Comparitive valuation$50 million for 800k oz silver annually at 3.90 oz. . if they get to production
Let's see 10 million oz in a couple of years
(100/8) roughly 13
13*50=650 million.
Present value of 3.90 *10 million =39 million. Conservative PE of 10 =roughly 400 million.
Present value of say 5 bucks per oz (was roughly 20 some a silver oz last year) of lead, zinc *10 million *PE of 10
=500 million.
Let see1.55 billion. $10-11 a share if SVM was to sell right to planned production. Ignores intermediate cash flows and preferred consolidator in China status.
Short it some more ---I'll be adding to my position. Silver is going to explode some day in my lifetime.
SILVER WHEATON ACQUIRES 25% OF THE LIFE OF MINE SILVER PRODUCTION FROM ALEXCO’S KENO HILL
PROJECT IN THE YUKON, CANADA
VANCOUVER, BRITISH COLUMBIA, October 3, 2008 – Silver Wheaton Corp. (“Silver Wheaton”) (NYSE, TSX: SLW) is pleased to announce that it has agreed to purchase 25% of the life of mine silver produced by Alexco Resource Corp. (“Alexco”)(TSX: AXR, AMEX: AXU) at its Keno Hill project (“Keno Hill”) located in the Yukon Territory, Canada. Keno Hill is historically one of the highest-grade and most prolific silver producing districts in the world.
Silver Wheaton will pay Alexco US$50 million to acquire 25% of all payable silver produced from the Keno Hill project, for the lesser of US$3.90 (subject to a one percent annual adjustment starting in year four after the achievement of specific operating targets) or the prevailing market price per ounce of silver delivered. The upfront payment will be made in several tranches, with a total payment of US$15 million to fund ongoing underground development made upon the satisfaction of certain conditions, and the remaining US$35 million payment to fund mill construction and mine development costs made on a drawdown basis, upon the satisfaction of certain additional requirements, including the receipt of operating permits. Silver Wheaton is not required to contribute to further capital or exploration expenditures and Alexco has provided a completion guarantee with certain minimum production criteria by specific dates. Payment for the transaction will be drawn from Silver Wheaton’s existing credit facilities.
Keno Hill, Alexco's flagship project, is located in the Yukon Territory, 330 kilometers north of Whitehorse, and comprises more than 30 historic mines. From 1913 to 1989, the district produced more than 217 million ounces of silver with average grades in excess of 40 ounces per ton silver, 5% lead and 3% zinc (according to the Yukon Government's published Minfile database). These historical production grades would rank Keno Hill in the top 3% by grade of today's global silver producers.
Alexco acquired the 240 square kilometre Keno Hill project in 2006 and has invested over US$26 million on exploration in and around at least seven of the historic mines. As a result of their exploration success, Alexco completed a preliminary economic assessment (“PEA”) on the Bellekeno deposit in July 2008, and is advancing Bellekeno towards production. The PEA forecasts a production start in 2010 with average annual mine production of 3.3 million ounces of silver, 30.1 million pounds of lead and 24.5 million pounds of zinc over an initial five year mine life. It is expected that the mine life will be extended significantly through continued exploration success. Currently, underground development is underway to access the deeper portions of the Bellekeno deposit.
Bellekeno is anticipated to be a low cost producer employing primarily cut and fill mining methods to feed a conventional flotation mill that ramps up from 250 tonnes per day in year one increasing to 400 tonnes per day by year three. A copy of the Bellekeno PEA can be found on www.sedar.com under Alexco’s profile.
In addition to expanding the resources at Bellekeno, Alexco recently completed a very successful drilling program on several other highly prospective targets on the Keno Hill project. A 43-101 compliant resource estimate for the historic Onek Mine, located only 1.5 kilometres northwest of the Bellekeno property, is expected to be completed later this year, and 2008 drilling at Onek continues to expand high grade silver-zinc mineralization previously identified in 2007 (see Alexco July 2, 2008 press release). Infill drilling at the past producing Lucky Queen mine, the highest-grade historic silver producer in the Keno Hill district, returned several very high-grade silver intersections (see Alexco September 18, 2008 press release) and several other near term production targets were drilled in 2008, with drill results pending.
"By partnering with Alexco, Silver Wheaton is strategically positioned within one of the richest silver belts in the world”, said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. “The Keno Hill district boasts a 75 year production history with unparalleled silver grades and we are excited to participate in the resumption of silver production in the area. With more than 30 historic mines in the region, and numerous high quality exploration targets, we expect a long and prosperous partnership with Alexco.”