On 24 September, the Canada Revenue Agency (CRA) issued notices of reassessment of tax to Silver Wheaton (SLW). The notices were not unexpected and were consistent with its earlier, 6 July notice, in which it advised that it was seeking C$273m (US$205m, US$0.50/share) in tax and transfer pricing penalties for 2005-10. However, the 24 Sept notices did also quantify interest and ‘other penalties’ at C$81m (US$60m, US$0.15/share), so that the total that it is seeking is C$353m (US$265m, US$0.66/share). Compared to this amount, the US$3.98 decline in SLW’s share price since 6 July (notwithstanding a weak interim precious metals price environment) appears excessive and leaves SLW materially cheap relative to both its peers and even the operating gold mining companies, despite being associated with materially less cost and operating risk.
