There seems to be no stopping Silver Wheaton Corp. The silver streaming giant has impressed analysts again by boosting attributable reserves more than 9% in 2010. It is the sixth straight year the company has increased reserves, and they now stand at 954 million silver equivalent ounces.
The biggest reason for the hike was the gold and silver stream from the Rosemont copper mine in Arizona that Silver Wheaton bought last year. But organic growth also played a role.
“The company was able to more than replenish its mined silver ounces during the period, excluding the acquisitions made during the year,” RBC Capital Markets analyst Haytham Hodaly wrote in a note.
Given the success that Silver Wheaton’s partners had in replenishing their depleted reserves, Mr. Hodaly hiked his price target on Silver Wheaton to $50 a share (from $48). He maintained a “sector perform” rating on the stock given its massive run-up in recent days.
Mr. Hodaly also pointed out that Silver Wheaton is highly leveraged to silver — for every US$5 increase in the silver price, he wrote that the company’s estimated 2011 net asset value rises by about 32%, and cash flows change by 24%.
