Record Silver Equivalent Production and Sales Volume During the Second Quarter of 2015

TSX: SLW
NYSE: SLW

VANCOUVER, Aug. 11, 2015 /CNW/ - Silver Wheaton Corp. ("Silver Wheaton" or the "Company") (TSX:SLW) (NYSE: SLW) is pleased to announce its unaudited results for the second quarter ended June 30, 2015. All figures are presented in United States dollars unless otherwise noted.

SECOND QUARTER HIGHLIGHTS

  • Record attributable silver equivalent production in Q2 2015 of 10.9 million ounces (7.2 million ounces of silver and 50,500 ounces of gold), compared with 8.5 million ounces in Q2 2014, representing an increase of 29%.
  • Record silver equivalent sales volume in Q2 2015 of 10.0 million ounces (5.6 million ounces of silver and 61,000 ounces of gold), compared with 7.5 million ounces in Q2 2014, representing an increase of 34%.
  • During the three month period ending June 30, 2015, payable silver equivalent ounces attributable to the Company produced but not yet delivered were virtually unchanged at approximately 6.5 million ounces.
  • Revenues of $164.4 million in Q2 2015 compared with $148.6 million in Q2 2014, representing an increase of 11%.
  • Average realized sale price per silver equivalent ounce sold in Q2 2015 of $16.38 ($16.42 per ounce of silver and $1,195 per ounce of gold), compared with $19.83 in Q2 2014, representing a decrease of 17%.
  • Net earnings of $53.7 million ($0.13 per share) in Q2 2015 compared with $63.5 million ($0.18 per share) in Q2 2014, representing a decrease of 15%.
  • Operating cash flows of $109.3 million ($0.27 per share¹) in Q2 2015 compared with $102.5 million ($0.29 per share¹) in Q2 2014, representing an increase of 7%.2
  • Cash operating margin¹ in Q2 2015 of $11.62 per silver equivalent ounce compared with $15.11 in Q2 2014, representing a decrease of 23%.
  • Average cash costs¹ in Q2 2015 were $4.26 and $395 per ounce of silver and gold, respectively. On a silver equivalent basis, average cash costs¹ increased to $4.76 compared with $4.72 in Q2 2014.
  • Declared quarterly dividend of $0.05 per common share.
  • Hudbay Minerals Inc.'s ("Hudbay") Constancia mine in Peru achieved commercial production on April 30, 2015.
  • Events Subsequent to the Quarter
    • On July 6, 2015, Silver Wheaton received a proposal letter (the "Proposal") from the Canada Revenue Agency (the "CRA") proposing to reassess the Company under various rules contained in the Income Tax Act (Canada).



1

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

2

On a per share basis, operating cash flow decreased as a result of the increase in common shares in the first quarter of 2015.

 

"Production hit record levels for a second straight quarter, as Silver Wheaton produced nearly 11 million silver equivalent ounces in the second quarter of 2015. To provide some context, in the first half of 2015 we produced over 21 million silver equivalent ounces, whereas in 2011 the Company produced just over 25 million ounces for the whole year. Adding to the production growth, in the second quarter of 2015 we also saw record sales volumes of ten million silver equivalent ounces. We are proud to be delivering on our 2015 production growth guidance of over 20% and reiterate that this growth is fully-funded," said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. "Events subsequent to the quarter, including the selloff in the precious metals markets and the receipt of the Proposal from the CRA, have been unfortunate; however, we remain confident in our business structure and will defend our tax filing positions vigorously. We do not anticipate any changes to our business operations, and we look forward to continued production growth in the second half of this year. Furthermore, we currently see a robust pipeline of very high quality corporate development opportunities."

Financial Review

Revenues

Revenue was $164.4 million in the second quarter of 2015, on silver equivalent sales of 10.0 million ounces (5.6 million ounces of silver and 61,000 ounces of gold). This represents an 11% increase from the $148.6 million of revenue generated in the second quarter of 2014 due primarily to a 34% increase in the number of silver equivalent ounces sold, partially offset by a 17% decrease in the average realized silver equivalent price ($16.38 in Q2 2015 compared with $19.83 in Q2 2014).

Costs and Expenses

Average cash costs¹ in the second quarter of 2015 were $4.76 per silver equivalent ounce as compared with $4.72 during the comparable period of 2014. This resulted in a cash operating margin¹ of $11.62 per silver equivalent ounce, a reduction of 23% as compared with Q2 2014. The decrease in the cash operating margin was primarily due to a 17% decrease in the average realized silver equivalent price in Q2 2015 compared with Q2 2014.

Earnings and Operating Cash Flows

Net earnings and cash flow from operations in the second quarter of 2015 were $53.7 million ($0.13 per share) and $109.3 million ($0.27 per share¹), compared with $63.5 million ($0.18 per share) and $102.5 million ($0.29 per share¹) for the same period in 2014, a decrease of 15% and an increase of 7%, respectively.2 Earnings and cash flow continued to be impacted by lower gold and silver prices.




1

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

2

On a per share basis, operating cash flow decreased as a result of the increase in common shares in the first quarter of 2015.

 

Balance Sheet

At June 30, 2015, the Company had approximately $72 million of cash on hand and $715 million outstanding under the Company's $2 billion revolving term loan.

CRA Audit Update

On July 6, 2015, the Company announced that it had received a Proposal letter from the CRA in which the CRA is proposing to reassess Silver Wheaton under various rules contained in the Income Tax Act (Canada). The Proposal outlines CRA's position 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 Silver Wheaton subject to tax in Canada should be increased for the 2005 to 2010 taxation years (the "Relevant Taxation Years") by approximately Cdn$715 million, which represents substantially all of the income of the Company's foreign subsidiaries. This amount represents a potential income inclusion and does not reflect the resultant tax liability. If Silver Wheaton is reassessed, the Company currently estimates on a preliminary basis that this would result in federal and provincial tax of approximately Cdn$190 million. The Proposal also indicates that the CRA is seeking to apply transfer pricing penalties of approximately Cdn$72 million in respect of the Relevant Taxation Years. The Proposal does not indicate the amount of interest or other penalties in respect of the Relevant Taxation Years. The issuance of the Proposal does not require the Company to pay any amount to the CRA at this time. If Silver Wheaton receives a notice of reassessment, Silver Wheaton intends to file a notice of objection and would be required to pay 50% of the reassessed amount of tax, interest and penalties. Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian tax law, and as a result no amounts have been recorded for any potential liability arising from this matter (including other penalties and interest). Silver Wheaton intends to vigorously defend its tax filing positions.

Second Quarter Asset Highlights

During the second quarter of 2015, attributable silver equivalent production was 10.9 million ounces (7.2 million ounces of silver and 50,500 ounces of gold), representing an increase of 29% compared with the second quarter of 2014.

Operational highlights for the quarter ended June 30, 2015, are as follows:

Salobo 

In the second quarter of 2015, Salobo produced 27,805 ounces of gold attributable to Silver Wheaton, an increase of approximately 230% relative to the second quarter of 2014. This increase was primarily due to the doubling of the percentage of gold that Silver Wheaton is entitled to and the increased throughput as a result of the expansion to 24 million tonnes per annum ("Mtpa") which commenced production in mid-2014.

Constancia

As disclosed in Hudbay's second quarter of 2015 MD&A, the Constancia mine achieved commercial production on April 30, 2015. Attributable production to Silver Wheaton from Constancia in the second quarter was approximately 0.6 million ounces of silver and 3,510 ounces of gold. Hudbay also reported that ocean shipments began in April 2015 and that the mine and concentrator are currently operating at or above design capacity.

Hudbay reports that during the second quarter, shipments of concentrate from the Constancia mine to the port in Matarani, Peru were constrained by several factors including truck availability, protests (unrelated to Constancia) along the lower part of the trucking route, and road refurbishment activities along the route that increased cycle times for concentrate trucks. According to Hudbay, steps have been taken to increase the size of the trucking fleet, and the excess inventory is expected to be drawn down over the second half of 2015.

Peñasquito

In the second quarter of 2015, the Peñasquito mine produced 1.9 million ounces of silver attributable to Silver Wheaton, a decrease of approximately 6% relative to the record second quarter of 2014 due to lower grades being mined. As disclosed in Goldcorp Inc.'s ("Goldcorp") second quarter of 2015 MD&A, progress on the construction of the Northern Well Field ("NWF") project was limited due to continued social issues with local communities.  According to Goldcorp, the remaining NWF work is on hold until a fair resolution of the issues is reached with the communities; however, contingency plans remain in place for a fresh water supply to Peñasquito until the NWF is fully operational. It was also reported that the Metallurgical Enhancement Project ("MEP") continues to demonstrate the potential to significantly enhance the overall economics and mine life of Peñasquito, and that during the quarter, the pilot plant construction was completed and pilot plant testing commenced. MEP permit applications were submitted in May 2015 and the feasibility study remains on track for completion in early 2016. 

San Dimas

In the second quarter of 2015, attributable production from San Dimas was 1.8 million ounces of silver, an increase of approximately 60% relative to the second quarter of 2014. This was primarily due to increased production as a result of the expansion to 2,500 tonnes per day ("tpd") which was completed early in 2014 and to the sharing threshold increasing to 6 million ounces1, partially offset by the cessation of Goldcorp's four-year obligation to deliver 1.5 million ounces of silver to the Company on August 6, 2014. As per Primero Mining Corp.'s ("Primero") second quarter MD&A, the San Dimas mill averaged 2,816 tpd in the second quarter, and the expansion of the San Dimas mine and mill from 2,500 tpd to 3,000 tpd is ahead of its originally planned completion of mid-2016 and now expected to be completed in April 2016 following the completion of the tailings filter system. 

As per Primero's July 20, 2015, news release, drilling results through the end of June 2015 have increased the Jessica vein's known extent to approximately 300 meters of strike length and 300 meters of dip, and remains open laterally for 1.7 kilometers between two major faults. The Jessica vein was not included in Primero's year-end 2014 reserve and resource estimation, but has since been included in its 2015 mine plan and is expected to provide approximately 5% of San Dimas' total mill feed in 2015. According to Primero, based on the full drill results through the end of June 2015, the Company expects to replace its estimated full-year 2015 production.

As at June 30, 2015, approximately 0.8 million ounces of cumulative payable silver ounces have been produced at San Dimas but not yet delivered to the Company, representing an increase of 0.5 million payable silver ounces during the second quarter of 2015.  As reported by Primero on July 6, 2015, silver deliveries had been delayed due to the suspension of Primero's import and export licenses in May 2015 by the Mexican customs authorities due to a discrepancy over Primero's address related to its corporate office relocation from Mexico City to Durango, Mexico.  As per Primero's August 6, 2015, news release, the import and export license has been reinstated and normal course imports and exports have resumed, including the commencement of sales of all inventoried silver.




1

On August 6, 2010, Goldcorp completed the sale of the San Dimas mine to Primero. In conjunction with the sale, Silver Wheaton amended its silver purchase agreement such that during the first four years following the closing of the transaction, Primero delivered to Silver Wheaton a per annum amount equal to the first 3.5 million ounces of payable silver produced at San Dimas and 50% of any excess, and Silver Wheaton received an additional 1.5 million ounces of silver per annum that was delivered by Goldcorp. Beginning on August 6, 2014, Primero delivers a per annum amount to Silver Wheaton equal to the first 6 million ounces of payable silver produced at San Dimas and 50% of any excess, and Goldcorp's obligation to deliver supplemental silver ceased. In the prior year, the San Dimas mine reached the previous sharing threshold of 3.5 million ounces of silver on March 13, 2014.

 

Barrick

In the second quarter of 2015, attributable silver production from Barrick was 0.6 million ounces, an increase of approximately 104% relative to the second quarter of 2014, primarily due to higher grades at the Veladero mine and higher recoveries at the Lagunas Norte mine.

777

In the second quarter of 2015, attributable gold production from Hudbay's 777 mine was 6,668 ounces, a decrease of approximately 43% relative to the second quarter of 2014 primarily due to lower throughput and grades.

Produced But Not Yet Delivered 1

As at June 30, 2015, payable silver equivalent ounces produced but not yet delivered to Silver Wheaton by its partners amounted to approximately 6.5 million silver equivalent payable ounces virtually unchanged from the balance at March 31, 2015, as increases at San Dimas and Peñasquito were largely offset by decreases at Salobo and Sudbury. Payable ounces produced but not yet delivered to Silver Wheaton are expected to average approximately two to three months of annualized production but may vary from quarter to quarter due to a number of mining operation factors including mine ramp-up, delays in shipments, and so forth.

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





1

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

 

Webcast and Conference Call Details

A conference call will be held Wednesday, August 12, 2015, 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:

84883183

Live audio webcast:

www.silverwheaton.com

 

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

The conference call will be recorded and available until August 19, 2015. 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:

84883183

Archived audio webcast:

www.silverwheaton.com 

 

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

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

About Silver Wheaton

Silver Wheaton is the largest pure precious metals streaming company in the world. Based upon its current agreements, forecast 2015 estimated annual attributable production is approximately 43.5 million silver equivalent ounces1, including 230,000 ounces of gold. By 2019, estimated annual attributable production is anticipated to increase significantly to approximately 51 million silver equivalent ounces1, including 325,000 ounces of gold. This anticipated growth is expected to be driven by the Company's portfolio of low-cost and long-life assets, including gold and precious metal streams on Vale's Salobo mine and Hudbay's Constancia mine.






1

Silver equivalent production forecast assumes a gold/silver ratio of 72:1

 

 

Condensed Interim Consolidated Statement of Earnings















Three Months Ended
June 30

Six Months Ended
June 30

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













2015

2014

2015

2014

Sales













$

164,435

$

148,570

$

294,939

$

313,949

Cost of sales






















Cost of sales, excluding depletion













$

47,795

$

35,368

$

82,259

$

72,456


Depletion














53,327


38,514


85,372


75,136

Total cost of sales













$

101,122

$

73,882

$

167,631

$

147,592

Earnings from operations













$

63,313

$

74,688

$

127,308

$

166,357

Expenses and other income






















General and administrative 1













$

7,886

$

10,375

$

16,056

$

20,485


Interest expense














798


591


2,298


1,699


Other expense














992


1,080


2,916


1,708














$

9,676

$

12,046

$

21,270

$

23,892

Earnings before income taxes













$

53,637

$

62,642

$

106,038

$

142,465

Income tax recovery (expense)














89


850


(2,893)


836

Net earnings













$

53,726

$

63,492

$

103,145

$

143,301






















Basic earnings per share













$

0.13

$

0.18

$

0.27

$

0.40

Diluted earnings per share













$

0.13

$

0.18

$

0.27

$

0.40

Weighted average number of shares outstanding






















Basic














404,138


357,655


387,464


357,453


Diluted














404,308


358,097


387,672


357,945

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













$

1,420

$

2,034

$

3,341

$

4,216

 

Condensed Interim Consolidated Balance Sheets





















June 30

December 31


(US dollars in thousands - unaudited)


















2015

2014

Assets
























Current assets

























Cash and cash equivalents




















$

71,892

$

308,098


Accounts receivable





















2,234


4,132


Other





















2,071


26,263

Total current assets




















$

76,197

$

338,493

Non-current assets

























Silver and gold interests




















$

5,067,975

$

4,248,265


Early deposit - gold interest





















14,717


13,599


Royalty interest





















9,107


9,107


Long-term investments





















24,717


32,872


Other





















10,658


5,427

Total non-current assets




















$

5,127,174

$

4,309,270

Total assets




















$

5,203,371

$

4,647,763

Liabilities
























Current liabilities

























Accounts payable and accrued liabilities




















$

15,946

$

14,798


Current portion of performance share units





















2,211


1,373

Total current liabilities




















$

18,157

$

16,171

Non-current liabilities

























Bank debt




















$

715,000

$

998,518


Deferred income taxes





















136


942


Performance share units





















2,379


3,396

Total non-current liabilities




















$

717,515

$

1,002,856

Total liabilities




















$

735,672

$

1,019,027

Shareholders' equity
























Issued capital




















$

2,821,029

$

2,037,923

Reserves





















(21,075)


(28,841)

Retained earnings





















1,667,745


1,619,654

Total shareholders' equity




















$

4,467,699

$

3,628,736

Total liabilities and shareholders' equity




















$

5,203,371

$

4,647,763

 

Condensed Interim Consolidated Statement of Cash Flows





Three Months Ended
June 30

Six Months Ended
June 30



(US dollars in thousands - unaudited)


2015

2014

2015

2014








Operating activities












Net earnings




$

53,726

$

63,492

$

103,145

$

143,301

Adjustments for













Depreciation and depletion





53,448


38,580


85,590


75,268


Amortization of credit facility origination fees:














Interest expense





138


35


251


90



Amortization of credit facility origination fees - undrawn facilities





225


257


474


508



Write off of credit facility origination fees upon repayment of NRT Loan





-


-


1,315


-


Interest expense





660


556


2,047


1,609


Equity settled stock based compensation





1,420


2,034


3,341


4,216


Performance share units





(684)


1,349


98


1,496


Deferred income tax expense (recovery)





(130)


(907)


2,806


(947)


Investment income recognized in net earnings





(39)


(74)


(171)


(159)


Other





(162)


32


(200)


(46)

Change in non-cash working capital





1,432


(2,253)


1,582


(6,385)

Cash generated from operations




$

110,034

$

103,101

$

200,278

$

218,951

Interest paid - expensed





(758)


(575)


(1,946)


(1,621)

Interest received





16


17


91


45

Cash generated from operating activities




$

109,292

$

102,543

$

198,423

$

217,375













Financing activities












Bank debt repaid




$

(85,000)

$

-

$

(1,085,000)

$

-

Bank debt drawn





-


-


800,000


-

Credit facility origination fees





(129)


(19)


(4,241)


(619)

Shares issued





-


-


800,000


-

Share issue costs





(1,045)


-


(31,389)


-

Share purchase options exercised





-


3,683


2,887


3,696

Dividends paid





(34,444)


(44,792)


(34,444)


(44,792)

Cash generated from (applied to) financing activities




$

(120,618)

$

(41,128)

$

447,813

$

(41,715)













Investing activities












Silver and gold interests




$

(55)

$

(52)

$

(900,058)

$

(125,134)

Interest paid - capitalized to silver interests





(2,508)


(3,607)


(4,332)


(6,498)

Silver and gold interests - early deposit





(1,045)


-


(1,058)


(149)

Proceeds on disposal of silver interest





-


-


25,000


-

Proceeds on disposal of long-term investments





12


-


12


-

Dividend income received





23


57


80


114

Other





(1,447)


(642)


(2,059)


(668)

Cash applied to investing activities




$

(5,020)

$

(4,244)

$

(882,415)

$

(132,335)

Effect of exchange rate changes on cash and cash equivalents




$

230

$

58

$

(27)

$

51

(Decrease) increase in cash and cash equivalents




$

(16,116)

$

57,229

$

(236,206)

$

43,376

Cash and cash equivalents, beginning of period





88,008


81,970


308,098


95,823

Cash and cash equivalents, end of period




$

71,892

$

139,199

$

71,892

$

139,199

 

Condensed Interim Summary of Ounces Produced and Sold






2015

2014

2013






Q2

Q1

Q4

Q3

Q2

Q1

Q4

Q3










Silver ounces produced 2









San Dimas 3

1,786

1,928

1,744

1,290

1,118

1,608

1,979

1,660

Yauliyacu

696

576

687

875

658

718

687

639

Peñasquito

1,932

1,447

1,582

1,630

2,054

2,052

2,047

1,636

Barrick 4

610

640

690

397

299

301

423

465

Other 5

2,177

1,751

1,701

1,903

2,182

2,185

2,119

2,450

Total silver ounces produced

7,201

6,342

6,404

6,095

6,311

6,864

7,255

6,850

Gold ounces produced 2









777

6,668

12,081

9,669

12,105

11,611

12,785

14,134

18,259

Sudbury 6

8,622

8,666

9,924

12,196

7,473

6,426

7,060

7,341

Salobo

27,805

27,185

12,253

10,415

8,486

8,903

10,067

8,061

Other 7

7,414

5,728

4,256

6,959

5,185

5,749

9,530

2,894

Total gold ounces produced

50,509

53,660

36,102

41,675

32,755

33,863

40,791

36,555

Silver equivalent ounces of gold produced 8

3,703

3,926

2,675

2,786

2,144

2,121

2,476

2,237

Silver equivalent ounces produced 8

10,904

10,268

9,079

8,881

8,455

8,985

9,731

9,087

Silver equivalent ounces produced - as originally reported 2, 8

 n.a.

10,371

8,964

8,447

8,365

8,977

9,723

8,948

Increase (Decrease) 2

 n.a.

(103)

115

434

90

8

8

139

Silver ounces sold









San Dimas 3

1,265

1,901

1,555

1,295

1,194

1,529

2,071

1,560

Yauliyacu

809

320

761

1,373

111

1,097

674

13

Peñasquito

1,420

1,573

1,640

1,662

1,958

1,840

1,412

1,388

Barrick 4

633

648

671

377

291

361

397

447

Other 5

1,448

1,223

1,106

1,592

1,673

1,398

1,510

2,257

Total silver ounces sold

5,575

5,665

5,733

6,299

5,227

6,225

6,064

5,665

Gold ounces sold









777

9,490

6,629

8,718

15,287

13,599

6,294

15,889

16,972

Sudbury 6

12,518

8,033

11,251

5,566

6,718

6,878

6,551

6,534

Salobo

32,156

9,794

14,270

7,180

11,902

10,560

6,944

6,490

Other 7

6,810

3,943

3,665

8,685

2,559

6,390

1,840

5,287

Total gold ounces sold

60,974

28,399

37,904

36,718

34,778

30,122

31,224

35,283

Silver equivalent ounces of gold sold 8

4,468

2,058

2,808

2,441

2,267

1,891

1,909

2,163

Silver equivalent ounces sold 8

10,043

7,723

8,541

8,740

7,494

8,116

7,973

7,828

Gold / silver ratio 8

73.3

72.5

74.1

66.5

65.2

62.8

61.1

61.3

Cumulative payable silver equivalent ounces produced but not yet delivered 9

6,452

6,445

4,952

5,147

5,996

6,042

5,997

5,283


1)

All figures in thousands except gold ounces produced and sold.

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 ounces produced and sold include ounces received from Goldcorp in connection with Goldcorp's four year commitment commencing on August 6, 2010 to deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting from their sale of San Dimas to Primero.

4)

Comprised of the Lagunas Norte, Pierina and Veladero silver interests.

5)

Comprised of the Los Filos, Zinkgruvan, Cozamin, Neves-Corvo, Stratoni, Keno Hill, Minto, 777, Aljustrel and Constancia silver interests in addition to the previously owned Mineral Park and Campo Morado silver interests.

6)

Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests.

7)

Comprised of the Minto and Constancia gold interests.

8)

Gold ounces produced and sold are converted to a silver equivalent basis 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.

9)

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

 

Results of Operations

The Company currently has nine reportable operating segments: the silver produced by the San Dimas, Yauliyacu, Peñasquito and Barrick mines, the gold produced by the 777, Sudbury and Salobo mines, the silver and gold produced by the Other mines and corporate operations.


Three Months Ended June 30, 2015


Ounces
Produced²

Ounces
Sold

Sales

Average
Realized
Price
($'s Per
Ounce)

Average
Cash
Cost
($'s Per
Ounce)3

Average
Depletion
($'s Per
Ounce)

Net
Earnings

Cash Flow
From
Operations

Total Assets

Silver


















San Dimas

1,786

1,265

$

20,762

$

16.42

$

4.20

$

0.88

$

14,339

$

15,451

$

150,169


Yauliyacu

696

809


13,296


16.44


4.20


6.43


4,693


9,898


180,214


Peñasquito

1,932

1,420


23,896


16.83


4.07


2.85


14,077


18,118


442,626


Barrick 4

610

633


10,320


16.31


3.90


3.24


5,806


8,003


606,209


Other 5

2,177

1,448


23,278


16.07


4.67


4.93


9,368


16,596


547,917


7,201

5,575

$

91,552

$

16.42

$

4.26

$

3.51

$

48,283

$

68,066

$

1,927,135

Gold


















777

6,668

9,490

$

11,251

$

1,186

$

400

$

823

$

(353)

$

8,461

$

230,652


Sudbury 6

8,622

12,518


15,074


1,204


400


841


(466)


10,044


566,569


Salobo

27,805

32,156


38,360


1,193


400


420


11,999


25,498


2,184,649


Other 7

7,414

6,810


8,198


1,204


353


285


3,850


5,817


158,970


50,509

60,974

$

72,883

$

1,195

$

395

$

554

$

15,030

$

49,820

$

3,140,840

Silver equivalent 8

10,904

10,043

$

164,435

$

16.38

$

4.76

$

5.31

$

63,313

$

117,886

$

5,067,975

Corporate


















General and administrative










$

(7,886)






Other












(1,701)





Total corporate











$

(9,587)

$

(8,594)

$

135,396


10,904

10,043

$

164,435

$

16.38

$

4.76

$

5.31

$

53,726

$

109,292

$

5,203,371

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 measures at the end of this press release.

4)

Comprised of the operating Lagunas Norte, Pierina and Veladero silver interests in addition to the non-operating Pascua-Lama silver interest.

5)

Comprised of the operating Los Filos, Zinkgruvan, Cozamin, Neves-Corvo, Stratoni, Minto, 777 and Constancia silver interests in addition to the non-operating Aljustrel, Keno Hill, Rosemont and Loma de La Plata silver interests. 

6)

Comprised of the operating Coleman, Copper Cliff, Garson, Stobie, Creighton and Totten gold interests in addition to the non-operating Victor gold interest.

7)

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

8)

Gold ounces produced and sold are converted to a silver equivalent basis 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.

 

Three Months Ended June 30, 2014


Ounces
Produced²

Ounces
Sold

Sales

Average
Realized
Price
($'s Per
Ounce)

Average
Cash

Cost
($'s Per
Ounce)3

Average
Depletion
($'s Per
Ounce)

Net
Earnings

Cash Flow
From
Operations

Total Assets

Silver


















San Dimas 4

1,118

1,194

$

23,775

$

19.92

$

4.17

$

0.81

$

17,822

$

18,794

$

155,274


Yauliyacu

658

111


2,184


19.67


4.16


5.92


1,065


1,722


200,120


Peñasquito

2,054

1,958


38,366


19.60


4.05


2.98


24,607


30,437


460,980


Barrick 5

299

291


5,853


20.11


3.90


3.26


3,768


3,580


603,799


Other 6

2,182

1,673


33,362


19.94


4.29


4.45


18,730


25,189


663,924


6,311

5,227

$

103,540

$

19.81

$

4.15

$

3.03

$

65,992

$

79,722

$

2,084,097

Gold


















777

11,611

13,599

$

17,621

$

1,296

$

400

$

823

$

994

$

12,181

$

263,661


Sudbury 7

7,473

6,718


8,692


1,294


400


841


352


6,005


598,013


Salobo

8,486

11,902


15,379


1,292


400


462


5,121


10,618


1,312,108


Other 8

5,185

2,559


3,338


1,304


309


124


2,229


2,340


27,468


32,755

34,778

$

45,030

$

1,295

$

393

$

651

$

8,696

$

31,144

$

2,201,250

Silver
equivalent 9

8,455

7,494

$

148,570

$

19.83

$

4.72

$

5.14

$

74,688

$

110,866

$

4,285,347

Corporate


















General and administrative










$

(10,375)






Other












(821)





Total corporate











$

(11,196)

$

(8,323)

$

236,248


8,455

7,494

$

148,570

$

19.83

$

4.72

$

5.14

$

63,492

$

102,543

$

4,521,595


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 measures at the end of this press release.

4)

Results for San Dimas include 375,000 ounces received from Goldcorp in connection with Goldcorp's four year commitment commencing on August 6, 2010 to deliver to Silver Wheaton 1.5 million ounces of silver per annum resulting from their sale of San Dimas to Primero.

5)

Comprised of the operating Lagunas Norte, Pierina and Veladero silver interests in addition to the non-operating Pascua-Lama silver interest.

6)

Comprised of the operating Los Filos, Zinkgruvan, Keno Hill, Cozamin, Neves-Corvo, Stratoni, Minto, 777 and Aljustrel silver interests; the non-operating Rosemont, Loma de La Plata and Constancia silver interests; and the previously owned Mineral Park and Campo Morado silver interests. 

7)

Comprised of the operating Coleman, Copper Cliff, Garson, Stobie, Totten and Creighton gold interests in addition to the non-operating Victor gold interest.

8)

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

9)

Gold ounces produced and sold are converted to a silver equivalent basis 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.

 

Non-IFRS Measures

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

i.

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 metals mining industry who present results on a similar basis.



ii.

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 metals 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. 



iii.

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 metals mining industry who present results on a similar basis.

 

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 Silver Wheaton's Management Discussion and Analysis available on the Company's website at www.silverwheaton.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 projected increases to Silver Wheaton's production and cash flow profile, the expansion and exploration potential at the Salobo mine, projected changes to Silver Wheaton's production mix, the anticipated increases in total throughput at the Salobo mine, the estimated future production, the future price of commodities, the future price of silver or gold, the estimation of mineral reserves and mineral resources, the realization of mineral reserve estimates, the timing and amount of estimated future production (including 2015 and 2019 attributable annual production and produced but not yet delivered ounces), estimated costs of future production, reserve determination, estimated reserve conversion rates, any statements as to future dividends, the ability to fund outstanding commitments and continue to acquire accretive precious metal stream interests, Silver Wheaton's confidence in its business structure, Silver Wheaton's response to the Proposal, the potential reassessment of Silver Wheaton's tax filings by the CRA, Silver Wheaton's position relating to any dispute with the CRA, the estimate of potential taxes, penalties and interest payable to the CRA, the impact of potential taxes, penalties and interest payable to the CRA, Silver Wheaton's intention to defend potential reassessments if issued by the CRA, Silver Wheaton's view of its tax filing positions, possible audits for taxation years subsequent to 2010, Silver Wheaton's intention to file future tax returns in a manner consistent with previous filings, the length of time it would take to resolve the Proposal or an objection to any reassessment, and assessments of the impact and resolution of various legal and tax matters, including current legal proceedings before the courts. 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 Silver Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: fluctuations in the price of commodities, the absence of control over the mining operations from which Silver Wheaton purchases silver or gold (the "Mining Operations") and risks related to these Mining Operations including risks related to fluctuations in the price of the primary commodities mined at such operations, actual results of mining and exploration activities, environmental, economic and political risks of the jurisdictions in which the Mining Operations are located and changes in project parameters as plans continue to be refined, risks relating to having to rely on the accuracy of the public disclosure and other information Silver Wheaton receives from the owners and operators of the Mining Operations as the basis for its analyses, forecasts and assessments relating to its own business, differences in the interpretation or application of tax laws and regulations or accounting policies and rules, Silver Wheaton's interpretation of, or compliance with, tax laws, and regulations or accounting policies and rules is found to be incorrect, Silver Wheaton's operations or ability to enter into precious metal purchase agreements is materially impacted as a result of any reassessment, any challenge by the CRA of Silver Wheaton's tax filings is successful and the potential negative impact to Silver Wheaton's previous and future tax filings, the tax impact to Silver Wheaton's business operations is materially different than currently contemplated, any reassessment of Silver Wheaton's tax filings and the continuation or timing of any such process is outside Silver Wheaton's control, any requirement to pay reassessed tax, Silver Wheaton is not assessed taxes on the foreign subsidiary's income on the same basis that it pays taxes on its Canadian income, interest and penalties will have an adverse impact on the financial position of Silver Wheaton, litigation risk associated with a challenge to Silver Wheaton's tax filings, changes to tax legislation and administrative policies, risks relating to production estimates from Mining Operations, credit and liquidity risks, hedging risk, competition in the mining industry, risks related to Silver Wheaton's acquisition strategy, risks related to the market price of Silver Wheaton's shares, risks related to Silver Wheaton's holding of long-term investments in other exploration and mining companies, risks related to the declaration, timing and payment of dividends, the ability of Silver Wheaton and the Mining Operations to retain key management employees or procure the services of skilled and experienced personnel, risks related to claims and legal proceedings against Silver Wheaton or the Mining Operations, risks relating to unknown defects and impairments, risks related to the adequacy of internal control over financial reporting, risks related to governmental regulations, including environmental regulations, risks related to international operations of Silver Wheaton and the Mining Operations, risks relating to exploration, development and operations at the Mining Operations, the ability of Silver Wheaton and the Mining Operations to obtain and maintain necessary permits, the ability of Silver Wheaton and the Mining Operations to comply with applicable laws, regulations and permitting requirements, lack of suitable infrastructure and employees to support the Mining Operations, uncertainty in the accuracy of mineral reserves and mineral resources estimates, production estimates from Mining Operations, inability to replace and expand mineral reserves, uncertainties related to title and indigenous rights with respect to the mineral properties of the Mining Operations, commodity price fluctuations, the ability of Silver Wheaton and the Mining Operations to obtain adequate financing, the ability of Mining Operations to complete permitting, construction, development and expansion, challenges related to global financial conditions, risks related to future sales or issuance of equity securities, as well as those factors discussed in the section entitled "Description of the Business – Risk Factors" in Silver Wheaton's Annual Information Form and the additional risks identified under "Risks and Uncertainties" in Management's Discussion and Analysis for the period ended June 30, 2015, both available on SEDAR at www.sedar.com and in Silver Wheaton's Form 40-F and Form 6-K filed August 11, 2015, both on file with the U.S. Securities and Exchange Commission in Washington, D.C. Forward-looking statements are based on assumptions management believes to be reasonable, including but not limited to: the continued operation of the Mining Operations, no material adverse change in the market price of commodities, that the Mining Operations will operate and the mining projects will be completed in accordance with public statements and achieve their stated production estimates, the continuing ability to fund or obtain funding for outstanding commitments, the ability to source and obtain accretive precious metal stream interests, expectations regarding the resolution of legal and tax matters, that Silver Wheaton will be successful in resolving the Proposal or challenging any reassessment by CRA, that Silver Wheaton has properly considered the application of Canadian tax law to its structure and operations, that Silver Wheaton has filed its tax returns and paid applicable taxes in compliance with Canadian tax law, that Silver Wheaton will not change its operations as a result of any reassessment, that Silver Wheaton's ability to enter into new precious metal purchase agreements will not be impacted by any reassessment, expectations and assumptions concerning prevailing tax laws and the potential amount that could be assessed as additional tax, penalties and interest by the CRA, that any foreign subsidiary income would be subject to the same tax calculations as Silver Wheaton's Canadian income, the estimate of the carrying value of the precious metal purchase agreements (as defined in the Annual Information Form) and such other assumptions and factors as set out herein. Although Silver 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, Silver 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 for the purpose of providing investors with information to assist them in understanding Silver Wheaton's expected performance and may not be appropriate for other purposes. Any forward looking statement speaks only as of the date on which it is made. Silver 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 NOTE TO UNITED STATES INVESTORS REGARDING PRESENTATION OF MINERAL RESERVE AND MINERAL RESOURCE ESTIMATES: 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 the Company'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 the Annual Information Form, a copy of which is available at www.sec.gov.

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

SOURCE Silver Wheaton Corp.

For further information: Patrick Drouin, Senior Vice President, Investor Relations, Silver Wheaton Corp., Tel: 1-800-380-8687, Email: info@silverwheaton.com, Website: www.silverwheaton.com

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