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Silver Wheaton Reports Strong First Quarter Results For 2014

Stocks in this article: SLW

VANCOUVER, May 8, 2014 /PRNewswire/ --


Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX:SLW) (NYSE:SLW) is pleased to announce its unaudited results for the first quarter ended March 31, 2014. All figures are presented in United States dollars unless otherwise noted.


  • Attributable silver equivalent production in Q1 2014 of 9.0 million ounces (6.9 million ounces of silver and 33,800 ounces of gold), compared to 8.3 million ounces in Q1 2013, representing an increase of 8%.
  • Attributable silver equivalent sales volume in Q1 2014 of 8.1 million ounces (6.2 million ounces of silver and 30,100 ounces of gold), compared to 6.9 million ounces in Q1 2013, representing an increase of 17%.
  • Revenues of $165.4 million in Q1 2014 compared with $205.8 million in Q1 2013, representing a decrease of 20%.
  • Average realized sale price per silver equivalent ounce sold in Q1 2014 of $20.38 ( $20.36 per ounce of silver and $1,283 per ounce of gold), representing a decrease of 31% as compared to Q1 2013.
  • Net earnings of $79.8 million ( $0.22 per share) in Q1 2014 compared with $133.4 million ( $0.38 per share) in Q1 2013, representing a decrease of 40%.
  • Operating cash flows of $114.8 million ( $0.32 per share¹) in Q1 2014 compared with $165.6 million ( $0.47 per share¹) in Q1 2013, representing a decrease of 31%.
  • Cash operating margin¹ Q1 2014 of $15.81 per silver equivalent ounce compared with $25.33 in Q1 2013.
  • Average cash costs¹ in Q1 2014 were $4.12 and $381 per ounce of silver and gold, respectively. On a silver equivalent basis, average cash costs¹ rose to $4.57 compared with $4.39 in Q1 2013.
  • Declared quarterly dividend of $0.07 per common share. On March 20, 2014, the Company announced that it will be implementing a dividend reinvestment plan whereby shareholders can elect to have dividends reinvested directly into additional Silver Wheaton common shares. The plan will be effective commencing with this quarter's dividend, which will be distributed on or about May 30, 2014.
  • On March 26, 2014, the Company paid $125 million to Hudbay Minerals Inc. ("Hudbay") in satisfaction of the final upfront payment relative to the silver stream on the Constancia project.

[ 1 ] Please refer to non-IFRS measures at the end of this press release.

"Silver Wheaton started the year on a strong note, achieving production of 9.0 million silver equivalent ounces in the first quarter of 2014. Production and sales increased, 8% and 17% respectively, compared with the first quarter of 2013," said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. "Furthermore, we maintained a very healthy cash operating margin of around 70% and operating cash flows of nearly $115 million, despite precious metal prices being down over 30% compared to a year ago. These numbers once again highlight one of the key strengths of our low-cost business model - that even in lower commodity price environments Silver Wheaton can generate some of the highest margins in the industry."

"This is an exciting year for Silver Wheaton as some of our key mining assets are expected to expand and come on line in 2014. During the first quarter, Primero's San Dimas mine completed an expansion from 2,150 to 2,500 tonnes per day, and we expect the true impact of this expansion to be fully realized by Silver Wheaton in 2015 and beyond. Furthermore, towards the end of the first quarter, we made the final payment for the silver stream on Hudbay's Constancia project, where production is expected to begin by the end of 2014. In addition, Vale's Totten mine in Sudbury, which commenced production in the first quarter, is now adding to the gold production we have already been receiving from five of Vale's other mines in Sudbury. Moreover, the expansion of Vale's Salobo mine continues to progress and remains on track to be commissioned in the middle of this year. All things considered, we see 2014 as a step forward for Silver Wheaton as these core assets continue to grow, adding significantly to our growth profile in 2015 and beyond."

Financial Review 


Revenue was $165.4 million in the first quarter of 2014, on silver equivalent sales of 8.1 million ounces (6.2 million ounces of silver and 30,100 ounces of gold). This represents a 20% decrease from the $205.8 million of revenue generated in the first quarter of 2013, due primarily to a 31% decrease in the average realized silver equivalent price ( $20.38 in Q1 2014 compared to $29.72 in Q1 2013), partially offset by a 17% increase in the number of silver equivalent ounces sold.

Costs and Expenses  

Average cash costs [ 1 ] in the first quarter of 2014 were $4.57 per silver equivalent ounce as compared to $4.39 during the comparable period of 2013. This resulted in a cash operating margin [ 1 ]of $15.81 per silver equivalent ounce, a reduction of 38% as compared to Q1 2013. The decrease in the cash operating margin was due to a 31% decrease in the silver equivalent price realized in Q1 2014 compared to Q1 2013.

Cash costs rose year over year primarily due to an increase in gold sales (30,100 ounces in Q1 2014 compared to 16,900 ounces in Q1 2013) associated with Vale S.A.'s ("Vale") Sudbury and Salobo mines. The average cash cost per gold ounce [ 1 ] was $381, or $6.06 per silver equivalent ounce [ 2 ].

Earnings and Operating Cash Flows  

Net earnings and cash flow from operations in the first quarter of 2014 were $79.8 million ( $0.22 per share) and $114.8 million ( $0.32 per share¹), compared with $133.4 million ( $0.38 per share) and $165.6 million ( $0.47 per share¹) for the same period in 2013, a decrease of 40% and 31%, respectively. Earnings and cash flow continued to be impacted by lower gold and silver prices.

Balance Sheet  

At March 31, 2014, the Company had approximately $82.0 million of cash on hand. The combination of cash and ongoing operating cash flows, combined with the credit available under the Company's $1 billion Revolving Facility, positions the Company well to fund all outstanding commitments as well as provide flexibility to acquire additional accretive precious metal stream interests.

In accordance with the provisions of the Company's US$1 billion non-revolving term loan ("NRT Loan"), Silver Wheaton has extended the term of the NRT Loan by one year to May 28, 2017. As of March 31, 2014, Silver Wheaton had $1 billion outstanding under the NRT Loan.

____________________________ [ 1 ] Please refer to non-IFRS measures at the end of this press release. [ 2 ] Cash cost per silver equivalent ounce calculated using a gold to silver ratio 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.

Operational and Development Highlights  

During the first quarter of 2014, attributable silver equivalent production was 9.0 million ounces (6.9 million ounces of silver and 33,800 ounces of gold), representing an increase of 8% compared to the first quarter of 2013.

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