http://seekingalpha.com/article/1090...

Market conditions have deteriorated since Gold Wheaton Gold Corp. was triumphantly launched last summer, and the Vancouver-based gold stream company is now facing serious problems.

According to RBC Capital Markets analyst Adam Schatzker, the company's business model of buying precious metal streams from base metal companies is "on hold" given its poor share price and the awful state of debt and equity markets.

Even worse, Gold Wheaton faces immediate financing issues. Early next year, the company is required to pay FNX Mining Company Inc. (FNXMF.PK) and First Uranium Corp. (FURAF.PK) a combined C$144-million to meet its metal purchasing obligations with those two companies. Raising the funds will be no easy task in this market.

However, Mr. Schatzker does not believe the situation is quite as bad as it looks. He expects that FNX will give Gold Wheaton more time to raise the funds (rather than force the company to dilute itself by issuing cash or warrants) since FNX owns 38% of Gold Wheaton's equity. In the case of the First Uranium, there is some flexibility in the deal where Gold Wheaton's interest in First Uranium's gold stream would decrease to 10% from 25% if it cannot raise the funds. If that happens, Mr. Schatzker said his target price would drop by C$0.10 a share.

Despite the company's struggles, Mr. Schatzker remains a believer in Gold Wheaton's business model, which is a replica of the highly successful Silver Wheaton Corp.

"With a higher share price and better underlying markets, we think Gold Wheaton would be well positioned to continue growing its portfolio of gold streams," he wrote in a note.

He cut his target on the stock to C$0.65 a share (from C$1.00) to reflect both the financing risks and overall market conditions. That is still more than double the stock's current level, and he maintained an "outperform" rating.