VANCOUVER (CP) -- Silver Wheaton Corp. [NYSE:SLW; TSX:SLW] could be a big winner if Goldcorp Inc. [NYSE:GG; TSX:G] is successful in its bid to merge with Glamis Gold Ltd. [TSX:GLG; NYSE:GLG], which could potentially add millions of ounces of silver production from its Penasquito project in Mexico when it starts up, analysts say.
Salman Partners analyst Haytham Hodaly suggested Friday that once Penasquito comes into full production in 2009 it could produce more than 20 million ounces of silver per year.
''A portion of that, if structured properly, could go to Silver Wheaton under an agreed upon silver purchase agreement,'' Hodaly said.
Silver Wheaton, in which Goldcorp holds a controlling interest, holds the rights to buy all of the silver produced by Goldcorp's Luismin mines in Mexico.
Goldcorp and Glamis announced a plan to merge earlier this week in an all-stock deal that would see the creation of a new senior gold miner in Canada.
In addition to 15.7 million proven and probably ounces of gold reserves, Glamis would also bring with it more than 617 million ounces of proven and probably silver reserves including 575 million at its undeveloped Penasquito property where it hopes to achieve initial mine start-up in late 2008 and full production by late 2009.
UBS analyst Craig West increased his price target on the Silver Wheaton from $12.50 to $13.50 with a rating of ''Buy 2'' on Friday.
Silver Wheaton shares were up 34 cents at C$12.42 on the Toronto Stock Exchange, while the stock gained 28 cents to trade for $11.25 on the New York Stock Exchange.
''We believe this transaction would provide Silver Wheaton with increased opportunity for new silver contracts, given its existing relationship with Goldcorp,'' West wrote in a note to clients.
''While Penasquito is large, given its early stage, we believe a contract could come at a discount so Silver Wheaton's other contracts, which are with existing mines.
West also said that in addition to Penasquito, Glamis's Marlin mine in Guatemala is ramping up and could produce over 3.5 million ounces of silver per year.
In its outlook, Silver Wheaton said it expects to have annual silver sales of about 15 million ounces this year, increasing to 20 million ounces by 2009.
Silver Wheaton, which was spun off from Wheaton River Minerals in 2004 as a pure play silver company, has said it is actively looking to add new long term silver purchase contracts and or silver exploration, development and production assets.
In addition to Luismin, Silver Wheaton also holds the rights to buy the silver from Lundin Mining's Zinkgruvan mine in Sweden and 4.75 million ounces of silver annually for 20 years from Glencore International AG and its Yauliyacu mine in central Peru.
(c) The Canadian Press 2006