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Market News

Silver Wheaton profit dips on production slip

(Figures in U.S. dollars unless noted)

OTTAWA, Aug 3 (Reuters) - Silver Wheaton Corp. SLW.TOSLW.N said on Friday that second-quarter earnings slipped 9 percent as it sold less silver because of a production shortfall at Goldcorp's G.TO Luismin mine in Mexico.

Silver Wheaton, which buys the silver produced by several miners, also reduced its 2007 forecast for silver sales of about 13 million ounces, down from an April estimate of 15 million ounces.

It maintained its estimate of 2009 silver sales of 23 million ounces, and 2012 sales of 28 million ounces.

The company said its quarterly profit fell to $22.8 million, or 10 cents a share, from $25.1 million, or 12 cents a share, in the same period of 2006.

Analysts polled by Reuters Estimates expected, on average, earnings of 10 cents a share.

Blackmont Capital analyst Richard Gray, who trimmed his target price to C$17 from C$17.50 but held his “buy” rating, said the results and forecast were “equally disappointing”. He expected earnings of 12 cents a share and quarterly silver sales of 3.6 million ounces.

The company said it sold 3.05 million ounces of silver in the second quarter, down from 3.8 million in the year-ago period. The average realized price rose to C$13.58 per ounce from $12.46.

Operating cash flow slipped 15 percent to $27.8 million, or 13 cents a share, from $32.7 million, or 15 cents a share.

Chief Executive Peter Barnes said the production shortfall at Goldcorp’s Luismin mines in Mexico is seen as temporary and by year-end will be back at normal levels.

“This was a company-transforming quarter for Silver Wheaton, with the announcements of the Penasquito and Stratoni silver contracts,” Barnes said in a statement. Those acquisitions will boost the company’s long-term cash flow per share by about 30 percent, he added.

Silver Wheaton has long-term silver contracts with Goldcorp, Lundin Mining LUN.TO, Glencore, and European Goldfields EGU.TO subsidiary Hellas Gold.

The stock, which is up about 18.5 percent over the past 12 months, dipped more than 2.2 percent on Friday to C$13.97 on the Toronto Stock Exchange and $13.27 in New York.

$1=$1.05 Canadian

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