta Resource Corporations Jan 2009 Feasibility Study; ** Based on Pan American Silvers Jan 2011Preliminary Economic Assessment
Two projects provide ~5Moz of long-term silver production
SILVER WHEATONS EQUITY INVESTMENTS
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SILVER WHEATONS EQUITY INVESTMENTS
Property ofInterest
Corani Rock Creek Montanore Hackett River
Ownership 15% 17% 11% 7%
Sta e Feasibilit Pre-FeasibilitAdvanced
Pre-Feasibilitxp orat on
ResourceA M oz
P&P 258
M&I 72 Inf. 229 M&I 166
Inf. 65
Ind. 200
Inf. 64 Inf. 36
Est. Annual Ag
Production+10 M oz/yr* 6 M oz/yr N/A 12 M oz/yr
44
Source: Company Reports, * For first 6yrs, 6.4 M oz/yr LOM
SIGNIFICANT GROWTH POTENTIAL
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SIGNIFICANT GROWTH POTENTIALSILVER WHEATONS RIGHT OF FIRST REFUSAL PORTFOLIO
Company Type Projects Covered by ROFR
-
Producer Yauliyacu*
Producer All Projects
Producer All Projects
Producer All Projects
AUX Canada Development La Bodega and Cal Vetas Projects (including 5km area of interest)
Development Hackett River, Del Norte and Red Lake
Development All Projects in Montana
Development Hermosa Silver Project
45
*Also includes a right of first offer on any project owned by Glencore and its affiliates as of Mar 23, 2006 other than the Yauliyacu Mine
2011 FORECAST PRODUCTION
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2011 FORECAST PRODUCTIONSIGNIFICANT OPERATING CASH FLOWS
2011 Forecast Production By Mine1
19%18% Peasquito (5.0Moz)
San Dimas (5.7Moz)2
22%
7%
3%Barrick (3.6Moz)
Yauliyacu (2.6Moz)
Zinkgruvan (1.8Moz)
3
14%
10%
Cozamin (1.7Moz)
Minto (0.8Moz - Au in Ag Eq)
Other (4.6Moz)
4
5
2011 attributable production guidance of 25 to 26 million silver equivalent ouncesyielding operating cash flows of approximately US$635M
6
46
1. Forecast production represents quantity of silver and gold contained in concentrate or dor prior to smelting or refining deductions; 2. Production includes Goldcorp's four yearcommitment to deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting from their sale of San Dimas to Primero; 3. Comprised of the Lagunas Norte, Pierinaand Veladero silver interests; 4. The Minto mine is forecast to produce approximately 15,000 oz of gold in 2011; 5. Includes the Los Filos, Mineral Park, Neves-Corvo, Stratoni,Keno Hill, Minto, Campo Morado and Aljustrel silver interests; 6. Assumes actual results for H1 2011 and analyst consensus silver and gold prices for Q3-Q4 2011
WELL DIVERSIFIED
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WELL DIVERSIFIEDBY GEOGRAPHY
Geographic distribution ofGeographic distribution of 2011
8%4%
Mexico4%
4% 2%
Mexico
43%
8%
8%Portugal
USA
Peru
Argentina
7%
Peru
Argentina
Sweden
9%
Chile
Sweden
Canada
Greece16%
8% Canada
Portugal
Greece
USA
20%
47
Well diversified asset base in 9 low political risk jurisdictions
LARGEST 40 SILVER DEPOSITS IN THE WORLD
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LARGEST 40 SILVER DEPOSITS IN THE WORLDPRODUCING MINES AND DEVELOPMENT PROJECTS
1,600 Silver Wheaton Relationships (9)
1,000
1,200
1,400
ources(Moz)
400
600
800
serves&Res
0
200
uito
oni
ama
idad
rrilla
gowton
dna
ates
wice
ubin
nillo
cho
obal
amkoe
rani
SM
ukat
hota
dou
obal
ores
cito
uMo
jack
ero
mas
long
itas
ama
iver
nore
reek
iejo
ipio
nton
iday
ome
erde
R
Peas
Ron
Pascua-L
Nav
La
Pita
Glo
Cannin R
Met
Polko L
Fres
Tor
om
SanC
rist
Olym
pic
Udo
kan C D
MalkuK
Xiasa
iYi
Esc
Dol
ElSa C
B
ruce
V
ela
Sa
nDi
Qu
Pirq
Cobre
Pan
Hack
ett
Monta
RockC
Pueblo
Ju
ani
SanA
Luck
yFr
SanBartol
CerroV
Copyright Metals Economics Group - MineSearch - 2010
48
Source: Data from Metals Economics Group and includes producing mines and development stage projects with reserve and resource updates subsequent to Jan 1, 2006
Stake in 3 of the top 4 (and 9 of the top 40) silver deposits in the world.
LOW ADMINISTRATIVE COSTS
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LOW ADMINISTRATIVE COSTSCOMPARED TO SILVER ETFS
0.70%Administrative Costs1
0.50% 0.49%
.
0.50%
0.60%
0.19%
0.30%0.30%
0.40%
0.10%
.
.Silver Wheaton iShares Silver Trust
(SLV)ETFS Physical Silver -
New York (SIVR)ETFS Physical Silver -
London (PHAG)Sprott Physical Silver
Trust (PSLV)
SLW administrative costs are lower than Silver ETFs
2
3 3 4 5
49
1. Presented as a % of Enterprise Value for SLW ; as a % of NAV for SLV, SIVR and PSLV; as a % of Bullion held in custody for PHAG; 2. LTM Jun-30-11 G&A of $24.1M /Enterprise Value of $12.9B per Bloomberg as of Aug-12-11; 3. As reported in Jun-30-11 10Q; 4. As reported in Dec-3-10 Prospectus; 5. As reported in Jun-30-11 6K.Management fee of 0.45% + operating expense of 0.16% of NAV. Annualized operating expense of $1.65 million (based on $0.8M for the 6 months ended Jun-30-11) / NAV of$1.1B as of Aug-12-11.
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WHY SILVER?
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WHY SILVER?
Silver is a unique precious metal
Produced primarily as a by-product
Significant industrial applications
Silver is a store of value
Physical silver demand has risen significantly in the past several yearsre ec ng s rong nves or n eres
ETF demand continues at record levels
Silver is a versatile industrial metal
New uses are being developed at a staggering pace
Relied upon for growth in developed and emerging economies
Global economy beginning to show signs of improvement
54
SILVER DEMAND
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SILVER DEMANDWHAT IS SILVER USED FOR?
2009 Actual 2010 Actual
17%14%
3%
46%10%
41%9%
7%
20%
9%
24%
Industry Photography Jewelry & Silverware Coins and Medals Investment De-hedging
Investment demand increased 40% in 2010 to 279Moz resulting in a net flow into
55
Source: GFMS; Investment demand is comprised of silver ETFs, physical bullion bars, coins and medals
s ver o . on, a mos ou ng
INVESTMENT DEMAND
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INVESTMENT DEMANDA MAJOR CATALYST OF SILVER PRICE
ETF Demand - continued to trend
Silver ETF Investment (in Mozs)
higher in 2010 setting new record
highs
in ETF holdings in 2010
Coins and Medals Demand (in Mozs)
100
120USA Canada Other
Coins and Medals Demand - roseby 28% in 2010 posting a newrecord of 101Moz
20
40
60
80
56
Source: GFMS, Mitsui
02001 2002 2003 2004 2005 2006 2007 2008 2009 2010
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DEMAND FROM INDUSTRIAL APPLICATIONS
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The largest component ofindustrial demand is:
Electrical and Electronics
Brazing alloys and solders
characteristics of being thebest conductor of all metals,
because it possessesnatural antimicrobial
,
industrial uses are forecastto increase future demand
58
SILVER SUPPLY
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7% 2%6%4%
31%
8%
8% Latin America
North America
Asia
Oceana
20%
Mine Production
Scrap
25%
19%
CIS
Europe
Africa70%
Government Sales
59
Source: GFMS
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SILVER SUPPLY SCRAP
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220
200ozs)
e
rScrap
(
Sil
160
2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Silver scrap supply has remained relatively constant for the past ten years at
61
Source: GFMS
approximately 200Moz per annum
SILVER BULLION INVENTORIES*
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Other silver inventories**
Government silver inventories3,000
nsofou
nces) Silver inventories held in ETFs
2,000
2,500
Silver(millio
1,000
1,500
0
500
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
Total silver bullion inventories declined from 1988-2005
The introduction of silver ETFs in 2006 reversed this trend
Government inventories have been declining since 1980 and are estimated at
62
*Source: CPM Group; **Other inventories include all reported inventories at exchanges, some industry-reported inventories, CPM Groups estimates of bullion in bar form. Itexcludes coins and silver held as a form of savings in silverware and jewelry as well.
less than 60Moz of silver
GOLD/SILVER RATIOS
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1833 - PRESENT
90
60
70
40
50
ld
/silverrati
Ave. Ratio = 37:1
10
20
G
0
1833 1858 1883 1908 1933 1958 1983 2008
63
Source: Average yearly gold and silver price sourced from www.kitco.com
e ra o o s ver o go n e ear s crus s approx ma e y :
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