With earnings season in full swing, on Monday Nov. 5 silver mining company Silver Wheaton Corp. (NYSE: SLW) will announce its third-quarter earnings before the bell.
After its second-quarter record-breaking results, what can those investing in Silver Wheaton expect?
Luckily, this quarter should be another good one.
Silver Wheaton's second-quarter earnings posted revenue of $201.4 millionfrom silver equivalent sales of 6.9 million ounces-a record for the company–and a 3% rise from $194.8 millionin the previous year. This came from a 36% increase in the number of silver equivalent ounces sold while silver production increased 10%.
The company increased its quarterly dividend to $0.10, which now has a 1.0% yield.
In its earnings release, Randy Smallwood, President and Chief Executive Officer ofSilver Wheaton, said, "For the second quarter in a row, we achieved record silver sales and revenues, putting us on track for our best year ever."
For the third quarter, sales and earnings will probably rise 25% and 29% respectively in 2012, reported MSN.
Here's what's behind SLW's money making.
Investing in Silver Wheaton (NYSE: SLW) Gets Brighter
Prior to the second quarter,Silver Wheatonannounced an agreement to acquire a precious metals stream fromHudbay Minerals Inc. 777 Mine and a silver stream from their development project, Constancia.
This project closed on Sept. 28 and according to Silver Wheaton's investor relations manager Rory Quinn, this will enable the company to grow from this 2012's 28 million equivalent silver ounces forecast up to a 48 million equivalent silver ounces forecast in 2016.
Smallwood said at the time of its second quarter earnings release, "We remain very excited about the current opportunity-rich environment. With approximatelyUS$600 millionin cash – net of the initialUS$500 millionupfront payment to Hudbay – a fully undrawnUS$400 millionrevolving credit facility, and strong forecast annual operating cash flow, we believe there is substantial opportunity for further growth both in the near and long-term."
Factor in a quarter of cash generation and this company is flush even with its long-termdebtof less than $36 million.
From its reserves, the company has around 1.3 billion ounces of silver. When using a rate of $31 per silver ounce, this has a $42 billion market value, which will rise with silver prices. Its cash costs come in under $4.06 per equivalent silver ounce, a decline from last year's $4.14.
For Silver Wheaton, the good news just kept coming in September as it was cited as #1 (out of 100) on Fortune's "Fastest-Growing Companies" list. This came after its profits grew 340% in three years.
Smallwood has made the company's success sound simple: "It is all about choosing the right commodity, and being focused on silver has proved to be a good decision for us. We are careful to select projects that will deliver significant organic growth."
On Friday, SLW closed down 4.01% at $39.49 . Year-to-date, the stock is trading up 36%.
Those investing in Silver Wheaton (NYSE: SLW) will want to catch Monday's conference call at 11:00 a.m. ET.
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