Silver Wheaton Reports Record Operating and Financial Results in 2011; Earnings and Operating Cash Flows Nearly Double
TSX: SLW
NYSE: SLW
VANCOUVER, March 22, 2012 /CNW/ - Silver Wheaton Corp. ('Silver Wheaton' or the 'Company')
is pleased to announce its audited results for the fourth quarter and year ended December 31, 2011.FULL YEAR HIGHLIGHTS
-- Third consecutive year of increasing attributable production to
a record 25.4 million silver equivalent ounces (24.6 million
ounces of silver and 18,400 ounces of gold), a 7% increase
compared to 2010. This resulted in record revenue, earnings and
operating cash flows.
-- Revenue increased 73% compared to 2010, to US$730.0 million, on
silver equivalent sales of 21.1 million ounces (20.2 million
ounces of silver and 18,300 ounces of gold).
-- Net earnings increased 92% compared to 2010 (on an adjusted
basis1), to US$550.0 million (US$1.56 per share).
-- Operating cash flows increased 96% compared to 2010, to
US$626.4 million (US$1.77 per share1).
-- Cash operating margin1 increased 84% compared to 2010, to
US$30.56 per silver equivalent ounce. Silver Wheaton's average
realized silver equivalent price increased by 68% over this
same period, demonstrating Silver Wheaton's leverage to
increasing silver prices.
-- Average cash costs of US$4.091 per silver equivalent ounce
(US$3.99 per ounce of silver and US$300 per ounce of gold), a
1% increase compared to 2010.
-- Adopted new dividend policy linking quarterly dividend payments
to 20% of the previous quarter's operating cash flows,
providing shareholders with additional exposure to increasing
silver prices and to Silver Wheaton's exceptional production
growth profile. During 2011, the Company paid US$63.6 million
in dividends (US$0.18 per share).
-- Year-end cash balance of US$840.2 million, with a net cash
position of US$761.6 million.
FOURTH QUARTER HIGHLIGHTS
-- Record attributable silver equivalent production of 6.9 million
ounces (6.7 million ounces of silver and 3,900 ounces of gold),
a 12% increase compared to 2010.
-- Revenue of US$191.9 million, on record silver equivalent sales
of 6.0 million ounces (5.8 million ounces of silver and 3,800
ounces of gold).
-- Net earnings of US$144.7 million (US$0.41 per share).
-- Operating cash flows of US$163.7 million (US$0.46 per share1).
-- Average cash costs of US$4.061 per silver equivalent ounce.
-- Quarterly dividend US$0.09 per common share was paid to
shareholders, representing a threefold increase from the prior
quarter.
-- Appointed Mr. Haytham Hodaly as Senior Vice President,
Corporate Development, effective January 1, 2012.
2012 OUTLOOK
-- Goldcorp Inc.'s world-class Peñasquito mine is forecast to
achieve full production capacity of 130,000 tonnes per day by
the end of Q1 2012. This cornerstone asset is poised to become
our largest contributor of silver and will drive our production
growth in 2012. As a result, Silver Wheaton anticipates a 6%
increase in its 2012 attributable production to approximately
27 million silver equivalent ounces, including 16,500 ounces of
gold.
-- Given the Company's unique business model of essentially fixed
cash costs2, average cash costs in 2012 are estimated to be
approximately US$4.071 per silver equivalent ounce, virtually
unchanged from 2011.
-- Executing on its growth strategy of acquiring additional
value-enhancing silver and precious metals streams will remain
Silver Wheaton's top priority in 2012.
'Silver Wheaton finished 2011 with its strongest ever quarter of production and sales,' said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. 'We are proud to have now grown for three consecutive years, and in 2011 we achieved record annual production levels of over 25 million silver equivalent ounces. The combination of increased silver equivalent sales and strong silver prices also generated record financial results including revenue, earnings, operating cash flows, and cash operating margins which increased a tremendous 82% to US$30.61 per ounce of silver.'
'The exceptional growth in cash flows allowed us to initiate an inaugural dividend, which grew threefold by year-end, and positions the company to quickly capitalize on new acquisition opportunities. We are now stronger than at any other time in our company's history, and more capable than ever of helping mining companies achieve their production and expansion goals by providing value-enhancing silver streaming funding. And, with low fixed costs, an exceptional production growth profile, and more silver reserves than any other silver company in the world, we believe we offer the premier investment vehicle for silver investors worldwide.'
Financial Review
Revenues
Revenue was US$191.9 million in the fourth quarter of 2011, on silver equivalent sales of 6.0 million ounces (5.8 million ounces of silver and 3,800 ounces of gold). This represents a 28% increase from the US$149.6 million of revenue generated in the fourth quarter of 2010, due primarily to increases in the average realized selling price of silver and gold of 22% and 24%, respectively.
Revenue was US$730.0 million for the year ended December 31, 2011, on silver equivalent sales of 21.1 million ounces (20.2 million ounces of silver and 18,300 ounces of gold). This represents a 72% increase from the US$423.4 million in revenue generated for the year ended December 31, 2010, due primarily to increases in the average realized selling price of silver and gold of 67% and 31%, respectively.
Costs and Expenses
Average cash costs in the fourth quarter of 2011 were US$4.06(1) per silver equivalent ounce, compared with US$4.02(1) during the comparable period of 2010. This resulted in cash operating margins(1 )of US$28.06 per silver equivalent ounce, a 25% increase compared with the fourth quarter of 2010, once again demonstrating Silver Wheaton's leverage to increasing silver prices.
Average cash costs for the year ended December 31, 2011, were US$4.09(1) per silver equivalent ounce, compared with US$4.04(1) during the comparable period of 2010. This resulted in record cash operating margins(1 )of US$30.56 per silver equivalent ounce, an 84% increase compared with the year ended December 31, 2010.
During the year ended December 31, 2011, the Company recorded an income tax expense of US$8.3 million, which includes a non-cash deferred income tax expense of US$7.6 million, attributable primarily to income from Canadian operations and the reversal of previously recognized deferred income tax assets relating to the decline in fair value of long-term investments in common shares held. In comparison, during the year ended December 31, 2010, the Company recorded an income tax recovery of US$9.9 million, which includes a non-cash deferred income tax recovery of US$10.2 million, relating primarily to the recognition of previously unrecognized deferred income tax assets.
Earnings and Operating Cash Flows
Net earnings in the fourth quarter of 2011 were US$144.7 million (US$0.41 per share), compared with adjusted net earnings(1) of US$120.7 (US$0.35 per share) for the same period in 2010, an increase of 20% (an increase of 17% on a per share basis). Cash flow from operations in the fourth quarter of 2011 was US$163.7 million (US$0.46 per share(1)), compared with US$124.7 million (US$0.36 per share(1)) for the same period in 2010, an increase of 31%. The increase in net earnings and operating cash flows is primarily attributable to the increased selling prices of silver and gold.
Net earnings for the year ended December 31, 2011, was US$550.0 million (US$1.56 per share), compared with adjusted net earnings(1) of US$286.6 million (US$0.83 per share) for the same period in 2010, an increase of 92% (an increase of 88% on a per share basis). Cash flow from operations for the year ended December 31, 2011, was US$626.4 million (US$1.77 per share(1)), compared with US$319.7 million (US$0.93 per share(1)) for the same period in 2010, an increase of 96%. The increase in net earnings and operating cash flow is primarily attributable to the increased selling prices of silver and gold.
Balance Sheet
At December 31, 2011, the Company had approximately US$840 million of cash on hand. In addition, the Company had US$400 million of available credit under its revolving bank debt facility. The combination of cash, available credit, and strong operating cash flows, positions the Company well to execute on its growth strategy of acquiring additional accretive silver stream interests.
______________________________________________
(1) Please refer to non-IFRS measures at the end of this press release.
(2) Silver Wheaton's cash operating costs are approximately US$3.90 per ounce of silver, with a small inflationary adjustment after the third year of production.
Operational Highlights
Attributable silver equivalent production was a record 6.9 million ounces (6.7 million ounces of silver and 3,900 ounces of gold) in the fourth quarter of 2011, a 12% increase compared to the fourth quarter of 2010. In 2011, Silver Wheaton experienced its third year of record annual attributable production of 25.4 million silver equivalent ounces (24.6 million ounces of silver and 18,400 ounces of gold), a 7% increase compared to 2010.
Operational highlights for the year ended December 31, 2011 are as follows:
Peñasquito -In 2011, Peñasquito was the primary driver of our production growth, as the mine continued its ramp up to full design capacity of 130,000 tonnes per day. Silver Wheaton's 2011 attributable silver production from the mine was 5.3 million ounces, an increase of 39% compared to 2010.
As per Goldcorp Inc.'s February 15, 2012, disclosure, throughput from the two 50,000 tonne per day capacity semi-autogenous grinding lines averaged 93,700 tonnes per day during the fourth quarter and 107,000 tonnes per day in December. Key projects including the high pressure grinding roll supplemental feed system and the tailings dam height increase were completed in January 2012, and the mine is on track to achieve target throughput levels of 130,000 tonnes per day by the end of the first quarter of 2012. Peñasquito will become Silver Wheaton's largest contributor of silver production in 2012, with forecast annual attributable silver production of over 7 million ounces.
Barrick - Silver Wheaton's 2011 attributable silver production from the currently producing Barrick silver interests, consisting of the Veladero, Lagunas Norte and Pierina mines, was 3.0 million ounces, an increase of 14% compared to 2010. Attributable silver production was less than anticipated due to lower than forecast silver production from the Veladero and Pierina mines, partially offset by higher than expected production from the Lagunas Norte mine.
As per Barrick Gold Corporation's February 16, 2012 disclosure, its world-class gold-silver Pascua-Lama project remains on track to commence production in mid-2013, with over 55% of the pre-production capital budget (of $4.7 to $5.0 billion) committed. At the end of the fourth quarter, earthworks in Chile and Argentina were approximately 95% and 65% complete, respectively. Approximately 40% of the concrete had been poured at the processing facilities in Argentina and about 15% of the structural steel was erected. The construction camps are expected to reach their full capacity of 10,000 beds in mid-2012.
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 9 million ounces annually.
Cozamin -Silver Wheaton's 2011 attributable silver production from the Cozamin mine was 1.6 million ounces, an increase of 12% compared to 2010. As per Capstone Mining Corp's January 17, 2012, disclosure, the Cozamin mine achieved record throughput levels in the fourth quarter of over 3,300 tonnes per day. Milled ore grade in the quarter also increased with full production attained from the higher grade Avoca area. As a result, the mine achieved record silver production for both the three months and year ended December 31, 2011.
Other Silver Interests - Silver Wheaton's 2011 attributable silver production from its other silver interests was 4.9 million ounces, an increase of 9% compared to 2010. The increase was primarily attributable to the continued production ramp up at Mercator Minerals Ltd.'s ('Mercator') Mineral Park mine and the commencement of commercial operations at Alexco Resource Corp.'s ('Alexco') Bellekeno mine. Operational highlights at the company's other silver interests for the year ended December 31, 2011, are as follows:
Mineral Park - As per Mercator's January 16, 2012, disclosure, the fourth quarter of 2011 represented the first full quarter of production since the completion of the Phase II mill expansion to 50,000 tons per day at its Mineral Park mine. As a result, the mine achieved record production for both the three months and year ended December 31, 2011.
Bellekeno -As per Alexco's January 23, 2012, disclosure, the Bellekeno mine, located within the Keno Hill district, completed its first full year of operations, having declared commercial production in January of 2011. The mine demonstrated steadily increasing silver production over the course of the year, culminating in record fourth quarter production as the mine approached initial design throughput levels of 250 tonnes per day.
Produced But Not Yet Delivered - Payable silver equivalent ounces produced but not yet delivered to Silver Wheaton by its partners increased by over 300,000 ounces in the fourth quarter, resulting in a total of approximately 4.1 million payable ounces at December 31, 2011. This was primarily due to an increase in concentrate inventory at the Peñasquito mine, as it continues to ramp up production levels, offset in part by reduced concentrate inventory levels at the Yauliyacu mine.
Since mid 2009, concentrate shipments from the Yauliyacu mine have been affected by the shut-down of the Doe Run Peru La Oroya smelter, the largest buyer of the bulk concentrate produced at the mine. Since that time, alternative smelting arrangements have been made by Glencore for a portion of the stockpiled bulk concentrates at Yauliyacu, leading to an inconsistent delivery schedule and delaying the eventual complete reduction of this bulk concentrate.
In the second quarter of 2011, Glencore began producing separate, and more marketable, copper and lead concentrates, replacing the bulk concentrate. The consistency and quantity of these new concentrates has now stabilized, with more consistent silver deliveries to Silver Wheaton from the copper concentrates expected in future quarters. Discussions between Glencore and prospective offtakers for the new lead concentrates are ongoing, and until such offtake agreements are established, sales of lead concentrates will continue to have an inconsistent delivery schedule.
As at December 31, 2011, approximately 1.7 million ounces of cumulative payable silver equivalent ounces have been produced at Yauliyacu but not yet delivered to the Company. Approximately 0.3 million ounces is attributable to the bulk concentrate, while 1.4 million ounces is attributable to the new copper and lead concentrates.
Detailed mine by mine production and sales figures can be found in the Appendix of this press release and in Silver Wheaton's Management's Discussion and Analysis ('MD&A') in the 'Results of Operations and Operational Review' section.
Operational highlights do not include material updates for mines with which Silver Wheaton has a silver or precious metal purchase agreement but where our partners have yet to report their quarterly results.
This earnings release should be read in conjunction with Silver Wheaton's MD&A and audited Financial Statements, which are available on the Company's website at www.silverwheaton.com and have been posted on SEDAR at www.sedar.com.
Reserves and Resources
Silver Wheaton's attributable reserves and resources, as of December 31, 2011, are available on the Company's website at www.silverwheaton.com and in its MD&A and audited Financial Statements, also available on the Company's website and posted on SEDAR at www.sedar.com. Attributable reserves and resources are based on information available to the Company as of March 22, 2012.
As per Primero Mining Corp's ('Primero') January 17, 2012, disclosure, Primero is undertaking a review of the reserve and resource estimation methods currently, and historically, used at San Dimas in order to determine whether other estimation methods might be used to improve predictability of operating results and, therefore, assist long term planning. While the results of this review are not currently known, the adoption of any new estimation methods may result in the Silver Wheaton reporting different and potentially lower total mineral reserve and total mineral resource numbers. Primero also states that it is not expected that any potential change in estimates will change the level of confidence Primero has in the ultimate mineral potential of San Dimas and that the review of estimation methodology is being driven by a desire to determine if greater operating predictability and improved mine planning can be achieved.
As per Primero's February 27, 2012, disclosure, Primero anticipates releasing updated mineral reserves and resources relating to its San Dimas mine on March 28, 2012. Subsequent to this, Silver Wheaton will disclose, by way of press release, Silver Wheaton's updated attributable reserves and resources for the year ended December 31, 2011.
2012 and Long-Term Silver Equivalent Production Forecast
The Company estimates, based upon its current agreements, to have 2012 attributable production of approximately 27 million silver equivalent ounces, including 16,500 ounces of gold. This represents a 6% increase compared to 2011, which is primarily driven by the continued production ramp up at Goldcorp's Peñasquito mine in Mexico. Average cash costs in 2012 are anticipated to be approximately US$4.07(1) per silver equivalent ounce, virtually unchanged from 2011.
By 2016, based upon its current agreements, annual attributable production is anticipated to increase by over 65% to approximately 43 million silver equivalent ounces, including 35,000 ounces of gold. The increase is the result of the anticipated ramp up of three new mines, including Barrick's Pascua-Lama project. The world-class Pascua-Lama project is forecast to commence production in mid-2013 and, in its first full five years of operation, will contribute approximately 9 million ounces of attributable silver production annually to Silver Wheaton.
Attributable mine-by-mine actual 2011 production and forecast 2012 production are as follows:
Attributable Production
2011 2012
Actual1 Forecast
Silver ounces produced (000's)
Peñasquito 5,284 7,000
San Dimas2 5,585 5,600
Barrick3 2,980 2,600
Yauliyacu 2,548 2,500
Zinkgruvan 1,691 1,900
Cozamin 1,567 1,700
Other4 4,902 4,875
24,557 26,175
Gold ounces produced (000'sin silver
equivalent)5
Minto 817 825
Silver equivalent ounces produced (000's) 25,374 27,000
1) Ounces produced represent the quantity of silver and gold contained
in concentrate or doré prior to smelting or
refining deductions. Certain production figures are based on
management estimates.
2) Production includes Goldcorp's four year commitment to deliver to
Silver Wheaton 1.5 million ounces of silver per annum resulting from
their sale of San Dimas to Primero.
3) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
4) Includes the Los Filos, Mineral Park, Neves-Corvo, Stratoni, Keno
Hill, Minto, Campo Morado and Aljustrel silver interests.
5) The Minto mine produced 18,436 oz of gold in 2011 and is forecast to
produce approximately 16,500 oz of gold in 2012.
Webcast and Conference Call Details
A conference call will be held Friday, March 23, 2012, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call please use one of the following methods:
Dial toll
free from 1-888-231-8191
Canada or
the US:
Dial from
outside 1-647-427-7450
Canada or
the US:
Pass 47916637
code:
Live audio www.silverwheaton.com
webcast:
Participants are recommended to 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 1-855-859-2056
Canada or
the US:
Dial from
outside 1-416-849-0833
Canada or
the US:
Pass 47916637
code:
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 2012 attributable production is approximately 27 million silver equivalent ounces, including 16,500 ounces of gold. By 2016, 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.
Summarized Financial Results
Year Ended December 31
2011 2010 2009
IFRS1 IFRS 1 GAAP 1
Silver
equivalent
production2
Attributable 24,557 21,984 16,263
silver
ounces
produced
(000's)
Attributable 18,436 28,795 18,021
gold ounces
produced
Attributable 25,374 23,758 17,395
silver
equivalent
ounces
produced
(000's) 2
Silver
equivalent
sales2
Silver 20,247 18,878 14,744
ounces sold
(000's)
Gold ounces 18,256 25,884 17,132
sold
Silver 21,069 20,483 15,823
equivalent
ounces sold
(000's) 2
Average realized
price ($'s per
ounce)
Average $ 34.60 $ 20.75 $ 15.02
realized
silver price
Average $ 1,609 $ 1,224 $ 1,042
realized
gold price
Average $ 34.65 $ 20.67 $ 15.13
realized
silver
equivalent
price 2
Average cash
cost ($'s per
ounce)3
Average $ 3.99 $ 3.97 $ 3.97
silver cash
cost
Average gold $ 300 $ 300 $ 300
cash cost
Average
silver
equivalent
cash cost 2 $ 4.09 $ 4.04 $ 4.03
Total revenue $ 729,997 $ 423,353 $ 239,293
($000's)
Net earnings $ 550,028 $ 153,381 $ 117,924
Add back - loss 133,210
on fair value - -
adjustment of
Canadian dollar
share purchase
warrants issued
Adjusted net
earnings3
($000's) $ 550,028 $ 286,591 $ 117,924
Earnings per
share
Basic $ 1.56 $ 0.45 $ 0.39
Diluted $ 1.55 $ 0.44 $ 0.38
Adjusted
earnings per
share3
Basic $ 1.56 $ 0.83 $ 0.39
Diluted $ 1.55 $ 0.83 $ 0.38
Cash flow from $ 626,427 $ 319,726 $ 165,932
operations
($000's)
Dividends
Dividends $ 63,612 $ $
paid - -
Dividends $ 0.18 $ 0.00 $ 0.00
paid per
share
Total assets $ 2,872,335 $ 2,635,383 $ 2,237,224
($000's)
Total $ 50,060 $ 200,966 $ 343,976
non-current
financial
liabilities
($000's)
Shareholders' $ 2,654,217 $ 2,261,949 $ 1,723,925
equity($000's)
1) 2011 and 2010 figures presented in accordance with IFRS. 2009
figures presented in accordance with Canadian Generally
Accepted Accounting Principles ('Cdn GAAP' or 'GAAP'). Certain
comparative figures have been reclassified to conform to the
presentation adopted in 2011.
2) 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.
3) Refer to discussion on non-IFRS measures at the end of this
press release.
Consolidated Statement of Earnings (audited)
Year Ended December 31
(US dollars and shares in thousands, except 2011 2010
per share amounts)
Sales $ 729,997 $ 423,353
Cost of sales
Cost of sales, excluding depletion $ 86,266 $ 82,749
Depletion 57,457 57,571
Total cost of sales $ 143,723 $ 140,320
Earnings from operations $ 586,274 $ 283,033
Expenses and other income
General and administrative 1 $ 25,180 $ 24,669
Loss on fair value adjustment of Canadian - 133,210
dollar share purchase warrants issued
Foreign exchange gain (453) (2,266)
Other expense (income) 3,182 (16,089)
$ 27,909 $ 139,524
Earnings before tax $ 558,365 $ 143,509
Income tax (expense)recovery (8,337) 9,872
Net earnings $ 550,028 $ 153,381
Basic earnings per share $ 1.56 $ 0.45
Diluted earnings per share $ 1.55 $ 0.44
Weighted average number of shares outstanding
Basic 353,249 344,288
Diluted 355,904 346,508
1) Equity settled stock based compensation (a $ 6,329 $ 7,732
non-cash item) included in general and
administrative expenses.
Consolidated Balance Sheets (audited)
December 31 December 31 January 1
(US dollars in thousands) 2011 2010 2010
Assets
Current assets
Cash and cash equivalents $ 840,201 $ 428,636 $ 227,566
Accounts receivable 3,890 7,088 4,881
Other 1,221 727 1,027
Total current assets $ 845,312 $ 436,451 $ 233,474
Non-current assets
Silver and gold interests $ 1,871,726 $ 1,912,877 $ 1,928,476
Long-term investments 151,621 284,448 73,747
Deferred income taxes 2,301 - -
Other 1,375 1,607 1,852
Total non-current assets $ 2,027,023 $ 2,198,932 $ 2,004,075
Total assets $ 2,872,335 $ 2,635,383 $ 2,237,549
Liabilities
Current liabilities
Accounts payable and accrued $ 8,709 $ 9,843 $ 10,302
liabilities
Current portion of bank debt 28,560 28,560 28,560
Current portion of silver 130,789 133,243 130,788
interest payments
Total current liabilities $ 168,058 $ 171,646 $ 169,650
Non-current liabilities
Deferred income taxes $ - $ 822 $ -
Liability for Canadian - - 51,967
dollar share purchase
warrants
Long-term portion of bank 50,060 78,620 107,180
debt
Long-term portion of silver - 122,346 236,796
interest payments
Total non-current liabilities $ 50,060 $ 201,788 $ 395,943
Total liabilities $ 218,118 $ 373,434 $ 565,593
Shareholders' Equity
Issued capital $ 1,793,772 $ 1,782,510 $ 1,476,480
Reserves 25,422 135,364 4,611
Retained earnings 835,023 344,075 190,865
Total shareholders' equity $ 2,654,217 $ 2,261,949 $ 1,671,956
Total liabilities and $ 2,872,335 $ 2,635,383 $ 2,237,549
shareholders' equity
Consolidated Statement of Cash Flows (audited)
Year Ended December 31
(US dollars in thousands) 2011 2010
Operating Activities
Net earnings $ 550,028 $ 153,381
Adjustments for
Depreciation and depletion 57,720 57,839
Equity settled stock based compensation 6,329 7,732
Deferred income tax expense (recovery) 7,575 (10,248)
Loss on fair value adjustment of Canadian - 133,210
dollar share purchase warrants issued
Loss (gain) on fair value adjustment of 3,118 (10,719)
share purchase warrants held
Gain on disposal of silver purchase - (5,911)
agreement
Investment income recognized in net (929) (510)
earnings
Other (84) (3,514)
Change in non-cash operating working capital 1,786 (2,009)
Operating cash flows before interest income $ 625,543 $ 319,251
Interest income received 884 475
Cash generated by operating activities $ 626,427 $ 319,726
Financing Activities
Bank debt repaid $ (28,560) $ (28,560)
Share issue costs - (85)
Share purchase warrants exercised 99 76,093
Share purchase options exercised 7,839 32,335
Dividends paid (63,612) -
Cash (applied to) generated by financing $ (84,234) $ 79,783
activities
Investing Activities
Silver and gold interests $ (140,063) $ (170,661)
Silver and gold interests - interest paid (1,260) (1,739)
Acquisition of long-term investments (13,674) (54,107)
Dividend income received 45 35
Proceeds on disposal of long-term investments 24,270 469
Proceeds on disposal of silver purchase - 25,000
agreement
Other (54) (287)
Cash applied to investing activities $ (130,736) $ (201,290)
Effect of exchange rate changes on cash and $ 108 $ 2,851
cash equivalents
Increase in cash and cash equivalents $ 411,565 $ 201,070
Cash and cash equivalents, beginning of year 428,636 227,566
Cash and cash equivalents, end of year $ 840,201 $ 428,636
Summary of Ounces Produced and Sold
2011 2010
(in Q4 Q3 Q2 Q1 Q4 Q3 Q2 Q1
thousands)
Silver
ounces
produced1
San Dimas
2 1,578 1,251 1,150 1,606 1,586 1,255 1,110 1,206
Zinkgruvan 390 379 414 508 428 508 478 387
Yauliyacu 583 608 674 683 651 633 692 737
Peñasquito 1,633 1,162 1,282 1,207 1,260 1,109 866 557
Cozamin 433 395 414 325 335 381 286 401
Barrick 3 723 794 741 722 458 682 697 780
Other 4 1,389 1,272 1,153 1,088 1,245 1,069 1,240 947
6,729 5,861 5,828 6,139 5,963 5,637 5,369 5,015
Silver
equivalent
ounces of
gold
produced5
Minto 202 257 261 97 205 402 522 645
Silver
equivalent 6,931 6,118 6,089 6,236 6,168 6,039 5,891 5,660
ounces
produced
Silver
ounces
sold
San Dimas
2 1,488 1,232 1,149 1,748 1,438 1,274 1,076 1,206
Zinkgruvan 425 319 401 321 421 635 313 498
Yauliyacu 655 11 471 120 470 87 517 581
Peñasquito 851 1,382 961 941 1,169 692 656 424
Cozamin 374 335 281 271 411 306 412 281
Barrick 3 755 747 726 680 482 533 727 783
Other 4 1,230 770 862 741 1,139 750 943 654
5,778 4,796 4,851 4,822 5,530 4,277 4,644 4,427
Silver
equivalent
ounces of
gold sold5
Minto 196 316 227 83 127 411 496 571
Silver
equivalent 5,974 5,112 5,078 4,905 5,657 4,688 5,140 4,998
ounces
sold
Gold /
silver 51.9 50.4 40.1 33.0 49.7 57.7 65.4 66.3
ratio5
Cumulative
payable 4,127 3,805 3,537 3,018 2,275 2,174 1,403 1,437
silver
equivalent
ounces
produced
but not
yet
delivered6
1) Ounces produced represent the quantity of silver and gold
contained in concentrate or doré prior to smelting or refining
deductions. Certain production figures are based on management
estimates.
2) Beginning in the third quarter of 2010, the ounces produced and
sold include ounces received from Goldcorp in connection with
Goldcorp's four year commitment to deliver to Silver Wheaton
1.5 million ounces of silver per annum resulting from their
sale of San Dimas to Primero.
3) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
4) Comprised of the Los Filos, Mineral Park, Neves-Corvo,
Stratoni, Keno Hill, Minto, Aljustrel and Campo Morado silver
interests in addition to the previously owned La Negra and San
Martin silver interests.
5) 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.
6) Based on management estimates.
Results of Operations (audited)
Three Months Ended December 31, 2011
Average
Average cash
realized cost Average Cash flow
price (US$'s depletion from
(US$'s per (US$'s Net (used in) Total
Ounces Ounces Sales per ounce) per earnings operations Assets
produced2 sold (US$'s) ounce) 3 ounce) (US$'s) (US$'s) (US$'s)
Silver
San Dimas 4 1,578 1,488 $ 44,641 $ 30.00 $ 4.09 $ 0.71 $ 37,494 $ 38,551 $ 167,527
Zinkgruvan 390 425 13,537 31.87 4.10 1.69 11,077 14,061 57,639
Yauliyacu 583 655 22,270 34.00 4.02 5.02 16,350 19,637 230,012
Peñasquito 1,633 851 27,374 32.17 3.96 2.41 21,954 24,004 504,973
Cozamin 433 374 12,786 34.18 4.08 4.62 9,531 10,260 25,115
Barrick 5 723 755 24,673 32.67 3.90 3.60 19,008 21,728 601,085
Other 6 1,389 1,230 40,120 32.63 3.94 4.22 30,089 36,301 251,716
6,729 5,778 $ 185,401 $ 32.09 $ 4.01 $ 2.90 $ 145,503 $ 164,542 $ 1,838,067
Gold
Minto 3,891 3,777 6,466 1,712 301 169 4,689 6,314 33,659
Silver
Equivalent7 6,931 5,974 $ 191,867 $ 32.12 $ 4.06 $ 2.91 $ 150,192 $ 170,856 $ 1,871,726
Corporate
General and $ (6,115)
administrative
Other 670
Total corporate $ (5,445) $ (7,142) $ 1,000,609
6,931 5,974 $ 191,867 $ 32.12 $ 4.06 $ 2.91 $ 144,747 $ 163,714 $ 2,872,335
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. Certain production figures are based on management
estimates.
3) Refer to discussion on non-IFRS measures at the end of this
press release.
4) Results for San Dimas include 375,000 ounces received from
Goldcorp in connection with Goldcorp's four year commitment to
deliver to Silver Wheaton 1.5 million ounces of silver per
annum resulting from their sale of San Dimas to Primero.
5) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
6) Comprised of the Los Filos, Mineral Park, Neves-Corvo,
Stratoni, Keno Hill, Minto, Campo Morado and Aljustrel silver
interests.
7) 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 December 31, 2010
Average Average
realized cash Average Cash flow
price cost depletion from
(US$'s (US$'s (US$'s Net (used in) Total
Ounces Ounces Sales per per per earnings operations Assets
produced2 sold (US$'s) ounce) ounce)3 ounce) (US$'s) (US$'s) (US$'s)
Silver
San Dimas
4 1,586 1,438 $ 39,283 $ 27.33 $ 4.05 $ 0.78 $ 32,351 $ 34,567 $ 171,524
Zinkgruvan 428 421 12,483 29.64 4.05 1.69 10,062 10,600 60,122
Yauliyacu 651 470 10,627 22.61 3.98 3.47 7,124 8,756 236,320
Peñasquito 1,260 1,169 31,166 26.66 3.90 2.54 23,634 26,607 514,930
Cozamin 335 411 10,953 26.67 4.04 4.62 7,396 8,729 30,949
Barrick 5 458 482 11,369 23.58 3.90 3.61 7,749 10,890 595,307
Other 6 1,245 1,139 30,149 26.47 3.92 4.81 20,207 24,452 266,978
5,963 5,530 $ 146,030 $ 26.41 $ 3.97 $ 2.81 $ 108,523 $ 124,601 $ 1,876,130
Gold
Minto 4,130 2,562 3,547 1,384 300 237 2,172 3,816 36,747
Silver
Equivalent7 6,168 5,657 $ 149,577 $ 26.44 $ 4.02 $ 2.86 $ 110,695 $ 128,417 $ 1,912,877
Corporate
General and administrative $ (6,409)
Loss on fair value adjustment of Canadian dollar share purchase (56,832)
warrants issued
Other 16,445
Total $ (46,796) $ (3,742) $ 722,506
corporate
6,168 5,657 $ 149,577 $ 26.44 $ 4.02 $ 2.86 $ 63,899 $ 124,675 $ 2,635,383
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. Certain production figures are based on management
estimates.
3) Refer to discussion on non-IFRS measures at the end of this
press release.
4) Results for San Dimas include 375,000 ounces received from
Goldcorp in connection with Goldcorp's four year commitment to
deliver to Silver Wheaton 1.5 million ounces of silver per
annum resulting from their sale of San Dimas to Primero.
5) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
6) Comprised of the Los Filos, Mineral Park, Neves-Corvo,
Stratoni, Minto and Campo Morado silver interests in addition
to the previously owned La Negra and San Martin silver
interests.
7) 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.
Year Ended December 31, 2011
Average Average
realized cash Average Cash flow
price cost depletion from
(US$'s (US$'s (US$'s Net (used in) Total
Ounces Ounces Sales per per per earnings operations Assets
produced2 sold (US$'s) ounce) ounce)3 ounce) (US$'s) (US$'s) (US$'s)
Silver
San Dimas 4 5,585 5,617 $ 188,377 $ 33.54 $ 4.06 $ 0.71 $ 161,554 $ 164,453 $ 167,527
Zinkgruvan 1,691 1,466 52,974 36.14 4.08 1.69 44,503 49,377 57,639
Yauliyacu 2,548 1,257 43,911 34.93 4.02 5.02 32,555 38,863 230,012
Peñasquito 5,284 4,135 143,069 34.61 3.93 2.41 116,855 126,812 504,973
Cozamin 1,567 1,261 43,990 34.85 4.07 4.62 33,018 40,586 25,115
Barrick 5 2,980 2,908 102,454 35.23 3.90 3.58 80,692 89,554 601,085
Other 6 4,902 3,603 125,854 34.93 3.94 4.27 96,298 112,414 251,716
24,557 20,247 $ 700,629 $ 34.60 $ 3.99 $ 2.69 $ 565,475 $ 622,059 $ 1,838,067
Gold
Minto 18,436 18,256 29,368 1,609 300 169 20,799 24,240 33,659
Silver
Equivalent7 25,374 21,069 $ 729,997 $ 34.65 $ 4.09 $ 2.73 $ 586,274 $ 646,299 $ 1,871,726
Corporate
General and $ (25,180)
administrative
Other (11,066)
Total corporate $ (36,246) $ (19,872) $ 1,000,609
25,374 21,069 $ 729,997 $ 34.65 $ 4.09 $ 2.73 $ 550,028 $ 626,427 $ 2,872,335
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. Certain production figures are based on management
estimates.
3) Refer to discussion on non-IFRS measures at the end of this
press release.
4) Results for San Dimas include 1.5 million ounces received from
Goldcorp in connection with Goldcorp's four year commitment to
deliver to Silver Wheaton 1.5 million ounces of silver per
annum resulting from their sale of San Dimas to Primero.
5) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
6) Comprised of the Los Filos, Mineral Park, Neves-Corvo,
Stratoni, Keno Hill, Minto, Campo Morado and Aljustrel silver
interests.
7) 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.
Year Ended December 31, 2010
Average Average
realized cash Average Cash flow
price cost depletion from
(US$'s (US$'s (US$'s Net (used in) Total
Ounces Ounces Sales per per per earnings operations Assets
produced2 sold (US$'s) ounce) ounce)3 ounce) (US$'s) (US$'s) (US$'s)
Silver
San Dimas 4 5,157 4,994 $ 105,747 $ 21.18 $ 4.04 $ 0.78 $ 81,659 $ 86,666 $ 171,524
Zinkgruvan 1,801 1,867 39,447 21.12 4.04 1.71 28,697 30,178 60,122
Yauliyacu 2,713 1,655 31,998 19.33 3.98 3.47 19,669 25,418 236,320
Peñasquito 3,792 2,941 63,632 21.64 3.90 2.54 44,683 52,163 514,930
Cozamin 1,403 1,410 29,180 20.71 4.03 4.62 16,987 23,252 30,949
Barrick 5 2,617 2,525 48,311 19.13 3.90 3.55 29,498 36,787 595,307
Other 6 4,501 3,486 73,345 21.04 3.92 4.49 44,010 58,182 266,978
21,984 18,878 $ 391,660 $ 20.75 $ 3.97 $ 2.73 $ 265,203 $ 312,646 $ 1,876,130
Gold
Minto 28,795 25,884 31,693 1,224 300 236 17,830 23,174 36,747
Silver
Equivalent7 23,758 20,483 $ 423,353 $ 20.67 $ 4.04 $ 2.81 $ 283,033 $ 335,820 $ 1,912,877
Corporate
General and $ (24,669)
administrative
Loss on fair value adjustment of Canadian dollar share purchase (133,210)
warrants issued
Other 28,227
Total corporate $ (129,652) $ (16,094) $ 722,506
23,758 20,483 $ 423,353 $ 20.67 $ 4.04 $ 2.81 $ 153,381 $ 319,726 $ 2,635,383
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. Certain production figures are based on management
estimates.
3) Refer to discussion on non-IFRS measures at the end of this
press release.
4) Results for San Dimas include 625,000 ounces received from
Goldcorp in connection with Goldcorp's four year commitment to
deliver to Silver Wheaton 1.5 million ounces of silver per
annum resulting from their sale of San Dimas to Primero.
5) Comprised of the Lagunas Norte, Pierina and Veladero silver
interests.
6) Comprised of the Los Filos, Mineral Park, Neves-Corvo,
Stratoni, Minto and Campo Morado silver interests in addition
to the previously owned La Negra and San Martin silver
interests.
7) 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 document, certain non-IFRS performance measures, including (i) average cash costs of silver and gold on a per ounce basis; (ii) operating cash flows per share (basic and diluted); (iii) cash operating margin and; (iv) adjusted net earnings and adjusted net earnings per share.
i. Average cash cost of silver and gold on a per ounce basis is
calculated by dividing the total cost of sales, less
depletion, by the ounces sold. In the precious metals mining
industry, this is a common performance measure but does not
have any standardized meaning. The Company believes that, in
addition to conventional measures prepared in accordance with
IFRS, certain investors use this information to evaluate the
Company's performance and ability to generate cash flow.
ii. Operating cash flow per share (basic and diluted) is
calculated by dividing cash generated by operating activities
by the weighted average number of shares outstanding (basic
and diluted). The Company presents operating cash flow per
share as it believes that certain investors use this
information to evaluate the Company's performance in
comparison to other companies in the precious metals mining
industry who present results on a similar basis.
iii. Cash operating margin is calculated by subtracting the
average cash cost of silver and gold on a per ounce basis
from the average realized selling price of silver and gold on
a per ounce basis. The Company presents cash operating margin
as it believes that certain investors use this information to
evaluate the Company's performance in comparison to other
companies in the precious metals mining industry who present
results on a similar basis.
iv. Adjusted net earnings and adjusted net earnings per share are
calculated by removing the effects of the non-cash, fair
value adjustment on the Company's previously issued and
outstanding share purchase warrants which had an exercise
price denominated in Canadian dollars from net earnings of
the Company. As more fully described in the financial
statements, these warrants are classified as a financial
liability with any fair value adjustments being reflected as
a component of net earnings. The Company believes that, in
addition to conventional measures prepared in accordance with
IFRS, the Company and certain investors use this information
to evaluate the Company's performance. For the three months
ended December 31, 2010, the net effect of these adjustments
was to increase net earnings by US$56.8 million. For the year
ending December 31, 2010 the net effect of these adjustments
was to increase net earnings by US$133.2 million. As there
were no share purchase warrants with an exercise price
denominated in Canadian dollars outstanding during 2011,
there were no fair value adjustments recorded as a component
of net earnings during the three and twelve months ending
December 31, 2011. As a result, adjusted net earnings are
equivalent to net earnings for these periods.
These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and other companies may calculate these measures differently. The presentation of these non-IFRS measures 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. For more detailed information, please refer to Silver Wheaton's Management Discussion and Analysis available on the Company's website at www.silverwheaton.com and posted on SEDAR at www.sedar.com.
Silver Wheaton Corp.
CONTACT: Brad Kopp
Senior Vice President, Investor Relations
Silver Wheaton Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: www.silverwheaton.com