Silver Wheaton earns $82.98-million (U.S.) in Q3
Silver Wheaton Corp (C:SLW)
Shares Issued 441,244,073
Last Close 11/9/2016 $32.24
Wednesday November 9 2016 - News Release
SILVER WHEATON REPORTS RECORD QUARTERLY GOLD PRODUCTION OF OVER 100,000 OUNCES RESULTING IN STRONG OPERATING CASH FLOW AND 20% INCREASE IN DECLARED DIVIDEND
Silver Wheaton Corp. is releasing its results for the third quarter ended Sept. 30, 2016. All figures are presented in U.S. dollars unless otherwise noted.
Silver Wheaton produced a record 109,200 ounces of gold in the third quarter of 2016 and has now produced over 240,000 ounces in the first nine months of 2016. Furthermore, gold sales were at a record level for the third-consecutive quarter, at over 85,000 ounces, driven by record gold sales at Salobo. The strong gold sales contributed to a 62% increase in operating cash flow relative to Q3 2015. Silver Wheaton's fourth quarterly dividend for 2016 rose to $0.06 per share, a 20% increase relative to the previous dividend. Silver Wheaton also welcomes Chuck Jeannes to the Company's Board of Directors.
THIRD QUARTER HIGHLIGHTS
- Attributable production in Q3 2016 of 7.7 million ounces of silver and 109,200 ounces of gold, compared with 6.9 million ounces of silver and 58,600 ounces of gold in Q3 2015, with silver production having increased by 11% and gold production, which represented a record, having increased 86%.
- -- On a silver equivalent basis1 and gold equivalent basis1 attributable production in Q3 2016 was 15.1 million silver equivalent ounces ("SEOs") or 221,600 gold equivalent ounces ("GEOs"), compared with 11.3 million SEOs or 149,900 GEOs in Q3 2015, with silver production having increased 33% and gold production, which represented a record, having increased 48%.
- -- Sales volume in Q3 2016 of 6.1 million ounces of silver and a record 85,100 ounces of gold, compared with 6.6 million ounces of silver and 48,100 ounces of gold in Q3 2015, with silver sales volume having decreased 7% and gold sales volume, which represented a record, having increased 77%.
- -- On a silver equivalent basis1 and gold equivalent basis1, sales volume in Q3 2016 was 11.9 million SEOs or 175,000 GEOs, compared with 10.2 million SEOs or 135,200 GEOs in Q3 2015, an increase of 17% and 29%, respectively.
- -- As at September 30, 2016, payable ounces attributable to the Company produced but not yet delivered4 amounted to 3.8 million payable silver ounces and 63,300 payable gold ounces, representing an increase of 0.8 million payable silver ounces and 18,500 payable gold ounces during the three month period ended September 30, 2016.
- -- Revenues of $233 million in Q3 2016 compared with $153 million in Q3 2015, representing an increase of 52%.
- -- Average realized sale price per ounce sold in Q3 2016 of $19.53 per ounce of silver and $1,336 per ounce of gold representing an increase of 30% and 18%, respectively, compared to Q3 2015. -
- - Net earnings of $83 million ($0.19 per share) in Q3 2016 compared with a net loss of $96 million ($0.24 per share) in Q3 2015, representing an increase of 187%.
- -- Net earnings of $83 million ($0.19 per share) in Q3 2016 compared with adjusted net earnings2 of $50 million ($0.12 per share) in Q3 2015, representing an increase of 67%. Earnings in Q3 2015 were adjusted by removing the $146 million after tax impact of an impairment charge taken in the quarter.
- -- Operating cash flows of $162 million ($0.37 per share2) in Q3 2016 compared with $100 million ($0.25 per share2) in Q3 2015, representing an increase of 62%.
- -- Cash operating margin2 in Q3 2016 of $15.02 per silver ounce sold and $946 per gold ounce sold, representing an increase of 39% and 28%, respectively, as compared with Q3 2015. -- Average cash costs2 in Q3 2016 were $4.51 and $390 per ounce of silver and gold, respectively.
- -- Declared quarterly dividend of $0.06 per common share, representing an increase of 20% relative to the previous quarterly dividend.
- -- Silver Wheaton announces the appointment of Chuck Jeannes to the Board of Directors.
Asset Highlights
- -- On August 16, 2016, Silver Wheaton's wholly-owned subsidiary, Silver Wheaton (Caymans) Ltd. ("SWC"), completed its acquisition from a subsidiary of Vale S.A. ("Vale") of an additional amount of gold equal to 25% of the life of mine gold production from the Salobo mine, located in Brazil. SWC is now entitled to 75% of gold production from the Salobo mine.
- -- Record Salobo gold production in Q3 2016 of 68,168 ounces compared with 35,717 ounces in Q3 2015, representing an increase of 91% due to the additional 25% of attributable gold and increased throughput.
- -- Sudbury gold production in Q3 2016 of 9,955 ounces compared with 7,300 ounces in Q3 2015, representing an increase of 36% due to higher grades.
- -- Record total Other Gold production in Q3 2016 of 31,070 ounces compared with 15,591 ounces in Q3 2015, representing an increase of 99% due primarily to record gold production at Minto and strong production at 777.
- -- Penasquito silver production in Q3 2016 of 1.5 million ounces compared with 2.1 million ounces in Q3 2015, representing a decrease of 29% due primarily to lower grades and throughput.
2016 Production Guidance
- -- Gold production for 2016 is now expected to be 335,000 ounces in 2016, up from previous guidance of 305,000 ounces primarily due to better than expected results in the first nine months of the year and expected production in Q4 relating to the Salobo and Sudbury mines.
- -- Silver production for 2016 is now expected to be 30 million ounces in 2016, down from previous guidance of 32 million ounces primarily due to lower than expected results from San Dimas and Penasquito, partially offset by better than expected results from Antamina.
- -- Based on the average LBMA gold and silver price for the first nine months of 2016 ($1,258 and $17.08, respectively)3, Silver Wheaton's 2016 forecast remains unchanged on a silver-equivalent basis at 55 million SEOs and on a gold-equivalent basis at 740,000 GEOs.
"Once again, Silver Wheaton had record gold production and sales, producing over 100,000 ounces of gold in the third quarter alone," said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. "As a result, cash flow from operations increased by over 60% relative to the same quarter last year, while commodity prices climbed on average only around 25% over the same time period. We have now generated over $400 million in operating cash flow in the first nine months of this year. Since our dividend is directly linked to operating cash flow, our dividend this quarter also climbed, increasing 20% from last quarter, delivering direct reward back to our shareholders. We believe this clearly highlights the strength of our streaming business model and the leverage it delivers to higher commodity prices."
"We are also very pleased to welcome Chuck Jeannes to our Board of Directors. Chuck brings a wealth of experience in the mining industry and will no doubt prove to be a valuable resource to Silver Wheaton."
Financial Review
Revenues
Revenue was $233 million in the third quarter of 2016, on sales volume of 6.1 million ounces of silver and 85,100 ounces of gold. This represents a 52% increase from the $153 million of revenue generated in the third quarter of 2015 due primarily to (i) a 77% increase in the number of gold ounces sold; (ii) a 30% increase in the average realized silver price ($19.53 in Q3 2016 compared with $15.05 in Q3 2015); (iii) an 18% increase in the average realized gold price ($1,336 in Q3 2016 compared with $1,130 in Q3 2015); partially offset by (iv) a 7% decrease in the number of silver ounces sold.
Costs and Expenses
Average cash costs2 in the third quarter of 2016 were $4.51 per silver ounce sold and $390 per gold ounce sold, as compared with $4.26 per silver ounce and $389 per gold ounce during the comparable period of 2015. This resulted in a cash operating margin2 of $15.02 per silver ounce sold and $946 per gold ounce sold, an increase of 39% and 28%, respectively, as compared with Q3 2015. The increase in the cash operating margin was primarily due to a 30% increase in the average realized silver price and an 18% increase in the average realized gold price in Q3 2016 compared with Q3 2015.
Earnings and Operating Cash Flows
Net earnings and cash flow from operations in the third quarter of 2016 were $83 million ($0.19 per share) and $162 million ($0.37 per share2), compared with adjusted net earnings2 of $50 million ($0.12 per share) and cash flow from operations of $100 million ($0.25 per share2) for the same period in 2015, an increase of 67% and 62%, respectively.
Balance Sheet
At September 30, 2016, the Company had approximately $126 million of cash on hand and $1.3 billion outstanding under the Company's $2 billion revolving term loan. The revolving term loan matures on February 27, 2021. |
