today silver wheaton agreed to pay farallon $80 million for a portion of its future silver production. this is a good deal for both companies, and i think iwe could see more of these transactions in the future.

silver wheaton is a royalty company. it doesn't own any mines, and purchases future silver production from mining companies. they have a great business model, and were among the first to think of it.

farallon resources is an exploration/development company that went looking for gold and silver, but ultimately found more zinc than anything else. the company's g-9 deposit will produce substantial amounts of silver as a byproduct, so they agreed to sell up to 75% of future silver production to silver wheaton for $3.90/oz. slw will also be paying $30 million up front, so now farallon will have enough cash to put g-9 into production.

that is one way to get yourself financed. it avoids going to the banks which will demand hedging, and avoids the massive dilution that comes with issuing shares (with warrants attached.) silver wheaton has plenty of cash and makes a very good living buying silver production at what could be bargain prices.

as always, the comparison with sso is instructive. silver standard has the financial strength to finance its projects internally, and there is no need to engage in any hedging or forward sales, so that sso retains all of the potential of higher metals prices.

http://biz.yahoo.com/iw/080513/03965...