TORONTO – Vancouver-based Silver Wheaton expects that silver prices will strengthen over the next six months, president and CEO Peter Barnes said on Monday.

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

Silver, like other precious and base metals, has slumped “drastically” as the US dollar strengthens and amid concern over demand as the world seems headed for an economic slowdown.

The metal has fallen from a highest-ever price of more than $21/oz in March this year, to around $9,80/oz on Monday afternoon.

Still, Barnes maintains that the mid- to long-term prospects for the silver market “continue to look very promising”.

“We are probably more bullish than ever on the price of silver as a result of what is unfolding in the global markets today,” he told analysts and investors on a conference call.

However, in response to tightening financial markets, Silver Wheaton is making a healthy balance sheet and the repayment of debt its first priorities in the immediate future.

“Given the near-term uncertainties in the global economy, our focus will remain on cash conservation and the repayment of debt,” Barnes said.

At September 30, Silver Wheaton had net debt of $365-million, after it used more than C$120-million raised in September from the early exercise of warrants to pay down its debt facility.

Based on its latest silver production guidance, the company would only need a long-term silver price of more than $7/oz to pay off its debt in the time required from operating cash flows.

However, Barnes added that production would likely be higher than the forecast three-million ounces for the fourth quarter of 2008, and 15- to 17-million ounces in 2009, which he described as “extremely conservative”.

Further, Silver Wheaton has “several options available” to ensure that its debt covenants remain in good standing, should the need arise, he added.

He didn't discount further acquisitions, particularly considering the "flurry of opportunities" that are available because cash-strapped firms are seeking to sell silver streams to fund developments, but emphasised that deleveraging the firm's capital structure remained the first priority.

"We can afford to be a bit more selective," added CFO Gary Brown.

Silver Wheaton posted third-quarter net earnings of $20,2-million, compared with $19,2-million a year earlier.