SILVER WHEATON REPORTS RECORD PRODUCTION WITH NET EARNINGS AND OPERATING CASH FLOWS MORE THAN DOUBLING IN THE FIRST QUARTER
- TSX: SLW
- NYSE: SLW
VANCOUVER, May 9, 2011 /PRNewswire/ -- 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
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- 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 share1) compared with US$57.6 million (US$0.17 per share1) 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$4.071 per silver equivalent ounce, compared with US$4.041 in Q1 2010.
- Cash operating margin1 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 the US: 1-888-231-8191
Dial from outside Canada or the US: 1-647-427-7450
Pass code: 58621503
Live audio webcast: http://www.silverwheaton.com
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 the US: 1-800-642-1687
Dial from outside Canada or the US: 1-416-849-0833
Pass code: 58621503
Archived audio webcast: http://www.silverwheaton.com
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 Penasquito 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 2,519 (377)
(expense)
$ 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 revaluation 126,682 116,088 (16,004)
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 (2,519) 377
(recovery) 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 $ 127,207 $ 57,600
activities
Financing Activities
Bank debt repaid $ (7,140) $ (7,140)
Share issue costs - (85)
Share purchase warrants 61 167
exercised
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 24,270 -
long-term investments
Other (8) (212)
Cash generated by (applied to) $ 21,405 $ (1,864)
investing activities
Effect of exchange rate changes on
cash and cash equivalents $ 106 $ 120
Increase in cash and cash $ 135,439 $ 52,092
equivalents
Cash and cash equivalents, beginning 428,636 227,566
of period
Cash and cash equivalents, end of $ 564,075 $ 279,658
period
Interest paid $ 315 $ 399
Interest received $ 198 $ 45
Results of Operations (unaudited)
Three Months Ended March 31, 2011
Average Total
realized cash Total Cash flow
price cost depletion Net from
(US$'s (US$'s (US$'s earnings (used in)
Ounces Ounces Sales per per per (loss) operations
produced(2)sold (US$'s) ounce) 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
Penasquito1,207 941 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 $23,854 $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 $127,207
1) All figures in thousands except gold ounces produced and sold and per ounce amounts. 2) Ounces produced represent the quantity of silver and gold contained in concentrate or dore prior to smelting or refining deductions and certain production figures are based on management estimates. 3) Refer to discussion on non-IFRS measures at the end of this press release. 4) Comprised of the Lagunas Norte, Pierina and Veladero silver interests. 5) Comprised of the Los Filos, Mineral Park, Neves-Corvo, Stratoni, Keno Hill, Minto, Campo Morado and Aljustrel silver interests. 6) Gold ounces produced and sold are converted to a silver equivalent basis on the ratio of the average silver price received to the average gold price received during the period from the assets that produce both gold and silver.
Three Months Ended March 31, 2010
Total
cash
Average cost Cash flow
realized (US$'s Total Net from
price per depletion earnings (used in)
Ounces Ounces Sales (US$'s per ounce) (US$'s (loss) operations
produced 2 sold (US$'s) ounce) 3 per ounce) (US$'s)(US$'s)
Silver
San Dimas 1,206 1,206 $ 20,851 $ 17.29 $ 4.04 $ 0.79 $15,033 $ 15,980
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
Penasquito 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 $85,93 $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 dore 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).
For further information:
Brad Kopp
Vice President, Investor Relations
Silver Wheaton Corp.
Tel: 1-800-380-8687
Email: info@silverwheaton.com
Website: http://www.silverwheaton.com
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