On track to exceed annual production guidance
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”) is pleased to announce its results for the third quarter ended September 30, 2018. All figures are presented in United States dollars unless otherwise noted.
In the third quarter of 2018, Wheaton generated close to $110 million in operating cash flow, and completed the acquisition of a gold and palladium stream on the Stillwater and East Boulder mines (collectively “Stillwater”). During the third quarter, Wheaton received its first deliveries of gold and palladium from Stillwater. Through the first nine months of 2018, Wheaton had record gold production and sales volumes, and is currently on track to exceed annual production guidance.
Q3 2018 Q3 2017 Change Ounces produced
Silver 5,701 7,595 (24.9)%
Gold 101,552 95,216 6.7 %
Palladium 8,817 - n.a
Silver 5,018 5,758 (12.9)%
Gold 89,242 82,548 8.1 %
Palladium 3,668 - n.a
Sales price per ounce
Silver $ 14.80 $ 16.87 (12.3)%
Gold $ 1,210 $1,283 (5.7)%
Palladium $ 955 $ n.a. n.a
Cash costs per ounce 1
Silver 1 $ 5.04 $ 4.43 13.8 %
Gold 1 $ 418 $ 396 5.6 %
Palladium 1 $ 169 $ n.a. n.a
Cash operating margin per ounce 1
Silver 1 $ 9.76 $ 12.44 (21.5)%
Gold 1 $ 792 $887 (10.7)%
Palladium 1 $ 786 $ n.a. n.a
Revenue $ 185,769 $203,034(8.5)%
Net earnings $ 34,021 $ 66,578 (48.9)%
Per share $ 0.08 $0.15 (46.7)%
Adjusted net earnings 1 $ 35,132 $66,578 (47.2)%
Per share 1 $ 0.08 $0.15 (47.4)%
Operating cash flows $ 108,413 $129,121 (16.0)%
Per share 1 $ 0.24 $0.29 (17.2)%
Dividends declared 1 $ 39,921 $44,201 (9.7)%
Per share $ 0.09 $0.10 (10.0)%
All amounts in thousands except gold and palladium ounces produced and sold, per ounce amounts and per share amounts.
• The decrease in attributable silver production for the three months ended September 30, 2018, was primarily due to the termination of the San Dimas silver purchase agreement and the entering into of the new San Dimas precious metals purchase agreement (“First Majestic PMPA”) effective May 10, 2018, the expiry of the streaming agreement relative to the Lagunas Norte, Veladero and Pierina mines on March 31, 2018, and lower production at Peñasquito due to lower throughput and planned lower grades from stockpiles during the commissioning of the now fully constructed Peñasquito Pyrite Leach Project (“PLP”).
• The increase in attributable gold production for the three months ended September 30, 2018, was primarily due to the entering into of the First Majestic PMPA, the acquisition of the new gold stream at Stillwater, partially offset by lower production at both Salobo and Minto.
• The decrease in silver sales volume for the three months ended September 30, 2018, was due to the lower production levels, partially offset by positive changes in the balance of payable silver produced but not yet delivered to Wheaton.
• The increase in gold sales volume for the three months ended September 30, 2018, was primarily the result of increased production levels coupled with positive changes in the balance of payable gold produced but not yet delivered to Wheaton.
• Declared quarterly dividend of $0.09 per common share.
• On July 25, 2018, the Company, through its wholly owned subsidiary Wheaton Precious Metals International Ltd. (“Wheaton International”), completed the acquisition from Sibanye Gold Limited ("Sibanye-Stillwater") of a fixed percentage of gold and palladium production from Stillwater effective July 1, 2018.
Reconfirming 2018 Production Guidance
• Wheaton’s estimated attributable production in 2018 is on track to exceed its guidance of approximately 355,000 ounces of gold, 22.5 million ounces of silver and 10,400 ounces of palladium.
Subsequent to the Quarter
• On October 24, 2018, Vale S.A. (“Vale”) announced the approval of the Salobo III mine expansion, which if completed as proposed, would increase processing throughput capacity from 24 million tonnes per annum (“Mtpa”) to 36 Mtpa once fully ramped up (the “Salobo Expansion”).
“Our robust precious metals business continued to grow in the third quarter with the first production of gold and palladium from our latest stream, Stillwater, exceeding our expectations. With the addition of Stillwater, Wheaton had record gold production and sales volume in the first nine months of 2018 resulting in operating cash flow of almost $370 million.” said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “In addition, we believe we are currently well positioned to exceed our production guidance for 2018. Finally, we also look forward to Vale pursuing their announced expansion of the Salobo mine in Brazil. Salobo has proven itself to be an exceptional mine, delivering metal to both Vale and Wheaton at a low cost.”
Revenue was $186 million in the third quarter of 2018, on sales volume of 5.0 million ounces of silver, 89,200 ounces of gold and 3,700 ounces of palladium. This represents a 9% decrease from the $203 million of revenue generated in the third quarter of 2017 due primarily to (i) a 13% decrease in the number of silver ounces sold; (ii) a 12% decrease in the average realized silver price ($14.80 in Q3 2018 compared with $16.87 in Q3 2017); and (iii) a 6% decrease in the average realized gold price ($1,210 in Q3 2018 compared with $1,283 in Q3 2017); partially offset by (iv) an 8% increase in the number of gold ounces sold; and (v) the first sales of palladium.
Costs and Expenses
Average cash costs¹ in the third quarter of 2018 were $5.04 per silver ounce sold, $418 per gold ounce sold and $169 per palladium ounce sold, as compared with $4.43 per silver ounce and $396 per gold ounce during the comparable period of 2017. This resulted in a cash operating margin¹ of $9.76 per silver ounce sold, $792 per gold ounce sold and $786 per palladium ounce sold, a reduction of 22% and 11% for silver and gold, respectively, as compared with Q3 2017. The decrease in the cash operating margin was primarily due to a 12% decrease in the average realized silver price and a 6% decrease in the average realized gold price in Q3 2018 compared with Q3 2017.
Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the third quarter of 2018 were $35 million ($0.08 per share) and $108 million ($0.24 per share¹), compared with $67 million ($0.15 per share) and $129 million ($0.29 per share¹) for the same period in 2017, a decrease of 47% and 16%, respectively.
At September 30, 2018, the Company had approximately $119 million of cash on hand and $1.4 billion outstanding under the Company's $2 billion revolving term loan (the "Revolving Facility").
Third Quarter Asset Highlights
During the third quarter of 2018, attributable production was 5.7 million ounces of silver, 101,600 ounces of gold and 8,800 ounces of palladium, representing a decrease of 25% and an increase of 7% for silver and gold, respectively, as compared with the third quarter of 2017.
Operational highlights for the quarter ended September 30, 2018, based upon counterparties’ reporting, are as follows:
In the third quarter of 2018, Salobo produced 68,600 ounces of attributable gold, a decrease of approximately 6% relative to the third quarter of 2017 due to slightly lower grades as expected due to mine sequencing in the open pit. As discussed below, subsequent to the quarter, Vale announced the approval of the Salobo Expansion.
In the third quarter of 2018, Peñasquito produced 1.0 million ounces of attributable silver, a decrease of approximately 36% relative to the third quarter of 2017 due to lower throughput and planned lower grades from constructed PLP. According to Goldcorp Inc.’s (“Goldcorp”) third quarter of 2018 MD&A, lower production was a result of the planned transition from higher grade ore in the Peñasco pit to lower grade from stockpiles during the first three quarters of 2018. This transition facilitated the stripping campaign in the Peñasco pit and the pre-stripping campaign in the newly developed Chile Colorado pit. Goldcorp further notes that production in the third quarter of 2018 was impacted by a reduction in mill throughput as much harder low-grade stockpiles were processed during commissioning of the Carbon Pre-flotation plant, a component of the PLP.
According to Goldcorp, commissioning of the PLP commenced, with commercial production expected in the fourth quarter of 2018. In addition, Goldcorp reports that substantially all of Peñasquito’s production in the fourth quarter will come from higher grade ore from the main Peñasco pit.
In the third quarter of 2018, Antamina produced 1.5 million ounces of attributable silver, a decrease of approximately 15% relative to the third quarter of 2017 as expected due to mine sequencing in the open pit.
see & read more on