Another Record Quarter of Silver Equivalent Production and Sales Volume for Silver Wheaton in the Third Quarter of 2015
FOR IMMEDIATE RELEASE TSX: SLW November 3, 2015 NYSE: SLW
ANOTHER RECORD QUARTER OF SILVER EQUIVALENT PRODUCTION AND SALES VOLUME FOR SILVER WHEATON IN THE THIRD QUARTER OF 2015
Vancouver, British Columbia – Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) is pleased to announce its unaudited results for the third quarter ended September 30, 2015. All figures are presented in United States dollars unless otherwise noted.
Silver Wheaton achieved record production for a third quarter in a row and record sales volume for a second quarter in a row, driven by record production at Salobo and Peñasquito and record sales volume at San Dimas. In addition, the ramp-up of production at Salobo and Constancia continue to progress as expected.
THIRD QUARTER HIGHLIGHTS
- Record attributable silver equivalent production in Q3 2015 of 11.0 million ounces (6.9 million ounces of silver and 54,500 ounces of gold), compared with 8.9 million ounces in Q3 2014, representing an increase of 24%.
- Record silver equivalent sales volume in Q3 2015 of 10.2 million ounces (6.6 million ounces of silver and 48,100 ounces of gold), compared with 8.7 million ounces in Q3 2014, representing an increase of 17%.
- During the three month period ending September 30, 2015, payable silver equivalent ounces attributable to the Company produced but not yet delivered decreased by 0.1 million ounces to approximately 6.3 million ounces.
- Revenues of $153.3 million in Q3 2015 compared with $165.9 million in Q3 2014, representing a decrease of 8%.
- Average realized sale price per silver equivalent ounce sold in Q3 2015 of $15.03 ($15.05 per ounce of silver and $1,130 per ounce of gold), compared with $18.98 in Q3 2014, representing a decrease of 21%.
- Adjusted net earnings¹ of $49.8 million ($0.12 per share) in Q3 2015 compared with $72.6 million ($0.20 per share) in Q3 2014, representing a decrease of 31%.
- During the three months ended September 30, 2015, the Company recognized an impairment charge of $154.0 million related to its 777 silver and gold interest.
- After including the after tax impact of the impairment charge, net loss of $95.9 million ($0.24 per share) in Q3 2015 compared with net earnings of $4.5 million ($0.01 per share) in Q3 2014.1
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- Operating cash flows of $99.5 million ($0.25 per share¹) in Q3 2015 compared with $120.4 million ($0.34 per share¹) in Q3 2014, representing a decrease of 17%.
- Cash operating margin¹ in Q3 2015 of $10.45 per silver equivalent ounce compared with $14.39 in Q3 2014, representing a decrease of 27%.
- Average cash costs¹ in Q3 2015 were $4.26 and $389 per ounce of silver and gold, respectively. On a silver equivalent basis, average cash costs¹ decreased to $4.58 compared with $4.59 in Q3 2014.
- Declared quarterly dividend of $0.05 per common share.
- On September 18, 2015, the Company announced that it had received TSX approval for a normal course issuer bid (“NCIB”) of up to 5% of the Company's outstanding Common Shares. To date, the Company has purchased 764,789 shares under the NCIB.
- On September 24, 2015, the Company announced that it had received Notices of Reassessment from the Canada Revenue Agency (the “CRA”) for the 2005 to 2010 taxation years (the “Relevant Taxation Years”).
- Subsequent to the quarter, Silver Wheaton filed notices of objection for each of the Relevant Taxation Years.
- Asset Highlights
- Salobo had record attributable production of almost 33,000 ounces of gold net to Silver Wheaton in Q3, and the ongoing ramp-up continues to be on track to achieve 100% utilization in Q4 2015.
- Record attributable production from Peñasquito.
- Record sale volume from San Dimas.
- Events Subsequent to the Quarter
- Silver Wheaton agreed to acquire from a subsidiary of Glencore Plc ("Glencore") an amount of silver equal to 33.75% of the silver production until delivery of 140 million ounces of silver and 22.5% of the silver production thereafter for the life of mine from the Antamina mine for an upfront cash consideration of US$900 million and ongoing payments of 20% of spot price per silver ounce delivered.
“Silver Wheaton hit record production for a third consecutive quarter, as the company produced 11 million silver equivalent ounces in the third quarter alone. Our cornerstone assets delivered solid results with Peñasquito and Salobo setting new production records. With over 32 million ounces produced year to date, we remain well on track to deliver on our original production growth guidance of over 20% in 2015,” said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. “Clearly, not everything has been smooth sailing, as we have also faced persistently low commodity prices, along with the receipt of the Notices of Reassessment from the CRA. I once again want to reiterate our confidence in our structure and that we will vigorously defend our tax filing position; as such, we have filed notices of objections with the CRA in regards to the Reassessments.”
“While our cornerstone operations have performed exceptionally well, we did take an impairment charge on 777 in the third quarter due to lack of exploration success combined with lower commodity prices. While the low commodity price environment has had its challenges, it has also created some great opportunities. This is clearly evidenced by the announcement of our acquisition of a silver stream on Antamina, one of the lowest cost, largest copper mines in the world. Antamina is an ideal asset for Silver Wheaton, one that readily fits in to our portfolio of top tier assets.”
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Financial Review
Revenues
Revenue was $153.3 million in the third quarter of 2015, on silver equivalent sales of 10.2 million ounces (6.6 million ounces of silver and 48,100 ounces of gold). This represents an 8% decrease from the $165.9 million of revenue generated in the third quarter of 2014 due primarily to a 21% decrease in the average realized silver equivalent price ($15.03 in Q3 2015 compared with $18.98 in Q3 2014), partially offset by a 17% increase in the number of silver equivalent ounces sold.
Costs and Expenses
Average cash costs¹ in the third quarter of 2015 were $4.58 per silver equivalent ounce as compared with $4.59 during the comparable period of 2014. This resulted in a cash operating margin¹ of $10.45 per silver equivalent ounce, a reduction of 27% as compared with Q3 2014. The decrease in the cash operating margin was primarily due to a 21% decrease in the average realized silver equivalent price in Q3 2015 compared with Q3 2014.
Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the third quarter of 2015 were $49.8 million ($0.12 per share) and $99.5 million ($0.25 per share¹), compared with $72.6 million ($0.20 per share) and $120.4 million ($0.34 per share¹) for the same period in 2014, a decrease of 31% and 17%, respectively. Earnings and cash flow continued to be impacted by lower gold and silver prices.
Balance Sheet
At September 30, 2015, the Company had approximately $81 million of cash on hand and $647 million outstanding under the Company's $2 billion revolving term loan.
On September 18, 2015 the Company announced it had received TSX approval to purchase up to 20,229,671 common shares (representing 5% of the Company's 404,593,425 total issued and outstanding common shares as of September 11, 2015) over a period of twelve months commencing on September 23, 2015. The NCIB will expire no later than September 22, 2016. During the three months ended September 30, 2015 the Company purchased 119,400 shares under the NCIB at an average price of $12.26 per share. Subsequent to September 30, 2015, the Company purchased an additional 645,389 shares under the NCIB at an average price of $11.86 per share.
Asset Impairment
On August 8, 2012, the Company entered into an agreement with Hudbay Minerals Inc. (“Hudbay”) to acquire an amount equal to 100% of the silver and gold production from its currently producing 777 mine, located in Canada, until the end of 2016, and 100% of the silver and 50% of the gold production for the remainder of the mine life. During the third quarter of 2015, the Company’s management was informed that as a result of an unsuccessful drilling program at 777, Hudbay’s management believes that the mine life for 777 is unlikely to be extended beyond 2020. As a result, during the third quarter of 2015, the estimate of future production from 777 was reduced, with this reduction
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representing an indicator of impairment related to the 777 silver and gold interest. At September 30, 2015, Silver Wheaton’s management estimated that the recoverable amount under the 777 silver and gold interest was $147.5 million, representing its fair value less cost to sell and resulting in an impairment charge of $154.0 million.
CRA Audit Update
On July 6, 2015, the Company announced that it had received a proposal letter (the “Proposal”) from the CRA in which the CRA was proposing to reassess Silver Wheaton under the transfer pricing provisions contained in the Income Tax Act (Canada) (the “Act”). Subsequent to the issuance of the Proposal, on September 24, 2015, the Company announced that it had received Notices of Reassessment (the “Reassessments”) from the CRA for the 2005 to 2010 taxation years (the “Relevant Taxation Years”). The Reassessments are consistent with the Proposal and seek to increase the Company’s income subject to tax in Canada for the Relevant Taxation Years by approximately Cdn$715.3 million which would result in federal and provincial tax of approximately Cdn$201.3 million. In addition, the CRA is seeking to impose transfer pricing penalties of approximately Cdn$71.5 million and interest and other penalties of Cdn$80.6 million for the Relevant Taxation Years. Total tax, interest and penalties sought by the CRA for the Relevant Taxation Years is Cdn$353.4 million. The CRA's position in the Reassessments is that the transfer pricing provisions of the Act relating to income earned by the Company’s foreign subsidiaries outside of Canada should apply such that the income of Silver Wheaton subject to tax in Canada should be increased by substantially all of the income of the Company’s foreign subsidiaries. Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian tax law, and as a result no amounts have been recorded for any potential liability arising from this matter.
Silver Wheaton intends to vigorously defend its tax filing positions. As such, subsequent to September 30, 2015, Silver Wheaton has filed notices of objection for each of the Relevant Taxation Years. The Company will be required to make a deposit of Cdn$176.7 million representing 50% of the reassessed amounts of tax, interest and penalties. Silver Wheaton will seek to post security in the form of a letter of credit for this amount as opposed to a cash deposit. Cash that has been deposited in respect of a reassessment will be refunded, plus interest, if the Company is ultimately successful in challenging that reassessment.
Events Subsequent to the Quarter
Antamina
Subsequent to the quarter, Silver Wheaton, through its wholly owned subsidiary Silver Wheaton (Caymans) Ltd. (“SWC”), has agreed to acquire from Anani Investments Ltd., a wholly-owned subsidiary of Glencore plc ("Glencore") an amount of silver equal to 33.75% of the silver production until delivery of 140 million ounces of silver and 22.5% of silver production thereafter for the life of mine silver production from the Antamina mine, located in Peru. SWC will pay Glencore cash consideration of US$900 million for the silver stream. In addition, SWC will make ongoing payments of 20% of spot price per silver ounce delivered. The silver stream is effective September 30, 2015, and as a result, production and sales attributable to Silver Wheaton are forecast for the fourth quarter of 2015. Silver production is expected to average 4.7 million ounces per year over the first 20 years. Closing of the transaction is expected to occur prior to the end of November 2015 and is subject to the completion of certain corporate matters and
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customary conditions. (See Silver Wheaton’s November 3, 2015 news release for full details.)
Third Quarter Asset Highlights
During the third quarter of 2015, attributable silver equivalent production was 11.0 million ounces (6.9 million ounces of silver and 54,500 ounces of gold), representing an increase of 24% compared with the third quarter of 2014.
Operational highlights for the quarter ended September 30, 2015, are as follows:
Salobo
In the third quarter of 2015, Salobo produced a record 32,954 ounces of gold attributable to Silver Wheaton, an increase of approximately 216% relative to the third quarter of 2014. This increase was primarily due to the doubling of the percentage of gold that Silver Wheaton is entitled to and the increased throughput as a result of the expansion to 24 million tonnes per annum, which commenced production in mid-2014. According to Vale’s third quarter of 2015 production report, the ramp-up of Salobo was weaker than expected in July and August but recovered in September with capacity utilization exceeding 90%. Salobo is expected to achieve 100% capacity utilization in the fourth quarter.
Constancia
In the third quarter of 2015, Constancia produced approximately 4,341 ounces of gold and 0.7 million ounces of silver attributable to Silver Wheaton as the mine declared commercial production on April 30, 2015, and it continues to ramp-up as expected.
Peñasquito
In the third quarter of 2015, Peñasquito produced a record 2.1 million ounces of silver attributable to Silver Wheaton, an increase of approximately 28% relative to the third quarter of 2014 due to higher grades being mined as substantial mining took place in the heart of the deposit. As disclosed in Goldcorp Inc.’s (“Goldcorp”) third quarter of 2015 MD&A, construction of the Northern Well Field project remained suspended throughout the third quarter of 2015 due to an illegal blockade by a local community. Peñasquito continues to seek a fair resolution of this matter with the community, while taking steps to enforce its contractual rights. Peñasquito is also advancing alternatives for completion of the project without crossing through the affected community lands. Goldcorp believes that there will be timely resolution of this matter to meet the future water needs of Peñasquito. The Metallurgical Enhancement Project feasibility study remains on schedule to be completed in early 2016.
San Dimas
In the third quarter of 2015, attributable production from San Dimas was 1.4 million ounces of silver, an increase of approximately 22% relative to the third quarter of 2014.2 This growth was primarily due to increased production as a result of the expansion to 2,500 tonnes per day (tpd), which was completed early in 2014, as well as to the sharing threshold increasing to 6 million ounces3, partially offset by the cessation of Goldcorp's four-year obligation to deliver 1.5 million ounces of silver to the Company on August 6, 2014.
Silver sales in the third quarter of 2015 from San Dimas were a record 2.0 million ounces, an increase of 72% relative to the third quarter of 20142, as silver inventories built up in the second quarter of 2014 were subsequently sold. As at September 30,
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2015, approximately 0.2 million ounces of cumulative payable silver ounces have been produced at San Dimas but not yet delivered to the Company, representing a decrease of 0.6 million payable silver ounces during the third quarter of 2015. As reported by Primero on July 6, 2015, silver deliveries in the second quarter had been delayed due to the suspension of Primero's import and export licenses in May 2015 by the Mexican customs authorities due to a discrepancy over Primero's address related to its corporate office relocation from Mexico City to Durango, Mexico. As per Primero’s August 6, 2015, news release, the import and export license was reinstated and normal course imports and exports resumed, including the sales of all inventoried silver.
Finally, as per Primero’s third quarter of 2015 MD&A, during the third quarter, Primero achieved key milestones at both the San Dimas mine and the mill, tracking towards the completion of its expansion from 2,500 tpd to 3,000 tpd by the accelerated April 2016 completion date. Primero successfully connected the tunnel between the Sinaloa- Graben and Central mining blocks, providing a critical de-bottlenecking in the flow of machinery through the San Dimas mine. At the San Dimas mill, Primero has completed the construction of foundations for the new secondary crusher and demolition of the old foundry is well advanced. The installation of the additional tailings pump is now complete and control has been handed over to the operations team. The new tailings filter and thickener are also in the process of fabrication and remain on-schedule for delivery to site in Q1 2016.
Sudbury
In the third quarter of 2015, attributable gold production from Vale’s Sudbury mine was 5,967 ounces, a decrease of approximately 51% relative to the third quarter of 2014. According to Vale’s third quarter of 2015 production report, the decrease was primarily due to planned maintenance shutdowns in the Sudbury surface plants in August 2015. As per Vale, key work completed as part of the shutdown encompassed the rebuild of the SAG mill, the overhaul of the acid plant in preparation for the implementation of the AER project (atmospheric emissions reduction project), and the upgrade of the environmental equipment at the Copper Cliff Nickel Refinery. It should also be noted that production in Q3 2014 was at an elevated level, as Vale processed large inventories of feed stock that had built up in Q2 2014 due to planned maintenance of surface facilities.
Yauliyacu
In the third quarter of 2015, attributable silver production from Yauliyacu was 0.7 million ounces, a decrease of approximately 20% relative to the third quarter of 2014, primarily due to lower grade being mined in the quarter.
Barrick
In the third quarter of 2015, attributable silver production from Barrick was 0.5 million ounces, an increase of approximately 27% relative to the third quarter of 2014, primarily due to higher grades at the Veladero mine and higher recoveries at the Lagunas Norte mine.
In the third quarter of 2015, 777 produced approximately 6,330 ounces of gold and 0.1 million ounces of silver attributable to Silver Wheaton, a decrease of approximately 48% and 37%, respectively, relative to the third quarter of 2014 primarily due to lower throughput and grades.
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Other
Minto: In the third quarter of 2015, attributable gold production from Minto was 4,920 ounces, a decrease of approximately 29% relative to the third quarter of 2014, primarily due to lower grade being mined in the quarter. According to Capstone Mining Corp.’s (“Capstone”) third quarter production results, the Minto mill processed solely underground and stockpiled ore while transitioning to the next open pit mining area. In addition, Capstone reported that the Yukon Water Board issued the final Water Use Licence on August 5, 2015, and that stripping of the Minto North open pit commenced immediately. Stripping of Minto North is reportedly on schedule for first ore to the mill starting in December 2015, with high grade ore commencing in the second quarter of 2016.
Stratoni: In the third quarter of 2015, attributable silver production from Stratoni was 0.1 million ounces, a decrease of approximately 52% relative to the third quarter of 2014, primarily due to lower throughput as a result of fewer production stopes available in the mine as well as a five week suspension of operations in the quarter. As per Eldorado Gold Corporation’s (“Eldorado”) news release dated August 20, 2015, operations at the Stratoni mine were temporarily suspended as a direct result of the revocation by Greece's Ministry of Energy of the technical studies of Eldorado’s projects in Halkidiki, Greece. As per Eldorado’s news release dated October 5, 2015, mining operations have resumed at Halkidiki.
Subsequent to the quarter, the Stratoni silver purchase agreement dated April 23, 2007, was amended in order to incentivize additional exploration and potentially extend the limited remaining mine life of Stratoni. The primary modification is to increase the production price per ounce of silver delivered to SWC over the current fixed price by one of the following amounts: i) US$2.50 if 10,000 meters of drilling is completed outside of the existing ore body and within SWC’s defined area of interest (“Expansion Drilling”), ii) US$5.00 if 20,000 meters of Expansion Drilling is completed, and iii) US$7.00 if 30,000 meters of Expansion Drilling is completed. Drilling in all three cases must be completed by December 31, 2020, in order for the agreed upon increase in production price to be initiated.4
Produced But Not Yet Delivered 5
As at September 30, 2015, payable silver equivalent ounces produced but not yet delivered to Silver Wheaton by its partners decreased by 0.1 million ounces to approximately 6.3 million silver equivalent payable ounces, as increases at Salobo and Constancia were more than offset by decreases at San Dimas, 777 and Peñasquito. Payable ounces produced but not yet delivered to Silver Wheaton are expected to average approximately two to three months of annualized production but may vary from quarter to quarter due to a number of mining operation factors including mine ramp-up, delays in shipments, and so forth.
Detailed mine by mine production and sales figures can be found in the Appendix to this press release and in Silver Wheaton’s MD&A in the ‘Results of Operations and Operational Review’ section.
Webcast and Conference Call Details
A conference call will be held Wednesday, November 4, 2015, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call, please use one of the following methods:
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Dial toll free from Canada or the US: 888-231-8191 Dial from outside Canada or the US: 647-427-7450 Pass code: 54718941 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 11, 2015. 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: 54718941 Archived audio webcast: www.silverwheaton.com
This earnings release should be read in conjunction with Silver Wheaton’s MD&A and unaudited 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 information on mineral reserves and mineral resources disclosed in this news release.
About Silver Wheaton
Silver Wheaton is the largest pure precious metals streaming company in the world. Based upon its current agreements and the anticipated closing of the Antamina transaction, forecast 2015 estimated annual attributable production is approximately 44.5 million silver equivalent ounces6, including 230,000 ounces of gold. By 2019, estimated annual attributable production is anticipated to increase significantly to approximately 55 million silver equivalent ounces6, including 325,000 ounces of gold. This anticipated growth is expected to be driven by the Company’s portfolio of low-cost and long-life assets, including gold and precious metal streams on Vale’s Salobo mine and Hudbay’s Constancia mine.
Notes
1 Please refer to non-IFRS measures at the end of this press release.
2 Year over year changes for production and sales at San Dimas are not inclusive of Goldcorp’s supplement of 1.5 million ounces of silver per year.
3 On August 6, 2010, Goldcorp completed the sale of the San Dimas mine to Primero. In conjunction with the sale, Silver Wheaton amended its silver purchase agreement such that during the first four years following the closing of the transaction, Primero delivered to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of payable silver produced at San Dimas and 50% of any excess, and Silver Wheaton received an additional 1.5 million ounces of silver per annum that was delivered by Goldcorp. Beginning on August 6, 2014, Primero delivers 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, and Goldcorp's obligation to deliver supplemental silver ceased. In the prior year, the San Dimas mine reached the previous sharing threshold of 3.5 million ounces of silver on March 13, 2014.
4 The parties also agreed to additional amendments to fix payable rates, fix refining charges and update certain other provisions.
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5 Payable silver equivalent ounces produced but not yet delivered are based on management estimates, and may be updated in future periods as additional information is received.
6 Silver equivalent production forecast assumes a gold/silver ratio of 72:1; Payable silver equivalent ounces produced but not yet delivered are based on management estimates, and may be updated in future periods as additional information is received.
Condensed Interim Consolidated Statement of Earnings
Three Months Ended Nine Months Ended September 30 September 30
| (US dollars and shares in thousands, except per share amounts - unaudited) | 2014 | 2014 | ||||||
| 2015 | 2015 | |||||||
| Sales | $ 165,852 | $ 479,801 | ||||||
| $ | 153,251 | $ | 448,191 | |||||
| Cost of sales Cost of sales, excluding depletion Depletion | $ 40,109 44,134 | $ 112,565 119,270 | ||||||
| $ | 46,708 | $ | 128,967 | |||||
| 45,248 | 130,620 | |||||||
| Total cost of sales | $ 84,243 | $ 231,835 | ||||||
| $ | 91,956 | $ | 259,587 | |||||
| Earnings from operations | $ 81,609 | $ 247,966 | ||||||
| $ | 61,295 | $ | 188,604 | |||||
| Expenses and other income General and administrative 1 Impairment charges Interest expense Other expense (income) | $ 8,383 68,151 583 (601) | $ 28,868 68,151 2,283 1,108 | ||||||
| $ | 7,170 | $ | 23,226 | |||||
| 154,021 | 154,021 | |||||||
| 428 | 2,726 | |||||||
| 763 | 3,680 | |||||||
| $ 76,516 | $ 100,410 | |||||||
| $ | 162,382 | $ | 183,653 | |||||
| (Loss) earnings before income taxes Income tax recovery (expense) | $ 5,093 (597) | $ 147,556 239 | ||||||
| $ | (101,087) | $ | 4,951 | |||||
| 5,162 | 2,269 | |||||||
| Net (loss) earnings | $ 4,496 | $ 147,795 | ||||||
| $ | (95,925) | $ | 7,220 | |||||
| Basic (loss) earnings per share Diluted (loss) earnings per share Weighted average number of shares outstanding Basic Diluted | $ 0.01 $ 0.01 358,366 358,762 | $ 0.41 $ 0.41 357,763 358,209 | ||||||
| $ | -0.24 | $ | 0.02 | |||||
| $ | -0.24 | $ | 0.02 | |||||
| 404,370 | 393,084 | |||||||
| 404,540 | 393,274 | |||||||
| 1) Equity settled stock based compensation (a non-cash item) included in general and administrative expenses. | 1,419 | 1,988 | 4,760 | 6,204 | ||||
| $ | $ | $ | $ |
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Condensed Interim Consolidated Balance Sheets
| (US dollars in thousands - unaudited) | September 30 | December 31 2014 | |
|---|---|---|---|
| 2015 | |||
| Assets Current assets Cash and cash equivalents Accounts receivable Other | $ 308,098 4,132 26,263 | ||
| $ | 80,512 | ||
| 1,711 | |||
| 1,860 | |||
| Total current assets | $ 338,493 | ||
| $ | 84,083 | ||
| Non-current assets Silver and gold interests Early deposit - gold interest Royalty interest Long-term investments Other | $ 4,248,265 13,599 9,107 32,872 5,427 | ||
| $ | 4,871,236 | ||
| 15,223 | |||
| 9,107 | |||
| 17,555 | |||
| 11,973 | |||
| Total non-current assets | $ 4,309,270 | ||
| $ | 4,925,094 | ||
| Total assets | $ 4,647,763 | ||
| $ | 5,009,177 | ||
| Liabilities Current liabilities Accounts payable and accrued liabilities Current portion of performance share units | $ 14,798 1,373 | ||
| $ | 15,407 | ||
| 1,647 | |||
| Total current liabilities | $ 16,171 | ||
| $ | 17,054 | ||
| Non-current liabilities Bank debt Deferred income taxes Performance share units | $ 998,518 942 3,396 | ||
| $ | 647,000 | ||
| 153 | |||
| 2,149 | |||
| Total non-current liabilities | $ 1,002,856 | ||
| $ | 649,302 | ||
| Total liabilities | $ 1,019,027 | ||
| $ | 666,356 | ||
| Shareholders' equity Issued capital Reserves Retained earnings | $ 2,037,923 (28,841) 1,619,654 | ||
| $ | 2,818,033 | ||
| (26,818) | |||
| 1,551,606 | |||
| Total shareholders' equity | $ 3,628,736 | ||
| $ | 4,342,821 | ||
| Total liabilities and shareholders' equity | $ 4,647,763 | ||
| $ | 5,009,177 |
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Condensed Interim Consolidated Statement of Cash Flows
Three Months Ended Nine Months Ended September 30 September 30
| (US dollars in thousands - unaudited) | 2014 | 2014 | ||||
| 2015 | 2015 | |||||
| Operating activities Net earnings Adjustments for Depreciation and depletion Amortization of credit facility origination fees: Interest expense Amortization of credit facility origination fees - undrawn facilities Write off of credit facility origination fees upon repayment of NRT Loan Gain on disposal of silver interest Impairment charges Interest expense Equity settled stock based compensation Performance share units Deferred income tax expense (recovery) Investment income recognized in net earnings Other Change in non-cash working capital | $ 4,496 44,231 35 256 - (1,260) 68,151 548 1,988 48 548 (88) (88) 2,025 | $ 147,795 119,499 125 764 - (1,260) 68,151 2,157 6,204 1,544 (399) (247) (133) (4,360) | ||||
| $ | (95,925) | $ | 7,220 | |||
| 45,406 | 130,996 | |||||
| 124 | 375 | |||||
| 244 | 717 | |||||
| - | 1,315 | |||||
| - | - | |||||
| 154,021 | 154,021 | |||||
| 304 | 2,351 | |||||
| 1,419 | 4,760 | |||||
| (513) | (415) | |||||
| (5,223) | (2,417) | |||||
| (36) | (207) | |||||
| (141) | (340) | |||||
| 213 | 1,795 | |||||
| Cash generated from operations Interest paid - expensed Interest received | $ | 99,893 | $ 120,890 (542) 31 | $ | 300,171 | $ 339,840 (2,163) 76 |
| (360) | (2,306) | |||||
| 14 | 105 | |||||
| Cash generated from operating activities | $ 120,379 | $ 337,753 | ||||
| $ | 99,547 | $ | 297,970 | |||
| Financing activities Bank debt repaid Bank debt drawn Credit facility origination fees Shares issued Share issue costs Redemption of share capital Share purchase options exercised Dividends paid | $ - - (2) - - - 722 (17,924) | $ - - (621) - - - 4,418 (62,716) | ||||
| $ | (68,000) | $ | (1,153,000) | |||
| - | 800,000 | |||||
| - | (4,241) | |||||
| - | 800,000 | |||||
| 6 | (31,383) | |||||
| (1,464) | (1,464) | |||||
| - | 2,887 | |||||
| (16,565) | (51,009) | |||||
| Cash generated from (applied to) financing activities | $ (17,204) | $ (58,919) | ||||
| $ | (86,023) | $ | 361,790 | |||
| Investing activities Silver and gold interests Interest paid - capitalized to silver interests Silver and gold interests - early deposit Royalty interest Proceeds on disposal of silver interest Proceeds on disposal of long-term investments Dividend income received Other | $ (121) (3,512) (1) (9,074) 3,408 - 57 (94) | $ (125,255) (10,010) (150) (9,074) 3,408 - 171 (761) | ||||
| $ | - | $ | (900,058) | |||
| (2,607) | (6,939) | |||||
| (560) | (1,618) | |||||
| - | - | |||||
| - | 25,000 | |||||
| - | 12 | |||||
| 23 | 103 | |||||
| (1,620) | (3,679) | |||||
| Cash applied to investing activities | $ (9,337) | $ (141,671) | ||||
| $ | (4,764) | $ | (887,179) | |||
| Effect of exchange rate changes on cash and cash equivalents | $ (34) | $ 17 | ||||
| $ | (140) | $ | (167) | |||
| Increase (decrease) in cash and cash equivalents Cash and cash equivalents, beginning of period | $ 93,804 139,199 | $ 137,180 95,823 | ||||
| $ | 8,620 | $ | (227,586) | |||
| 71,892 | 308,098 | |||||
| Cash and cash equivalents, end of period | $ 233,003 | $ 233,003 | ||||
| $ | 80,512 | $ | 80,512 |
- 12 -
Condensed Interim Summary of Ounces Produced and Sold
2015 2014 2013
| Q4 Q3 Q2 Q1 Q4 | ||||
|---|---|---|---|---|
| Q3 | Q2 | Q1 | ||
| Silver ounces produced ² San Dimas ³ Yauliyacu Peñasquito Barrick ⁴ Other ⁵ | 1,744 1,290 1,118 1,608 1,979 687 875 658 718 687 1,582 1,630 2,054 2,052 2,047 690 397 299 301 423 1,701 1,903 2,182 2,185 2,119 | |||
| 1,418 | 1,786 | 1,928 | ||
| 696 | 696 | 576 | ||
| 2,092 | 1,932 | 1,447 | ||
| 506 | 610 | 640 | ||
| 2,178 | 2,177 | 1,751 | ||
| Total silver ounces produced | 6,404 6,095 6,311 6,864 7,255 | |||
| 6,890 | 7,201 | 6,342 | ||
| Gold ounces produced ² 777 Sudbury ⁶ Salobo Other ⁷ | 9,669 12,105 11,611 12,785 14,134 9,924 12,196 7,473 6,426 7,060 12,253 10,415 8,486 8,903 10,067 4,256 6,959 5,185 5,749 9,530 | |||
| 6,330 | 6,668 | 12,081 | ||
| 5,967 | 8,195 | 8,666 | ||
| 32,954 | 27,805 | 27,185 | ||
| 9,262 | 7,414 | 5,728 | ||
| Total gold ounces produced | 36,102 41,675 32,755 33,863 40,791 | |||
| 54,513 | 50,082 | 53,660 | ||
| Silver equivalent ounces of gold produced ⁸ | 2,675 2,786 2,144 2,121 2,476 | |||
| 4,103 | 3,672 | 3,926 | ||
| Silver equivalent ounces produced ⁸ | 9,079 8,881 8,455 8,985 9,731 | |||
| 10,993 | 10,873 | 10,268 | ||
| Silver equivalent ounces produced - as originally reported 2, 8 | 8,964 8,447 8,365 8,977 9,723 | |||
| n.a. | 10,904 | 10,371 | ||
| Increase (Decrease) 2 | 115 434 90 8 8 | |||
| n.a. | (31) | (103) | ||
| Silver ounces sold San Dimas ³ Yauliyacu Peñasquito Barrick ⁴ Other ⁵ | 1,555 1,295 1,194 1,529 2,071 761 1,373 111 1,097 674 1,640 1,662 1,958 1,840 1,412 671 377 291 361 397 1,106 1,592 1,673 1,398 1,510 | |||
| 2,014 | 1,265 | 1,901 | ||
| 428 | 809 | 320 | ||
| 2,053 | 1,420 | 1,573 | ||
| 514 | 633 | 648 | ||
| 1,566 | 1,448 | 1,223 | ||
| Total silver ounces sold | 5,733 6,299 5,227 6,225 6,064 | |||
| 6,575 | 5,575 | 5,665 | ||
| Gold ounces sold 777 Sudbury ⁶ Salobo Other ⁷ | 8,718 15,287 13,599 6,294 15,889 11,251 5,566 6,718 6,878 6,551 14,270 7,180 11,902 10,560 6,944 3,665 8,685 2,559 6,390 1,840 | |||
| 10,550 | 9,490 | 6,629 | ||
| 6,674 | 12,518 | 8,033 | ||
| 21,957 | 32,156 | 9,794 | ||
| 8,896 | 6,810 | 3,943 | ||
| Total gold ounces sold | 37,904 36,718 34,778 30,122 31,224 | |||
| 48,077 | 60,974 | 28,399 | ||
| Silver equivalent ounces of gold sold ⁸ | 2,808 2,441 2,267 1,891 1,909 | |||
| 3,619 | 4,468 | 2,058 | ||
| Silver equivalent ounces sold⁸ | 8,541 8,740 7,494 8,116 7,973 | |||
| 10,194 | 10,043 | 7,723 | ||
| Gold / silver ratio ⁸ | 74.1 66.5 65.2 62.8 61.1 | |||
| 75.3 | 73.3 | 72.5 | ||
| Cumulative payable silver equivalent ounces produced but not yet delivered ⁹ | 4,952 5,147 5,996 6,042 5,997 | |||
| 6,291 | 6,398 | 6,445 |
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) The ounces produced and sold include ounces received from Goldcorp in connection with Goldcorp’s four year commitment commencing on August 6, 2010 to deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting from their sale of San Dimas to Primero.
4) Comprised of the Lagunas Norte, Pierina and Veladero silver interests.
5) Comprised of the Los Filos, Zinkgruvan, Cozamin, Neves-Corvo, Stratoni, Keno Hill, Minto, 777, Aljustrel and Constancia silver interests in addition to the previously owned Mineral Park and Campo Morado silver interests.
6) Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests.
7) Comprised of the Minto and Constancia gold interests.
8) Gold ounces produced and sold are converted to a silver equivalent basis based on either (i) the ratio of the average silver price received to the average gold price received during the period from the assets that produce both gold and silver; or (ii) the ratio of the price of silver to the price of gold on the date of sale as per the London Bullion Metal Exchange for the assets which produce only gold.
9) Payable silver equivalent ounces produced but not yet delivered are based on management estimates. These figures may be updated in future periods as additional information is received.