November 9, 2010 / 9:23 PM / 8 years ago

UPDATE 1-Silver Wheaton eyes dividend, growth after Q3 profit

* Q3 EPS $0.20 vs $0.11 a year ago

* Q3 sales up 33 percent

* Shares fall 8.62 percent to C$32.35

* Company plans small dividend starting in 2011 (In U.S. dollars unless noted)

By Julie Gordon and Bhaswati Mukhopadhyay

TORONTO, Nov 9 (Reuters) - Silver Wheaton SLW.TO said on Tuesday it might start issuing a small dividend in early 2011, after third-quarter profits more than doubled on strong silver prices.

Vancouver-based Silver Wheaton, which buys silver by-product from other miners and then resells it, reported a third-quarter profit of $69.2 million, or 20 cents a share. That compared with a year-earlier profit of $33.6 million, or 11 cents.

Sales rose to $92.8 million from $69.8 million in the third quarter of 2009.

“Over the last six years we’ve gone from 0 to a $12 billion market cap, and our share price has done very well,” said Silver Wheaton Chief Executive Peter Barnes in a conference call with analysts, “and that’s been driven by growth.”

The company sees continued growth over the next three years, with Goldcorp’s Penasquito mine ramping up 2011 and Barrick Gold’s Pascua Lama project coming online in 2013.

Barnes also said that while most companies either pay dividends, or reinvest earnings to fuel growth, Silver Wheaton plans to do both.

“I think Silver Wheaton is fast getting to the stage where we can actually do both,” he said. “Keep the growth going and maybe start paying a small dividend and increase it over time.”

Barnes did not elaborate on the amount or frequency of the dividend, but said the company was looking at an early 2011 start.


Silver Wheaton pays miners $4 per ounce up front to build projects, usually gold mines, in exchange for the silver by-product produced from those mines. With spot silver currently hovering around $28 an ounce, the profits are high.

While the company is always looking for new deals to fuel growth, Barnes said there was no pressure to pay more than its traditional $4 an ounce.

“We don’t need to do deals,” said Barnes. “We’re only going to do deals if they make sense for us.”

The company sold 4.7 ounces of silver equivalent for total cost of $4.09 per silver equivalent ounce.

Production rose 41 percent to 5.9 million ounces in the quarter. The company said it was maintaining a target of 23.5 million ounces of silver equivalent ounces for the full year 2010.

Silver Wheaton’s shares were up over 4 percent on Monday morning, before dropping down 8.62 percent to C$32.35 in afternoon trade on the Toronto Stock Exchange. The stock has risen more then 70 percent in the last six months. (Editing by Frank McGurty)

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