TSX: WPM
NYSE: WPM
VANCOUVER, Aug. 10, 2017 /CNW/ - Wheaton Precious
Metals™ Corp. ("Wheaton Precious Metals" or the
"Company") (TSX:WPM) (NYSE: WPM) is pleased to announce its results
for the second quarter ended June 30,
2017. All figures are presented in United States dollars unless otherwise
noted.
In the second quarter of 2017, Wheaton Precious Metals increased
the percentage of cash flow used for the dividend distribution
calculation from 20% to 30%, resulting in an increase to the
quarterly dividend of over 40%.
SECOND QUARTER HIGHLIGHTS
- Attributable production in Q2 2017 of 7.2 million ounces of
silver and 78,100 ounces of gold, compared with 7.6 million ounces
of silver and 71,200 ounces of gold in Q2 2016, with silver
production having decreased 5% and gold production having increased
10%.
- On a silver equivalent basis1 and gold equivalent
basis1 attributable production in Q2 2017 was 12.9
million silver equivalent ounces ("SEOs") or 176,600 gold
equivalent ounces ("GEOs"), compared with 12.9 million SEOs or
172,600 GEOs in Q2 2016, with SEO production being virtually
unchanged and GEO production having increased 2%.
- Sales volume in Q2 2017 of 6.4 million ounces of silver and
72,000 ounces of gold, compared with 7.1 million ounces of silver
and 70,800 ounces of gold in Q2 2016, with silver sales volume
having decreased 11% and gold sales volume having increased
2%.
- On a silver equivalent basis1 and gold equivalent
basis1, sales volume in Q2 2017 was 11.6 million SEOs or
159,200 GEOs, compared with 12.5 million SEOs or 165,900 GEOs in Q2
2016, a decrease of 7% and 4%, respectively.
- As at June 30, 2017, payable
ounces attributable to the Company produced but not yet
delivered4 amounted to 4.2 million payable silver ounces
and 52,900 payable gold ounces, representing an increase of 0.2
million payable silver ounces and 2,000 payable gold ounces during
the three month period ended June 30,
2017.
- Revenues of $200 million in Q2
2017 compared with $212 million in Q2
2016, representing a decrease of 6%.
- Average realized sale price per ounce sold in Q2 2017 of
$17.09 per ounce of silver and
$1,263 per ounce of gold with the
sale price of silver having decreased 1% while the sale price of
gold was virtually unchanged compared to Q2 2016.
- Net earnings of $68 million
($0.15 per share) in Q2 2017 compared
with $60 million ($0.14 per share) in Q2 2016, representing an
increase of 12%.
- Operating cash flows of $125
million ($0.28 per
share2) in Q2 2017 compared with $134 million ($0.31
per share2) in Q2 2016, representing a decrease of
7%.
- Cash operating margin2 in Q2 2017 of $12.58 per silver ounce sold and $870 per gold ounce sold, representing a
reduction of 1% per silver ounce sold while the cash operating
margin2 per ounce of gold sold was virtually unchanged
as compared with Q2 2016.
- Average cash costs2 in Q2 2017 were $4.51 and $393 per
ounce of silver and gold, respectively.
- Declared quarterly dividend of $0.10 per common share, representing an increase
of 43% relative to the previous quarterly dividend.
EVENTS SUBSEQUENT TO THE QUARTER
- On August 10, 2017, the Company
announced that it has signed a non-binding term sheet with Desert
Star Resources Ltd. ("Desert Star") to enter into an Early Deposit
Precious Metals Purchase Agreement for the Kutcho project located
in British Columbia.
"Wheaton Precious Metals continues to generate strong operating
margins from its portfolio of low-cost assets, resulting in close
to $250 million in cash flow in the
first half of 2017," said Randy
Smallwood, President and Chief Executive Officer of Wheaton
Precious Metals. "We are confident in our ability to continue to
grow the Company by adding new high-quality streams to our
portfolio, and we will remain disciplined and only do transactions
that are accretive to our shareholders. As a result of our
sector-leading cash flow as well as ample access to capital to
finance acquisitions through our revolving credit facility, we have
taken the step today to increase the amount of capital we return to
our shareholders with a significant increase to our dividend."
Financial Review
Revenues
Revenue was $200 million in the second quarter of 2017, on
sales volume of 6.4 million ounces of silver and 72,000 ounces of
gold. This represents a 6% decrease from the $212 million of revenue generated in the second
quarter of 2016 due primarily to an 11% decrease in the number of
silver ounces sold, partially offset by a 2% increase in the number
of gold ounces sold.
Costs and Expenses
Average cash
costs2 in the second quarter of 2017 were $4.51 per silver ounce sold and $393 per gold ounce sold, as compared with
$4.46 per silver ounce and
$401 per gold ounce during the
comparable period of 2016. This resulted in a cash operating
margin2 of $12.58 per
silver ounce sold and $870 per gold
ounce sold, a decrease of 1% per silver ounce sold while the cash
operating margin2 per ounce of gold sold was virtually
unchanged as compared with Q2 2016. The decrease in the cash
operating margin was primarily due to a 1% decrease in the average
realized silver price in Q2 2017 compared with Q2 2016.
Earnings and Operating Cash Flows
Net earnings
and cash flow from operations in the second quarter of 2017 were
$68 million ($0.15 per share) and $125
million ($0.28 per
share2), compared with $60
million ($0.14 per share) and
$134 million ($0.31 per share2) for the same period
in 2016, an increase of 12% and a decrease of 7%, respectively.
Balance Sheet
At June
30, 2017, the Company had approximately $77 million of cash on hand and $953 million outstanding under the Company's
$2 billion revolving term loan (the
"Revolving Facility").
Second Quarter Asset Highlights
During the second quarter of 2017, attributable production was
7.2 million ounces of silver and 78,100 ounces of gold,
respectively, representing a decrease of 5% and an increase of 10%,
as compared with the second quarter of 2016.
Operational highlights for the quarter ended June 30, 2017, based upon counterparties'
reporting, are as follows:
Salobo
In the second quarter of 2017,
Salobo produced 57,500 ounces of attributable gold, an increase of
approximately 61% relative to the second quarter of 2016. This
growth was primarily due to the acquisition of an additional 25% of
attributable gold from the Salobo mine in the third quarter of
2016. According to Vale S.A.'s ("Vale") second quarter of 2017
production report, production was positively impacted mainly due to
higher feed grades and stronger plant performance in the second
quarter.
Peñasquito
In the second quarter of 2017, Peñasquito produced 1.5 million
ounces of attributable silver, an increase of approximately 71%
relative to the second quarter of 2016. According to Goldcorp
Inc.'s ("Goldcorp") second quarter of 2017 MD&A, higher
production at Peñasquito was primarily due to higher grade ore as a
result of mine sequencing in Phases 5 and 6, and higher mill
throughput as the second quarter of 2016 included a prolonged
period of planned and unplanned maintenance.
According to Goldcorp, the Pyrite Leach Project ("PLP") achieved
construction progress of 14% and engineering progress of 94% by the
end of the second quarter of 2017. Major procurement activities are
nearing completion, material and equipment is arriving on site and
major works contractors have mobilized to site. Earthwork
activities are now complete, concrete works are underway, and
mechanical works installation has commenced and is ramping up.
Construction of the PLP is expected to be completed by the end of
2018. The Carbon Pre-flotation Project ("CPP") is also being
constructed, which will allow Peñasquito to process ore that was
previously considered uneconomic, including significant amounts
already in stockpiles. CPP earthworks are substantially complete
and the concrete works are underway. The mechanical works
contractor is mobilizing and will ramp up in the third quarter of
2017.
Antamina
In the second quarter of 2017,
Antamina produced 1.9 million ounces of attributable silver, an
increase of approximately 11% relative to the second quarter of
2016. The increase was primarily the result of higher grade ore
being processed in the quarter, partially offset by lower silver
recovery.
San Dimas
In
the second quarter of 2017, San
Dimas produced 1.0 million ounces of attributable silver, a
decrease of approximately 39% relative to the second quarter of
2016. According to Primero Mining Corp.'s ("Primero") second
quarter of 2017 MD&A, production during the quarter was
impacted by a strike related to the renegotiation of the Collective
Bargaining Agreement, with a phased restart of operations
commencing on April 22, 2017. Primero
further reports that mill throughput was affected by a 13-day
suspension of milling activities in mid-June following the failure
of an anchor block affixed to one of eight cables supporting the
tailing suspension bridge; however, mining operation continued
uninterrupted during this time, and all ore was stockpiled at the
mill site. Full plant operations reportedly resumed on June 24, 2017, and the ore stockpile was fully
processed by the mill in July.
According to Primero, despite seeing initial improvements in
relations with unionized workers following the resolution of the
San Dimas strike in the second
quarter, the situation degraded in July
2017 with the negotiation of the 2016 annual workers' bonus
(''PTU Bonus''), and as a result, the site experienced a
significant work slowdown in July. While the PTU Bonus negotiation
was reportedly resolved on July 29,
2017, Primero believes that labour disruptions may continue
to adversely affect the profitability of the San Dimas mine. Primero is maintaining its
previously disclosed production guidance but believes that
production will track toward the lower end of the range. Primero
also notes that despite significant investment at San Dimas, exploration efforts have not
identified large replacement veins for the depleting Roberta and
Robertita veins, and that without new large veins coming into
production or changes to the operating environment, mining rates
above 1,800 tonnes per day may not be possible.
Primero has indicated that it believes that at lower production
rates, it is unable to carry on a sustainable operation at
San Dimas while complying with its
obligations, including under the Silver Purchase Agreement.
Primero has indicated that it believes that the San Dimas mine life will become significantly
shorter as a result of Primero's inability to invest in exploration
and development, unless revisions to the Silver Purchase Agreement
are made. The Company is prepared to consider reasonable
alternatives towards a sustainable solution, but there can be no
assurance that an acceptable solution will be achieved.
As previously announced, Primero has initiated a strategic
review process. As noted in Primero's second quarter of 2017
MD&A, Primero has received a number of proposals from
interested parties regarding a potential acquisition of the
San Dimas operation. The process
is ongoing but there can be no certainty that these discussions
will result in a resolution acceptable to all stakeholders,
including the Company.
Sudbury
In the
second quarter of 2017, Vale's Sudbury mines produced 7,000 ounces of
attributable gold, a decrease of approximately 53% relative to the
second quarter of 2016. According to Vale's second quarter of 2017
production report, production was impacted due to the scheduled
rebuild and expansion in capacity of Furnace #2 and the three-week
scheduled maintenance in June for all surface operations. The
scheduled maintenance in all surface operations happens every 18
months. Vale notes that Furnace #2 was off-line for the entire
second quarter and will resume operation in the third quarter,
during which the Sudbury smelter
complex will transition to the new single furnace flowsheet and
will commence operating as a single furnace operation in the fourth
quarter. Finally, as Vale announced in March
2017, the Stobie mine was placed on care and maintenance at
the end of May.
Constancia
In the second quarter of 2017,
Constancia produced 0.5 million ounces of attributable silver and
2,300 ounces of attributable gold, a decrease of approximately 30%
and 50% for silver and gold production, respectively, relative to
the second quarter of 2016. The decrease in production was
primarily the result of the processing of lower grade ore as
expected in Hudbay Mineral Inc.'s ("Hudbay") mine plan.
Other Gold
In the second quarter of 2017,
total Other Gold attributable production was 11,200 ounces, a
decrease of approximately 29% relative to the second quarter of
2016. The decrease was driven primarily by lower attributable
production at 777 and lower production at the Minto mine, which was impacted by sequencing
changes to support a mine life extension.
Other Silver
In the second quarter of 2017,
total Other Silver attributable production was 2.3 million ounces,
a decrease of approximately 13% relative to the second quarter of
2016. The decrease was driven primarily due to lower production
from Cozamin as the Cozamin silver purchase agreement expired on
April 4, 2017.
Development Update – Rosemont
As per Hudbay's
June 7, 2017 news release,
the U.S. Forest Service has
issued the Final Record of Decision for Hudbay's Rosemont
Project. The other key federal permit outstanding is the Section
404 Water Permit from the U.S. Army Corps of Engineers. As per
the precious metals streaming agreement, Wheaton Precious Metals
International Ltd. will provide a payment of a $230 million deposit upon achievement of certain
milestones in exchange for an amount equal to 100% of the life of
mine silver and gold production from Rosemont3.
Produced But Not Yet Delivered
4
As at June 30,
2017, payable ounces attributable to the Company produced
but not yet delivered⁴amounted to 4.2 million payable silver ounces
and 52,900 payable gold ounces, representing an increase of 0.2
million payable silver ounces and 2,000 payable gold ounces during
the three month period ended June 30,
2017. Payable silver ounces produced but not yet delivered
increased primarily as a result of increases related to the
Antamina, San Dimas, and Yauliyacu
silver interests, partially offset by a decrease related to the
Peñasquito silver interest. Payable gold ounces produced but not
yet delivered increased primarily as a result of an increase
related to the Salobo interest, offset partially by a decrease
related to the Minto gold
interest. Payable ounces produced but not yet delivered to the
Wheaton Precious Metals group of companies are expected to average
approximately two months of annualized production but may vary from
quarter to quarter due to a number of mining operation factors
including mine ramp-up and timing of shipments.
Detailed mine-by-mine production and sales figures can be found
in the Appendix to this press release and in Wheaton Precious
Metals' consolidated MD&A in the 'Results of Operations and
Operational Review' section.
Events Subsequent to the Quarter
Kutcho
Wheaton Precious Metals has announced
that it has signed a non-binding term sheet with Desert Star to
enter into an Early Deposit Precious Metals Purchase Agreement (the
"Kutcho Early Deposit Agreement") for the Kutcho project located in
British Columbia (the "Kutcho
Project"). Under the terms of the proposed Kutcho Early Deposit
Agreement, the Company will be entitled to purchase 100% of the
silver and gold production from the Kutcho Project until 51,000
ounces of gold and 5.6 million ounces of silver have been
delivered, at which point the stream will decrease to 66.67% of
silver and gold production for the life of mine. Based on the
Prefeasibility Study Technical Report on the Kutcho Project,
British Columbia dated
July 31, 2017, and current spot
commodity prices, the proposed stream would represent less than 10%
of the revenue generated by the project.
Under the proposed Kutcho Early Deposit Agreement, the Company
will pay a total cash consideration of $65
million (subject to certain customary conditions including
the acquisition of the Kutcho Project by Desert Star) plus an
ongoing production payment of 20% of the spot silver and gold
price. Of the $65 million total
upfront amount, $7 million will be
advanced to Desert Star on an early deposit basis, which will be
used for purposes of funding a definitive feasibility study,
environmental study and impact assessment, and other related
documents (collectively, the "Feasibility Documentation").
Following receipt of the Feasibility Documentation and receipt of
permits and construction commencing, the Company may then advance
the remaining deposit or elect to terminate the Kutcho Early
Deposit Agreement. If the Company elects to terminate, the Company
will be entitled to a return of the portion of the $7 million paid less $1
million payable upon certain triggering events occurring.
The Company will be required to make an additional payment to
Desert Star, of up to $20 million if
processing throughput is increased to 4,500 tpd or more within five
years of attaining commercial production.
Wheaton Precious Metals has also agreed to participate in up to
14% of a Desert Star equity financing to a maximum of Cdn$4 million, where the funds are to be used for
the acquisition of the Kutcho Project. The entering into of the
Kutcho Early Deposit Agreement is subject to the completion of the
acquisition of the Kutcho Project by Desert Star, the negotiation
and completion of definitive documentation and certain other
typical conditions and approvals. There can be no assurance that
the Kutcho Early Deposit Agreement will be completed on the terms
set out in the non-binding term sheet or at all.
Dividend
Third Quarterly Dividend
The third quarterly cash dividend of US$0.10 will be paid to holders of record of
Wheaton Precious Metals common shares as of the close of business
on August 25, 2017, and will be
distributed on or about September 8,
2017.
Under the Company's dividend policy, the quarterly dividend per
common share will be equal to 30%, up from 20% in previous
quarters, of the average cash generated by operating activities in
the previous four quarters divided by the Company's then
outstanding common shares, all rounded to the nearest
cent.
The declaration, timing, amount and payment of future dividends
remain at the discretion of the Board of Directors. This dividend
qualifies as an 'eligible dividend' for Canadian income tax
purposes.
Dividend Reinvestment Plan
The Company has previously implemented a Dividend Reinvestment
Plan ("DRIP"). Participation in the DRIP is optional. For the
purposes of this third quarterly dividend, the Company has elected
to issue common shares under the DRIP through treasury at a 3%
discount to the Average Market Price, as defined in the DRIP.
However, the Company may, from time to time, in its discretion,
change or eliminate the discount applicable to Treasury
Acquisitions, as defined in the DRIP, or direct that such
common shares be purchased in Market Acquisitions, as
defined in the DRIP, at the prevailing market price, any of
which would be publicly announced.
The DRIP and enrollment forms are available for download on the
Company's website at www.wheatonpm.com, accessible by quick links
directly from the home page, and can also be found in the
'investors' section, under the 'dividends' tab.
Registered shareholders may also enroll in the DRIP online
through the plan agent's self-service web portal at:
https://www.canstockta.com/en/InvestorServices/Investor_Information/Issuer_List/IssuerDetail.jsp?companyCode=1501.
Beneficial shareholders should contact their financial
intermediary to arrange enrollment. All shareholders considering
enrollment in the DRIP should carefully review the terms of the
DRIP and consult with their advisors as to the implications of
enrollment in the DRIP.
This press release is not an offer to sell or a solicitation of
an offer of securities. A registration statement relating to the
DRIP has been filed with the U.S. Securities and Exchange
Commission and may be obtained under the Company's profile on the
U.S. Securities and Exchange Commission's website at
http://www.sec.gov. A written copy of the prospectus included in
the registration statement may be obtained by contacting the
Corporate Secretary of the Company at 1021 West Hastings Street,
Suite 3500, Vancouver, British
Columbia, Canada V6E 0C3.
Outlook
Wheaton Precious Metals' estimated attributable silver and gold
production in 2017 is forecast to be 28 million silver ounces and
340,000 gold ounces. Estimated average annual attributable silver
and gold production over the next five years (including 2017) is
anticipated to be approximately 29 million silver ounces and
340,000 gold ounces per year. As a reminder, Wheaton Precious
Metals does not include any production from Barrick's Pascua-Lama
project or Hudbay's Rosemont
project in its guidance.
From a liquidity perspective, the $77
million of cash and cash equivalents as at June 30, 2017 combined with the liquidity
provided by the available credit under the $2 billion Revolving Facility and ongoing
operating cash flows positions the Company well to fund all
outstanding commitments and known contingencies as well as
providing flexibility to acquire additional accretive precious
metal stream interests.
Webcast and Conference Call Details
A conference call and webcast will be held Friday, August 11, 2017, 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
Canada or the US:
|
888-231-8191
|
Dial from outside
Canada or the US:
|
647-427-7450
|
Pass
code:
|
50693115
|
Live audio
webcast:
|
www.wheatonpm.com
|
Participants should dial in five to ten minutes before the
call.
The conference call will be recorded and available until
August 18, 2017 at 11:59 pm (Eastern Time). The webcast will be
available for one year. You can listen to an archive of the call by
one of the following methods:
Dial toll free from
Canada or the US:
|
855-859-2056
|
Dial from outside
Canada or the US:
|
416-849-0833
|
Pass
code:
|
50693115
|
Archived audio
webcast:
|
www.wheatonpm.com
|
This earnings release should be read in conjunction with Wheaton
Precious Metals' MD&A and Financial Statements, which are
available on the Company's website at www.wheatonpm.com and have
been posted on SEDAR at www.sedar.com.
Mr. Neil Burns, Vice President,
Technical Services for Wheaton Precious Metals, is a "qualified
person" as such term is defined under National Instrument 43-101,
and has reviewed and approved the technical information including
information on mineral reserves and mineral resources disclosed in
this news release.
Wheaton Precious Metals believes that there are no significant
differences between its corporate governance practices and
those required to be followed by United
States domestic issuers under the NYSE listing standards.
This confirmation is located on the Wheaton Precious Metals website
at
http://www.wheatonpm.com/Company/corporate-governance/default.aspx
End Notes
_______________________________
|
1 Please
refer to the table on the bottom of pages 12 and 13 for the
methodology of converting production and sales volumes to silver
and gold equivalent ounces.
|
2
Please refer to non-IFRS measures at the end of this press
release.
|
3 In
the Rosemont Technical Report, including the effect of the stream,
Hudbay estimates silver to represent only approximately 2% of the
mines revenue, while the financial impact of gold was not estimated
as it is currently thought to be negligible to the overall
economics of the mine.
|
4
Payable silver and gold ounces produced but not yet delivered are
based on management estimates, and may be updated in future periods
as additional information is received.
|
Condensed Interim Consolidated Statements of Earnings
|
Three Months
Ended
June 30
|
Six Months Ended
June 30
|
(US dollars and
shares in thousands, except per share
amounts - unaudited)
|
2017
|
2016
|
2017
|
2016
|
Sales
|
$
|
199,684
|
$
|
212,351
|
$
|
397,635
|
$
|
399,862
|
Cost of
sales
|
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depletion
|
$
|
56,981
|
$
|
60,208
|
$
|
115,272
|
$
|
116,845
|
|
Depletion
|
|
59,772
|
|
75,074
|
|
123,715
|
|
146,417
|
Total cost of
sales
|
$
|
116,753
|
$
|
135,282
|
$
|
238,987
|
$
|
263,262
|
Gross
margin
|
$
|
82,931
|
$
|
77,069
|
$
|
158,648
|
$
|
136,600
|
Expenses
|
|
|
|
|
|
|
|
|
|
General and
administrative 1
|
$
|
9,069
|
$
|
9,959
|
$
|
16,967
|
$
|
20,803
|
|
Interest
expense
|
|
6,482
|
|
4,590
|
|
12,854
|
|
11,522
|
|
Other
income
|
|
(1,075)
|
|
(54)
|
|
(2,173)
|
|
(86)
|
|
Other
expense
|
|
1,358
|
|
1,600
|
|
2,507
|
|
2,256
|
|
Foreign exchange
loss
|
|
41
|
|
53
|
|
85
|
|
589
|
|
$
|
15,875
|
$
|
16,148
|
$
|
30,240
|
$
|
35,084
|
Earnings before
income taxes
|
$
|
67,056
|
$
|
60,921
|
$
|
128,408
|
$
|
101,516
|
Income tax
recovery (expense)
|
|
556
|
|
(615)
|
|
428
|
|
(231)
|
Net
earnings
|
$
|
67,612
|
$
|
60,306
|
$
|
128,836
|
$
|
101,285
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.15
|
$
|
0.14
|
$
|
0.29
|
$
|
0.24
|
Diluted earnings
per share
|
$
|
0.15
|
$
|
0.14
|
$
|
0.29
|
$
|
0.24
|
Weighted average
number of shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
441,784
|
|
436,726
|
|
441,635
|
|
419,838
|
|
Diluted
|
|
442,370
|
|
436,986
|
|
442,168
|
|
420,019
|
1) Equity settled
stock based compensation (a non-cash
item) included in general and administrative expenses.
|
$
|
1,273
|
$
|
1,205
|
$
|
2,469
|
$
|
2,602
|
Condensed Interim Consolidated Balance Sheets
|
As at
June 30
|
As at
December 31
|
(US dollars in
thousands -
unaudited)
|
2017
|
2016
|
Assets
|
|
|
|
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
76,575
|
$
|
124,295
|
|
Accounts
receivable
|
|
3,775
|
|
2,316
|
|
Other
|
|
2,250
|
|
1,481
|
Total current
assets
|
$
|
82,600
|
$
|
128,092
|
Non-current
assets
|
|
|
|
|
|
Silver and gold
interests
|
$
|
5,790,622
|
$
|
5,919,272
|
|
Early deposit -
silver and gold interests
|
|
20,711
|
|
20,064
|
|
Royalty
interest
|
|
9,107
|
|
9,107
|
|
Long-term
investments
|
|
80,595
|
|
64,621
|
|
Other
|
|
12,375
|
|
12,163
|
Total non-current
assets
|
$
|
5,913,410
|
$
|
6,025,227
|
Total
assets
|
$
|
5,996,010
|
$
|
6,153,319
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
$
|
11,419
|
$
|
18,829
|
|
Current portion of
performance share units
|
|
-
|
|
228
|
Total current
liabilities
|
$
|
11,419
|
$
|
19,057
|
Non-current
liabilities
|
|
|
|
|
|
Bank debt
|
$
|
953,000
|
$
|
1,193,000
|
|
Deferred income
taxes
|
|
53
|
|
262
|
|
Performance share
units
|
|
810
|
|
1,012
|
Total non-current
liabilities
|
$
|
953,863
|
$
|
1,194,274
|
Total
liabilities
|
$
|
965,282
|
$
|
1,213,331
|
Shareholders'
equity
|
|
|
|
|
Issued
capital
|
$
|
3,457,319
|
$
|
3,445,914
|
Reserves
|
|
67,632
|
|
55,301
|
Retained
earnings
|
|
1,505,777
|
|
1,438,773
|
Total shareholders'
equity
|
$
|
5,030,728
|
$
|
4,939,988
|
Total liabilities and
shareholders' equity
|
$
|
5,996,010
|
$
|
6,153,319
|
Condensed Interim Consolidated Statements of Cash
Flows
|
Three Months
Ended
June 30
|
Six Months Ended
June 30
|
(US dollars in
thousands - unaudited)
|
2017
|
2016
|
2017
|
2016
|
Operating
activities
|
|
|
|
|
|
|
|
|
Net
earnings
|
$
|
67,612
|
$
|
60,306
|
$
|
128,836
|
$
|
101,285
|
Adjustments
for
|
|
|
|
|
|
|
|
|
|
Depreciation and
depletion
|
|
60,016
|
|
75,308
|
|
124,202
|
|
146,883
|
|
Amortization of
credit facility origination fees:
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
184
|
|
149
|
|
384
|
|
406
|
|
|
Amortization of
credit facility origination fees - undrawn facilities
|
|
179
|
|
214
|
|
340
|
|
321
|
|
Interest
expense
|
|
6,298
|
|
4,441
|
|
12,470
|
|
11,116
|
|
Equity settled stock
based compensation
|
|
1,273
|
|
1,205
|
|
2,469
|
|
2,602
|
|
Performance share
units
|
|
(23)
|
|
(2,142)
|
|
(457)
|
|
179
|
|
Deferred income tax
(recovery) expense
|
|
(820)
|
|
603
|
|
(705)
|
|
232
|
|
Investment income
recognized in net earnings
|
|
(87)
|
|
(55)
|
|
(163)
|
|
(86)
|
|
Other
|
|
(44)
|
|
58
|
|
(1,074)
|
|
88
|
Change in non-cash
working capital
|
|
(3,466)
|
|
(705)
|
|
(8,929)
|
|
(3,796)
|
Cash generated from
operations before interest paid and received
|
$
|
131,122
|
$
|
139,382
|
$
|
257,373
|
$
|
259,230
|
Interest paid -
expensed
|
|
(6,513)
|
|
(5,155)
|
|
(12,902)
|
|
(11,274)
|
Interest
received
|
|
72
|
|
40
|
|
133
|
|
65
|
Cash generated from
operating activities
|
$
|
124,681
|
$
|
134,267
|
$
|
244,604
|
$
|
248,021
|
Financing
activities
|
|
|
|
|
|
|
|
|
Bank debt
repaid
|
$
|
(111,000)
|
$
|
(665,000)
|
$
|
(240,000)
|
$
|
(760,000)
|
Credit facility
origination fees
|
|
(5)
|
|
-
|
|
(1,305)
|
|
(1,300)
|
Shares
issued
|
|
-
|
|
632,547
|
|
-
|
|
632,547
|
Share issue
costs
|
|
-
|
|
(25,834)
|
|
-
|
|
(25,834)
|
Repurchase of share
capital
|
|
-
|
|
-
|
|
-
|
|
(33,126)
|
Share purchase
options exercised
|
|
280
|
|
599
|
|
1,002
|
|
599
|
Dividends
paid
|
|
(52,108)
|
|
(36,740)
|
|
(52,108)
|
|
(36,740)
|
Cash used in
financing activities
|
$
|
(162,833)
|
$
|
(94,428)
|
$
|
(292,411)
|
$
|
(223,854)
|
Investing
activities
|
|
|
|
|
|
|
|
|
Silver and gold
interests
|
$
|
-
|
$
|
(11)
|
$
|
-
|
$
|
(284)
|
Interest paid -
capitalized to silver interests
|
|
-
|
|
-
|
|
-
|
|
(615)
|
Early deposit -
silver and gold interests
|
|
(15)
|
|
(2,041)
|
|
(894)
|
|
(2,042)
|
Proceeds on disposal
of silver interest 1
|
|
-
|
|
-
|
|
1,022
|
|
-
|
Dividend income
received
|
|
15
|
|
14
|
|
30
|
|
20
|
Other
|
|
(32)
|
|
(60)
|
|
(86)
|
|
(107)
|
Cash (used for)
generated from investing activities
|
$
|
(32)
|
$
|
(2,098)
|
$
|
72
|
$
|
(3,028)
|
Effect of exchange
rate changes on cash and cash equivalents
|
$
|
10
|
$
|
(27)
|
$
|
15
|
$
|
54
|
(Decrease) increase
in cash and cash equivalents
|
$
|
(38,174)
|
$
|
37,714
|
$
|
(47,720)
|
$
|
21,193
|
Cash and cash
equivalents, beginning of period
|
|
114,749
|
|
86,776
|
|
124,295
|
|
103,297
|
Cash and cash
equivalents, end of period
|
$
|
76,575
|
$
|
124,490
|
$
|
76,575
|
$
|
124,490
|
1)
|
During the three
months ended March 31, 2017, the Company received an additional $1
million settlement related to the November 4, 2014 bankruptcy of
Mercator Minerals Ltd. ("Mercator") with whom Wheaton Precious
Metals had a silver purchase agreement relative to Mercator's
Mineral Park mine in the United States.
|
Summary of Ounces Produced and Sold
|
2017
|
2016
|
2015
|
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Silver ounces
produced 2
|
|
|
|
|
|
|
|
|
|
San
Dimas
|
973
|
623
|
1,429
|
1,264
|
1,596
|
923
|
2,317
|
1,418
|
|
Peñasquito
|
1,483
|
1,339
|
1,328
|
1,487
|
867
|
1,352
|
1,766
|
2,092
|
|
Antamina
|
1,888
|
1,464
|
1,599
|
1,469
|
1,707
|
2,021
|
2,403
|
-
|
|
Constancia
|
546
|
540
|
723
|
749
|
778
|
509
|
637
|
664
|
|
Other
3
|
2,302
|
2,682
|
2,510
|
2,682
|
2,659
|
2,727
|
3,161
|
2,716
|
Total silver ounces
produced
|
7,192
|
6,648
|
7,589
|
7,651
|
7,607
|
7,532
|
10,284
|
6,890
|
Gold ounces produced
²
|
|
|
|
|
|
|
|
|
|
Sudbury
4
|
7,040
|
14,581
|
8,901
|
10,779
|
15,054
|
7,895
|
13,678
|
7,300
|
|
Salobo
|
57,514
|
53,193
|
71,328
|
68,168
|
35,627
|
38,474
|
39,395
|
35,717
|
|
Constancia
|
2,332
|
2,431
|
3,151
|
3,737
|
4,622
|
3,435
|
4,617
|
4,341
|
|
Other
5
|
11,241
|
14,156
|
21,825
|
30,642
|
15,885
|
12,053
|
14,676
|
11,250
|
Total gold ounces
produced
|
78,127
|
84,361
|
105,205
|
113,326
|
71,188
|
61,857
|
72,366
|
58,608
|
SEOs produced
6
|
12,898
|
12,554
|
15,067
|
15,365
|
12,947
|
12,453
|
15,699
|
11,309
|
GEOs produced
6
|
176,591
|
179,347
|
211,970
|
225,712
|
172,566
|
156,513
|
209,783
|
149,941
|
Silver ounces
sold
|
|
|
|
|
|
|
|
|
|
San Dimas
|
845
|
796
|
1,571
|
1,065
|
1,426
|
1,345
|
2,097
|
2,014
|
|
Peñasquito
|
1,639
|
860
|
1,270
|
1,078
|
886
|
949
|
2,086
|
2,053
|
|
Antamina
|
1,453
|
1,170
|
1,488
|
1,598
|
2,202
|
1,879
|
1,340
|
-
|
|
Constancia
|
559
|
383
|
702
|
536
|
520
|
666
|
511
|
329
|
|
Other
3
|
1,873
|
2,016
|
2,475
|
1,845
|
2,108
|
2,713
|
2,717
|
2,179
|
Total silver ounces
sold
|
6,369
|
5,225
|
7,506
|
6,122
|
7,142
|
7,552
|
8,751
|
6,575
|
Gold ounces
sold
|
|
|
|
|
|
|
|
|
|
Sudbury
4
|
5,822
|
6,887
|
10,183
|
12,294
|
11,351
|
9,007
|
6,256
|
6,674
|
|
Salobo
|
50,478
|
63,007
|
73,646
|
50,043
|
45,396
|
35,366
|
44,491
|
21,957
|
|
Constancia
|
2,356
|
2,315
|
3,343
|
3,396
|
3,610
|
4,933
|
4,473
|
2,701
|
|
Other
5
|
13,309
|
16,188
|
21,759
|
19,330
|
10,400
|
15,952
|
9,679
|
16,745
|
Total gold ounces
sold
|
71,965
|
88,397
|
108,931
|
85,063
|
70,757
|
65,258
|
64,899
|
48,077
|
SEOs sold
6
|
11,625
|
11,412
|
15,249
|
11,913
|
12,451
|
12,745
|
13,607
|
10,201
|
GEOs sold
6
|
159,161
|
163,032
|
214,529
|
175,008
|
165,945
|
160,180
|
181,838
|
135,243
|
Cumulative payable
silver ounces produced but not yet delivered
7
|
4,152
|
3,967
|
3,224
|
3,783
|
2,999
|
3,230
|
3,872
|
3,320
|
Cumulative payable
gold ounces produced but not yet delivered 7
|
52,879
|
50,876
|
59,536
|
63,935
|
44,780
|
49,679
|
56,867
|
54,462
|
Silver / Gold Ratio
8
|
73.0
|
70.0
|
71.1
|
68.1
|
75.0
|
79.6
|
74.8
|
75.4
|
1)
|
All figures in
thousands except gold ounces produced and sold.
|
2)
|
Ounces produced
represent the quantity of silver and gold contained in concentrate
or doré prior to smelting or refining deductions. Production
figures are based on information provided by the operators of the
mining operations to which the silver or gold interests relate or
management estimates in those situations where other information is
not available. Certain production figures may be updated in
future periods as additional information is
received.
|
3)
|
Comprised of the Los
Filos, Zinkgruvan, Yauliyacu, Stratoni, Minto, Neves-Corvo,
Aljustrel, Keno Hill, Lagunas Norte, Pierina, Veladero and 777
silver interests in addition to the Cozamin silver interest which
expired on April 4, 2017.
|
4)
|
Comprised of the
Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold
interests.
|
5)
|
Comprised of the
Minto and 777 gold interests.
|
6)
|
Silver equivalent
ounces (SEOs) and gold equivalent ounces (GEOs) are calculated by
converting gold (in the case of SEOs) or silver (in the case of
GEOs) using the ratio of the average price of silver to the average
price of gold per the London Bullion Metal Exchange during the
period.
|
7)
|
Payable silver and
gold ounces produced but not yet delivered are based on management
estimates. These figures may be updated in future periods as
additional information is
received.
|
8)
|
The silver / gold
ratio is the ratio of the average price of silver to the average
price of gold per the London Bullion Metal Exchange during the
period.
|
Results of Operations
The Company currently has eight reportable operating segments:
the silver produced by the San
Dimas, Peñasquito and Antamina mines, the gold produced by
the Sudbury and Salobo mines, the
silver and gold produced by the Constancia mine and the Other
mines, and corporate operations.
Three Months Ended
June 30, 2017
|
|
Ounces
Produced2
|
Ounces
Sold
|
Average
Realized
Price
($'s Per
Ounce)
|
Average
Cash Cost
($'s Per
Ounce)3
|
Average
Depletion
($'s Per
Ounce)
|
Sales
|
Net
Earnings
|
Cash Flow
From
Operations
|
Total
Assets
|
Silver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Dimas
|
973
|
845
|
$
|
16.92
|
$
|
4.28
|
$
|
1.46
|
$
|
14,298
|
$
|
9,443
|
$
|
10,680
|
$
|
138,173
|
|
Peñasquito
|
1,483
|
1,639
|
|
17.40
|
|
4.13
|
|
2.88
|
|
28,519
|
|
17,026
|
|
21,750
|
|
410,876
|
|
Antamina
|
1,888
|
1,453
|
|
17.12
|
|
3.50
|
|
9.81
|
|
24,873
|
|
5,529
|
|
15,729
|
|
790,072
|
|
Constancia
|
546
|
559
|
|
17.29
|
|
5.90
|
|
7.36
|
|
9,659
|
|
2,250
|
|
6,363
|
|
269,036
|
|
Other
4
|
2,302
|
1,873
|
|
16.80
|
|
5.31
|
|
3.64
|
|
31,465
|
|
14,702
|
|
21,216
|
|
766,091
|
|
7,192
|
6,369
|
$
|
17.09
|
$
|
4.51
|
$
|
4.89
|
$
|
108,814
|
$
|
48,950
|
$
|
75,738
|
$
|
2,374,248
|
Gold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sudbury
5
|
7,040
|
5,822
|
$
|
1,248
|
$
|
400
|
$
|
769
|
$
|
7,264
|
$
|
455
|
$
|
4,930
|
$
|
391,757
|
|
Salobo
|
57,514
|
50,478
|
|
1,259
|
|
400
|
|
381
|
|
63,577
|
|
24,163
|
|
43,386
|
|
2,861,619
|
|
Constancia
|
2,332
|
2,356
|
|
1,252
|
|
400
|
|
409
|
|
2,949
|
|
1,043
|
|
2,007
|
|
123,758
|
|
Other
6
|
11,241
|
13,309
|
|
1,283
|
|
361
|
|
297
|
|
17,080
|
|
8,320
|
|
12,192
|
|
39,240
|
|
78,127
|
71,965
|
$
|
1,263
|
$
|
393
|
$
|
398
|
$
|
90,870
|
$
|
33,981
|
$
|
62,515
|
$
|
3,416,374
|
Operating
results
|
|
|
|
|
|
|
|
|
$
|
199,684
|
$
|
82,931
|
$
|
138,253
|
$
|
5,790,622
|
Corporate
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
$
|
(9,069)
|
$
|
(6,869)
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
(6,482)
|
|
(6,513)
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
(324)
|
|
(190)
|
|
|
|
Income tax
recovery
|
|
|
|
|
|
|
|
|
|
|
|
556
|
|
-
|
|
|
Total corporate
costs
|
|
|
|
|
|
|
|
|
|
|
$
|
(15,319)
|
$
|
(13,572)
|
$
|
205,388
|
|
|
|
|
|
|
|
|
|
|
|
$
|
67,612
|
$
|
124,681
|
$
|
5,996,010
|
|
|
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. Production
figures are based on information provided by the operators of the
mining operations to which the silver or gold interests relate or
management estimates in those situations where other information is
not available. Certain production figures may be updated in
future periods as additional information is received.
|
3)
|
Refer to discussion
on non-IFRS measure (ii) at the end of this press
release.
|
4)
|
Comprised of the
operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Minto,
Neves-Corvo, Lagunas Norte, Pierina, Veladero and 777 silver
interests, the non-operating Keno Hill, Aljustrel, Loma de La
Plata, Pascua-Lama and Rosemont silver interests and the
Cozamin silver interest, which expired on April 4,
2017.
|
5)
|
Comprised of the
operating Coleman, Copper Cliff, Garson, Creighton and Totten gold
interests, the non-operating Victor gold interest and the Stobie
gold interest which was placed into care and maintenance during the
second quarter of 2017.
|
6)
|
Comprised of the
operating Minto and 777 gold interests in addition to the
non-operating Rosemont gold interest.
|
On a silver equivalent and gold equivalent basis, results for
the Company for the three months ended June
30, 2017 were as follows:
Three Months Ended
June 30, 2017
|
|
Silver /
Gold
Ratio 1
|
Ounces
Produced 2, 3
|
Ounces
Sold 3
|
Average
Realized
Price
($'s Per
Ounce)
|
Average
Cash Cost
($'s Per
Ounce) 4
|
Cash
Operating
Margin
($'s Per
Ounce) 5
|
Average
Depletion
($'s Per
Ounce)
|
Gross
Margin
($'s Per
Ounce)
|
|
|
|
|
|
|
|
|
|
Silver equivalent
basis
|
73.0
|
12,898
|
11,625
|
$
|
17.18
|
$
|
4.90
|
$
|
12.28
|
$
|
5.14
|
$
|
7.14
|
Gold equivalent
basis
|
73.0
|
176,591
|
159,161
|
$
|
1,255
|
$
|
358
|
$
|
897
|
$
|
376
|
$
|
521
|
|
|
1)
|
The silver / gold
ratio is the ratio of the average price of silver to the average
price of gold per the London Bullion Metal Exchange during the
period.
|
2)
|
Ounces produced
represent the quantity of silver and gold contained in concentrate
or doré prior to smelting or refining deductions. Production
figures are based on information provided by the operators of the
mining operations to which the silver or gold interests relate or
management estimates in those situations where other information is
not available. Certain production figures may be updated in future
periods as additional information is received.
|
3)
|
Silver ounces
produced and sold in thousands.
|
4)
|
Refer to discussion
on non-IFRS measure (ii) at the end of this press
release.
|
5)
|
Refer to discussion
on non-IFRS measure (iii) at the end of this press
release
|
Three Months Ended
June 30, 2016
|
|
Ounces
Produced²
|
Ounces
Sold
|
Average
Realized
Price
($'s Per
Ounce)
|
Average
Cash Cost
($'s Per
Ounce)3
|
Average
Depletion
($'s Per
Ounce)
|
Sales
|
Net
Earnings
|
Cash Flow
From
Operations
|
Total
Assets
|
Silver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Dimas
|
1,596
|
1,426
|
$
|
17.49
|
$
|
4.24
|
$
|
1.11
|
$
|
24,945
|
$
|
17,321
|
$
|
18,898
|
$
|
143,490
|
|
Peñasquito
|
867
|
886
|
|
16.11
|
|
4.09
|
|
3.05
|
|
14,272
|
|
7,945
|
|
10,649
|
|
425,247
|
|
Antamina
|
1,707
|
2,202
|
|
16.96
|
|
3.42
|
|
9.94
|
|
37,344
|
|
7,934
|
|
29,818
|
|
846,474
|
|
Constancia
|
778
|
520
|
|
16.92
|
|
5.90
|
|
7.41
|
|
8,795
|
|
1,874
|
|
5,727
|
|
285,140
|
|
Other
4
|
2,659
|
2,108
|
|
17.72
|
|
5.50
|
|
4.36
|
|
37,355
|
|
16,570
|
|
25,026
|
|
808,504
|
|
7,607
|
7,142
|
$
|
17.18
|
$
|
4.46
|
$
|
5.49
|
$
|
122,711
|
$
|
51,644
|
$
|
90,118
|
$
|
2,508,855
|
Gold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sudbury
5
|
15,054
|
11,351
|
$
|
1,258
|
$
|
400
|
$
|
787
|
$
|
14,280
|
$
|
806
|
$
|
9,636
|
$
|
490,227
|
|
Salobo
|
35,627
|
45,396
|
|
1,263
|
|
400
|
|
423
|
|
57,357
|
|
19,985
|
|
39,198
|
|
2,122,575
|
|
Constancia
|
4,622
|
3,610
|
|
1,258
|
|
400
|
|
409
|
|
4,539
|
|
1,618
|
|
3,095
|
|
128,428
|
|
Other
6
|
15,885
|
10,400
|
|
1,295
|
|
404
|
|
601
|
|
13,464
|
|
3,016
|
|
8,779
|
|
72,963
|
|
71,188
|
70,757
|
$
|
1,267
|
$
|
401
|
$
|
507
|
$
|
89,640
|
$
|
25,425
|
$
|
60,708
|
$
|
2,814,193
|
Operating
results
|
|
|
|
|
|
|
|
|
$
|
212,351
|
$
|
77,069
|
$
|
150,826
|
$
|
5,323,048
|
Corporate
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
$
|
(9,959)
|
$
|
(9,560)
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
(4,590)
|
|
(5,155)
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
(1,599)
|
|
(1,844)
|
|
|
|
Income tax
expense
|
|
|
|
|
|
|
|
|
|
|
|
(615)
|
|
-
|
|
|
Total corporate
costs
|
|
|
|
|
|
|
|
|
|
$
|
(16,763)
|
$
|
(16,559)
|
$
|
238,161
|
|
|
|
|
|
|
|
|
|
|
|
$
|
60,306
|
$
|
134,267
|
$
|
5,561,209
|
|
|
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. Production
figures are based on information provided by the operators of the
mining operations to which the silver or gold interests relate or
management estimates in those situations where other information is
not available. Certain production figures may be updated in
future periods as additional information is received.
|
3)
|
Refer to discussion
on non-IFRS measure (ii) at the end of this press
release.
|
4)
|
Comprised of the
operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo,
Minto, Lagunas Norte, Pierina, Veladero and 777 silver interests,
the non-operating Rosemont, Keno Hill, Aljustrel, Loma de La Plata
and Pascua-Lama silver interests and the Cozamin silver
interest, which expired on April 4, 2017.
|
5)
|
Comprised of the
operating Coleman, Copper Cliff, Garson, Creighton and Totten gold
interests, the non-operating Victor gold interest and the Stobie
gold interest which was placed into care and maintenance during the
second quarter of 2017.
|
6)
|
Comprised of the
operating Minto and 777 gold interests in addition to the
non-operating Rosemont gold interest.
|
On a silver equivalent and gold equivalent basis, results for
the Company for the three months ended June
30, 2016 were as follows:
Three Months Ended
June 30, 2016
|
|
Silver /
Gold
Ratio 1
|
Ounces
Produced 2, 3
|
Ounces
Sold 3
|
Average
Realized
Price
($'s Per
Ounce)
|
Average
Cash Cost
($'s Per
Ounce) 4
|
Cash
Operating
Margin
($'s Per
Ounce) 5
|
Average
Depletion
($'s Per
Ounce)
|
Gross
Margin
($'s Per
Ounce)
|
|
|
|
|
|
|
|
|
|
Silver equivalent
basis
|
75.0
|
12,947
|
12,451
|
$
|
17.06
|
$
|
4.84
|
$
|
12.22
|
$
|
6.03
|
$
|
6.19
|
Gold equivalent
basis
|
75.0
|
172,566
|
165,945
|
$
|
1,280
|
$
|
363
|
$
|
917
|
$
|
452
|
$
|
465
|
1)
|
The silver / gold
ratio is the ratio of the average price of silver to the average
price of gold per the London Bullion Metal Exchange during the
period.
|
2)
|
Ounces produced
represent the quantity of silver and gold contained in concentrate
or doré prior to smelting or refining deductions. Production
figures are based on information provided by the operators of the
mining operations to which the silver or gold interests relate or
management estimates in those situations where other information is
not available. Certain production figures may be updated in future
periods as additional information is received.
|
3)
|
Silver ounces
produced and sold in thousands.
|
4)
|
Refer to discussion
on non-IFRS measure (ii) at the end of this press
release.
|
5)
|
Refer to discussion
on non-IFRS measure (iii) at the end of this press
release.
|
Non-IFRS Measures
Wheaton Precious Metals has included, throughout this document,
certain non-IFRS performance measures, including (i) operating cash
flow per share (basic and diluted); (ii) average cash costs of
silver and gold on a per ounce basis and; (iii) cash operating
margin.
i.
|
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 management and certain investors
use this information to evaluate the Company's performance in
comparison to other companies in the precious metal mining industry
who present results on a similar basis.
|
|
|
|
The following table
provides a reconciliation of operating cash flow per share (basic
and diluted).
|
|
Three Months
Ended
June 30
|
(in thousands, except
for per share amounts)
|
2017
|
|
2016
|
Cash generated by
operating activities
|
$
|
124,681
|
|
$
|
134,267
|
Divided
by:
|
|
|
|
|
|
|
Basic weighted
average number of shares outstanding
|
|
441,784
|
|
|
436,726
|
|
Diluted weighted
average number of shares outstanding
|
|
442,370
|
|
|
436,986
|
Equals:
|
|
|
|
|
|
|
Operating cash flow
per share - basic
|
$
|
0.28
|
|
$
|
0.31
|
|
Operating cash flow
per share - diluted
|
$
|
0.28
|
|
$
|
0.31
|
ii.
|
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 metal mining industry, this is a common performance
measure but does not have any standardized meaning. In addition to
conventional measures prepared in accordance with IFRS, management
and certain investors use this information to evaluate the
Company's performance and ability to generate cash flow.
|
|
|
|
The following table
provides a reconciliation of average cash cost of silver and gold
on a per ounce basis.
|
|
Three Months
Ended
June 30
|
(in thousands, except
for gold ounces sold and per ounce amounts)
|
2017
|
|
2016
|
Cost of
sales
|
$
|
116,753
|
|
$
|
135,282
|
Less:
depletion
|
|
(59,772)
|
|
|
(75,074)
|
Cash cost of
sales
|
$
|
56,981
|
|
$
|
60,208
|
Cash cost of sales is
comprised of:
|
|
|
|
|
|
|
Total cash cost of
silver sold
|
$
|
28,711
|
|
$
|
31,867
|
|
Total cash cost of
gold sold
|
|
28,270
|
|
|
28,341
|
|
Total cash cost of
sales
|
$
|
56,981
|
|
$
|
60,208
|
Divided
by:
|
|
|
|
|
|
|
Total silver ounces
sold
|
|
6,369
|
|
|
7,142
|
|
Total gold ounces
sold
|
|
71,965
|
|
|
70,757
|
Equals:
|
|
|
|
|
|
|
Average cash cost of
silver (per ounce)
|
$
|
4.51
|
|
$
|
4.46
|
|
Average cash cost of
gold (per ounce)
|
$
|
393
|
|
$
|
401
|
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 management and certain investors use this
information to evaluate the Company's performance in comparison to
other companies in the precious metal mining industry who present
results on a similar basis as well as to evaluate the Company's
ability to generate cash flow.
|
|
|
|
The following table
provides a reconciliation of cash operating margin.
|
|
|
Three Months
Ended
June 30
|
(in thousands, except
for gold ounces sold and per ounce amounts)
|
|
2017
|
|
2016
|
Total
sales:
|
|
|
|
|
|
|
|
Silver
|
|
$
|
108,814
|
|
$
|
122,711
|
|
Gold
|
|
$
|
90,870
|
|
$
|
89,640
|
Divided
by:
|
|
|
|
|
|
|
|
Total silver ounces
sold
|
|
|
6,369
|
|
|
7,142
|
|
Total gold ounces
sold
|
|
|
71,965
|
|
|
70,757
|
Equals:
|
|
|
|
|
|
|
|
Average realized
price of silver (per ounce)
|
|
$
|
17.09
|
|
$
|
17.18
|
|
Average realized
price of gold (per ounce)
|
|
$
|
1,263
|
|
$
|
1,267
|
Less:
|
|
|
|
|
|
|
|
Average cash cost of
silver 1 (per ounce)
|
|
$
|
(4.51)
|
|
$
|
(4.46)
|
|
Average cash cost of
gold 1 (per ounce)
|
|
$
|
(393)
|
|
$
|
(401)
|
Equals:
|
|
|
|
|
|
|
|
Cash operating margin
per silver ounce sold
|
|
$
|
12.58
|
|
$
|
12.72
|
|
Cash operating margin
per gold ounce sold
|
|
$
|
870
|
|
$
|
866
|
1)
|
Please refer to
non-IFRS measure (ii), above.
|
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 Wheaton Precious Metals' MD&A
available on the Company's website at www.wheatonpm.com and posted
on SEDAR at www.sedar.com.
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:
- statements with respect to the successful negotiation and
entering into of a definitive documentation by the Company with
Desert Star, payment by the Company of US$65
million to Desert Star and the satisfaction of each party's
obligations in accordance with the Kutcho Early Deposit
Agreement;
- the receipt by the Company of silver and gold production in
respect of the Kutcho project;
- future payments by the Company in accordance with precious
metal purchase agreements, including any acceleration of payments,
estimated throughput and exploration potential;
- projected increases to Wheaton Precious Metals' production and
cash flow profile;
- the expansion and exploration potential at the Salobo and
San Dimas mines;
- projected changes to Wheaton Precious Metals' production
mix;
- anticipated increases in total throughput;
- the effect of the SAT legal claim on Primero's business,
financial condition, results of operations and cash flows for
2010-2014 and 2015-2019;
- the impact on Primero of the unionized employee strike at the
San Dimas mine which concluded in
April 2017 and any other labour
disruptions;
- the ability of Primero to continue as a going concern;
- the ability of Primero to achieve expected production
levels;
- the Guarantee of the Primero Facility;
- possible amendments to the San
Dimas silver purchase agreement as a result of any strategic
process or discussions with Primero;
- the estimated future production;
- the future price of commodities;
- the estimation of mineral reserves and mineral resources;
- the realization of mineral reserve estimates;
- the timing and amount of estimated future production (including
2017 and average attributable annual production over the next five
years);
- the costs of future production;
- reserve determination;
- estimated reserve conversion rates and produced but not yet
delivered ounces;
- any statements as to future dividends, the ability to fund
outstanding commitments and the ability to continue to acquire
accretive precious metal stream interests;
- confidence in the Company's business structure;
- the Company's position relating to any dispute with the CRA and
the Company's intention to defend reassessments issued by the CRA;
the impact of potential taxes, penalties and interest payable to
the CRA; possible audits for taxation years subsequent to 2013;
estimates as to amounts that may be reassessed by the CRA in
respect of taxation years subsequent to 2010; amounts that may be
payable in respect of penalties and interest; the Company's
intention to file future tax returns in a manner consistent with
previous filings; that the CRA will continue to accept the Company
posting security for amounts sought by the CRA under notices of
reassessment for the 2005-2010 taxation years or will accept
posting security for any other amounts that may be sought by the
CRA under other notices of reassessment; the length of time it
would take to resolve any dispute with the CRA or an objection to a
reassessment; and assessments of the impact and resolution of
various tax matters, including outstanding audits, proceedings with
the CRA and proceedings before the courts; and
- assessments of the impact and resolution of various legal and
tax matters, including but not limited to outstanding class action
litigation.
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", "projects", "intends", "anticipates" or
"does not anticipate", or "believes", "potential", 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 Wheaton Precious Metals to be materially different
from those expressed or implied by such forward-looking statements,
including but not limited to:
- any specific risks relating to the completion of documentation
and diligence for the Kutcho Early Deposit Agreement;
- the satisfaction of each party's obligations in accordance with
the terms of the Kutcho Early Deposit Agreement;
- risks related to the satisfaction of each party's obligations
in accordance with the terms of the precious metal purchase
agreements, including any acceleration of payments, estimated
throughput and exploration potential;
- fluctuations in the price of commodities;
- risks related to the mining operations from which Wheaton
Precious Metals purchases silver or gold (the "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, environmental, 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;
- the absence of control over Mining Operations and having to
rely on the accuracy of the public disclosure and other information
Wheaton Precious Metals receives from the owners and operators of
the Mining Operations as the basis for its analyses, forecasts and
assessments relating to its own business;
- Primero is not able to defend the validity of the 2012 APA, is
unable to pay taxes in Mexico
based on realized silver prices or the SAT proceedings or actions
otherwise have an adverse impact on the business, financial
condition or results of operation of Primero;
- Primero not being able to profitably operate the San Dimas mine due to the impact of the strike
or other labour disruptions;
- Primero not being able to continue as a going concern;
- Primero not being able to achieve expected production
levels;
- Primero not being able to secure additional funding, resume
San Dimas mine operations to
normal operating capacity, reduce cash outflows or have a
successful outcome to a strategic review process;
- Primero failing to make required payments or otherwise
defaulting under its credit facility and the Company having to meet
its guarantee obligations under the Guarantee;
- amendments to the San Dimas
silver purchase agreement have a material adverse effect on the
Company's business, financial condition, results of operation or
cash flows;
- differences in the interpretation or application of tax laws
and regulations or accounting policies and rules; and Wheaton
Precious Metals' interpretation of, or compliance with, tax laws
and regulations or accounting policies and rules, is found to be
incorrect or the tax impact to the Company's business operations is
materially different than currently contemplated;
- any challenge by the CRA of the Company's tax filings is
successful and the potential negative impact to the Company's
previous and future tax filings;
- the Company's business or ability to enter into precious metal
purchase agreements is materially impacted as a result of any CRA
reassessment;
- any reassessment of the Company's tax filings and the
continuation or timing of any such process is outside the Company's
control;
- any requirement to pay reassessed tax;
- the Company is not assessed taxes on its foreign subsidiary's
income on the same basis that the Company pays taxes on its
Canadian income, if taxable in Canada;
- interest and penalties associated with a CRA reassessment
having an adverse impact on the Company's financial position;
- litigation risk associated with a challenge to the Company's
tax filings;
- credit and liquidity risks;
- hedging risk;
- competition in the mining industry;
- risks related to Wheaton Precious Metals' acquisition
strategy;
- risks related to the market price of the common shares of
Wheaton Precious Metals;
- equity price risks related to Wheaton Precious Metals' holding
of long‑term investments in other exploration and mining
companies;
- risks related to the declaration, timing and payment of
dividends;
- the ability of Wheaton Precious Metals and the Mining
Operations to retain key management employees or procure the
services of skilled and experienced personnel;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Wheaton
Precious Metals or the Mining Operations;
- risks relating to unknown defects and impairments;
- risks relating to security over underlying assets;
- risks related to ensuring the security and safety of
information systems, including cyber security risks;
- risks related to the adequacy of internal control over
financial reporting;
- risks related to governmental regulations;
- risks related to international operations of Wheaton Precious
Metals and the Mining Operations;
- risks relating to exploration, development and operations at
the Mining Operations;
- risks related to the ability of the companies with which the
Company has precious metal purchase agreements to perform their
obligations under those precious metal purchase agreements in the
event of a material adverse effect on the results of operations,
financial condition, cash flows or business of such companies;
- risks related to environmental regulations and climate
change;
- the ability of Wheaton Precious Metals and the Mining
Operations to obtain and maintain necessary licenses, permits,
approvals and rulings;
- the ability of Wheaton Precious Metals and the Mining
Operations to comply with applicable laws, regulations and
permitting requirements;
- lack of suitable infrastructure and employees to support the
Mining Operations;
- uncertainty in the accuracy of mineral reserve and mineral
resource estimates;
- inability to replace and expand mineral reserves;
- risks relating to production estimates from Mining Operations,
including anticipated timing of the commencement of production by
certain Mining Operations;
- uncertainties related to title and indigenous rights with
respect to the mineral properties of the Mining Operations;
- fluctuation in the commodity prices other than silver or
gold;
- the ability of Wheaton Precious Metals and the Mining
Operations to obtain adequate financing;
- the ability of Mining Operations to complete permitting,
construction, development and expansion;
- challenges related to global financial conditions;
- risks relating to future sales or the issuance of equity
securities; and
- other risks discussed in the section entitled "Description of
the Business – Risk Factors" in Wheaton Precious Metals' Annual
Information Form available on SEDAR at www.sedar.com, and in
Wheaton Precious Metals' Form 40-F filed March 31, 2017 and Form 6-K filed March 21, 2017 both on file with the U.S.
Securities and Exchange Commission in Washington, D.C. (the "Disclosure").
Forward-looking statements are based on assumptions management
currently believes to be reasonable, including but not limited
to:
- the completion of documentation and diligence in respect of the
Kutcho Early Deposit Agreement;
- the payment of US$65 million to
Desert Star and the satisfaction of each party's obligations in
accordance with the terms of the Kutcho Early Deposit
Agreement;
- the satisfaction of each party's obligations in accordance with
the precious metal purchase agreements;
- no material adverse change in the market price of
commodities;
- that the Mining Operations will continue to operate and the
mining projects will be completed in accordance with public
statements and achieve their stated production estimates;
- the continuing ability to fund or obtain funding for
outstanding commitments;
- that the impact on Primero of the unionized employee strike or
other labour disruptions at the San
Dimas mine will not be significant;
- that Primero is able to continue as a going concern;
- that Primero is able to achieve expected production
levels;
- that Primero will make all required payments and not be in
default under the Primero Facility;
- that any amendments to the San
Dimas silver purchase agreement will not have a material
adverse effect on the Company's business, financial condition,
results of operation or cash flows;
- Wheaton Precious Metals' ability to source and obtain accretive
precious metal stream interests;
- expectations regarding the resolution of legal and tax matters,
including the ongoing class action litigation and CRA audit
involving the Company;
- Wheaton Precious Metals will be successful in challenging any
reassessment by the CRA;
- Wheaton Precious Metals has properly considered the application
of Canadian tax law to its structure and operations;
- Wheaton Precious Metals will continue to be permitted to post
security for amounts sought by the CRA under notices of
reassessment;
- Wheaton Precious Metals has filed its tax returns and paid
applicable taxes in compliance with Canadian tax law;
- Wheaton Precious Metals will not change its business as a
result of any CRA reassessment;
- Wheaton Precious Metals' ability to enter into new precious
metal purchase agreements will not be impacted by any CRA
reassessment;
- expectations and assumptions concerning prevailing tax laws and
the potential amount that could be reassessed as additional tax,
penalties and interest by the CRA;
- any foreign subsidiary income, if taxable in Canada, would be subject to the same or
similar tax calculations as Wheaton Precious Metals' Canadian
income, including the Company's position, in respect of precious
metal purchase agreements with upfront payments paid in the form of
a deposit, that the estimates of income subject to tax is based on
the cost of precious metal acquired under such precious metal
purchase agreements being equal to the market value of such
precious metal.
- the estimate of the recoverable amount for any precious metal
purchase agreement with an indicator of impairment; and
- such other assumptions and factors as set out in the
Disclosure.
Although Wheaton Precious Metals has attempted to identify
important factors that could cause actual results, level of
activity, performance or achievements to differ materially from
those contained in forward-looking statements, there may be other
factors that cause results, level of activity, performance or
achievements not to be as anticipated, estimated or intended. There
can be no assurance that forward-looking statements will prove to
be accurate and even if events or results described in the
forward-looking statements are realized or substantially realized,
there can be no assurance that they will have the expected
consequences to, or effects on, Wheaton Precious Metals.
Accordingly, readers should not place undue reliance on
forward-looking statements and are cautioned that actual outcomes
may vary. The forward-looking statements included herein are for
the purpose of providing investors with information to assist them
in understanding Wheaton Precious Metals' expected financial and
operational performance and may not be appropriate for other
purposes. Any forward looking statement speaks only as of the date
on which it is made. Wheaton Precious Metals does not undertake to
update any forward-looking statements that are included or
incorporated by reference herein, except in accordance with
applicable securities laws.
Cautionary Language Regarding Reserves And Resources
For further information on Mineral Reserves and Mineral
Resources and on Wheaton Precious Metals more generally, readers
should refer to Wheaton Precious Metals' Annual Information Form
for the year ended December 31, 2016
and other continuous disclosure documents filed by Wheaton Precious
Metals since January 1, 2017,
available on SEDAR at www.sedar.com. Wheaton Precious Metals'
Mineral Reserves and Mineral Resources are subject to the
qualifications and notes set forth therein. Mineral Resources which
are not Mineral Reserves do not have demonstrated economic
viability.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Resources: The
information contained herein has been prepared in accordance with
the requirements of the securities laws in effect in Canada, which differ from the requirements of
United States securities laws. The
terms "mineral reserve", "proven mineral reserve" and "probable
mineral reserve" are Canadian mining terms defined in accordance
with Canadian National Instrument 43-101 – Standards of Disclosure
for Mineral Projects ("NI 43-101") and the Canadian Institute of
Mining, Metallurgy and Petroleum (the "CIM") – CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended (the "CIM Standards"). These definitions
differ from the definitions in Industry Guide 7 ("SEC Industry
Guide 7") under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"). Under U.S. standards, mineralization may
not be classified as a "reserve" unless the determination has been
made that the mineralization could be economically and legally
produced or extracted at the time the reserve determination is
made. Also, under SEC Industry Guide 7 standards, a "final" or
"bankable" feasibility study is required to report reserves, the
three-year historical average price is used in any reserve or cash
flow analysis to designate reserves and the primary environmental
analysis or report must be filed with the appropriate governmental
authority. In addition, the terms "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred
mineral resource" are defined in and required to be disclosed by NI
43-101; however, these terms are not defined terms under SEC
Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors
are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into reserves.
"Inferred mineral resources" have a great amount of uncertainty as
to their existence and as to their economic and legal feasibility.
It cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part
of an inferred mineral resource exists or is economically or
legally mineable. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. Disclosure of
"contained ounces" in a resource is permitted disclosure under
Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute
"reserves" by SEC standards as in place tonnage and grade without
reference to unit measures. Accordingly, information contained
herein that describes Wheaton Precious Metals' mineral deposits may
not be comparable to similar information made public by U.S.
companies subject to reporting and disclosure requirements under
the United States federal
securities laws and the rules and regulations thereunder.
United States investors are urged
to consider closely the disclosure in Wheaton Precious Metals' Form
40-F, a copy of which may be obtained from Wheaton Precious Metals
or from http://www.sec.gov/edgar.shtml.
In accordance with the Company's MD&A and financial
statements, reference to the Company includes the Company's wholly
owned subsidiaries.
SOURCE Wheaton Precious Metals Corp.