Silver Wheaton Reports Record Revenue and Sales Volumes in 2016 and Announces Proposed Name Change to Wheaton Precious Metals
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FOR IMMEDIATE RELEASE TSX: SLW March 21, 2017 NYSE: SLW
SILVER WHEATON REPORTS RECORD REVENUE AND SALES VOLUMES IN 2016 AND ANNOUNCES PROPOSED NAME CHANGE TO WHEATON PRECIOUS METALS
Vancouver, British Columbia – Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) is pleased to announce its results for the fourth quarter and year ended December 31, 2016. All figures are presented in United States dollars unless otherwise noted.
Silver Wheaton had record silver and gold sales volumes in 2016 at 28.3 million ounces and 330,000 ounces, respectively. Gold production was also a record at 353,700 ounces in 2016. In the fourth quarter of 2016, gold sales exceeded 100,000 ounces for the first time with over 73,000 ounces of gold sold from the Salobo mine alone. Silver Wheaton’s quarterly dividend increased for the second quarter in a row to $0.07 as the impact of growing sales volumes, especially in gold, resulted in operating cash flow growing to approximately $175 million in the fourth quarter of 2016.
FULL YEAR HIGHLIGHTS
- Attributable production for the year ended December 31, 2016 of 30.4 million ounces of silver and 353,700 ounces of gold, compared with 30.7 million ounces of silver and 243,000 ounces of gold in 2015, with silver production having decreased 1% and gold production, which represented a record, having increased 46%.
- On a silver equivalent basis¹ and gold equivalent basis¹, record attributable production for the year ended December 31, 2016 was 56.2 million silver equivalent ounces ("SEOs") or 770,300 gold equivalent ounces ("GEOs"), compared with 48.7 million SEOs or 658,600 GEOs in 2015, an increase of 15% and 17%, respectively.
- Record sales volume for the year ended December 31, 2016 of 28.3 million ounces of silver and 330,000 ounces of gold, compared with 26.6 million ounces of silver and 202,300 ounces of gold in 2015, an increase of 7% and 63%, respectively.
- On a silver equivalent basis¹ and gold equivalent basis¹, record sales volume for the year ended December 31, 2016 was 52.4 million SEOs or 718,400 GEOs, compared with 41.5 million SEOs or 561,600 GEOs in 2015, an increase of 26% and 28%, respectively.
- Record revenues of $892 million for the year ended December 31, 2016 compared with $649 million in 2015, representing an increase of 37%.
- Average realized sale price per ounce sold for the year ended December 31, 2016 of $16.96 per ounce of silver and $1,246 per ounce of gold, representing an increase of 8% for both compared to 2015.
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- Net earnings were $195 million ($0.45 per share) compared with a net loss of $162 million ($0.41 per share) in 2015.
- Adjusted net earnings² of $266 million ($0.62 per share) for the year ended December 31, 2016 compared with adjusted net earnings² of $210 million ($0.53 per share) in 2015, representing an increase of 27%. Earnings were adjusted by removing the impact of the $71 million after tax impairment charge taken in 2016 and the $372 million after tax impairment charge taken in 2015.
- Operating cash flows of $584 million ($1.36 per share²) for the year ended December 31, 2016 compared with $431 million ($1.09 per share²) in 2015, representing an increase of 35%.
- Cash operating margin² for the year ended December 31, 2016 of $12.54 per silver ounce sold and $855 per gold ounce sold, representing an increase of 9% and 13%, respectively, as compared with 2015.
- Average cash costs² for the year ended December 31, 2016 of $4.42 and $391 per ounce of silver and gold, respectively.
FOURTH QUARTER HIGHLIGHTS
- Attributable production in Q4 2016 of 7.6 million ounces of silver and 107,300 ounces of gold, compared with 10.3 million ounces of silver and 72,400 ounces of gold in Q4 2015, with silver production having decreased 26% and gold production having increased 48%.
- On a silver equivalent basis¹ and gold equivalent basis¹ attributable production in Q4 2016 was 15.2 million SEOs or 214,100 GEOs, compared with 15.7 million SEOs or 209,800 GEOs in Q4 2015, with silver production having decreased 3% and gold production having increased 2%.1
- Sales volume in Q4 2016 of 7.5 million ounces of silver and a record 108,900 ounces of gold, compared with 8.8 million ounces of silver and 64,900 ounces of gold in Q4 2015, with silver sales volume having decreased 14% and gold sales volume, which represented a record, having increased 68%.
- On a silver equivalent basis¹ and gold equivalent basis¹, record sales volume in Q4 2016 was 15.2 million SEOs or 214,500 GEOs, compared with 13.6 million SEOs or 181,800 GEOs in Q4 2015, an increase of 12% and 18%, respectively.
ounces, representing a decrease of 0.6 million payable silver ounces and 2,200 payable gold ounces during the three month period ended December 31, 2016.
- Revenues of $258 million in Q4 2016 compared with $200 million in Q4 2015, representing an increase of 29%.
- Average realized sale price per ounce sold in Q4 2016 of $16.95 per ounce of silver and $1,205 per ounce of gold representing an increase of 15% and 10%, respectively, compared to Q4 2015.
- Net earnings of $11 million ($0.02 per share) in Q4 2016 compared with a net loss of $169 million ($0.42 per share) in Q4 2015.
- Adjusted net earnings² of $82 million ($0.19 per share) in Q4 2016 compared with adjusted net earnings² of $57 million ($0.14 per share) in Q4 2015, representing an increase of 43%. Earnings were adjusted by removing the impact of the $71 million after
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tax impairment charge taken in Q4 2016 and the $227 million after tax impairment charge taken in Q4 2015.
- Operating cash flows of $175 million ($0.40 per share²) in Q4 2016 compared with $133 million ($0.33 per share²) in Q4 2015, representing an increase of 31%.2
- Cash operating margin² in Q4 2016 of $12.36 per silver ounce sold and $817 per gold ounce sold, representing an increase of 16% for both as compared with Q4 2015.
- Average cash costs² in Q4 2016 were $4.59 and $389 per ounce of silver and gold, respectively.
- Declared quarterly dividend of $0.07 per common share, representing an increase of 17% relative to the previous quarterly dividend.
- Asset Highlights
- Record Salobo attributable gold production in Q4 2016 of 71,328 ounces compared with 39,395 ounces in Q4 2015, representing an increase of 81% due to the acquisition of an additional 25% of attributable gold in the third quarter of 2016 and increased throughput.
OUTLOOK
- Silver Wheaton’s estimated attributable production in 2017 is forecast to be 28 million ounces of silver and 340,000 ounces of gold. For 2017 guidance, Silver Wheaton has assumed the ongoing strike at San Dimas will continue for a three-month period and that San Dimas will otherwise achieve production in line with 2016.
- Silver Wheaton’s estimated average annual attributable production over the next five years is anticipated to be in line with 2017 production at approximately 29 million ounces of silver and 340,000 ounces of gold.
PROPOSED NAME CHANGE TO WHEATON PRECIOUS METALS
- The Board of Directors has recommended changing the Company’s name to Wheaton Precious Metals Corp. to better align the corporate identity with the Company’s diverse portfolio of both silver and gold assets. The Company plans to seek shareholder approval for the proposed name change at its annual shareholder meeting in May.
“2016 was a record year for Silver Wheaton on many fronts. We sold more silver and gold than any other year and produced over 350,000 ounces of gold for the first time,” said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. “In the fourth quarter of 2016, we sold over 7.5 million ounces of silver and over 100,000 ounces of gold. Strong sales and production resulted in operating cash flow reaching $175 million in the fourth quarter alone, and over $580 million in 2016. Our portfolio of low cost, long life assets provides a solid foundation that we believe can continue to deliver strong production, sales, and cash flow.”
“Since 2013, our company has seen a marked increase in gold production, and in the second half of 2016, revenue was evenly split between silver and gold. In order to better align our corporate identity with underlying operations while maintaining a link to our past and the innovation that the ‘Wheaton’ name has become synonymous with, we have recommended changing our name to Wheaton Precious Metals. Over the company's history we have
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created value through streaming both silver and gold from a diverse portfolio of high-quality assets, and the new name will reinforce our position as the leader in precious metals streaming.”
Financial Review
Revenues
Revenue was $258 million in the fourth quarter of 2016, on sales volume of 7.5 million ounces of silver and 108,900 ounces of gold. This represents a 29% increase from the $200 million of revenue generated in the fourth quarter of 2015 due primarily to (i) a 68% increase in the number of gold ounces sold; (ii) a 15% increase in the average realized silver price ($16.95 in Q4 2016 compared with $14.75 in Q4 2015); (iii) a 10% increase in the average realized gold price ($1,205 in Q4 2016 compared with $1,100 in Q4 2015); partially offset by (iv) a 14% decrease in the number of silver ounces sold.
Revenue was $892 million in the year ended December 31, 2016, on sales volume of 28.3 million ounces of silver and 330,000 ounces of gold. This represents a 37% increase from the $649 million of revenue generated in 2015 due primarily to (i) a 63% increase in the number of gold ounces sold; (ii) an 8% increase in the average realized silver price ($16.96 in 2016 compared with $15.64 in 2015); (iii) an 8% increase in the average realized gold price ($1,246 in 2016 compared with $1,152 in 2015); and (iv) a 7% increase in the number of silver ounces sold.
Costs and Expenses
Average cash costs² in the fourth quarter of 2016 were $4.59 per silver ounce sold and $389 per gold ounce sold, as compared with $4.06 per silver ounce and $396 per gold ounce during the comparable period of 2015. This resulted in a cash operating margin² of $12.36 per silver ounce sold and $817 per gold ounce sold, an increase of 16% for both as compared with Q4 2015. The increase in the cash operating margin was primarily due to a 15% increase in the average realized silver price and a 10% increase in the average realized gold price in Q4 2016 compared with Q4 2015.
Average cash costs² during the year ended December 31, 2016 were $4.42 per silver ounce sold and $391 per gold ounce sold, as compared with $4.17 per silver ounce and $393 per gold ounce during the comparable period of 2015. This resulted in a cash operating margin² of $12.54 per silver ounce sold and $855 per gold ounce sold, an increase of 9% and 13%, respectively, as compared with 2015. The increase in the cash operating margin was primarily due to an 8% increase in the average realized silver price and an 8% increase in the average realized gold price in 2016 compared with 2015.
Earnings and Operating Cash Flows
Adjusted net earnings² and cash flow from operations in the fourth quarter of 2016 were $82 million ($0.19 per share) and $175 million ($0.40 per share²), compared with adjusted net earnings² of $57 million ($0.14 per share) and cash flow from operations of $133 million ($0.33 per share²) for the same period in 2015, an increase of 43% and 31%, respectively.
Adjusted net earnings² and cash flow from operations for the year ended December 31, 2016 were $266 million ($0.62 per share) and $584 million ($1.36 per share²), compared with adjusted net earnings² of $210 million ($0.53 per share) and cash flow from operations of $431 million ($1.09 per share²) for the same period in 2015, an increase of 27% and 35%, respectively.
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Balance Sheet
At December 31, 2016, the Company had approximately $124 million of cash on hand and $1.2 billion outstanding under the Company's $2 billion revolving term loan (the "Revolving Facility"). On February 27, 2017, the term of the revolving term loan was extended so that the term loan now matures on February 27, 2022.
Asset Impairment
At the end of each reporting period, the Company assesses each precious metal purchase agreement to determine whether any indication of impairment exists. If such an indication exists, the recoverable amount of the precious metal purchase agreement is estimated in order to determine the extent of the impairment (if any).
Vale has recently completed a detailed study on the Sudbury mines in an effort to improve operating margins. This has resulted in a number of changes to Vale’s anticipated mine plan, with the resulting 2017 to 2032 mine plan having approximately 20% less recoverable gold production than previously estimated, and this reduction in recoverable ounces is an indicator of impairment related to the Sudbury gold interest as at December 31, 2016. The Sudbury gold interest had a carrying value at December 31, 2016 of $473 million. Management has estimated that the recoverable amount at December 31, 2016 under the Sudbury gold interest was $402 million, representing its fair value less cost to sell and resulting in an impairment charge of $71 million.
Fourth Quarter Asset Highlights
During the fourth quarter of 2016, attributable production was 7.6 million ounces of silver and 107,300 ounces of gold, respectively, representing a decrease of 26% and an increase of 48%, as compared with the fourth quarter of 2015.
Operational highlights for the quarter ended December 31, 2016, are as follows:
Salobo
In the fourth quarter of 2016, Salobo produced 71,328 ounces of attributable gold, an increase of approximately 81% relative to the fourth quarter of 2015. 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 as well as increased throughput. According to Vale’s fourth quarter production report, production of copper in concentrate at Salobo reached a quarterly record in the fourth quarter with December also achieving a monthly production record.
Antamina
In the fourth quarter of 2016, Antamina produced 1.6 million ounces of attributable silver, a decrease of approximately 33% relative to the fourth quarter of 2015. The apparent significant decrease relative to the fourth quarter of 2015 was primarily attributed to the Antamina transaction being closed in the fourth quarter of 2015 with a term that entitled Silver Wheaton to Glencore’s portion of silver sold from Antamina to on offtaker as of September 30, 2015, resulting in reported production in the fourth quarter of 2015 including some material processed in the previous quarter. It should be noted that Antamina produced 6.8 million ounces of silver in 2016, well exceeding expectations and full year guidance of approximately 5.5 million ounces.
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Peñasquito
In the fourth quarter of 2016, Peñasquito produced 1.3 million ounces of attributable silver, a decrease of approximately 25% relative to the fourth quarter of 2015. The drop in production was attributable to lower grades as a result of mine sequencing. As disclosed in Goldcorp Inc.’s (“Goldcorp”) fourth quarter of 2016 MD&A, the Pyrite Leach Project (“PLP”) achieved 65% engineering progress by the end of 2016, with procurement activities well advanced to support execution. Goldcorp further reports that as part of the PLP, a carbon pre-flotation facility is being constructed and is anticipated to be completed in the second quarter of 2018. The Northern Well Field project has also reportedly reached full production capacity during the fourth quarter of 2016 and is expected to satisfy Peñasquito's long-term water requirements.
San Dimas
In the fourth quarter of 2016, San Dimas produced 1.4 million ounces of attributable silver, a decrease of approximately 38% relative to the fourth quarter of 2015. The decrease in production was primarily driven by lower throughput and grades. As per Primero Mining Corp.’s (“Primero”) fourth quarter of 2016 MD&A, production in 2016 was impacted by the implementation of enhanced ground support in early-2016, and later by high unplanned worker absences and lack of compliance to the mine plans. This reportedly resulted in reduced underground development rates and ventilation restrictions which reduced mine productivity. Starting in late-2016, Primero reportedly began undertaking actions to reduce the complexity and scale of the San Dimas mine operations, including significant decreases to the San Dimas workforce. Mining development during Q4 was reportedly the highest quarterly total since Q2 2015.
On February 15, 2017, Primero announced that unionized employees at the San Dimas mine had initiated a strike action, resulting in the complete stoppage of mining and milling activities at the San Dimas mine. Primero has noted that its key focus in these negotiations has been to better align the short-term bonus structure with overall mine-site performance and profitability, to move the labour force onto a more continuous shift cycle to improve productivity and to achieve the necessary reductions to the unionized workforce. Primero has indicated that depending on its duration, the strike could have a negative impact on Primero’s 2017 production.
As was further noted in Primero’s fourth quarter of 2016 MD&A, Primero has commenced a strategic review process to explore alternatives as there is material uncertainty related to the company’s ability to continue as a going concern.
Sudbury
In the fourth quarter of 2016, Vale’s Sudbury mines produced 11,028 ounces of attributable gold, a decrease of approximately 19% relative to the fourth quarter of 2015. This decrease was attributable to lower throughput and grades. According to Vale’s fourth quarter production report, Sudbury production was adversely impacted in the quarter by operational issues and by mine redesign and remediation work. Furthermore, Sudbury will transition to a single furnace operation during 2017 and, as preparation for this, Vale will take one of the furnaces off-line in mid-March in order to rebuild and expand the furnace. The rebuilt furnace will reportedly remain in operation post the transition to one furnace in the second half of the year. Subsequent to quarter end, Vale announced that the Stobie mine, one of the six currently operating mines from which Silver Wheaton is entitled to gold production, will be placed on care and maintenance later in 2017 due to a number of factors including low metal prices and ongoing market challenges, declining ore grades, and, more recently, seismicity issues that restricted production below the
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3,000-foot level. The Stobie mine represented approximately 5% of Silver Wheaton’s attributable production from Sudbury.
Other Gold
In the fourth quarter of 2016, total Other Gold attributable production was 21,825 ounces, an increase of 49% relative to the fourth quarter of 2015. The increase was driven primarily by higher grades at Minto and, to a lesser extent, better recoveries at 777.
Other Silver
In the fourth quarter of 2016, total Other Silver attributable production was 2.5 million ounces, a decrease of approximately 21% relative to the fourth quarter of 2015. The decrease was driven primarily due to lower silver grades at Zinkgruvan, Cozamin, and Veladero. In addition, as per the amendment to the silver stream agreement dated November 30, 2015, production from Yauliyacu was split evenly with Glencore for the entire fourth quarter of 2016 as the mine reached the annual sharing threshold of 1.5 million ounces in the third quarter of 2016.
Development Update – Pascua Lama
As per Barrick Gold Corporation’s (“Barrick”) news release “Barrick Reports Progress on Projects” dated February 15, 2017, Barrick has initiated a prefeasibility study to evaluate the construction of an underground mine at Lama. Barrick has indicated that the study will evaluate the use of low-cost bulk mining methods, including sub-level cave and block cave mining, designed to target higher-value ore on the Argentinean side of the border in the initial stages of the operation. According to Barrick, cash flow from Lama could support a staged development that would, over time, incorporate ore from the Chilean side of the border, subject to additional permitting in Chile. Barrick’s efforts in Chile in 2017 will reportedly focus on advancing project concepts in parallel with the Lama study, with the intention of moving to a prefeasibility level study in 2018. According to Barrick, conceptually, initial ore processing at Lama would be undertaken using one of three partially completed processing streams at the site, which currently has a capacity of approximately 15,000 tonnes per day; existing infrastructure could potentially be scaled up to 25,000 tonnes per day at a later date. Furthermore, Barrick states that an underground mine would reduce the surface footprint of the operation and would be less susceptible to weather-related production interruptions during the winter season.
Produced But Not Yet Delivered 3
ounces, representing a decrease of 0.6 million payable silver ounces and 2,200 payable gold ounces during the three month period ended December 31, 2016. Payable silver ounces produced but not yet delivered decreased primarily as a result of decreases related to the Yauliyacu, Zinkgruvan, and San Dimas silver interests, partially offset by an increase related to the Antamina silver interest. Payable gold ounces produced but not yet delivered decreased primarily as a result of decreases related to the Salobo and Minto gold interests, offset partially by an increase related to the 777 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.
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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.
Reserves and Resources
As of December 31, 2016, Proven and Probable Mineral Reserves attributable to Silver Wheaton were 735.6 million ounces of silver compared with 775.3 million ounces as reported in Silver Wheaton’s 2015 Annual Information Form (“AIF”), a decrease of 5%, and 11.55 million ounces of gold compared with 8.79 million ounces, an increase of 31%. On an attributable Measured and Indicated Mineral Resource basis, silver resources were 783.6 million ounces compared with 675.4 million ounces as reported in Silver Wheaton’s 2015 AIF, an increase of 16%, and gold resources were 3.05 million ounces compared with 2.70 million ounces, an increase of 13%. On an attributable Inferred Mineral Resource basis, silver resources were 392.1 million ounces compared with 473.5 million as reported in Silver Wheaton’s 2015 AIF, a decrease of 17%, and gold resources were 2.85 million ounces compared with 2.38 million ounces, an increase of 20%.
Estimated attributable reserves and resources contained in this press release are based on information available to the Company as of March 2, 2017, and therefore will not reflect updates, if any, after that date. Updated reserves and resources data incorporating year-end 2016 estimates will also be included in the Company's 2016 Annual Information Form. Silver Wheaton’s most current attributable reserves and resources, as of December 31, 2016, can be found on the Company’s website at www.silverwheaton.com.
2017 and Long-Term Production Forecast
Silver Wheaton is pleased to provide its updated one-year and long-term production guidance. Silver Wheaton’s estimated attributable silver and gold production in 2017 is forecast to be 28 million silver ounces and 340,000 gold ounces. For 2017 guidance, Silver Wheaton has assumed the ongoing strike at San Dimas will continue for a three-month period and that San Dimas will otherwise achieve production in line with 2016. 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.
Over the next five years, forecast production growth from Salobo, Peñasquito, and Constancia is expected to be offset by the cessation of production from assets with fixed terms. In particular, the 10-year-term contract on Capstone Mining’s Cozamin mine, acquired with Silver Wheaton’s 2009 acquisition of Silverstone, expires in April 2017. In addition, Silver Wheaton’s streaming agreement with Barrick regarding Pascua-Lama provides the Company with silver production from the Lagunas Norte, Veladero, and Pierina mines until March 31, 2018. In addition, Hudbay’s Constancia mine satisfied its completion test in 2016, resulting in gold production from the 777 mine attributable to Silver Wheaton dropping from 100% to 50% in 2017. And lastly, as a reminder, Silver Wheaton does not include any production from Barrick’s Pascua-Lama project or Hudbay’s Rosemont project in its guidance.
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Attributable mine-by-mine actual 2015 and 2016 production and forecast 2017 production are as follows:
| Attributable Production1, 2 | |||||
|---|---|---|---|---|---|
| 2015 Actual | 2016 Actual | 2017 Forecast | |||
| Silver ounces produced (000's) Peñasquito San Dimas3 Antamina Constancia Other4 | |||||
| 7,237 | 5,034 | 5,250 | |||
| 7,449 | 5,212 | 4,000 | |||
| 2,403 | 6,796 | 6,000 | |||
| 1,996 | 2,759 | 2,500 | |||
| 11,649 | 10,578 | 10,250 | |||
| Total silver ounces Gold ounces produced (000's) Salobo Sudbury5 Constancia Other6 | 30,734 | 30,379 | 28,000 | ||
| 138.3 | 213.6 | 245 | |||
| 37.8 | 44.8 | 40 | |||
| 14.4 | 14.9 | 10 | |||
| 52.4 | 80.4 | 45 | |||
| Total gold ounces | 243.0 | 353.7 | 340 |
1) Ounces produced represent quantity of silver and gold contained in concentrate or doré prior to smelting or refining deductions.
2) 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.
3) Primero will deliver a per annum amount to Silver Wheaton equal to the first 6 million ounces of payable silver produced at San Dimas and 50% of any excess. Due to the ongoing strike at the San Dimas mine, Primero has not released 2017 forecast production for either gold or silver. Guidance for 2017 does not reflect Primero’s opinion and assumes annualized production from San Dimas being in-line with 2016 net of one quarter of production to reflect the potential impact of the ongoing strike;
therefore, guidance is subject to change depending on the actual length of the strike.
4) Includes the Yauliyacu, Los Filos, Zinkgruvan, Keno Hill, Cozamin, Neves-Corvo, Stratoni, Minto, 777, Constancia, Lagunas Norte, Pierina, Veladero, and Aljustrel silver interests.
5) Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests.
6) Includes Minto and 777 gold interests.
Silver Wheaton to Rename Company to Wheaton Precious Metals
The Company plans to seek shareholder approval to change its name to Wheaton Precious Metals Corp. at its annual shareholder meeting in May.
Since 2013, the Company has seen a marked increase in gold production, and in the second half of 2016, revenue was evenly split between silver and gold. In order to better align the Company’s corporate identity with underlying operations, the Board of Directors has recommended that the name be changed to Wheaton Precious Metals Corp. Silver continues to be a focus for the Company; however, the new name will more accurately reflect the Company’s diverse portfolio of both silver and gold assets.
If the name change to Wheaton Precious Metals is approved by shareholders, the Company plans to also change its Toronto Stock Exchange (“TSX”) and New York Stock Exchange (“NYSE”) ticker symbol from “SLW” to “WPM.” The timing of the name change and ticker symbol change will be announced at a later date. Concurrent with the name change, the Company’s web domain will also change to www.wheatonpm.com.
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Outlook
From a liquidity perspective, the $124 million of cash and cash equivalents as at December 31, 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 metals stream interests.
Webcast and Conference Call Details
A conference call and webcast will be held Wednesday, March 22, 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: 64357311 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 March 29, 2017 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: 64357311 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 16 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 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.
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Summarized Financial Results
| 2015 2014 | ||
|---|---|---|
| 2016 | ||
| Silver and gold production Attributable silver ounces produced (000’s) Attributable gold ounces produced Attributable silver equivalent ounces produced (000’s) 1 Attributable gold equivalent ounces produced 1 Silver and gold sales Silver ounces sold (000’s) Gold ounces sold Silver equivalent ounces sold (000’s) 1 Gold equivalent ounces sold 1 Average realized price ($'s per ounce) Average realized silver price Average realized gold price Average realized silver equivalent price 1 Average realized gold equivalent price 1 Average cash cost ($'s per ounce) 2 Average silver cash cost Average gold cash cost Average silver equivalent cash cost 1 Average gold equivalent cash cost 1 Average depletion ($'s per ounce) 2 Average silver depletion Average gold depletion Average silver equivalent depletion 1 Average gold equivalent depletion 1 | 30,734 25,674 242,957 147,635 48,701 35,471 658,551 534,553 26,566 23,484 202,349 139,521 41,529 32,742 561,570 493,425 $ 15.64 $ 18.92 $ 1,152 $ 1,261 $ 15.62 $ 18.94 $ 1,155 $ 1,257 $ 4.17 $ 4.14 $ 393 $ 386 $ 4.58 $ 4.61 $ 339 $ 306 $ 3.41 $ 3.22 $ 534 $ 607 $ 4.78 $ 4.89 $ 354 $ 325 | |
| 30,379 | ||
| 353,703 | ||
| 56,169 | ||
| 770,289 | ||
| 28,322 | ||
| 330,009 | ||
| 52,388 | ||
| 718,430 | ||
| $ 16.96 | ||
| $ 1,246 | ||
| $ 17.02 | ||
| $ 1,241 | ||
| $ 4.42 | ||
| $ 391 | ||
| $ 4.86 | ||
| $ 354 | ||
| $ 5.32 | ||
| $ 479 | ||
| $ 5.89 | ||
| $ 430 | ||
| Total revenue ($000's) | $ 648,687 $ 620,176 | |
| $ 891,557 | ||
| Net earnings (loss) ($000's) Add back - impairment loss, net of tax | $ (162,042) $ 199,826 372,399 68,151 | |
| $ 195,137 | ||
| 71,000 | ||
| Adjusted net earnings 2 ($000's) | $ 210,357 $ 267,977 | |
| $ 266,137 | ||
| Earnings (loss) per share Basic Diluted | $ (0.41) $ 0.56 $ (0.41) $ 0.56 | |
| $ 0.45 | ||
| $ 0.45 | ||
| Adjusted earnings per share 2 Basic Diluted | $ 0.53 $ 0.75 $ 0.53 $ 0.74 | |
| $ 0.62 | ||
| $ 0.62 | ||
| Cash flow from operations ($000's) | $ 431,359 $ 431,873 | |
| $ 584,301 | ||
| Dividends Dividends paid ($000's) Dividends paid per share | $ 80,809³ $ 93,400³ $ 0.20 $ 0.26 | |
| $ 90,612³ | ||
| $ 0.21 | ||
| Total assets ($000's) | $ 5,632,211 $ 4,647,763 | |
| $ 6,153,319 | ||
| Total non-current financial liabilities ($000’s) | $ 1,468,732 $ 1,001,914 | |
| $ 1,194,012 | ||
| Total other liabilities ($000’s) | $ 12,744 $ 17,113 | |
| $ 19,319 | ||
| Shareholders' equity ($000's) | $ 4,150,735 $ 3,628,736 | |
| $ 4,939,988 | ||
| Shares outstanding | 404,039,065 364,777,928 | |
| 441,456,217 |
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) Refer to discussion on non-IFRS measures at the end of this press release.
3) During the year ended December 31, 2016, the Company declared and paid total dividends to its shareholders of $91 million, with the payment being comprised of $79 million in cash and $12 million in common shares issued, with the Company issuing 624,931 common shares under the Company’s dividend reinvestment plan (“DRIP”). During the year ended December 31, 2015, the Company declared and paid total dividends of $81 million, with the payment being comprised of $69 million in cash and $12 million in common shares issued, with the Company issuing 847,064 common shares under the Company’s DRIP. During the year ended December 31, 2014, the Company declared and paid total dividends of $93 million, with the payment being comprised of $80 million in cash and $13 million in common shares issued, with the Company issuing 646,618 common shares under the Company’s DRIP.
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Consolidated Statements of Earnings (Loss)
Years Ended December 31
| (US dollars and shares in thousands, except per share amounts) 2016 | 2015 | |||
| Sales | $ 648,687 | |||
| $ | 891,557 | |||
| Cost of sales Cost of sales, excluding depletion Depletion | $ 190,214 198,581 | |||
| $ | 254,434 | |||
| 308,702 | ||||
| Total cost of sales | $ 388,795 | |||
| $ | 563,136 | |||
| Gross margin | $ 259,892 | |||
| $ | 328,421 | |||
| Expenses General and administrative 1 Impairment charges Interest expense Other expense | $ 32,237 384,922 4,090 4,076 | |||
| $ | 34,439 | |||
| 71,000 | ||||
| 24,193 | ||||
| 4,982 | ||||
| $ 425,325 | ||||
| $ | 134,614 | |||
| Earnings (loss) before income taxes Income tax recovery | $ (165,433) 3,391 | |||
| $ | 193,807 | |||
| 1,330 | ||||
| Net earnings (loss) | $ (162,042) | |||
| $ | 195,137 | |||
| Basic earnings per share Diluted earnings per share Weighted average number of shares outstanding Basic Diluted | $ (0.41) $ (0.41) 395,755 395,938 | |||
| $ | 0.45 | |||
| $ | 0.45 | |||
| 430,461 | ||||
| 430,845 | ||||
| 1) Equity settled stock based compensation (a non-cash item) included in general and administrative expenses. | 5,060 | 6,160 | ||
| $ | $ |