TSX: SLW
NYSE: SLW
VANCOUVER, Nov. 9, 2016 /CNW/ - Silver Wheaton Corp.
("Silver Wheaton" or the "Company") (TSX:SLW) (NYSE:SLW) is pleased
to announce its results for the third quarter ended September 30, 2016. All figures are presented in
United States 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.
- Peñasquito 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
Peñasquito, 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.
Third Quarter Asset Highlights
During the third quarter of 2016, attributable production was
7.7 million ounces of silver and 109,200 ounces of gold,
respectively, with silver production having increased 11% and gold
production, which represented a record, having increased 86% as
compared with the third quarter of 2015.
Operational highlights for the quarter ended September 30, 2016, are as follows:
Salobo
In the third quarter of 2016,
Salobo produced 68,168 ounces of attributable gold, an increase of
approximately 91% relative to the third quarter of 2015. This
growth was primarily due to the 25% increase in the amount of gold
Silver Wheaton is entitled to as detailed below as well as
increased throughput. Salobo achieved a monthly production record
of 17,000 tons of copper in September, running at nominal capacity
on a monthly basis.
On August 16, 2016, SWC completed
its previously announced amendment to its agreement with Vale to
acquire an additional amount of gold equal to 25% of the life of
mine gold production from its Salobo mine located in Brazil. This acquisition is in addition to the
50% of the Salobo gold production that SWC acquired pursuant to its
existing agreement with Vale. SWC paid an upfront cash
consideration of US$800 million for
the increased gold stream and the 10 million Silver Wheaton common
share purchase warrants previously issued to a subsidiary of Vale
were amended to reduce the exercise price from US$65 to US$43.75
per common share. In addition, SWC will make ongoing payments of
the lesser of US$400 (subject to a 1%
annual inflation adjustment now commencing in 2019 on the entire
75% stream) and the prevailing market price for each ounce of gold
delivered under the agreement. SWC was entitled to all attributable
gold production for which an off-taker payment was received after
July 1, 2016. As a result of this,
reported production for Salobo in Q3 2016 is inclusive of some
material produced in Q2.
Antamina
In the third quarter of 2016, Antamina
produced 1.5 million ounces of attributable silver with production
being lower than the previous quarters as expected due to lower
tonnage and recovery, offset partially by higher grades. Antamina
is on track to well exceed the Company's original production
guidance for 2016.
Peñasquito
In the third quarter of 2016, Peñasquito produced 1.5 million
ounces of attributable silver, a decrease of approximately 29%
relative to the third quarter of 2015. As disclosed in Goldcorp's
third quarter of 2016 MD&A, the drop in production was
attributable to lower grades as a result of mine sequencing, lower
throughput due to harder ore types processed, and lower recoveries
associated with processing lower grade stockpile ore. Furthermore,
Goldcorp reports that towards the end of the third quarter of 2016,
mining shifted from the lower grade upper transitional ore into
higher grade ore in the lower portion of the pit and that tonnes
milled are also expected to increase due to less planned
maintenance. Finally, the Northern Well Field project, which should
satisfy Peñasquito's long-term water requirements, has reportedly
ramped up as expected and reached full design capacity in the
fourth quarter of 2016.
San Dimas
In the third quarter of 2016, San
Dimas produced 1.3 million ounces of attributable silver, a
decrease of approximately 11% relative to the third quarter of
2015. The decrease in production was primarily driven by lower
throughput and lower grades. As per Primero Mining Corp.'s
("Primero") third quarter of 2016 MD&A, production during the
quarter was affected by high unplanned worker absences and lack of
achievement of mine plans, which resulted in reduced underground
development rates and delayed certain ventilation improvement
projects, and in turn, limited access to certain high-grade areas
of the San Dimas mine. Primero further reports that as a result of
these challenges, they have reduced 2016 silver production guidance
to between 5.5-6.0 million ounces from prior guidance of 7.5-8.5
million ounces.
Sudbury
In the
third quarter of 2016, Vale's Sudbury mines produced 9,955 ounces of
attributable gold, an increase of approximately 36% relative to the
third quarter of 2015. This increase was attributable to higher
grades and associated mill recoveries at the Coleman and Totten
mines.
Other Gold
In the third quarter of 2016, total
Other Gold attributable production was a record 31,070 ounces,
almost twice as much as the third quarter of 2015. The increase was
driven primarily by record gold production at Minto and strong production from 777. As per
Capstone Mining Corp.'s third quarter of 2016 production report,
Minto's record production was
driven by record quarterly mill-throughput and strong recoveries
due to the lower than expected oxide content in the Minto North
ore. Open pit mining of the Minto North pit was completed at the
end of September and the mill is reportedly now processing high
grade stockpile combined with underground ore. In addition,
777 gold production in the third quarter of 2016 was 60% higher
than the third quarter of 2015 primarily due to higher throughput
and grades.
Produced But Not Yet Delivered4
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. Payable silver ounces produced but not yet delivered
increased primarily as a result of increases related to the
Yauliyacu, Peñasquito, and San Dimas silver interests, partially
offset by decreases related to the Antamina silver interest.
Payable gold ounces produced but not yet delivered increased
primarily as a result of increases related to the Salobo and
Minto gold interests, offset
partially by decreases related to the Sudbury gold interest. Payable ounces produced
but not yet delivered to Silver Wheaton 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 Silver Wheaton's
consolidated MD&A in the 'Results of Operations and Operational
Review' section.
Dividend
Fourth Quarterly Dividend
In connection with the Board
of Directors declaration of a dividend, the fourth quarterly cash
dividend of US$0.06 will be paid to
holders of record of Silver Wheaton common shares as of the close
of business on November 23, 2016, and
will be distributed on or about December
7, 2016.
Under the Company's dividend policy, the quarterly dividend per
common share will be equal to 20% 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 Plan5
The Company has
previously implemented a Dividend Reinvestment Plan ("DRIP").
Participation in the DRIP is optional. For the purposes of this
fourth 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.silverwheaton.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.
New Addition to Silver Wheaton's Board of Directors
Silver Wheaton is pleased to announce the addition of
Chuck Jeannes to the Company's Board
of Directors. Mr. Jeannes is a mining industry veteran with over 30
years of experience. As President and CEO of Goldcorp Inc. from
December 2008 to April 2016, he led the company's development into
one of the world's largest and most successful gold mining
companies with mining operations and development projects located
throughout the Americas. Prior to his appointment as President and
CEO, he held the role of Executive Vice President, Corporate
Development where he managed a series of M&A transactions that
have contributed to the company's significant growth. Prior to
joining Goldcorp, Mr. Jeannes held senior positions with Glamis
Gold Ltd. and Placer Dome Inc. He holds a B.A. degree from the
University of Nevada (1980) and
graduated from the University of
Arizona College of Law with honors in 1983. He practiced law
for 11 years and has broad experience in capital markets, mergers
and acquisitions, public and private financing and international
operations.
Updated Production Guidance for 2016 / Outlook
Silver Wheaton has updated its 2016 attributable production
forecast for both gold and silver. Attributable 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. Attributable 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 Peñasquito, 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
($1,260 and $17.12, respectively)3, Silver
Wheaton's 2016 forecast for attributable production remains
unchanged on a silver equivalent basis at 55 million SEOs and on a
gold equivalent basis at 740,000 GEOs. Estimated average annual
production over the next five years (inclusive of 2016) remains
unchanged at approximately 330,000 ounces of gold and 31 million
ounces of silver.
From a liquidity perspective, the $126
million of cash and cash equivalents as at September 30, 2016 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 Thursday, November 10, 2016, 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:
|
99437889
|
Live audio
webcast:
|
www.silverwheaton.com
|
Participants should dial in five to ten minutes before the
call.
The conference call will be recorded and available until
November 17, 2016 at 11:59 pm ET. 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:
|
99437889
|
Archived audio
webcast:
|
www.silverwheaton.com
|
This earnings release should be read in conjunction with Silver
Wheaton's 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.
Mr. Neil Burns, Vice President,
Technical Services for Silver Wheaton, 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.
Silver Wheaton 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 Silver Wheaton website at
http://www.silverwheaton.com/company/corporate-governance/default.aspx.
End Notes
_______________________________
1
|
Please refer to the
table on the bottom of page 12 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
|
London Bullion Market
Association (LBMA) gold price is the average of the daily LBMA AM
and PM gold benchmark prices in the first nine months of 2016. The
LBMA silver price is the daily average of the LBMA silver benchmark
prices in the first nine months of 2016.
|
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.
|
5
|
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.
|
Condensed Interim Consolidated Statement of Earnings
(Loss)
|
Three Months
Ended
September 30
|
Nine Months Ended
September 30
|
(US dollars and
shares in thousands, except per share amounts -
unaudited)
|
2016
|
2015
|
2016
|
2015
|
Sales
|
$
|
233,204
|
$
|
153,251
|
$
|
633,066
|
$
|
448,191
|
Cost of
sales
|
|
|
|
|
|
|
|
|
|
Cost of sales,
excluding depletion
|
$
|
60,776
|
$
|
46,708
|
$
|
177,620
|
$
|
128,967
|
|
Depletion
|
|
73,919
|
|
45,248
|
|
220,336
|
|
130,620
|
Total cost of
sales
|
$
|
134,695
|
$
|
91,956
|
$
|
397,956
|
$
|
259,587
|
Gross
margin
|
$
|
98,509
|
$
|
61,295
|
$
|
235,110
|
$
|
188,604
|
Expenses
|
|
|
|
|
|
|
|
|
|
General and
administrative1
|
$
|
9,513
|
$
|
7,170
|
$
|
30,316
|
$
|
23,226
|
|
Impairment
charges
|
|
-
|
|
154,021
|
|
-
|
|
154,021
|
|
Interest
expense
|
|
6,007
|
|
428
|
|
17,529
|
|
2,726
|
|
Other
expense
|
|
1,380
|
|
763
|
|
4,138
|
|
3,680
|
|
$
|
16,900
|
$
|
162,382
|
$
|
51,983
|
$
|
183,653
|
Earnings (loss)
before income taxes
|
$
|
81,609
|
$
|
(101,087)
|
$
|
183,127
|
$
|
4,951
|
Income tax
recovery
|
|
1,377
|
|
5,162
|
|
1,144
|
|
2,269
|
Net earnings
(loss)
|
$
|
82,986
|
$
|
(95,925)
|
$
|
184,271
|
$
|
7,220
|
|
|
|
|
|
|
|
|
|
Basic earnings per
share
|
$
|
0.19
|
$
|
(0.24)
|
$
|
0.43
|
$
|
0.02
|
Diluted earnings
per share
|
$
|
0.19
|
$
|
(0.24)
|
$
|
0.43
|
$
|
0.02
|
Weighted average
number of shares outstanding
|
|
|
|
|
|
|
|
|
|
Basic
|
|
440,635
|
|
404,370
|
|
426,737
|
|
393,084
|
|
Diluted
|
|
441,917
|
|
404,540
|
|
427,094
|
|
393,274
|
1) Equity settled
stock based compensation (a non-cash item)
included in general and administrative expenses.
|
$
|
1,220
|
$
|
1,419
|
$
|
3,822
|
$
|
4,760
|
Condensed Interim Consolidated Balance Sheets
|
|
September
30
|
December
31
|
(US dollars in
thousands - unaudited)
|
2016
|
2015
|
Assets
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
125,545
|
$
|
103,297
|
|
Accounts
receivable
|
|
|
2,900
|
|
1,124
|
|
Other
|
|
|
2,334
|
|
1,455
|
Total current
assets
|
|
$
|
130,779
|
$
|
105,876
|
Non-current
assets
|
|
|
|
|
|
|
Silver and gold
interests
|
|
$
|
6,078,629
|
$
|
5,469,412
|
|
Early deposit -
silver and gold interests
|
|
|
17,777
|
|
15,725
|
|
Royalty
interest
|
|
|
9,107
|
|
9,107
|
|
Long-term
investments
|
|
|
77,063
|
|
19,776
|
|
Other
|
|
|
12,677
|
|
12,315
|
Total non-current
assets
|
|
$
|
6,195,253
|
$
|
5,526,335
|
Total
assets
|
|
$
|
6,326,032
|
$
|
5,632,211
|
Liabilities
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
$
|
12,022
|
$
|
10,664
|
|
Current portion of
performance share units
|
|
|
3,859
|
|
1,904
|
Total current
liabilities
|
|
$
|
15,881
|
$
|
12,568
|
Non-current
liabilities
|
|
|
|
|
|
|
Bank debt
|
|
$
|
1,345,000
|
$
|
1,466,000
|
|
Deferred income
taxes
|
|
|
204
|
|
176
|
|
Performance share
units
|
|
|
1,772
|
|
2,732
|
Total non-current
liabilities
|
|
$
|
1,346,976
|
$
|
1,468,908
|
Total
liabilities
|
|
$
|
1,362,857
|
$
|
1,481,476
|
Shareholders'
equity
|
|
|
|
|
|
Issued
capital
|
|
$
|
3,442,537
|
$
|
2,815,569
|
Reserves
|
|
|
66,256
|
|
(23,197)
|
Retained
earnings
|
|
|
1,454,382
|
|
1,358,363
|
Total shareholders'
equity
|
|
$
|
4,963,175
|
$
|
4,150,735
|
Total liabilities and
shareholders' equity
|
|
$
|
6,326,032
|
$
|
5,632,211
|
Condensed Interim Consolidated Statement of Cash
Flows
|
|
Three Months
Ended
September 30
|
Nine Months Ended
September 30
|
(US dollars in
thousands - unaudited)
|
|
2016
|
2015
|
2016
|
2015
|
Operating
activities
|
|
|
|
|
|
|
|
|
|
Net earnings
(loss)
|
|
$
|
82,986
|
$
|
(95,925)
|
$
|
184,271
|
$
|
7,220
|
Adjustments
for
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
depletion
|
|
|
74,149
|
|
45,406
|
|
221,032
|
|
130,996
|
|
Amortization of
credit facility origination fees:
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
190
|
|
124
|
|
596
|
|
375
|
|
|
Amortization of
credit facility origination fees - undrawn facilities
|
|
|
177
|
|
244
|
|
498
|
|
717
|
|
|
Write off of credit
facility origination fees upon repayment of NRT Loan
|
|
|
-
|
|
-
|
|
-
|
|
1,315
|
|
Impairment
charges
|
|
|
-
|
|
154,021
|
|
-
|
|
154,021
|
|
Interest
expense
|
|
|
5,817
|
|
304
|
|
16,933
|
|
2,351
|
|
Equity settled stock
based compensation
|
|
|
1,220
|
|
1,419
|
|
3,822
|
|
4,760
|
|
Performance share
units
|
|
|
565
|
|
(513)
|
|
744
|
|
(415)
|
|
Deferred income tax
recovery
|
|
|
(1,404)
|
|
(5,223)
|
|
(1,170)
|
|
(2,417)
|
|
Investment income
recognized in net earnings
|
|
|
(19)
|
|
(36)
|
|
(105)
|
|
(207)
|
|
Other
|
|
|
(308)
|
|
(141)
|
|
(220)
|
|
(340)
|
Change in non-cash
working capital
|
|
|
3,397
|
|
213
|
|
(401)
|
|
1,795
|
Cash generated from
operations
|
|
$
|
166,770
|
$
|
99,893
|
$
|
426,000
|
$
|
300,171
|
Interest paid -
expensed
|
|
|
(5,204)
|
|
(360)
|
|
(16,478)
|
|
(2,306)
|
Interest
received
|
|
|
11
|
|
14
|
|
76
|
|
105
|
Cash generated from
operating activities
|
|
$
|
161,577
|
$
|
99,547
|
$
|
409,598
|
$
|
297,970
|
Financing
activities
|
|
|
|
|
|
|
|
|
|
Bank debt
repaid
|
|
$
|
(141,000)
|
$
|
(68,000)
|
$
|
(901,000)
|
$
|
(1,153,000)
|
Bank debt
drawn
|
|
|
780,000
|
|
-
|
|
780,000
|
|
800,000
|
Credit facility
origination fees
|
|
|
-
|
|
-
|
|
(1,300)
|
|
(4,241)
|
Shares
issued
|
|
|
-
|
|
-
|
|
632,547
|
|
800,000
|
Share issue
costs
|
|
|
(162)
|
|
6
|
|
(25,996)
|
|
(31,383)
|
Redemption of share
capital
|
|
|
-
|
|
(1,464)
|
|
(33,126)
|
|
(1,464)
|
Share purchase
options exercised
|
|
|
20,284
|
|
-
|
|
20,883
|
|
2,887
|
Dividends
paid
|
|
|
(19,310)
|
|
(16,565)
|
|
(56,050)
|
|
(51,009)
|
Cash generated from
(applied to) financing activities
|
|
$
|
639,812
|
$
|
(86,023)
|
$
|
415,958
|
$
|
361,790
|
Investing
activities
|
|
|
|
|
|
|
|
|
|
Silver and gold
interests
|
|
$
|
(800,013)
|
$
|
-
|
$
|
(800,297)
|
$
|
(900,058)
|
Interest paid -
capitalized to silver interests
|
|
|
-
|
|
(2,607)
|
|
(615)
|
|
(6,939)
|
Silver and gold
interests - early deposit
|
|
|
-
|
|
(560)
|
|
(2,042)
|
|
(1,618)
|
Proceeds on disposal
of silver interest
|
|
|
-
|
|
-
|
|
-
|
|
25,000
|
Proceeds on disposal
of long-term investments
|
|
|
-
|
|
-
|
|
-
|
|
12
|
Dividend income
received
|
|
|
8
|
|
23
|
|
28
|
|
103
|
Other
|
|
|
(115)
|
|
(1,620)
|
|
(222)
|
|
(3,679)
|
Cash applied to
investing activities
|
|
$
|
(800,120)
|
$
|
(4,764)
|
$
|
(803,148)
|
$
|
(887,179)
|
Effect of exchange
rate changes on cash and cash equivalents
|
|
$
|
(214)
|
$
|
(140)
|
$
|
(160)
|
$
|
(167)
|
Increase (decrease)
in cash and cash equivalents
|
|
$
|
1,055
|
$
|
8,620
|
$
|
22,248
|
$
|
(227,586)
|
Cash and cash
equivalents, beginning of period
|
|
|
124,490
|
|
71,892
|
|
103,297
|
|
308,098
|
Cash and cash
equivalents, end of period
|
|
$
|
125,545
|
$
|
80,512
|
$
|
125,545
|
$
|
80,512
|
Summary of Ounces Produced and Sold
|
|
|
|
|
2016
|
2015
|
2014
|
|
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
Silver ounces
produced2
|
|
|
|
|
|
|
|
|
|
San Dimas
|
1,264
|
1,596
|
923
|
2,317
|
1,418
|
1,786
|
1,928
|
1,744
|
|
Yauliyacu
|
721
|
686
|
657
|
749
|
696
|
696
|
576
|
687
|
|
Peñasquito
|
1,487
|
867
|
1,352
|
1,766
|
2,092
|
1,932
|
1,447
|
1,582
|
|
Antamina
|
1,469
|
1,707
|
2,021
|
2,403
|
-
|
-
|
-
|
-
|
|
Other3
|
2,710
|
2,751
|
2,579
|
3,049
|
2,684
|
2,787
|
2,408
|
2,391
|
Total silver ounces
produced
|
7,651
|
7,607
|
7,532
|
10,284
|
6,890
|
7,201
|
6,359
|
6,404
|
Gold ounces
produced2
|
|
|
|
|
|
|
|
|
|
Sudbury4
|
9,955
|
15,054
|
7,895
|
13,678
|
7,300
|
8,195
|
8,666
|
9,924
|
|
Salobo
|
68,168
|
35,627
|
38,474
|
39,395
|
35,717
|
34,036
|
29,195
|
13,850
|
|
Other5
|
31,070
|
19,729
|
14,823
|
19,293
|
15,591
|
14,082
|
17,809
|
13,925
|
Total gold ounces
produced
|
109,193
|
70,410
|
61,192
|
72,366
|
58,608
|
56,313
|
55,670
|
37,699
|
SEOs
produced6
|
15,084
|
12,889
|
12,401
|
15,699
|
11,309
|
11,299
|
10,421
|
9,148
|
GEOs
produced6
|
221,578
|
171,787
|
155,848
|
209,783
|
149,941
|
155,303
|
142,862
|
125,653
|
Silver ounces
sold
|
|
|
|
|
|
|
|
|
|
San Dimas
|
1,065
|
1,426
|
1,345
|
2,097
|
2,014
|
1,265
|
1,901
|
1,555
|
|
Yauliyacu
|
342
|
578
|
603
|
987
|
428
|
809
|
320
|
761
|
|
Peñasquito
|
1,078
|
886
|
949
|
2,086
|
2,053
|
1,420
|
1,573
|
1,640
|
|
Antamina
|
1,598
|
2,202
|
1,879
|
1,340
|
-
|
-
|
-
|
-
|
|
Other3
|
2,039
|
2,050
|
2,776
|
2,241
|
2,080
|
2,081
|
1,871
|
1,777
|
Total silver ounces
sold
|
6,122
|
7,142
|
7,552
|
8,751
|
6,575
|
5,575
|
5,665
|
5,733
|
Gold ounces
sold
|
|
|
|
|
|
|
|
|
|
Sudbury4
|
12,294
|
11,351
|
9,007
|
6,256
|
6,674
|
12,518
|
8,033
|
11,251
|
|
Salobo
|
50,043
|
45,396
|
35,366
|
44,491
|
21,957
|
32,156
|
9,794
|
14,270
|
|
Other5
|
22,726
|
14,010
|
20,885
|
14,152
|
19,446
|
16,300
|
10,572
|
12,383
|
Total gold ounces
sold
|
85,063
|
70,757
|
65,258
|
64,899
|
48,077
|
60,974
|
28,399
|
37,904
|
SEOs
sold6
|
11,913
|
12,451
|
12,745
|
13,607
|
10,201
|
10,010
|
7,737
|
8,493
|
GEOs
sold6
|
175,008
|
165,945
|
160,180
|
181,838
|
135,243
|
137,591
|
106,071
|
116,654
|
Cumulative payable
silver ounces
produced but not yet delivered7
|
3,783
|
2,999
|
3,230
|
3,872
|
3,320
|
3,747
|
2,873
|
2,876
|
Cumulative payable
gold ounces
produced but not yet delivered7
|
63,303
|
44,780
|
49,679
|
56,867
|
54,462
|
46,809
|
55,286
|
31,068
|
Silver / Gold
Ratio8
|
68.1
|
75.0
|
79.6
|
74.8
|
75.4
|
72.8
|
72.9
|
72.8
|
|
|
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, Stratoni, Keno Hill, Cozamin, Neves-Corvo,
Minto, Aljustrel, Lagunas Norte, Pierina, Veladero, 777 and
Constancia silver interests in addition to the previously owned
Mineral Park and Campo Morado silver interests.
|
4)
|
Comprised of the
Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold
interests.
|
5)
|
Comprised of the
Minto, 777 and Constancia 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, Yauliyacu, Peñasquito and
Antamina mines, the gold produced by the Sudbury and Salobo mines, the silver and gold
produced by the Other mines and corporate operations.
Three Months Ended
September 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
|
Gross
Margin
|
Other
|
Net
Earnings
|
Cash Flow
From
Operations
|
Total
Assets
|
Silver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Dimas
|
1,264
|
1,065
|
$
|
19.75
|
$
|
4.28
|
$
|
1.11
|
$
|
21,037
|
$
|
15,300
|
$
|
-
|
$
|
15,300
|
$
|
16,478
|
$
|
142,312
|
|
Yauliyacu
|
721
|
342
|
|
20.00
|
|
8.74
|
|
5.78
|
|
6,841
|
|
1,876
|
|
-
|
|
1,876
|
|
3,852
|
|
156,478
|
|
Peñasquito
|
1,487
|
1,078
|
|
19.73
|
|
4.09
|
|
3.05
|
|
21,276
|
|
13,574
|
|
-
|
|
13,574
|
|
16,866
|
|
421,955
|
|
Antamina
|
1,469
|
1,598
|
|
19.67
|
|
3.84
|
|
9.94
|
|
31,437
|
|
9,424
|
|
-
|
|
9,424
|
|
25,305
|
|
830,594
|
|
Other4
|
2,710
|
2,039
|
|
19.11
|
|
4.68
|
|
5.41
|
|
38,982
|
|
18,402
|
|
-
|
|
18,402
|
|
31,404
|
|
924,157
|
|
Total
silver
|
7,651
|
6,122
|
$
|
19.53
|
$
|
4.51
|
$
|
5.45
|
$
|
119,573
|
$
|
58,576
|
$
|
-
|
$
|
58,576
|
$
|
93,905
|
$
|
2,475,496
|
Gold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sudbury5
|
9,955
|
12,294
|
$
|
1,332
|
$
|
400
|
$
|
787
|
$
|
16,382
|
$
|
1,787
|
$
|
-
|
$
|
1,787
|
$
|
11,463
|
$
|
480,550
|
|
Salobo
|
68,168
|
50,043
|
|
1,339
|
|
400
|
|
382
|
|
67,008
|
|
27,875
|
|
-
|
|
27,875
|
|
46,991
|
|
2,932,959
|
|
Other6
|
31,070
|
22,726
|
|
1,331
|
|
361
|
|
518
|
|
30,241
|
|
10,271
|
|
-
|
|
10,271
|
|
22,202
|
|
189,624
|
|
Total gold
|
109,193
|
85,063
|
$
|
1,336
|
$
|
390
|
$
|
477
|
$
|
113,631
|
$
|
39,933
|
$
|
-
|
$
|
39,933
|
$
|
80,656
|
$
|
3,603,133
|
Operating
results
|
|
|
|
|
|
|
|
|
$
|
233,204
|
$
|
98,509
|
$
|
-
|
$
|
98,509
|
$
|
174,561
|
$
|
6,078,629
|
Corporate
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(9,513)
|
$
|
(9,513)
|
$
|
(7,994)
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(6,007)
|
|
(6,007)
|
|
(5,204)
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1,380)
|
|
(1,380)
|
|
214
|
|
|
|
Income tax
recovery
|
|
|
|
|
|
|
|
|
|
|
|
|
1,377
|
|
1,377
|
|
-
|
|
|
Total corporate
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(15,523)
|
$
|
(15,523)
|
$
|
(12,984)
|
$
|
247,403
|
|
|
|
|
|
|
|
|
|
$
|
233,204
|
$
|
98,509
|
$
|
(15,523)
|
$
|
82,986
|
$
|
161,577
|
$
|
6,326,032
|
|
|
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 (iii) at the end of this press
release.
|
4)
|
Comprised of the
operating Los Filos, Zinkgruvan, Stratoni, Cozamin, Neves-Corvo,
Minto, Lagunas Norte, Pierina, Veladero, 777 and Constancia silver
interests in addition to the non-operating Keno Hill, Aljustrel,
Loma de La Plata, Pascua-Lama and Rosemont silver
interests.
|
5)
|
Comprised of the
operating Coleman, Copper Cliff, Garson, Stobie, Creighton and
Totten gold interests in addition to the non-operating Victor gold
interest.
|
6)
|
Comprised of the
operating Minto, 777 and Constancia 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 September 30, 2016 were as follows:
Three Months Ended
September 30, 2016
|
|
Silver /
Gold
Ratio1
|
Ounces
Produced2,3
|
Ounces
Sold3
|
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
|
68.1
|
15,084
|
11,913
|
$
|
19.57
|
$
|
5.10
|
$
|
14.47
|
$
|
6.20
|
$
|
8.27
|
Gold equivalent
basis
|
68.1
|
221,578
|
175,008
|
$
|
1,333
|
$
|
347
|
$
|
986
|
$
|
422
|
$
|
564
|
|
|
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 (iii) at the end of this press
release.
|
5)
|
Refer to discussion
on non-IFRS measure (iv) at the end of this press
release
|
Three Months Ended
September 30, 2015
|
|
Ounces
Produced2
|
Ounces
Sold
|
Average
Realized
Price
($'s Per Ounce)
|
Average
Cash Cost
($'s Per
Ounce)3
|
Average
Depletion
($'s Per
Ounce)
|
Sales
|
Gross
Margin
|
Impairment
Charges
|
Other
|
Net
Loss
|
Cash Flow
From
Operations
|
Total
Assets
|
Silver
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
San Dimas
|
1,418
|
2,014
|
$
|
15.11
|
$
|
4.22
|
$
|
0.88
|
$
|
30,429
|
$
|
20,167
|
$
|
-
|
$
|
-
|
$
|
20,167
|
$
|
21,937
|
$
|
148,399
|
|
Yauliyacu
|
696
|
428
|
|
14.73
|
|
4.20
|
|
6.43
|
|
6,304
|
|
1,753
|
|
-
|
|
-
|
|
1,753
|
|
4,507
|
|
177,461
|
|
Peñasquito
|
2,092
|
2,053
|
|
15.13
|
|
4.07
|
|
2.85
|
|
31,052
|
|
16,854
|
|
-
|
|
-
|
|
16,854
|
|
22,697
|
|
436,783
|
|
Other4
|
2,684
|
2,080
|
|
14.97
|
|
4.50
|
|
4.40
|
|
31,141
|
|
12,632
|
|
(53,722)
|
|
-
|
|
(41,090)
|
|
22,050
|
|
1,093,780
|
|
6,890
|
6,575
|
$
|
15.05
|
$
|
4.26
|
$
|
2.97
|
$
|
98,926
|
$
|
51,406
|
$
|
(53,722)
|
$
|
-
|
$
|
(2,316)
|
$
|
71,191
|
$
|
1,856,423
|
Gold
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sudbury5
|
7,300
|
6,674
|
$
|
1,121
|
$
|
400
|
$
|
841
|
$
|
7,480
|
$
|
(805)
|
$
|
-
|
$
|
-
|
$
|
(805)
|
$
|
4,811
|
$
|
560,953
|
|
Salobo
|
35,717
|
21,957
|
|
1,127
|
|
400
|
|
420
|
|
24,742
|
|
6,743
|
|
-
|
|
-
|
|
6,743
|
|
15,959
|
|
2,175,433
|
|
Other6
|
15,591
|
19,446
|
|
1,137
|
|
373
|
|
560
|
|
22,103
|
|
3,951
|
|
(100,299)
|
|
-
|
|
(96,348)
|
|
13,136
|
|
278,427
|
|
58,608
|
48,077
|
$
|
1,130
|
$
|
389
|
$
|
535
|
$
|
54,325
|
$
|
9,889
|
$
|
(100,299)
|
$
|
-
|
$
|
(90,410)
|
$
|
33,906
|
$
|
3,014,813
|
Operating
results
|
|
|
|
|
|
|
|
|
$
|
153,251
|
$
|
61,295
|
$
|
(154,021)
|
$
|
-
|
$
|
(92,726)
|
$
|
105,097
|
$
|
4,871,236
|
Corporate
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(7,170)
|
$
|
(7,170)
|
$
|
(5,626)
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(428)
|
|
(428)
|
|
(360)
|
|
|
|
Other
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(763)
|
|
(763)
|
|
436
|
|
|
|
Income tax
recovery
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,162
|
|
5,162
|
|
-
|
|
|
Total corporate
costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
(3,199)
|
$
|
(3,199)
|
$
|
(5,550)
|
$
|
137,941
|
|
|
|
|
|
|
|
|
|
$
|
153,251
|
$
|
61,295
|
$
|
(154,021)
|
$
|
(3,199)
|
$
|
(95,925)
|
$
|
99,547
|
$
|
5,009,177
|
|
|
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 (iii) at the end of this press
release.
|
4)
|
Comprised of the
operating Los Filos, Zinkgruvan, Stratoni, Cozamin, Neves-Corvo,
Minto, Lagunas Norte, Pierina, Veladero, 777 and Constancia silver
interests in addition to the non-operating Keno Hill, Aljustrel,
Loma de La Plata, Pascua-Lama and Rosemont silver
interests.
|
5)
|
Comprised of the
operating Coleman, Copper Cliff, Garson, Stobie, Totten and
Creighton gold interests in addition to the non-operating Victor
gold interest.
|
6)
|
Comprised of the
operating Minto, 777 and Constancia 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 September 30, 2015 were as follows:
Three Months Ended
September 30, 2015
|
|
Silver / Gold
Ratio1
|
Ounces
Produced2,3
|
Ounces
Sold3
|
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
|
75.4
|
11,309
|
10,201
|
$
|
15.02
|
$
|
4.58
|
$
|
10.44
|
$
|
4.44
|
$
|
6.00
|
Gold equivalent
basis
|
75.4
|
149,941
|
135,243
|
$
|
1,133
|
$
|
345
|
$
|
788
|
$
|
335
|
$
|
453
|
|
|
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 (iii) at the end of this press
release.
|
5)
|
Refer to
discussion on non-IFRS measure (iv) at the end of this press
release.
|
Non-IFRS Measures
Silver Wheaton has included, throughout this document, certain
non-IFRS performance measures, including (i) adjusted net earnings
and adjusted net earnings per share; (ii) operating cash flow per
share (basic and diluted); (iii) average cash costs of silver and
gold on a per ounce basis and; (iv) cash operating margin.
i.
|
Adjusted net earnings
and adjusted net earnings per share are calculated by removing the
effects of the non-cash impairment charges. The Company believes
that, in addition to conventional measures prepared in accordance
with IFRS, management and certain investors use this information to
evaluate the Company's performance.
|
|
|
|
The following table
provides a reconciliation of adjusted net earnings and adjusted net
earnings per share (basic and diluted).
|
|
Three Months
Ended
September 30
|
(in thousands, except
for per share amounts)
|
|
2016
|
|
2015
|
Net earnings
(loss)
|
|
$
|
82,986
|
|
$
|
(95,925)
|
Add back - impairment
loss, net of tax
|
|
|
-
|
|
|
145,726
|
Adjusted net
earnings
|
|
$
|
82,986
|
|
$
|
49,801
|
Divided
by:
|
|
|
|
|
|
|
|
Basic weighted
average number of shares outstanding
|
|
|
440,635
|
|
|
404,370
|
|
Diluted weighted
average number of shares outstanding
|
|
|
441,917
|
|
|
404,540
|
Equals:
|
|
|
|
|
|
|
|
Adjusted earnings per
share - basic
|
|
$
|
0.19
|
|
$
|
0.12
|
|
Adjusted earnings per
share - diluted
|
|
$
|
0.19
|
|
$
|
0.12
|
ii.
|
Operating cash flow
per share (basic and diluted) is calculated by dividing cash
generated by operating activities by the weighted average number of
shares outstanding (basic and diluted). The Company presents
operating cash flow per share as 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
September 30
|
(in thousands, except
for per share amounts)
|
|
2016
|
|
2015
|
Cash generated by
operating activities
|
|
$
|
161,577
|
|
$
|
99,547
|
Divided
by:
|
|
|
|
|
|
|
|
Basic weighted
average number of shares outstanding
|
|
|
440,635
|
|
|
404,370
|
|
Diluted weighted
average number of shares outstanding
|
|
|
441,917
|
|
|
404,540
|
Equals:
|
|
|
|
|
|
|
|
Operating cash flow
per share - basic
|
|
$
|
0.37
|
|
$
|
0.25
|
|
Operating cash flow
per share - diluted
|
|
$
|
0.37
|
|
$
|
0.25
|
iii.
|
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
September 30
|
(in thousands, except
for gold ounces sold and per ounce amounts)
|
|
2016
|
|
2015
|
Cost of
sales
|
|
$
|
134,695
|
|
$
|
91,956
|
Less:
depletion
|
|
|
(73,919)
|
|
|
(45,248)
|
Cash cost of
sales
|
|
$
|
60,776
|
|
$
|
46,708
|
Cash cost of sales is
comprised of:
|
|
|
|
|
|
|
|
Total cash cost of
silver sold
|
|
$
|
27,637
|
|
$
|
28,000
|
|
Total cash cost of
gold sold
|
|
|
33,139
|
|
|
18,708
|
|
Total cash cost of
sales
|
|
$
|
60,776
|
|
$
|
46,708
|
Divided
by:
|
|
|
|
|
|
|
|
Total silver ounces
sold
|
|
|
6,122
|
|
|
6,575
|
|
Total gold ounces
sold
|
|
|
85,063
|
|
|
48,077
|
Equals:
|
|
|
|
|
|
|
|
Average cash cost of
silver (per
ounce)
|
|
$
|
4.51
|
|
$
|
4.26
|
|
Average cash cost of
gold (per ounce)
|
|
$
|
390
|
|
$
|
389
|
iv.
|
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
September 30
|
(in thousands, except
for gold ounces sold and per ounce amounts)
|
|
2016
|
|
2015
|
Total
sales:
|
|
|
|
|
|
|
|
Silver
|
|
$
|
119,573
|
|
$
|
98,926
|
|
Gold
|
|
$
|
113,631
|
|
$
|
54,325
|
Divided
by:
|
|
|
|
|
|
|
|
Total silver ounces
sold
|
|
|
6,122
|
|
|
6,575
|
|
Total gold ounces
sold
|
|
|
85,063
|
|
|
48,077
|
Equals:
|
|
|
|
|
|
|
|
Average realized
price of silver (per
ounce)
|
|
$
|
19.53
|
|
$
|
15.05
|
|
Average realized
price of gold (per ounce)
|
|
$
|
1,336
|
|
$
|
1,130
|
Less:
|
|
|
|
|
|
|
|
Average cash cost of
silver1 (per ounce)
|
|
$
|
(4.51)
|
|
$
|
(4.26)
|
|
Average cash cost of
gold1 (per ounce)
|
|
$
|
(390)
|
|
$
|
(389)
|
Equals:
|
|
|
|
|
|
|
|
Cash operating margin
per silver ounce sold
|
|
$
|
15.02
|
|
$
|
10.79
|
|
Cash operating margin
per gold ounce sold
|
|
$
|
946
|
|
$
|
741
|
|
|
|
|
|
|
|
1) Please refer to
non-IFRS measure (iii), 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 Silver Wheaton's MD&A available on
the Company's website at www.silverwheaton.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:
- future payments by the Company in accordance with precious
metal purchase agreements, including any acceleration of payments,
estimated throughput and exploration potential;
- the normal course issuer bid ("NCIB") and the number of shares
that may be purchased under the NCIB;
- projected increases to Silver Wheaton's production and cash
flow profile;
- the expansion and exploration potential at the Salobo and San
Dimas mines;
- projected changes to Silver Wheaton's 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 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
2016 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.
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 Silver Wheaton to be materially different from
those expressed or implied by such forward-looking statements,
including but not limited to:
- 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 Silver
Wheaton 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
Silver Wheaton 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;
- differences in the interpretation or application of tax laws
and regulations or accounting policies and rules; and Silver
Wheaton's 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 Silver Wheaton's acquisition strategy;
- risks related to the market price of the common shares of
Silver Wheaton (the "Common Shares") , including with respect to
the market price of the Common Shares being too high to ensure that
purchases under the NCIB benefit Silver Wheaton or its
shareholders;
- equity price risks related to Silver Wheaton's holding of
long‑term investments in other exploration and mining
companies;
- risks related to the declaration, timing and payment of
dividends;
- the ability of Silver Wheaton 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 Silver
Wheaton 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 Silver Wheaton 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 Silver Wheaton and the Mining Operations to
obtain and maintain necessary licenses, permits, approvals and
rulings;
- the ability of Silver Wheaton 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 Silver Wheaton 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 Silver Wheaton's Annual Information
Form available on SEDAR at www.sedar.com, and in Silver Wheaton's
Form 40-F filed March 30, 2016 and
Form 6-K filed March 16, 2016 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 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;
- Silver Wheaton's 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;
- Silver Wheaton will be successful in challenging any
reassessment by the CRA;
- Silver Wheaton has properly considered the application of
Canadian tax law to its structure and operations;
- Silver Wheaton will continue to be permitted to post security
for amounts sought by the CRA under notices of reassessment;
- Silver Wheaton has filed its tax returns and paid applicable
taxes in compliance with Canadian tax law;
- Silver Wheaton will not change its business as a result of any
CRA reassessment;
- Silver Wheaton's 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 Silver Wheaton's 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 Silver Wheaton 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, Silver Wheaton. 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 Silver Wheaton's 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. 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.
Cautionary Language Regarding Reserves And Resources
For further information on Mineral Reserves and Mineral
Resources and on Silver Wheaton more generally, readers should
refer to Silver Wheaton's Annual Information Form for the year
ended December 31, 2015 and other
continuous disclosure documents filed by Silver Wheaton since
January 1, 2016, available on SEDAR
at www.sedar.com. Silver Wheaton's 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 Silver Wheaton's 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 Silver Wheaton's Form 40-F, a copy of
which may be obtained from Silver Wheaton 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 Silver Wheaton Corp.