SILVER WHEATON REPORTS RECORD PRODUCTION WITH NET EARNINGS AND OPERATING CASH FLOWS MORE THAN DOUBLING IN THE FIRST QUARTER
VANCOUVER, May 9 /CNW/ --
TSX: SLW
NYSE: SLW
VANCOUVER, May 9 /CNW/ - Silver Wheaton Corp. ('Silver Wheaton' or the
'Company') (TSX:SLW) (NYSE:SLW) is pleased to announce its unaudited
results for the first quarter ended March 31, 2011.
FIRST QUARTER HIGHLIGHTS
-- Revenue increased 84% to a record US$158.2 million compared
with US$85.9 million in Q1 2010.
-- Net earnings increased 142% to a record US$122.2 million
(US$0.35 per share), compared with US$50.6 million (US$0.15 per
share) in Q1 2010.
-- Operating cash flows increased 121% to a record US$127.2
million (US$0.36 per share(1)) compared with US$57.6 million
(US$0.17 per share(1)) in Q1 2010.
-- Record attributable silver equivalent production of 6.2 million
ounces (6.1 million ounces of silver and 2,900 ounces of gold),
representing an increase of 10% over the comparable period in
2010.
-- Silver equivalent sales of 4.9 million ounces (4.8 million
ounces of silver and 2,500 ounces of gold).
-- As at March 31, 2011, approximately 3.0 million payable silver
equivalent ounces attributable to the Company have been
produced at the various mines and will be recognized in future
sales as they are delivered to the Company under the terms of
their contracts. This represents an increase in the first
quarter of approximately 700,000 payable silver equivalent
ounces, and is primarily due to the timing of concentrate
shipments from the Yauliyacu, Zinkgruvan, Mineral Park and
Campo Morado mines.
-- Total cash costs of US$4.07(1) per silver equivalent ounce,
compared with US$4.04(1) in Q1 2010.
-- Cash operating margin(1) increased 114% compared to Q1 2010 to
a record US$28.17, while the average realized silver price over
the same period increased by 85%.
-- Announced an inaugural quarterly cash dividend of US$0.03 per
common share (US$0.12 per common share, annually). The initial
dividend of US$0.03 per common share was distributed on March
30, 2011.
-- Announced attributable proven and probable reserves increased
by over nine percent in 2010, as a result of an increase of 80
million ounces of silver and 23,000 ounces of gold, to a record
954 million silver equivalent ounces. Over the same period,
attributable measured and indicated resources increased by one
percent to 377 million silver equivalent ounces. Attributable
inferred resources increased by 22%, as a result of an increase
of 89 million ounces of silver, to 497 million silver
equivalent ounces.
-- Barrick Gold Corporation's world-class gold-silver Pascua-Lama
project is forecast to commence production in the first half of
2013. Over 45% of the pre-production capital budget of
$US3.3-3.6 billion has been committed and earthworks are more
than 65% complete. First concrete for the process plant will be
poured in Q2 2011 and pre-strip mining is expected to begin in
Q4 2011. Once in production, Pascua-Lama is forecast to be one
of the largest and lowest cost gold mines in the world with an
expected mine life in excess of 25 years. In its first full
five years of operation, Silver Wheaton's attributable silver
production is expected to average nine million ounces annually.
-- Subsequent to quarter end, Randy Smallwood, the President and
one of the founders of Silver Wheaton, was appointed Chief
Executive Officer, replacing Peter Barnes who resigned
effective April 11, 2011. Since 2004, Mr. Smallwood has been
instrumental in building Silver Wheaton into the second largest
silver company in the world.
(_________________________________ )
(1) Refer to discussion on non-IFRS measures at the end of this press
release.
'Record first quarter production represented a solid start to the year,
and we are confident that our 2011 production forecast of 27 to 28
million silver equivalent ounces, an increase of 15% over 2010, will be
met,' said Randy Smallwood, President and Chief Executive Officer of
Silver Wheaton. 'Though sales lagged production, and resulted in an
increase of over 700,000 payable silver equivalent ounces produced but
not yet delivered by our partners, record earnings and operating cash
flows were achieved in this quarter. We expect increased silver
deliveries throughout 2011 to make up for the sales shortfall, and in
the current environment of strong silver prices, our shareholders
should benefit from increased earnings and cash flows in future
quarters from these deferred silver deliveries.'
'In March, Silver Wheaton reached another major milestone by commencing
an inaugural quarterly cash dividend. Our unique business model, which
offers shareholders very good leverage to increasing silver prices
while at the same time reducing the risks faced by traditional mining
companies, now offers another significant advantage over silver
exchange traded funds - a dividend yield. With one of the strongest
cash operating margins in the sector, which was US$28.17/oz or 87% in
the first quarter, Silver Wheaton has the capacity to offer its
shareholders meaningful long-term dividend growth.'
'Lastly, our corporate development team remains very busy pursuing
further partnerships, and some stability in the price of silver will
likely result in a significant increase in silver streaming
opportunities as mining companies seek to capitalize on the benefits of
the current silver price environment. For companies striving to grow
their core operations, silver streaming provides a very attractive
financing solution, compared to debt and equity. With in excess of
US$560 million in cash, an undrawn US$400 million revolving credit
facility, and very robust operating cash flows, Silver Wheaton is
extremely well-positioned to help mining companies achieve their growth
goals.'
This earnings release should be read in conjunction with Silver
Wheaton's unaudited MD&A and Financial Statements, which are available
on the Company's website at www.silverwheaton.com and have been posted on SEDAR at www.sedar.com.
Randy Smallwood Appointed to Board of Directors
The Board of Directors is also pleased to announce the appointment of
Randy Smallwood, Silver Wheaton's President and Chief Executive
Officer, to the Company's Board of Directors in place of Peter Barnes,
who had earlier tendered his resignation. Randy Smallwood will be
nominated for election as a director of the Company at its Annual
General Meeting to be held on May 20, 2011 in lieu of Peter Barnes.
Webcast and Conference Call Details
A conference call will be held Monday, May 9, 2011, starting at 10:00 am
(Eastern Time) to discuss these results. To participate in the live
call use one of the following methods:
Dial toll
free from
Canada or 1-888-231-8191
the
US:
Dial from
outside 1-647-427-7450
Canada or
the US:
Pass code: 58621503
Live audio www.silverwheaton.com
webcast:
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and you can listen to an archive of
the call by one of the following methods:
Dial toll
free from
Canada or 1-800-642-1687
the
US:
Dial from
outside 1-416-849-0833
Canada or
the US:
Pass code: 58621503
Archived
audio www.silverwheaton.com
webcast:
About Silver Wheaton
Silver Wheaton is the largest silver streaming company in the world.
Based upon its current agreements, forecast 2011 attributable
production is 27 to 28 million silver equivalent ounces, including
15,000 ounces of gold. By 2015, annual attributable production is
anticipated to increase significantly to approximately 43 million
silver equivalent ounces, including 35,000 ounces of gold. This growth
is driven by the Company's portfolio of world-class assets, including
silver streams on Goldcorp's Peñasquito mine and Barrick's Pascua-Lama
project.
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
The information contained herein contains 'forward-looking statements'
within the meaning of the United States Private Securities Litigation
Reform Act of 1995 and 'forward-looking information' within the meaning
of applicable Canadian securities legislation. Forward-looking
statements, which are all statements other than statements of
historical fact, include, but are not limited to, statements with
respect to the future price of silver and gold, the estimation of
mineral reserves and resources, the realization of mineral reserve
estimates, the timing and amount of estimated future production, costs
of production, reserve determination, reserve conversion rates and
statements as to any future dividends. Generally, these
forward-looking statements can be identified by the use of
forward-looking terminology such as 'plans', 'expects' or 'does not
expect', 'is expected', 'budget', 'scheduled', 'estimates',
'forecasts', 'intends', 'anticipates' or 'does not anticipate', or
'believes', or variations of such words and phrases or statements that
certain actions, events or results 'may', 'could', 'would', 'might' or
'will be taken', 'occur' or 'be achieved'. Forward-looking statements
are subject to known and unknown risks, uncertainties and other factors
that may cause the actual results, level of activity, performance or
achievements of Silver Wheaton to be materially different from those
expressed or implied by such forward-looking statements, including but
not limited to: fluctuations in the price of silver and gold; the
absence of control over mining operations from which Silver Wheaton
purchases silver or gold and risks related to these mining operations
including risks related to fluctuations in the price of the primary
commodities mined at such operations, actual results of mining and
exploration activities, economic and political risks of the
jurisdictions in which the mining operations are located and changes in
project parameters as plans continue to be refined; and differences in
the interpretation or application of tax laws and regulations; as well
as those factors discussed in the section entitled 'Description of the
Business - Risk Factors' in Silver Wheaton's Annual Information Form
available on SEDAR at www.sedar.com and in Silver Wheaton's Form 40-F on file with the U.S. Securities and
Exchange Commission in Washington, D.C. Forward-looking statements are
based on assumptions management believes to be reasonable, including
but not limited to: the continued operation of the mining operations
from which Silver Wheaton purchases silver or gold, no material adverse
change in the market price of commodities, that the mining operations
will operate and the mining projects will be completed in accordance
with their public statements and achieve their stated production
outcomes, and such other assumptions and factors as set out herein.
Although Silver Wheaton has attempted to identify important factors
that could cause actual results to differ materially from those
contained in forward-looking statements, there may be other factors
that cause results not to be as anticipated, estimated or intended.
There can be no assurance that forward-looking statements will prove to
be accurate. Accordingly, readers should not place undue reliance on
forward-looking statements. Silver Wheaton does not undertake to update
any forward-looking statements that are included or incorporated by
reference herein, except in accordance with applicable securities laws.
Condensed Interim Consolidated Statement of Operations (unaudited)
Three Months Ended March 31
(US dollars and shares in thousands,
except per share amounts - unaudited) 2011 2010
Sales $ 158,183 $ 85,938
Cost of sales $ 19,948 $ 20,167
Depletion 11,684 13,551
$ 31,632 $ 33,718
Earnings from operations $ 126,551 $ 52,220
Expenses and other income
General and administrative (1) $ 6,501 $ 7,195
Gain on fair value adjustment of - (6,306)
warrants issued
Foreign exchange gain (4) (32)
Other (income) expense 397 427
$ 6,894 $ 1,284
Earnings before tax $ 119,657 $ 50,936
Deferred income tax recovery (expense) 2,519 (377)
$ 122,176 $ 50,559
Earnings per share
Basic $ 0.35 $ 0.15
Diluted (2) $ 0.34 $ 0.13
Weighted average number of shares
outstanding
Basic 352,898 342,334
Diluted 355,903 346,457
1) Equity settled stock based $ 1,255 $ 3,108
compensation (a non-cash item)
included in general and administrative
expenses.
2) Diluted earnings per share for the
three months ended March 31, 2010 was
calculated using net earnings adjusted
for the gain on fair value adjustment of
warrants issued.
Condensed Interim Consolidated Balance Sheets (unaudited)
March 31 December 31 January 1
(US dollars in thousands - 2011 2010 2010
unaudited)
Assets
Current assets
Cash and cash equivalents $ 564,075 $ 428,636 $ 227,566
Accounts receivable 7,819 7,088 4,881
Other 854 727 1,027
Total current assets $ 572,748 $ 436,451 $ 233,474
Non-current assets
Silver and gold interests $ 1,905,841 $ 1,912,877 $ 1,928,476
Long-term investments 276,888 284,448 73,747
Other 1,588 1,607 1,852
Total non-current assets $ 2,184,317 $ 2,198,932 $ 2,004,075
Total assets $ 2,757,065 $ 2,635,383 $ 2,237,549
Liabilities
Current liabilities
Accounts payable and $ 5,296 $ 9,843 $ 10,302
accrued liabilities
Current portion of bank 28,560 28,560 28,560
debt
Current portion of silver 132,988 133,243 130,788
interest payments
Total current liabilities $ 166,844 $ 171,646 $ 169,650
Non-current liabilities
Deferred income taxes $ 402 $ 822 $ -
Liability for Canadian - - 51,967
dollar share purchase
warrants
Long-term portion of bank 71,480 78,620 107,180
debt
Long-term portion of 124,405 122,346 236,796
silver interest payments
Total non-current liabilities $ 196,287 $ 201,788 $ 395,943
Total liabilities $ 363,131 $ 373,434 $ 565,593
Shareholders' Equity
Issued capital and contributed $ 1,807,497 $ 1,801,786 $ 1,497,095
surplus
Retained earnings 459,755 344,075 190,865
Long-term investment 126,682 116,088 (16,004)
revaluation reserve (net of
tax)
Total shareholders' equity $ 2,393,934 $ 2,261,949 $ 1,671,956
Total liabilities and $ 2,757,065 $ 2,635,383 $ 2,237,549
shareholders' equity
Condensed Interim Consolidated Statement of Cash Flows (unaudited)
Three Months Ended March 31
(US dollars in thousands - 2011 2010
unaudited)
Operating Activities
Net earnings $ 122,176 $ 50,559
Items not affecting cash
Depreciation and depletion 11,754 13,616
Equity settled stock-based 1,255 3,108
compensation
Deferred income tax (recovery) (2,519) 377
expense
Gain on fair value adjustment - (6,306)
of warrants issued
Other (income) expense (67) 291
Change in non-cash operating (5,392) (4,045)
working capital
Cash generated by operating activities $ 127,207 $ 57,600
Financing Activities
Bank debt repaid $ (7,140) $ (7,140)
Share issue costs - (85)
Share purchase warrants exercised 61 167
Share purchase options exercised 4,395 3,294
Dividends paid (10,595) -
Cash applied to financing activities $ (13,279) $ (3,764)
Investing Activities
Silver and gold interests $ (2,857) $ (517)
Long-term investments - (1,135)
Proceeds on disposal of long-term 24,270 -
investments
Other (8) (212)
Cash generated by (applied to) investing $ 21,405 $ (1,864)
activities
Effect of exchange rate changes on cash
and cash equivalents $ 106 $ 120
Increase in cash and cash equivalents $ 135,439 $ 52,092
Cash and cash equivalents, beginning of 428,636 227,566
period
Cash and cash equivalents, end of period $ 564,075 $ 279,658
Interest paid $ 315 $ 399
Interest received $ 198 $ 45
Results of Operations (unaudited)
Three Months Ended March 31, 2011
Total
Average cash
realized cost Total Cash flow
price (US$'s depletion Net from
Ounces (US$'s per (US$'s earnings (used in)
produced Ounces Sales per ounce) per (loss) operations
(2) sold (US$'s) ounce) (3) ounce) (US$'s) (US$'s)
Silver
San Dimas 1,606 1,748 $ 58,371 $ 33.39 $ 4.04 $ 0.71 $ 50,051 $ 50,203
Zinkgruvan 500 321 11,049 34.41 4.08 1.69 9,195 9,606
Yauliyacu 683 120 3,523 29.36 3.98 5.02 2,443 3,045
Peñasquito 1,207 941 27,020 28.72 3.90 2.41 21,085 23,351
Cozamin 325 271 8,651 31.87 4.04 4.62 6,299 7,776
Barrick
(4) 722 680 21,663 31.84 3.90 3.55 16,595 17,451
Other (5) 1,088 741 24,027 32.44 3.93 3.95 18,186 20,184
6,131 4,822 $ 154,304 $ 32.00 $ 3.98 $ 2.33 $ 123,854 $ 131,616
Gold
Minto 2,925 2,524 3,879 1,537 300 168 2,697 2,870
Silver
Equivalent
(6) 6,228 4,905 $ 158,183 $ 32.24 $ 4.07 $ 2.38 $ 126,551 $ 134,486
Corporate
General and (6,501)
administrative
Other 2,126
Total $ (4,375) $ (7,279)
corporate
6,228 4,905 $ 158,183 $ 32.24 $ 4.07 $ 2.38 $ 122,176 $ 127,207
1) All figures in thousands except gold ounces produced and sold and
per ounce amounts.
2) Ounces produced represent the quantity of silver and gold contained
in concentrate or doré prior to smelting or refining deductions and
certain production figures are based on management estimates.
3) Refer to discussion on non-IFRS measures at the end of this press
release.
4) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
5) Comprised of the Los Filos, Mineral Park, Neves-Corvo, Stratoni,
Keno Hill, Minto, Campo Morado and Aljustrel silver interests.
6) Gold ounces produced and sold are converted to a silver equivalent
basis on the ratio of the average silver price received to the average
gold price received during the period from the assets that produce both
gold and silver.
Three Months Ended March 31, 2010
Total
Average cash
realized cost Total Cash flow
price (US$'s depletion Net from
Ounces (US$'s per (US$'s earnings (used in)
produced Ounces Sales per ounce) per (loss) operations
(2) sold (US$'s) ounce) (3) ounce) (US$'s) (US$'s)
Silver
San Dimas 1,206 1,206 $ 20,851 $ 17.29 $ $ 0.79 $ 15,033 $ 15,980
4.04
Zinkgruvan 387 498 8,557 17.19 4.04 1.72 5,692 5,704
Yauliyacu 737 581 10,135 17.44 3.97 3.47 5,809 7,849
Peñasquito 557 424 7,375 17.40 3.90 2.54 4,644 5,722
Cozamin 401 281 4,813 17.13 4.00 4.62 2,391 4,035
Barrick
(4) 780 783 13,498 17.24 3.90 3.50 7,705 8,410
Other (5) 947 654 11,233 17.16 3.92 3.99 6,061 8,982
5,015 4,427 $ 76,462 $ 17.27 $ 3.97 $ 2.61 $ 47,335 $ 56,682
Gold
Minto 9,729 8,611 9,476 1,100 300 233 4,885 5,752
Silver
Equivalent
(6) 5,660 4,998 $ 85,938 $ 17.20 $ 4.04 $ 2.71 $ 52,220 $ 62,434
Corporate
General and (7,195)
administrative
Gain on fair value 6,306
adjustment of warrants
issued
Other (772)
Total $ (1,661) $ (4,834)
corporate
5,660 4,998 $ 85,938 $ 17.20 $ 4.04 $ 2.71 $ 50,559 $ 57,600
1) All figures in thousands except gold ounces produced and sold and
per ounce amounts.
2) Ounces produced represent the quantity of silver and gold contained
in concentrate or doré prior to smelting or refining deductions and
certain production figures are based on management estimates.
3) Refer to discussion on non-IFRS measures at the end of this press
release.
4) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
5) Comprised of the Los Filos, San Martin, Mineral Park, Neves-Corvo,
Stratoni, Minto, Campo Morado and La Negra silver interests.
6) Gold ounces produced and sold are converted to a silver equivalent
basis on the ratio of the average silver price received to the
average gold price received during the period from the assets that
produce both gold and silver.
Non-IFRS Measures
Silver Wheaton has included, throughout this press release, certain
non-IFRS performance measures, including total cash costs of silver and
gold on a sales basis, as well as operating cash flows per share and
cash operating margin. These non-IFRS measures do not have any
standardized meaning prescribed by IFRS, nor are they necessarily
comparable with similar measures presented by other companies. Cash
costs are presented as they represent an industry standard method of
comparing certain costs on a per unit basis. Cash operating margin is
defined as the realized selling price less total cash cost per silver
equivalent ounce. The Company believes that certain investors use this
information to evaluate the Company's performance. The data is
intended to provide additional information and should not be considered
in isolation or as a substitute for measures of performance prepared in
accordance with IFRS. During the three months ended March 31, 2011,
the Company's total cash costs, which were equivalent to the Company's
cost of sales in accordance with IFRS, were $3.98 per ounce of silver
and $300 per ounce of gold (2010 - $3.97 per ounce of silver and $300
per ounce of gold).
To view this news release in HTML formatting, please use the following URL: http://www.newswire.ca/en/releases/archive/May2011/09/c2043.html
Brad Kopp
Vice President, Investor Relations
Silver Wheaton Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: www.silverwheaton.com