Vancouver-based silver reseller Silver Wheaton's president and CEO, Peter Barnes, expects the spot price for the precious metal will continue to rise, in the medium term, underpinned by both physical and investment demand, he said on Tuesday.

“My view is that silver is going through $30/oz in the next couple of years,” he said on a conference call with investors.

The supply and demand outlook was “pretty robust”, and the combined effects of geopolitical risk and a weaker US dollar would continue to support higher prices.

“My strong feeling is that, in the long term, the US dollar still has a long way to go [downwards],” Barnes said.

Silver Wheaton buys silver from producers on a long-term basis, at predetermined prices, and then sells the metal at the current spot price.

For the first quarter of 2008, the company realised an average silver price of $17,36/oz during the quarter, well above the $13,20/oz reported for the same period of 2007, and several ballparks away from the $3,90/oz at which it buys the metal.

The spot price for silver reached a 27-year high above $21/oz last month, but has since slipped back to around $17/oz.

“It takes a bit of consolidation...whenever it hits new levels it consolidates for a while and then it takes another run,” Barnes commented.

GROWTH PROSPECTS

Silver Wheaton continues to scout for additional sources of silver, and hopes to announce “several” new deals in the next 12 months, Barnes said.

He expected that the new contracts would be a mix of current and near-term production, as well as some deals where Silver Wheaton pays for silver upfront to help companies fund new mines.

“In terms of future growth prospects, things have never looked better,” Barnes said.

The current volatile market conditions were “perfect” for the company, as small and medium-sized mining companies were finding it increasingly difficult to raise debt and equity finance, which made Silver Wheaton's model attractive as a means of securing funds for capital investment.

The firm has a $100-million revolving credit facility at its disposal, and is in talks with its banks to double this to $200-million, “in order to increase cash available for acquisitions”, CFO Nolan Watson said.

Last year, Silver Wheaton agreed to buy silver from Goldcorp's Penasquito mine, in Mexico and Hellas Gold's Stratoni project in Greece.

It is also waiting to finalise the terms of an agreement to buy silver from Augusta Resource's Rosemont project, in the US, and announced in March that it had signed an agreement to buy the entire silver production from Mercator Minerals' Mineral Park copper/molybdenum/silver mine, in Arizona.

EARNINGS UP, SALES DOWN

Silver Wheaton reported first-quarter net earnings of $27,9-million, up from $24,9-million a year ago, as higher silver prices more than offset lower sales.

The firm sold 2,8-million ounces of silver during the quarter, down from 3,3-million ounces of silver in 2007, and 14% less than forecast.

The decline was primarily due to shipment delays, which meant about 270 000 oz would be reported in the second-quarter results, as well as the lower grades of ore being mined at the Luismin and Yauliyacu mines.

However, Barnes said that the lower grades were not a cause for concern.

"These are both world-class deposits...it is not a matter of if we will get the silver from them, it's only a matter of when."

Shares in Silver Wheaton declined 8,69% on Tuesday, to C$13,14 a share by 14:25 in Toronto.