Market Overview

Wheaton Precious Metals Announces Third Quarter Results for 2017 and Declares Fourth Quarterly Dividend of 2017

Share:

TSX: WPM
NYSE: WPM

VANCOUVER, Nov. 9, 2017 /PRNewswire/ - 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.
  • Attributable gold production for the three months ended September 30, 2017, decreased 15% relative to the comparable period in 2016, with the decrease being 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:
    • 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.
    • 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 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.
  • 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 its 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 of 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 the 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 ounce 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%.

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, Wheaton 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 of 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 production guidance range from 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 cert

View Comments and Join the Discussion!
 
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com