Wheaton Precious Metals Announces First Quarter Results For 2018 and Declares Second Quarterly Dividend of 2018

Wheaton Precious Metals Announces First Quarter Results For 2018 and Declares Second Quarterly Dividend of 2018

PR Newswire

VANCOUVER, May 11, 2018

TSX: WPM
NYSE: WPM

VANCOUVER, May 11, 2018 /PRNewswire/ -- Wheaton Precious Metals™ Corp. ("Wheaton" or the "Company") is pleased to announce its results for the first quarter ended March 31, 2018. All figures are presented in United States dollars unless otherwise noted.

Operational Overview




Q1 2018



Q1 2017


Change

Ounces produced










Silver



7,428



6,648


11.7 %


Gold



79,657



83,778


(4.9)%

Ounces sold










Silver



6,343



5,225


21.4 %


Gold



69,973



88,397


(20.8)%

Sales price per ounce










Silver


$

16.73


$

17.45


(4.1)%


Gold


$

1,330


$

1,208


10.1 %

Cash costs per ounce 1










Silver1                                                


$

4.49


$

4.54


(1.1)%


Gold 1


$

399


$

391


2.0 %

Cash operating margin per ounce 1










Silver 1


$

12.24


$

12.91


(5.2)%


Gold 1


$

931


$

817


14.0 %

Revenue


$

199,252


$

197,951


0.7 %

Net earnings


$

68,123


$

61,224


11.3 %


Per share


$

0.15


$

0.14


7.1 %

Adjusted net earnings 1


$

69,945


$

61,224


14.2 %


Per share 1


$

0.16


$

0.14


13.9 %

Operating cash flows


$

125,340


$

119,923


4.5 %


Per share 1


$

0.28


$

0.27


3.7 %

Dividends declared 1


$

39,852


$

30,906


28.9 %


Per share


$

0.09


$

0.07


28.6 %

All amounts in thousands except gold ounces produced and sold, per ounce amounts and per share amounts.

 

Highlights

Subsequent to the Quarter

"Wheaton has had a solid start to 2018 with our core assets performing better than expected, demonstrating the inherent quality of our portfolio," said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. "We are encouraged by the sharp rebound in production at San Dimas and welcome First Majestic as a partner. With this strong foundation in place, we continue to advance a number of new opportunities for additional accretive growth that we believe will deliver long-term value to our shareholders."

Financial Review

Revenues
Revenue was $199 million in the first quarter of 2018, on sales volume of 6.3 million ounces of silver and 70,000 ounces of gold. This represents a 1% increase from the $198 million of revenue generated in the first quarter of 2017 due primarily to (i) a 21% increase in the number of silver ounces sold, coupled with (ii) a 10% increase in the average realized gold price ($1,330 in Q1 2018 compared with $1,208 in Q1 2017); partially offset by (iii) a 21% decrease in the number of gold ounces sold and (iv) a 4% decrease in the average realized silver price ($16.73 in Q1 2018 compared with $17.45 in Q1 2017).

Costs and Expenses
Average cash costs¹ in the first quarter of 2018 were $4.49 per silver ounce sold and $399 per gold ounce sold, as compared with $4.54 per silver ounce and $391 per gold ounce during the comparable period of 2017. This resulted in a cash operating margin¹ of $12.24 per silver ounce sold and $931 per gold ounce sold, a decrease of 5% per silver ounce sold and an increase of 14% per ounce of gold sold as compared with Q1 2017. The increase in the gold cash operating margin was primarily due to a 10% increase in the average realized gold price in Q1 2018 compared with Q1 2017 while the decrease in the silver cash operating margin was primarily due to a 4% decrease in the average realized silver price during the same period.

Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the first quarter of 2018 were $70 million ($0.16 per share) and $125 million ($0.28 per share¹), compared with $61 million ($0.14 per share) and $120 million ($0.27 per share¹) for the same period in 2017, an increase of 14% and 5%, respectively.

Balance Sheet
At March 31, 2018, the Company had approximately $116 million of cash on hand and $663 million outstanding under the Company's $2 billion revolving term loan (the "Revolving Facility").

Canadian Tax Dispute
On September 24, 2015, the Company received Notices of Reassessment (the "Reassessments") from the CRA for the 2005-2010 taxation years. The CRA's position in the Reassessments is that the transfer pricing provisions of the Income Tax Act (Canada) relating to income earned by the Company's foreign subsidiaries outside of Canada should apply such that the income of Wheaton subject to tax in Canada should be increased by an amount equal to substantially all of the income earned outside of Canada by the Company's foreign subsidiaries for the 2005-2010 taxation years. Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian tax law and is vigorously defending its tax filing positions.

On January 8, 2016, the Company commenced an appeal in the Tax Court of Canada. The Company is currently in the discovery phase of the appeal, with a trial scheduled to commence in mid-September 2019 for a two-month period.

First Quarter Asset Highlights

During the first quarter of 2018, attributable production was 7.4 million ounces of silver and 79,700 ounces of gold, representing an increase of 12% and a decrease of 5%, as compared with the first quarter of 2017.

Operational highlights for the quarter ended March 31, 2018, based upon counterparties' reporting, are as follows:

Salobo 
In the first quarter of 2018, Salobo produced 61,500 ounces of attributable gold, an increase of approximately 6% relative to the first quarter of 2017 as higher grades were partially offset by lower recovery. The Salobo plant operated at 98% despite a planned shut down for scheduled maintenance in the quarter.

Peñasquito 
In the first quarter of 2018, Peñasquito produced 1.4 million ounces of attributable silver, an increase of approximately 8% relative to the first quarter of 2017 as higher grades and recoveries were partially offset by lower throughput. According to Goldcorp Inc.'s ("Goldcorp") first quarter of 2018 MD&A, lower throughput at Peñasquito was due to ten days of planned shut downs during the month of February for mill relines and completing all tie-ins for the Pyrite Leach Project ("PLP"), which reduced the number of operating days for the mill. Subsequent to the shutdown, Goldcorp reports that new records were established for throughput at the primary crusher and concentrator driven by the continued implementation of a management operating system, which resulted in more consistent ore delivery to the primary crusher. In addition, ongoing mill improvement projects reportedly resulted in higher mill recoveries.

According to Goldcorp, the PLP at Peñasquito was 86% complete as of March 31, 2018, and expected to commence commissioning in the fourth quarter of 2018. The carbon pre-flotation component of the project is reported to have commenced wet commissioning during April 2018. 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 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 first quarter of 2018, Antamina produced 1.3 million ounces of attributable silver, a decrease of approximately 9% relative to the first quarter of 2017 as lower grades were partially offset by higher recovery. As expected, silver grades were lower given mine sequencing in the open pit.

San Dimas
In the first quarter of 2018, San Dimas produced 1.6 million ounces of attributable silver, an increase of approximately 158% relative to the first quarter of 2017 as first quarter 2017 production was impacted by a strike initiated by the union at San Dimas on February 15, 2017.

On May 10, 2018, First Majestic announced that they had closed the previously announced acquisition of Primero. In connection with this acquisition, Wheaton terminated the existing San Dimas silver purchase agreement with Primero (the "Primero SPA") and entered into a new precious metals purchase agreement with First Majestic relating to the San Dimas mine (the "San Dimas PMPA"). Under the San Dimas PMPA: Wheaton is entitled to 25% of gold production plus an additional amount of gold equal to 25% of silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine; for each ounce of gold delivered, Wheaton will pay to First Majestic a production payment equal to the lesser of US$600/oz, subject to a 1% annual inflationary adjustment, and the prevailing market price; and First Majestic has provided a corporate guarantee and security limited to San Dimas assets. As part of the transaction, in addition to the new stream, Wheaton has received 20,914,590 First Majestic common shares.2 Upon termination of the Primero SPA, the Company will reflect a gain on the disposal of the Primero SPA and will reflect the San Dimas PMPA as a component of Other gold interests. The Company's guarantee of the Primero credit facility was also terminated concurrent with closing of the acquisition.

Sudbury
In the first quarter of 2018, Vale's Sudbury mines produced 6,500 ounces of attributable gold, a decrease of approximately 29% relative to the first quarter of 2017 primarily due to lower throughput. According to Vale's first quarter of 2018 MD&A, the decrease in throughput was primarily due to the extended unscheduled maintenance at the Coleman mine as well as the cessation of mining activities at the Stobie mine since the second quarter of 2017. Vale reports that the Coleman mine was in a maintenance shutdown since November 2017 but returned to production in April 2018.

Constancia
In the first quarter of 2018, Constancia produced 0.6 million ounces of attributable silver and 3,300 ounces of attributable gold, an increase of approximately 20% and 36%, respectively, relative to the first quarter of 2017, primarily due to higher throughput. As per Hudbay Mineral Inc.'s ("Hudbay") news release dated March 26, 2018, although negotiations to secure surface rights over the Pampacancha deposit continue to progress and Hudbay has been granted access to the land to carry out early-works activities, they anticipate mining of this high-grade satellite deposit to commence in 2019, a one-year delay. In the interim, Hudbay will reportedly continue to mine higher-grade ore from the main Constancia pit. As the mining of the Pampacancha deposit has been delayed beyond 2018, Wheaton will be entitled to an increased portion of gold from Hudbay starting in 2019. Based on the current market price of gold, the additional deliveries due in 2019 will have a net value to the Company of approximately $7 million

Other Silver
In the first quarter of 2018, total Other Silver attributable production was 2.4 million ounces, a decrease of approximately 11% relative to the first quarter of 2017. The decrease was driven primarily by the cessation of production from Cozamin as the Cozamin silver purchase agreement with Capstone Mining Corp. ("Capstone") expired on April 4, 2017. 

Other Gold
In the first quarter of 2018, total Other Gold attributable production was 8,400 ounces, a decrease of approximately 41% relative to the first quarter of 2017. The decrease was due primarily to lower production at Minto due to lower grade mill feed during the quarter.

As per Capstone's news release dated February 2, 2018, Capstone has entered into a definitive share purchase agreement pursuant to which it has agreed to sell its Minto mine to Pembridge Resources plc. Capstone expects the transaction to close in the second quarter of 2018.

Development Update – Pascua Lama
According to Barrick Gold Corporation's ("Barrick") first quarter of 2018 MD&A, Barrick has suspended work on the prefeasibility study for a potential underground project at Pascua- Lama as it did not meet Barrick's investment criteria and will focus on adjusting the project closure plan for surface infrastructure on the Chilean side of the project, in line with legal requirements. Barrick will reportedly continue to evaluate opportunities to de-risk the project while maintaining Pascua-Lama as an option for development in the future if economics improve, and related risks can be mitigated. 

The Pascua-Lama silver purchase agreement had a carrying value at March 31, 2018 of $254 million. If the requirements of the completion test have not been satisfied by the completion test deadline of June 30, 2020, the Company may, within 90 days of such date, elect to terminate the Pascua-Lama silver purchase agreement in which case the Company will be entitled to a return of the original upfront cash payment of $625 million less the cash flows received relative to silver deliveries from the Lagunas Norte, Veladero, and Pierina mines. As at March 31, 2018, the Company has received approximately 19.5 million ounces related to silver production from these mines, generating cumulative operating cash flows of approximately $370 million, resulting in a refundable balance of approximately $255 million.

Produced But Not Yet Delivered 3
As at March 31, 2018, payable ounces attributable to the Company produced but not yet delivered3 amounted to 4.8 million payable silver ounces and 84,800 payable gold ounces, representing an increase of 0.3 million payable silver ounces and 5,300 payable gold ounces during the three-month period ended March 31, 2018. Payable silver ounces produced but not yet delivered increased primarily as a result of increases related to the San Dimas and Peñasquito silver interests partially offset by a decrease at the Antamina silver interest. Payable gold ounces produced but not yet delivered increased primarily as a result of increases related to the Salobo and 777 gold interests. Payable ounces produced but not yet delivered to the Wheaton Precious Metals group of companies are expected to average approximately two months of annualized production for silver and two to three months for gold but may vary from quarter to quarter due to a number of mining operation factors including mine ramp-up and timing of shipments.

Detailed mine-by-mine production and sales figures can be found in the Appendix to this press release and in Wheaton's consolidated MD&A in the 'Results of Operations and Operational Review' section.

Subsequent to the Quarter

On April 25, 2018, the Company made a strategic investment of $1 million by participating in a private placement undertaken by Tradewind, a financial technology company that uses blockchain to streamline digital gold trading. Tradewind has built a technology platform for digitizing the trading, settlement, and ownership of precious metals. The Tradewind platform combines exchange technology with Vaultchain™ Gold, Tradewind's blockchain technology tailored for precious metals.   

Dividend

Second Quarterly Dividend
The second quarterly cash dividend for 2018 of US$0.09 will be paid to holders of record of Wheaton Precious Metals common shares as of the close of business on May 25, 2018, and will be distributed on or about June 7, 2018.

Under the Company's dividend policy, the quarterly dividend per common share will be equal to 30% of the average cash generated by operating activities in the previous four quarters divided by the Company's then outstanding common shares, all rounded to the nearest cent. 

The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. This dividend qualifies as an 'eligible dividend' for Canadian income tax purposes.

Dividend Reinvestment Plan
The Company has previously implemented a Dividend Reinvestment Plan ("DRIP"). Participation in the DRIP is optional. For the purposes of this second quarterly dividend, the Company has elected to issue common shares under the DRIP through treasury at a 3% discount to the Average Market Price, as defined in the DRIP. However, the Company may, from time to time, in its discretion, change or eliminate the discount applicable to Treasury Acquisitions, as defined in the DRIP, or direct that such common shares be purchased in Market Acquisitions, as defined in the DRIP, at the prevailing market price, any of which would be publicly announced.

The DRIP and enrollment forms are available for download on the Company's website at www.wheatonpm.com, accessible by quick links directly from the home page, and can also be found in the 'investors' section, under the 'dividends' tab.

Registered shareholders may also enroll in the DRIP online through the plan agent's self-service web portal at: https://www.canstockta.com/en/InvestorServices/Investor_Information/Issuer_List/IssuerDetail.jsp?companyCode=1501.

Beneficial shareholders should contact their financial intermediary to arrange enrollment. All shareholders considering enrollment in the DRIP should carefully review the terms of the DRIP and consult with their advisors as to the implications of enrollment in the DRIP.

This press release is not an offer to sell or a solicitation of an offer of securities. A registration statement relating to the DRIP has been filed with the U.S. Securities and Exchange Commission and may be obtained under the Company's profile on the U.S. Securities and Exchange Commission's website at http://www.sec.gov. A written copy of the prospectus included in the registration statement may be obtained by contacting the Corporate Secretary of the Company at 1021 West Hastings Street, Suite 3500, Vancouver, British Columbia, Canada V6E 0C3.

Outlook

Wheaton's estimated attributable silver and gold production in 2018 is forecast to be approximately 22.5 million silver ounces and 355,000 gold ounces. Estimated average annual attributable silver and gold production over the next five years (including 2018) is anticipated to be approximately 25 million silver ounces and 370,000 gold ounces per year. As a reminder, Wheaton does not include any production from Barrick's Pascua-Lama project or Hudbay's Rosemont project in its estimated average five-year production guidance.

From a liquidity perspective, the $116 million of cash and cash equivalents as at March 31, 2018 combined with the liquidity provided by the available credit 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 additional accretive precious metal stream interests.

Webcast and Conference Call Details

A conference call and webcast will be held Friday, May 11, 2018, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call, please use one of the following methods:

Dial toll free from Canada or the US:

888-231-8191

Dial from outside Canada or the US: 

647-427-7450

Pass code:   

4590118

Live audio webcast: 

www.wheatonpm.com

 

Participants should dial in five to ten minutes before the call.

The conference call will be recorded and available until May 18, 2018 at 11:59 pm (Eastern Time). The webcast will be available for one year. You can listen to an archive of the call by one of the following methods:

Dial toll free from Canada or the US:

855-859-2056

Dial from outside Canada or the US:

416-849-0833

Pass code:

4590118

Archived audio webcast: 

www.wheatonpm.com 

 

This earnings release should be read in conjunction with Wheaton Precious Metals' MD&A and Financial Statements, which are available on the Company's website at www.wheatonpm.com and have been posted on SEDAR at www.sedar.com

Mr. Neil Burns, Vice President, Technical Services for Wheaton Precious Metals, is a "qualified person" as such term is defined under National Instrument 43-101, and has reviewed and approved the technical information including information on mineral reserves and mineral resources disclosed in this news release.

Wheaton Precious Metals believes that there are no significant differences between its corporate governance practices and those required to be followed by United States domestic issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious Metals website at http://www.wheatonpm.com/Company/corporate-governance/default.aspx.

End Notes

_________________________________

1 Please refer to non-IFRS measures at the end of this press release. Dividends declared in the referenced calendar quarter, relative to the financial results of the prior quarter.

2 If the average gold to silver price ratio decreases to less than 50:1 or increases to more than 90:1 for a period of 6 months or more, then the "70" shall be revised to "50" or "90", as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a period of 6 months or more in which event the "70" shall be reinstated. The First Majestic common shares will be issuable upon termination of the Primero SPA.

3 Payable silver and gold ounces produced but not yet delivered are based on management estimates and may be updated in future periods as additional information is received.


 

Condensed Interim Consolidated Statements of Earnings


Three Months Ended
March 31

(US dollars and shares in thousands, except per share amounts - unaudited)

2018

2017

Sales

$

199,252

$

197,951

Cost of sales






Cost of sales, excluding depletion

$

56,414

$

58,291


Depletion


57,265


63,943

Total cost of sales

$

113,679

$

122,234

Gross margin

$

85,573

$

75,717

Expenses






General and administrative1

$

9,757

$

7,898


Interest expense


5,591


6,373


Unrealized fair value losses (gains), net


1,869


-


Other income


(833)


(1,098)


Other expense


1,721


1,148


Foreign exchange (gain) loss


(170)


44


$

17,935

$

14,365

Earnings before income taxes

$

67,638

$

61,352

Income tax recovery (expense)


485


(128)

Net earnings

$

68,123

$

61,224






Basic earnings per share

$

0.15

$

0.14

Diluted earnings per share

$

0.15

$

0.14






Weighted average number of shares outstanding






Basic


442,728


441,484


Diluted


443,181


441,955

1) Equity settled stock based compensation (a non-cash item) included in general and
administrative expenses.

$

1,249

$

1,196

 

Condensed Interim Consolidated Balance Sheets



As at
March 31

As at
December 31

(US dollars in thousands - unaudited)

2018

2017

Assets






Current assets







Cash and cash equivalents


$

115,568

$

98,521


Accounts receivable



2,194


3,194


Other



1,496


1,700

Total current assets


$

119,258

$

103,415

Non-current assets







Silver and gold interests


$

5,366,012

$

5,423,277


Early deposit - silver and gold interests



21,739


21,722


Royalty interest



9,107


9,107


Long-term investments



92,505


95,732


Investment in associates



2,793


2,994


Convertible note receivable



14,007


15,777


Other



12,306


11,289

Total non-current assets


$

5,518,469

$

5,579,898

Total assets


$

5,637,727

$

5,683,313

Liabilities






Current liabilities







Accounts payable and accrued liabilities


$

7,645

$

12,118


Dividends payable



39,852


-


Current portion of performance share units



49


-


Other



23


25

Total current liabilities


$

47,569

$

12,143

Non-current liabilities







Bank debt


$

663,000

$

770,000


Deferred income taxes



86


76


Performance share units



1,533


1,430

Total non-current liabilities


$

664,619

$

771,506

Total liabilities


$

712,188

$

783,649

Shareholders' equity






Issued capital


$

3,473,443

$

3,472,029

Reserves



73,197


77,007

Retained earnings



1,378,899


1,350,628

Total shareholders' equity


$

4,925,539

$

4,899,664

Total liabilities and shareholders' equity


$

5,637,727

$

5,683,313

 

Condensed Interim Consolidated Statements of Cash Flow



Three Months Ended
March 31

(US dollars in thousands - unaudited)


2018

2017

Operating activities






Net earnings


$

68,123

$

61,224

Adjustments for







Depreciation and depletion



57,505


64,186


Amortization of credit facility origination fees:








Interest expense



129


200



Amortization of credit facility origination fees - undrawn facilities



230


161


Interest expense



5,462


6,173


Equity settled stock based compensation



1,249


1,196


Performance share units



184


(434)


Deferred income tax (recovery) expense



(507)


115


Loss on fair value adjustment of share purchase warrants held



99


-


Share in losses of associate



201


-


Fair value adjustment on convertible note receivable



1,770


-


Investment income recognized in net earnings



(585)


(76)


Other



(4)


(1,031)

Change in non-cash working capital



(3,103)


(5,463)

Cash generated from operations before interest paid and received


$

130,753

$

126,251

Interest paid



(5,596)


(6,389)

Interest received



183


61

Cash generated from operating activities


$

125,340

$

119,923

Financing activities






Bank debt repaid


$

(107,000)

$

(129,000)

Credit facility extension fees



(1,200)


(1,300)

Share purchase options exercised



149


722

Cash (used for) generated from financing activities


$

(108,051)

$

(129,578)

Investing activities






Early deposit - silver and gold interests



(203)


(879)

Proceeds on disposal of silver interest 1



-


1,022

Dividend income received



20


15

Other



(41)


(54)

Cash used for investing activities


$

(224)

$

104

Effect of exchange rate changes on cash and cash equivalents


$

(18)

$

5

Increase (decrease) in cash and cash equivalents


$

17,047

$

(9,546)

Cash and cash equivalents, beginning of period



98,521


124,295

Cash and cash equivalents, end of period


$

115,568

$

114,749



1)

During the three months ended March 31, 2017, the Company received an additional $1 million settlement related to the November 4, 2014 bankruptcy of Mercator Minerals Ltd. ("Mercator") with whom Wheaton Precious Metals had a silver purchase agreement relative to Mercator's Mineral Park mine in the United States.

 

Summary of Ounces Produced


Q1 2018

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Silver ounces produced 2










San Dimas

1,606

1,324

1,043

973

623

1,429

1,264

1,596


Peñasquito

1,450

1,561

1,641

1,483

1,339

1,328

1,487

867


Antamina

1,339

1,467

1,735

1,888

1,464

1,599

1,469

1,707


Constancia

646

670

618

546

540

723

749

778


Other











Los Filos

34

48

43

42

32

33

44

56



Zinkgruvan

565

619

710

493

538

557

449

495



Yauliyacu

550

335

588

607

562

379

721

686



Stratoni

137

131

137

171

166

187

206

222



Minto

35

30

43

42

56

100

153

60



Neves-Corvo

405

305

341

316

330

312

279

331



Cozamin 3

-

-

-

17

397

265

239

253



Lagunas Norte 4

217

253

243

218

210

234

215

233



Pierina 4

107

111

107

114

137

117

50

31



Veladero 4

191

211

201

144

158

174

160

193



777

146

146

145

138

96

152

166

99


Total Other

2,387

2,189

2,558

2,302

2,682

2,510

2,682

2,659

Total silver ounces produced

7,428

7,211

7,595

7,192

6,648

7,589

7,651

7,607

Gold ounces produced ²










Sudbury 5

6,477

8,568

8,519

7,468

9,182

8,901

10,779

15,054


Salobo

61,513

76,153

72,980

57,514

58,009

77,787

70,776

38,853


Constancia

3,315

2,947

2,498

2,332

2,431

3,151

3,737

4,622


Other











Minto

2,707

3,328

6,105

6,063

9,734

10,906

20,184

6,985



777

5,645

5,478

5,114

6,259

4,422

10,919

10,140

8,900


Total Other

8,352

8,806

11,219

12,322

14,156

21,825

30,324

15,885

Total gold ounces produced

79,657

96,474

95,216

79,636

83,778

111,664

115,616

74,414

SEOs produced 6

13,744

14,572

14,823

13,009

12,513

15,526

15,521

13,189

GEOs produced 6

173,340

190,979

195,263

178,100

178,766

218,429

228,001

175,792

Gold / Silver Ratio 7

79.3

76.3

75.9

73.0

70.0

71.1

68.1

75.0



1)

All figures in thousands except gold ounces produced.

2)

Ounces produced represent the quantity of silver and gold contained in concentrate or doré prior to smelting or refining deductions.  Production figures are based on information provided by the operators of the mining operations to which the silver or gold interests relate or management estimates in those situations where other information is not available.  Certain production figures may be updated in future periods as additional information is received. 

3)

The Cozamin precious metal purchase agreement expired on April 4, 2017.

4)

The Lagunas Norte, Pierina and Veladero precious metal purchase agreements expired on March 31, 2018.

5)

Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests. The Stobie gold interest was placed into care and maintenance as of May 2017.

6)

Silver equivalent ounces (SEOs) and gold equivalent ounces (GEOs), which are provided to assist the reader, are calculated by converting gold (in the case of SEOs) or silver (in the case of GEOs) using the ratio of the average price of silver to the average price of gold per the London Bullion Metal Exchange during the period.

7)

The gold / silver ratio is the ratio of the average price of gold to the average price of silver per the London Bullion Metal Exchange during the period.          

 

Summary of Ounces Sold 


Q1 2018

Q4 2017

Q3 2017

Q2 2017

Q1 2017

Q4 2016

Q3 2016

Q2 2016

Silver ounces sold










San Dimas

1,372

1,299

962

845

796

1,571

1,065

1,426


Peñasquito

1,227

1,537

1,109

1,639

860

1,270

1,078

886


Antamina

1,413

1,769

1,537

1,453

1,170

1,488

1,598

2,202


Constancia

574

491

491

559

383

702

536

520


Other











Los Filos

52

16

43

42

32

33

44

55



Zinkgruvan

391

597

305

398

296

592

340

369



Yauliyacu

360

642

364

423

403

671

342

578



Stratoni

148

110

84

123

195

165

203

129



Minto

(1)

34

43

39

37

102

96

26



Cozamin 2

-

-

23

125

232

196

207

219



Neves-Corvo

169

119

117

114

153

147

88

158



Lagunas Norte 3                              

236

237

242

204

217

227

237

224



Pierina 3

88

106

102

136

150

84

32

27



Veladero 3

161

211

201

144

159

174

160

193



777

153

124

135

125

142

84

96

130


Total Other

1,757

2,196

1,659

1,873

2,016

2,475

1,845

2,108

Total silver ounces sold

6,343

7,292

5,758

6,369

5,225

7,506

6,122

7,142

Gold ounces sold










Sudbury 4

5,186

12,059

3,237

5,822

6,887

10,183

12,294

11,351


Salobo

54,645

71,683

67,198

50,478

63,007

73,646

50,043

45,396


Constancia

3,247

1,965

2,206

2,356

2,315

3,343

3,396

3,610


Other











Minto

1,763

2,020

4,603

6,988

9,902

15,445

11,110

19



777

5,132

6,568

5,304

6,321

6,286

6,314

8,220

10,381


Total Other

6,895

8,588

9,907

13,309

16,188

21,759

19,330

10,400

Total gold ounces sold

69,973

94,295

82,548

71,965

88,397

108,931

85,063

70,757

SEOs sold 5

11,892

14,488

12,024

11,625

11,412

15,249

11,913

12,451

GEOs sold 5

149,987

189,882

158,401

159,161

163,032

214,529

175,008

165,945

Cumulative payable silver ounces PBND 6

4,820

4,515

5,257

4,152

3,967

3,224

3,783

2,999

Cumulative payable gold ounces PBND 6

84,791

79,477

82,632

74,899

71,571

80,621

82,775

56,642

Gold / Silver Ratio 7

79.3

76.3

75.9

73.0

70.0

71.1

68.1

75.0



1)

All figures in thousands except gold ounces sold.

2)

The Cozamin precious metal purchase agreement expired on April 4, 2017.

3)

The Lagunas Norte, Pierina and Veladero precious metal purchase agreements expired on March 31, 2018.

4)

Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests. The Stobie gold interest was placed into care and maintenance as of May 2017.

5)

Silver equivalent ounces (SEOs) and gold equivalent ounces (GEOs), which are provided to assist the reader, are calculated by converting gold (in the case of SEOs) or silver (in the case of GEOs) using the ratio of the average price of silver to the average price of gold per the London Bullion Metal Exchange during the period.

6)

Payable silver and gold ounces produced but not yet delivered ("PBND") are based on management estimates. These figures may be updated in future periods as additional information is received.

7)

The gold / silver ratio is the ratio of the average price of gold to the average price of silver per the London Bullion Metal Exchange during the period.

 

Results of Operations

The Company currently has eight reportable operating segments: the silver produced by the San Dimas, Peñasquito, Antamina and Other mines, the gold produced by the Sudbury, Salobo and Other mines and the silver and gold produced by the Constancia mine.

Three Months Ended March 31, 2018


Ounces
Produced²

Ounces
Sold

Average
Realized
Price
($'s Per

Ounce)

Average
Cash Cost
($'s Per
Ounce)3

Average
Depletion
($'s Per
Ounce)

Sales

Net
Earnings

Cash Flow
From
Operations

Total
Assets

Silver


















San Dimas

1,606

1,372

$

16.71

$

4.32

$

1.46

$

22,921

$

14,986

$

16,994

$

132,853


Peñasquito

1,450

1,227


16.81


4.17


2.96


20,620


11,878


15,504


399,624


Antamina

1,339

1,413


16.82


3.41


8.70


23,771


6,660


18,951


745,348


Constancia

646

574


16.68


5.90


7.14


9,579


2,087


6,190


257,700


Other 4

2,387

1,757


16.65


5.26


3.42


29,275


14,023


20,023


517,131


7,428

6,343

$

16.73

$

4.49

$

4.42

$

106,166

$

49,634

$

77,662

$

2,052,656

Gold


















Sudbury 5

6,477

5,186

$

1,331

$

400

$

795

$

6,901

$

702

$

4,949

$

375,864


Salobo

61,513

54,645


1,333


400


386


72,835


29,875


50,977


2,787,630


Constancia

3,315

3,247


1,328


400


374


4,311


1,798


3,012


120,837


Other 6

8,352

6,895


1,311


389


405


9,039


3,564


5,150


29,025


79,657

69,973

$

1,330

$

399

$

418

$

93,086

$

35,939

$

64,088

$

3,313,356

Operating results









$

199,252

$

85,573

$

141,750

$

5,366,012

Corporate costs


















General and administrative









$

(9,757)

$

(9,965)




Interest expense











(5,591)


(5,596)




Other












(2,587)


(849)




Income tax recovery











485


-



Total corporate costs









$

(17,450)

$

(16,410)

$

271,715












$

68,123

$

125,340

$

5,637,727



1)

All figures in thousands except gold ounces produced and sold and per ounce amounts.

2)

Ounces produced represent the quantity of silver and gold contained in concentrate or doré prior to smelting or refining deductions.  Production figures are based on information provided by the operators of the mining operations to which the silver or gold interests relate or management estimates in those situations where other information is not available.  Certain production figures may be updated in future periods as additional information is received.

3)

Refer to discussion on non-IFRS measure (iii) at the end of this press release.

4)

Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Minto, Neves-Corvo, Lagunas Norte, Pierina, Veladero and 777 silver interests as well as the  non-operating Keno Hill, Aljustrel, Loma de La Plata, Pascua-Lama and Rosemont silver interests. The Lagunas Norte, Pierina and Veladero precious metal purchase agreements expired on March 31, 2018. 

5)

Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests, the non-operating Victor gold interest and the Stobie gold interest which was placed into care and maintenance during the second quarter of 2017.

6)

Comprised of the operating Minto and 777 gold interests in addition to the non-operating Rosemont gold interest.

                                                      

On a silver equivalent and gold equivalent basis, results for the Company for the three months ended March 31, 2018 were as follows:

Three Months Ended March 31, 2018


Gold /
Silver
Ratio 1

Ounces
Produced 2, 3

Ounces
Sold 3

Average
Realized
Price
($'s Per
Ounce)

Average
Cash Cost
($'s Per
Ounce) 4

Cash
Operating
Margin
($'s Per
Ounce)
5

Average
Depletion
($'s Per
Ounce)

Gross
Margin
($'s Per
Ounce)










Silver equivalent basis

79.3

13,744

11,892

$

16.75

$

4.74

$

12.01

$

4.82

$

7.19

Gold equivalent basis

79.3

173,340

149,987

$

1,328

$

376

$

952

$

382

$

570



1)

The gold / silver ratio is the ratio of the average price of gold to the average price of silver per the London Bullion Metal Exchange during the period.

2)

Ounces produced represent the quantity of silver and gold contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the silver or gold interests relate or management estimates in those situations where other information is not available. Certain production figures may be updated in future periods as additional information is received. 

3)

Silver ounces produced and sold in thousands.

4)

Refer to discussion on non-IFRS measure (iii) at the end of this press release.

5)

Refer to discussion on non-IFRS measure (iv) at the end of this press release

 

Three Months Ended March 31, 2017


Ounces
Produced²

Ounces
Sold

Average
Realized
Price
($'s Per
Ounce)

Average
Cash Cost
($'s Per
Ounce)3

Average
Depletion
($'s Per
Ounce)

Sales

Net
Earnings

Cash Flow
From
Operations

Total
Assets

Silver


















San Dimas

623

796

$

17.56

$

4.28

$

1.46

$

13,968

$

9,398

$

10,563

$

139,410


Peñasquito

1,339

860


17.09


4.13


2.88


14,696


8,666


11,144


415,599


Antamina

1,464

1,170


17.08


3.46


9.81


19,977


4,455


19,988


804,330


Constancia

540

383


17.45


5.90


7.36


6,687


1,604


4,223


273,149


Other 4

2,682

2,016


17.78


5.18


3.83


35,837


17,678


23,478


777,848


6,648

5,225

$

17.45

$

4.54

$

4.91

$

91,165

$

41,801

$

69,396

$

2,410,336

Gold


















Sudbury 5

9,182

6,887

$

1,216

$

400

$

769

$

8,374

$

321

$

5,593

$

396,236


Salobo

58,009

63,007


1,216


400


381


76,628


27,432


51,426


2,880,842


Constancia

2,431

2,315


1,212


400


409


2,806


933


1,867


124,723


Other 6

14,156

16,188


1,172


353


497


18,978


5,230


8,994


43,192


83,778

88,397

$

1,208

$

391

$

433

$

106,786

$

33,916

$

67,880

$

3,444,993

Operating results








$

197,951

$

75,717

$

137,276

$

5,855,329

Corporate costs
















General and administrative










$

(7,898)

$

(10,472)




Interest expense











(6,373)


(6,389)




Other












(94)


(492)




Income tax expense











(128)


-



Total corporate costs









$

(14,493)

$

(17,353)

$

230,380












$

61,224

$

119,923

$

6,085,709



1)

All figures in thousands except gold ounces produced and sold and per ounce amounts.

2)

Ounces produced represent the quantity of silver and gold contained in concentrate or doré prior to smelting or refining deductions.  Production figures are based on information provided by the operators of the mining operations to which the silver or gold interests relate or management estimates in those situations where other information is not available.  Certain production figures may be updated in future periods as additional information is received.

3)

Refer to discussion on non-IFRS measure (iii) at the end of this press release.

4)

Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Minto, Cozamin, Neves-Corvo, Lagunas Norte, Pierina, Veladero and 777 silver interests as well as the non-operating Keno Hill, Aljustrel, Loma de La Plata, Pascua-Lama and Rosemont silver interests. The Cozamin precious metal purchase agreement expired on April 4, 2017 while the Lagunas Norte, Pierina and Veladero precious metal purchase agreements expired on March 31, 2018. 

5)

Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests, the non-operating Victor gold interest and the Stobie gold interest which was placed into care and maintenance during the second quarter of 2017.

6)

Comprised of the operating Minto and 777 gold interests in addition to the non-operating Rosemont gold interest.

 

On a silver equivalent and gold equivalent basis, results for the Company for the three months ended March 31, 2017 were as follows:

Three Months Ended March 31, 2017


Gold /
Silver 
Ratio 1

Ounces
Produced 2, 3

Ounces
Sold 3

Average
Realized
Price
($'s Per
Ounce)

Average
Cash Cost
($'s Per
Ounce) 4

Cash
Operating
Margin
($'s Per
Ounce)
5

Average
Depletion
($'s Per
Ounce)

Gross
Margin
($'s Per
Ounce)










Silver equivalent basis

70.0

12,513

11,412

$

17.35

$

5.11

$

12.24

$

5.60

$

6.64

Gold equivalent basis

70.0

178,766

163,032

$

1,214

$

358

$

856

$

392

$

464



1)

The gold / silver ratio is the ratio of the average price of gold to the average price of silver per the London Bullion Metal Exchange during the period.

2)

Ounces produced represent the quantity of silver and gold contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the silver or gold interests relate or management estimates in those situations where other information is not available. Certain production figures may be updated in future periods as additional information is received.

3)

Silver ounces produced and sold in thousands.

4)

Refer to discussion on non-IFRS measure (iii) at the end of this press release.

5)

Refer to discussion on non-IFRS measure (iv) at the end of this press release.

 

Non-IFRS Measures

Wheaton Precious Metals has included, throughout this document, certain non-IFRS performance measures, including (i) adjusted net earnings and adjusted net earnings per share; (ii) operating cash flow per share (basic and diluted); (iii) average cash costs of silver and gold on a per ounce basis and; (iv) cash operating margin.

i.

Adjusted net earnings and adjusted net earnings per share are calculated by removing the effects of the non-cash impairment charges, non-cash fair value (gains) losses, non-cash share of losses of associates and other one-time (income) fees. The Company believes that, in addition to conventional measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company's performance.




The following table provides a reconciliation of adjusted net earnings and adjusted net earnings per share (basic and diluted).

 


Three Months Ended
March 31

(in thousands, except for per share amounts)

2018


2017

Net earnings

$

68,123


$

61,224

Add back (deduct):







Share in losses of associate


201



-


Loss on fair value adjustment of Kutcho Convertible Note receivable


1,770



-


Loss on fair value adjustment of share purchase warrants held


99



-


Fees for contract amendments and reconciliations


(248)



-

Adjusted net earnings

$

69,945


$

61,224

Divided by:







Basic weighted average number of shares outstanding


442,728



441,484


Diluted weighted average number of shares outstanding


443,181



441,955

Equals:







Adjusted earnings per share - basic

$

0.16


$

0.14


Adjusted earnings per share - diluted

$

0.16


$

0.14

 

ii. 

Operating cash flow per share (basic and diluted) is calculated by dividing cash generated by operating activities by the weighted average number of shares outstanding (basic and diluted). The Company presents operating cash flow per share as management and certain investors use this information to evaluate the Company's performance in comparison to other companies in the precious metal mining industry who present results on a similar basis.




The following table provides a reconciliation of operating cash flow per share (basic and diluted).

 


Three Months Ended
March 31

(in thousands, except for per share amounts)

2018


2017

Cash generated by operating activities

$

125,340


$

119,923

Divided by:







Basic weighted average number of shares outstanding


442,728



441,484


Diluted weighted average number of shares outstanding


443,181



441,955

Equals:







Operating cash flow per share - basic

$

0.28


$

0.27


Operating cash flow per share - diluted

$

0.28


$

0.27

 

iii.

Average cash cost of silver and gold on a per ounce basis is calculated by dividing the total cost of sales, less depletion, by the ounces sold. In the precious metal mining industry, this is a common performance measure but does not have any standardized meaning. In addition to conventional measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company's performance and ability to generate cash flow.




The following table provides a reconciliation of average cash cost of silver and gold on a per ounce basis.

 


Three Months Ended
March 31

(in thousands, except for gold ounces sold and per ounce amounts)

2018


2017

Cost of sales

$

113,679


$

122,234

Less:  depletion


(57,265)



(63,943)

Cash cost of sales

$

56,414


$

58,291

Cash cost of sales is comprised of:







Total cash cost of silver sold

$

28,500


$

23,701


Total cash cost of gold sold


27,914



34,590


Total cash cost of sales

$

56,414


$

58,291

Divided by:







Total silver ounces sold


6,343



5,225


Total gold ounces sold


69,973



88,397

Equals:







Average cash cost of silver (per ounce)                              

$

4.49


$

4.54


Average cash cost of gold (per ounce)

$

399


$

391

 

iv. 

Cash operating margin is calculated by subtracting the average cash cost of silver and gold on a per ounce basis from the average realized selling price of silver and gold on a per ounce basis. The Company presents cash operating margin as management and certain investors use this information to evaluate the Company's performance in comparison to other companies in the precious metal mining industry who present results on a similar basis as well as to evaluate the Company's ability to generate cash flow.




The following table provides a reconciliation of cash operating margin.

 


Three Months Ended
March 31

(in thousands, except for gold ounces sold and per ounce amounts)

2018


2017

Total sales:







Silver

$

106,166


$

91,165


Gold

$

93,086


$

106,786

Divided by:







Total silver ounces sold


6,343



5,225


Total gold ounces sold


69,973



88,397

Equals:







Average realized price of silver (per ounce)

$

16.73


$

17.45


Average realized price of gold (per ounce)

$

1,330


$

1,208

Less:







Average cash cost of silver 1 (per ounce)

$

(4.49)


$

(4.54)


Average cash cost of gold 1 (per ounce)

$

(399)


$

(391)

Equals:







Cash operating margin per silver ounce sold

$

12.24


$

12.91



As a percentage of realized price of silver                         


73%



74%


Cash operating margin per gold ounce sold

$

931


$

817



As a percentage of realized price of gold               


70%



68%









1)  Please refer to non-IFRS measure (ii), above.

 

These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and other companies may calculate these measures differently.  The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For more detailed information, please refer to Wheaton Precious Metals' MD&A available on the Company's website at www.wheatonpm.com and posted on SEDAR at www.sedar.com.

CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS

The information contained herein contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and "forward-looking information" within the meaning of applicable Canadian securities legislation. Forward-looking statements, which are all statements other than statements of historical fact, include, but are not limited to, statements with respect to:

Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "projects", "intends", "anticipates" or "does not anticipate", or "believes", "potential", or variations of such words and phrases or statements that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to:

Forward-looking statements are based on assumptions management currently believes to be reasonable, including but not limited to:

Although Wheaton has attempted to identify important factors that could cause actual results, level of activity, performance or achievements to differ materially from those contained in forward-looking statements, there may be other factors that cause results, level of activity, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate and even if events or results described in the forward-looking statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Wheaton. Accordingly, readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary. The forward-looking statements included herein are for the purpose of providing investors with information to assist them in understanding Wheaton's expected financial and operational performance and may not be appropriate for other purposes. Any forward looking statement speaks only as of the date on which it is made. Wheaton does not undertake to update any forward-looking statements that are included or incorporated by reference herein, except in accordance with applicable securities laws.

Cautionary Language Regarding Reserves And Resources

For further information on Mineral Reserves and Mineral Resources and on Wheaton more generally, readers should refer to Wheaton's Annual Information Form for the year ended December 31, 2017 and other continuous disclosure documents filed by Wheaton since January 1, 2018, available on SEDAR at www.sedar.com. Wheaton's Mineral Reserves and Mineral Resources are subject to the qualifications and notes set forth therein. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.

Cautionary Note to United States Investors Concerning Estimates of Measured, Indicated and Inferred Resources: The information contained herein has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws. The terms "mineral reserve", "proven mineral reserve" and "probable mineral reserve" are Canadian mining terms defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects ("NI 43-101") and the Canadian Institute of Mining, Metallurgy and Petroleum (the "CIM") – CIM Definition Standards on Mineral Resources and Mineral Reserves, adopted by the CIM Council, as amended (the "CIM Standards"). These definitions differ from the definitions in Industry Guide 7 ("SEC Industry Guide 7") under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"). Under U.S. standards, mineralization may not be classified as a "reserve" unless the determination has been made that the mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Also, under SEC Industry Guide 7 standards, a "final" or "bankable" feasibility study is required to report reserves, the three-year historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental analysis or report must be filed with the appropriate governmental authority. In addition, the terms "mineral resource", "measured mineral resource", "indicated mineral resource" and "inferred mineral resource" are defined in and required to be disclosed by NI 43-101; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to be used in reports and registration statements filed with the SEC. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. "Inferred mineral resources" have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Disclosure of "contained ounces" in a resource is permitted disclosure under Canadian regulations; however, the SEC normally only permits issuers to report mineralization that does not constitute "reserves" by SEC standards as in place tonnage and grade without reference to unit measures. Accordingly, information contained herein that describes Wheaton's mineral deposits may not be comparable to similar information made public by U.S. companies subject to reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder. United States investors are urged to consider closely the disclosure in Wheaton's Form 40-F, a copy of which may be obtained from Wheaton or from http://www.sec.gov/edgar.shtml.

In accordance with the Company's MD&A and financial statements, reference to the Company includes the Company's wholly owned subsidiaries.



For further information: Patrick Drouin, Senior Vice President, Investor Relations, Wheaton Precious Metals Corp., Tel: 1-844-288-9878, Email: info@wheatonpm.com, Website: www.wheatonpm.com


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