Silver Wheaton: Will the 777 and Constancia Projects Payoff?

The weakness of the silver market in the past couple of years calls into question the profitability of some of Silver Wheaton’s (SLW) streaming contracts. Let’s examine the company’s streaming agreement with Hudbay (HBM) from back in September 2012 for 100% of the life of mine gold and silver production from the 777 mine and 100% of the life of mine silver output in Constancia. At the current prices of gold and silver –will this streaming contract pay off?

Expected production

Besides the uncertainty around the prices of gold and silver, the output of these mines could differ than current expectations. Currently, the company sees a gold and silver stream from the 777 mine, which started at the end of the fourth quarter of 2012.

According to Hudbay, the Constancia project is roughly 85% complete by the end of the second quarter. It’s estimated to start production by the end of 2014.

The rest of this analysis is at Seeking Alpha

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