Silver Wheaton lifts bottom line 49% as streaming volumes jump

VANCOUVER (miningweekly.com) – Canadian precious metals streaming firm Silver Wheaton has reported bumper profit for the first quarter ended March, as precious metals received in the period rose and prices increased.

The Vancouver-based firm reported net earnings of $61-million, or $0.14 a share, compared with $41-million, or $0.10 a share, for the comparable period in 2016, representing an increase of 49%, or a 36% increase on a per share basis, the company reported after market close Tuesday. Earnings were in line with analyst forecasts, but revenue missed the average estimate calling for $214.16-million.

Revenue for the period was 6% higher year-on-year at $198-million, of which 46% was attributable to the sale of silver, and 54% was attributable to the sale of gold.

In the first quarter, Silver Wheaton's gold output and sales volumes climbed over 35% relative to the first quarter of 2016, putting the company on track to meet or exceed full-year gold production guidance.

"For the third quarter in a row, revenue was roughly balanced between silver and gold, further supporting the proposed name change to Wheaton Precious Metals," president and CEO Randy Smallwood stated.

First quarter silver production and silver sales were impacted by strike action at Primero Mining’s San Dimas mine, in Mexico.

Attributable output in the quarter totalled 6.5-million ounces of silver and 84 900 oz of gold, compared with 7.5-million ounces of silver and 61 900 oz of gold a year earlier, with silver output having fallen 14% and gold production having increased 37%.

On a silver-equivalent basis, attributable output was 12.5-million silver equivalent ounces (SEOs), flat when compared with that of a year earlier.

SEO sales in the quarter were 11.4-million, 10% down when compared with 12.7-million SEOs a year earlier.

The average realised price per silver ounce sold was 19% higher, at $17.45, in the first quarter and $1 208/oz of gold, representing an increase of 3%, compared with the first quarter of 2016.

The board has declared a dividend in the amount of $0.07 per common share, in line with the company’s dividend policy whereby the quarterly dividend will be equal to 20% of the average of the operating cash flow of the previous four quarters.

Silver Wheaton believes that the $115-million of cash and cash equivalents as at March 31, combined with the $900 000 available 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 further precious metal stream interests.

Silver Wheaton has guided for 2017 output of 28-million silver ounces and 340 000 gold ounces. Over the next five years, the company expects attributable output to be about 29-million ounces of silver and 340 000 oz of gold a year. Excluded from the guidance, the company retains potential upside from any production from Barrick Gold’s Pascua-Lama project, straddling the Argentina/Chile border, or from Hudbay Minerals’ Rosemont project, in Arizona.