Wheaton Precious Metals posts 20% dip in Q3 profit

VANCOUVER (miningweekly.com) – The world’s largest precious metals streaming firm Wheaton Precious Metals (WPM) has reported a 20% year-on-year drop in profit, as lower attributable production and lower metals prices weighed on the company's bottom line.

For the three months ended September, the Vancouver-based company recorded net profit of $67-million, or $0.15 a share, compared with $83-million, or $0.19 a share, in the same period a year earlier. The result was on par with the average forecast of 13 analysts expecting earnings of $0.15 a share.

Cash flow also fell 20% to $129-million, or $0.29 a share.

Revenue totalled $203-million, derived from the sale of 5.8-million ounces of silver and 82 500 oz of gold. This reflects a 13% year-on-year decrease from the $233-million of revenue generated in the third quarter of 2016, mainly impacted by a 6% decrease in the number of silver ounces sold; a 3% decrease in the number of gold ounces sold; a 14% decrease in the average realised silver price, from $19.53/oz in the third quarter of 2016, to $16.87/oz; and a 4% fall in the average realised gold price to $1 283/oz, compared with $1 336/oz a year earlier.

WPM was in 2004 the first to use the precious metals streaming model for funding mining development, by providing up-front capital funding in exchange for a future stream of typically ‘non-core’ metals – such as the silver from a lead/zinc mine, or the gold from a copper mine. It had earlier this year changed its name from Silver Wheaton to better reflect its increasing attributable gold streams.

For the third quarter, silver output of 7.6-million ounces was mainly impacted on by 17% lower silver production from Primero Mining’s struggling San Dimas mine, in Mexico, as well as an 18% drop in silver and a 33% drop in gold output at Hudbay Minerals’ Constancia mine, in Peru. This was offset by increased output from the giant Antamina mine, in Peru, and Goldcorp’s Peñasquito operation, also in Mexico.

Attributable gold output at 95 900 oz for the period fell 15% over that of the same period of 2016, with the decrease attributable to lower output from Hudbay’s 777 mine, in Manitoba, as well as from Capstone Mining’s Minto mine, in Canada’s Yukon Territory.

At September 30, WPM had about $70-million of cash on hand and $1.15-billion available under its $2-billion revolving term loan.

WPM expects to produce 28-million ounces of silver and 340 000 oz of gold in 2017, rising to 29-million silver ounces in 2018, with gold output remaining stable. This guidance does not include any production from Barrick Gold’s stalled Pascua-Lama project, straddling the Chile/Argentina border, or Hudbay’s Rosemont project, in Arizona.

WPM’s NYSE-listed equity fell 1.18% on Thursday, and after-market trading saw another 0.53% lopped off the stock value to change hands at $20.80 apiece.