Wheaton Precious Metals Announces Third Quarter Results FOR 2017 and Declares Fourth Quarterly Dividend of 2017
FOR IMMEDIATE RELEASE TSX: WPM
November 9, 2017 NYSE: WPM
WHEATON PRECIOUS METALS ANNOUNCES THIRD QUARTER RESULTS FOR
2017 AND DECLARES FOURTH QUARTERLY DIVIDEND OF 2017
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”)
is pleased to announce its results for the third quarter ended September 30, 2017. All figures are
presented in United States dollars unless otherwise noted.
In the third quarter of 2017, Wheaton Precious Metals continued to generate strong cash flow
and remains on track to meet 2017 production guidance.
Operational Overview
Q3 2017 Q3 2016 Change
Ounces produced
Silver 7,595
7,651
(0.7)%
Gold 95,897
113,008
(15.1)%
Ounces sold
Silver 5,758
6,122
(5.9)%
Gold 82,548 85,063 (3.0)%
Sales price per ounce
Silver $ 16.87 $ 19.53
(13.6)%
Gold $ 1,283 $ 1,336
(4.0)%
Cash costs per ounce 1
Silver 1 $ 4.43 $ 4.51
(1.8)%
Gold 1 $ 396 $ 390
1.5 %
Cash operating margin per ounce 1
Silver 1 $ 12.44 $ 15.02
(17.2)%
Gold 1 $ 887 $ 946 (6.2)%
Revenue $ 203,034 $ 233,204
(12.9)%
Net earnings $ 66,578 $ 82,986
(19.8)%
Per share $ 0.15 $ 0.19
(21.1)%
Operating cash flows $ 129,121 $ 161,577
(20.1)%
Per share 1 $ 0.29 $ 0.37 (21.6)%
Dividends paid $ 44,201 $ 22,049 100.5%
Per share $ 0.10 $ 0.05 100.0%
All amounts in thousands except gold ounces produced and sold, per ounce amounts and per share amounts.
Third Quarter Highlights
Attributable silver production for the three months ended September 30, 2017, decreased
1% relative to the comparable period in 2016, with lower production from San Dimas and
Constancia being largely offset by increased production from Antamina and Peñasquito.
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Attributable gold production for the three mont hs ended September 30, 2017 , decreased
15% relative to the comparable period in 2016, with the decrease b eing in line with
expectations and primarily due to lower attributable production from 777 and Minto.
On a silver equivalent ounce2 (“SEO”) basis and gold equivalent ounce2 (“GEO”) basis:
o Attributable production in Q3 2017 was 14.9 million SEOs or 195,900 GEOs,
compared with 15.3 million SEOs or 225,400 GEOs in Q3 2016, a decrease of 3%
and 13%, respectively.
o Sales volume in Q3 2017 was 12.0 million SEOs or 158,400 GEOs, compared with
11.9 million SEOs or 175,000 GEOs in Q3 2016, an increase of 1% and a decrease
of 9%, respectively.
As at September 30, 2017, payable ounces attributable to the Company produced but not
yet delivered³ am ounted to 5.3 million payable silver ounces and 57,200 payable gold
ounces, representing an increase of 1.1 million payable silver ounces and 8,200 payable
gold ounces during the three month period ended September 30, 2017.
Declared quarterly dividend of $ 0.09 per common share . This represents an increase of
50% relative to the comparable period in 2016.
The Company is reiterating its production guidance for 2017.
“Wheaton Precious Metals continues to generate strong operating margins from it s portfolio of
low-cost assets and remains on track to meet full year production guidance ,” said Randy
Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “We continue to
work diligently not only to strengthen our current portfolio, the source o f our sector leading cash
flows and dividend yield, but also to pursue additional accretive opportunities.”
Financial Review
Revenues
Revenue was $203 million in the third quarter of 2017, on sales volume of 5.8 million ounces
of silver and 82,500 ounces of gold. This represents a 13% decrease from the $233 million
of revenue generated in the third quarter of 2016 due primarily to (i) a 6% decrease in the
number of silver ounces sold; (ii) a 3% decrease in the number of gold ounces sold; (iii) a
14% decrease in the average realized silver price ($16.87 in Q3 2017 compared with $19.53
in Q3 2016); and (iv) a 4% decrease in the average realized gold price ($1,283 in Q3 2017
compared with $1,336 in Q3 2016).
Costs and Expenses
Average cash costs¹ in th e third quarter of 2017 were $4.43 per silver ounce sold and $396
per gold ounce sold, as compared with $4.51 per silver ounce and $390 per gold ounce
during the comparable period of 2016. This resulted in a cash operating margin¹ of $12.44
per silver ounc e sold and $887 per gold ounce sold, a reduction of 17% and 6% as
compared with Q3 2016. The decrease in the cash operating margin was primarily due to a
14% decrease in the average realized silver price and a 4% decrease in the average
realized gold price in Q3 2017 compared with Q3 2016.
Earnings and Operating Cash Flows
Net earnings and cash flow from operations in the third quarter of 2017 were $67 million
($0.15 per share) and $129 million ($0.29 per share¹), compared with $83 million ($0.19 per
share) and $162 million ($0.37 per share¹) for the same period in 2016, both a decrease of
20%.
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Balance Sheet
At September 30, 2017, the Company had approximately $70 million of cash on hand and
$854 million outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility").
Third Quarter Asset Highlights
During the third quarter of 2017, attributable production was 7.6 million ounces of silver and
95,900 ounces of gold, representing a decrease of 1% and 15% , respectively, compared with
the third quarter of 2016.
Operational highlights for the quarter ended September 30, 2017, based upon counterparties’
reporting, are as follows:
Salobo
In the third quarter of 2017, Salobo produced 73,000 ounces of attributable gold, an increase
of approximately 7% relative to the third quarter of 2016 . According to Vale S.A.’s (“Vale”)
third quarter of 2017 production report, production was positively impacted mainly due to
higher feed grades and stronger plant performance in the third quarter. The Salobo plant
operated above nameplate capacity on average in the third quarter of 2017.
Peñasquito
In the third quarter of 2017, Peñasquito produced 1.6 million ounces of attributable silver, an
increase of approximately 10% relative to the third quarter of 2016 primarily due to higher
metal recoveries and grades. According to Goldcorp Inc.’s (“Goldcorp”) third quarter of 2017
MD&A, throughput at Peñasquito is expected to increase in the fourth quarter of 2017 as a
result of improved mill efficiencies. Pre -stripping of the Chile Colorado pit is reportedly
ahead of schedule and will contribute to mill feed starting in 2018.
According to Goldcorp, the Pyrite Leach Project ("PLP") at Peñasquito is 40% complete and
expected to commence commissioning in the fourth quarter of 2018, three months ahead of
schedule. The PLP is reportedly expected to recover approximately 40% of the gold and
48% of the silver currently reporting to the tailings, and is expected to add production of
approximately 1 million ounces of gold and 44 million ounces of silver over the current life of
the mine. As a reminder, W heaton Precious Metals is entitled to 25% of the silver produced
at Peñasquito for the life of mine, or 11 million of the additional 44 million silver ounces.
Antamina
In the third quarter of 2017, Antamina produced 1.7 million ounces of attributable silver, an
increase of approximately 18% relative to the third quarter of 2016 primarily due to increased
grades and throughput, partially offset by lower recovery.
San Dimas
In the third quarter of 2017, San Dimas produced 1.0 million ounces of attributable silver, a
decrease of approximately 17% relative to the third quarter of 2016 primarily due to a
decrease in throughput , which was partially offset by better grades . According to Primero
Mining Corp.’s (“Primero”) news release dated September 21, 2017, the expected ramp-up
in production at San Dimas following a work stoppage in the second quarter o f 2017 was
significantly delayed due to persistent issues with underground equipment reliability, which
has impacted development rates and underground stoping activities. As a result of these
issues, Primero reduced the upper end of its 2017 silver producti on guidance range from
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4.5-5.5 million ounces to 4.5 -5.0 million ounces. As a reminder, Wheaton’s full year 2017
guidance is based on attributable production from San Dimas of 4.0 million ounces of silver.
Wheaton continues to work closely with Primero as they work through their strategic review
process. As per Primero’s announcement on March 24, 2017, Wheaton provided significant
support for the strategic review process by providing a guarantee to the lenders under
Primero’s existing revolving credit facility, which resulted in an extension of the maturity date
by six months to November 23, 2017. The intent of this guarantee is to provide Primero with
time to complete its strategic review process, which was first announced on February 27,
2017. Wheaton has been encouraged by Primero’s ability through this process to reduce
general and administrative costs and divest of non-core operations. Also, as noted in
Primero’s second quarter of 2017 MD&A, Primero has received a number of proposals from
interested parties regarding a potential acquisition of the San Dimas operation. The process
is ongoing but there can be no certainty that these discussions will result in a resolution
acceptable to all stakeholders, including the Company.4
Sudbury
In the third quarter of 20 17, Vale’s Sudbury mines produced 8,400 ounces of attributable
gold, a decrease of approximately 22% relative to the third quarter of 2016 primarily due to
lower throughput. According to Vale’s third quarter of 2017 production report, the decrease
in production was primarily due to the full operation of two furnaces in Q3 2016, while in Q3
2017 Sudbury transitioned to a single furnace operation. According to Vale, the transition
has gone very well with the newly designed furnace already exceeding its n ameplate
capacity. Vale further reports that while nickel production was down in the quarter, with the
transition to the new single furnace flowsheet, Sudbury achieved record quarterly copper
concentrate production.
Constancia
In the third quarter of 2017, Constancia produced 0.6 million ounces of attributable silver
and 2,500 ounces of attributable gold, a decrease of approximately 18% and 33%,
respectively, relative to the third quarter of 2016 . The decrease in production was primarily
the result of the processing of lower grade ore as expected in Hudbay Mineral Inc.’s
(“Hudbay”) mine plan as well as lower recovery, partially offset by record high throughput.
Other Gold
In the third quarter of 2017, total Other Gold attributable production was 12,000 ounces, a
decrease of approximately 60% relative to the third quarter of 2016 . The decrease was
relatively in line with expectations and primarily due to the anticipated reduction of the
Company's share of the gold production at the 777 mine from 100% to 50% effective
January 1, 2017 , coupled with reduced production at the Minto mine due to mine
sequencing changes to support the mine life extension as previously announced by
Capstone Mining Corp. (“Capstone”).
Subsequent to the quarter, i n October 2017, the Company agreed to amend the Minto
precious metal purchase agreement in order to incentivize Capstone to extend the mine life
of Minto. The primary modification is to increase the production payment per ounce of gold
delivered to Wheaton Precious Metals over the current fixed price in periods where the
market price of copper is lower than $2.50 per pound. In consideration for this contra ct
amendment and certain other agreements made between the Company and Capstone, the
Company received shares of Capstone with a value of $8 million.
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Other Silver
In the third quarter of 2017, total Other Silver attributable production was 2.6 million ounces,
a decrease of approximately 5% relative to the third quarter of 2016 . The decrease was
driven primarily by the cessation of production from Cozamin as the Cozamin silver
purchase agreement with Capstone expired on April 4, 2017 , as well as lower grades at
Yauliyacu. Lower attributable production from Cozamin and Yauliyacu was partially offset by
stronger production from Zinkgruvan.
Produced But Not Yet Delivered 31
As at September 30, 2017, payable ounces attributable to the Co mpany produced but not
yet delivered ³ amounted to 5.3 million payable silver ounces and 57,200 payable gold
ounces, representing an increase of 1.1 million payable silver ounces and 8,200 payable
gold ounces during the three month period ended September 30, 2017 . Payable silver
ounces produced but not yet delivered increased primarily as a result of increases related to
the Peñasquito, Zinkgruvan, Yauliyacu, and Antamina silver interests. Payable gold ounces
produced but not yet delivered increased primarily as a result of increases related to the
Sudbury and Salobo gold interests. Payable ounces produced but not yet delivered to the
Wheaton Precious Metals group of companies are expected to average approximately two
months of annualized production but may vary from quarter to quarter due to a number of
mining operation factors including mine ramp-up and timing of shipments.
Detailed mine-by-mine production and sales figures can be found in the Appendix to this press
release and in Wheaton Precious Metals’ consolidated MD&A in the ‘Results of Operations and
Operational Review’ section.
Events Subsequent to the Quarter
Kutcho
Pending completion of the Kutcho Early Deposit Agreement, the Company has entered into
a non-binding term sheet with Desert Star Resources Ltd. to provide assistance in the form
of an up to Cdn$20 million subordinated secured convertible debt loan at an interest rate of
10% per annum over a 7 -year term (the “Desert Star Loan”). There can be no assurance
that the Desert Star Loan will be completed on the term s set out in the non -binding term
sheet or at all.
Dividend
Fourth Quarterly Dividend
The fourth quarterly cash dividend of US$0. 09 will be paid to holders of record of Wheaton
Precious Metals common shares as of the close of business on November 27, 2017, and will
be distributed on or about December 7, 2017.
Under the Company’s dividend policy, the quarterly dividend per common share will be equal
to 30% 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 Cana dian income
tax purposes.
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Dividend Reinvestment Plan
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.wheatonpm.com, accessible by quick links directly from the home page, and can also
be found in the ‘investors’ section, under the ‘dividends’ tab.
Registered shareholders may also enroll in the DRIP online through the plan agent’s self-
service web portal at:
https://www.canstockta.com/en/InvestorServices/Investor_Information/Issuer_List/IssuerDet
ail.jsp?companyCode=1501.
Beneficial shareholders should contact their financial intermediary to arrange enrollment. All
shareholders considering enrollment in the DRIP should care fully review the terms of the
DRIP and consult with their advisors as to the implications of enrollment in the DRIP.
This press release is not an offer to sell or a solicitation of an offer of securities. A registration
statement relating to th e DRIP has been filed with the U.S. Securities and Exchange
Commission and may be obtained under the Company’s profile on the U.S. Securities and
Exchange Commission’s website at http://www.sec.gov. A written copy of the prospectus
included in the registration statement may be obtained by contacting the Corporate Secretary
of the Company at 1021 West Hastings Street, Suite 3500, Vancouver, British Columbia,
Canada V6E 0C3.
Outlook
Wheaton Precious Metals’ estimated attributable silver and gold production in 2017 is forecast to
be 28 million silver ounces and 340,000 gold ounces. Estimated average annual attributable
silver and gold production over the next five years (including 2017) is anticipated to be
approximately 29 million silver ounces and 340,000 gold ounces per year. As a reminder,
Wheaton Precious Metals does not include any production in its guidance from streams on
development assets, such as Barrick’s Pascua-Lama project or Hudbay’s Rosemont project.
From a liquidity perspective, the $70 million of cash and cash equivalents as at September 30,
2017 combined with the liquidity provided by the available credit under the $2 billion Revolving
Facility and ongoing operating cash flows positions the Company well to fund all outstanding
commitments and known contingencies as well as providing flexibility to acquire additional
accretive precious metal stream interests.
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Webcast and Conference Call Details
A conference call and webcast will be held Friday, November 10, 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: 94521962
Live audio webcast: www.wheatonpm.com
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and available until November 17, 201 7 at 11:59 pm
(Eastern Time). The webcast will be available for one year. You can listen to an archive of the
call by one of the following methods:
Dial toll free from Canada or the US: 855-859-2056
Dial from outside Canada or the US: 416-849-0833
Pass code: 94521962
Archived audio webcast: www.wheatonpm.com
This earnings release should be read in conjunction with Wheaton Precious Metals’ MD&A and
Financial Statements, which are available on the Company’s website at www.wheatonpm.com
and have been posted on SEDAR at www.sedar.com.
Mr. Neil Burns, Vice President , Technical Services for Wheaton Precious Metals, is a “qualified
person” as such term is defined under National Instrument 43 -101, and has reviewed and
approved the technical information including information on mineral reserves and mineral
resources disclosed in this news release.
Wheaton Precious Metals believes that there are no significant differences between its
corporate governance practices and those required to be followed by United States domestic
issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious
Metals website at http://www.wheatonpm.com/Company/corporate-governance/default.aspx.
End Notes
1 Please refer to non-IFRS measures at the end of this press release.
2 Silver equivalent ounces (SEOs) and gold equivalent ounces (GEOs), which are provided to assist the reader, 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. 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.
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.
4 Please refer to Wheaton Precious Metals Q3 2017 Management’s Discussion and Analysis (“MD&A”) for a more
detailed description of the status and risks associated with the San Dimas Silver Interest. Please also see
“Cautionary Note Regarding Forward Looking Statements” in the Company’s MD&A for material risks, assumptions,
and important disclosure associated with San Dimas and Primero.
Condensed Interim Consolidated Statements of Earnings
Three Months Ended
September 30
Nine Months Ended
September 30
(US dollars and shares in thousands, except per share
amounts - unaudited) 2017 2016 2017 2016
Sales $ 203,034 $ 233,204 $ 600,669 $ 633,066
Cost of sales
Cost of sales, excluding depletion
$ 58,234 $ 60,776 $ 173,506 $ 177,620
Depletion 61,852 73,919 185,567 220,336
Total cost of sales $ 120,086 $ 134,695 $ 359,073 $ 397,956
Gross margin $ 82,948 $ 98,509 $ 241,596 $ 235,110
Expenses
General and administrative 1
$ 8,793 $ 9,513 $ 25,760 $ 30,316
Interest expense
6,360
6,007 19,214
17,529
Other income
(93)
(19) (2,266)
(105)
Other expense
1,410
1,377 3,917
3,632
Foreign exchange loss 163 22 248 611
$ 16,633 $ 16,900 $ 46,873 $ 51,983
Earnings before income taxes
$ 66,315 $ 81,609 $ 194,723 $ 183,127
Income tax recovery 263 1,377 691 1,144
Net earnings $ 66,578 $ 82,986 $ 195,414 $ 184,271
Basic earnings per share
$ 0.15 $ 0.19 $ 0.44 $ 0.43
Diluted earnings per share
$ 0.15 $ 0.19 $ 0.44 $ 0.43
Weighted average number of shares
outstanding
Basic
442,094
440,635 441,790
426,737
Diluted 442,476 441,917 442,263 427,094
1) Equity settled stock based compensation (a non -cash
item) included in general and administrative expenses. $ 1,279 $ 1,220 $ 3,748 $ 3,822