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Wednesday
Aug142013

Silver Wheaton reports record second quarter and first half 2013 production

TSX: SLW
NYSE: SLW

VANCOUVER, Aug. 14, 2013 /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, 2013. All figures are presented in United States dollars unless otherwise noted.

SECOND QUARTER HIGHLIGHTS


  • Record attributable silver equivalent production of 8.6 million ounces (6.4 million ounces of silver and 35,600 ounces of gold) compared to 6.7 million ounces in Q2 2012, representing an increase of 28%.

  • Silver equivalent sales of 7.2 million ounces (5.1 million ounces of silver and 33,900 ounces of gold) compared to 6.9 million ounces in Q2 2012, representing an increase of 4%.

  • Revenues of $166.9 million compared to $201.4 million in Q2 2012, representing a decrease of 17%.

  • Net earnings of $71.1 million ($0.20 per share) compared to $141.4 million ($0.40 per share) in Q2 2012, representing a decrease of 50%.

  • Operating cash flows of $125.3 million ($0.35 per share1) compared to $172.9 million ($0.49 per share1) in Q2 2012, representing a decrease of 28%.

  • Cash operating margin1 of $18.28 per silver equivalent ounce compared to $25.01 in Q2 2012.

  • Average cash costs1 were $4.14 and $391 per ounce of silver and gold, respectively.  On a silver equivalent basis, average cash costs1 rose to $4.77 compared with $4.06 in Q2 2012 due primarily to an increase in the percentage of revenue from gold sales.

  • Declared quarterly dividend of $0.10 per common share as the result of an amended dividend policy whereby the quarterly dividend is equal to 20% of the average of the previous four quarters' operating cash flow, with a gradual implementation.

  • On May 28, 2013, the Company entered into a $1 billion non-revolving term loan ("NRT Loan") with a 3-year term. The proceeds were used to repay the remaining balance of $560 million under the Company's $1.5 billion bridge financing facility (the "Bridge Facility") and $440 million outstanding under the Company's revolving credit facility (the "Revolving Facility"). The Bridge Facility was terminated following the repayment of the outstanding balance.

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

"Record first half production of 16.9 million ounces puts Silver Wheaton well on track to meet our 2013 forecast of 33.5 million silver equivalent ounces, an increase of 14% over the previous year," said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. "Production from the recently acquired Sudbury and Salobo mines was stronger than expected, and we anticipate further growth as Salobo continues ramping up and the Totten mine in Sudbury starts production in the second half of this year."

"While Barrick announced that there has been an additional delay at Pascua-Lama, we remain confident in their ability to bring this world class project on line. Furthermore, given the production we continue to receive from three of Barrick's other mines,Silver Wheaton shareholders are well compensated for the delay. In the first half of the year, these other mines have produced nearly 1.3 million ounces of silver for Silver Wheaton."

"Given the current volatility in precious metal prices, it is important to have a strong portfolio of high-quality, low-cost assets. At Silver Wheaton, over 85% of the production from our 19 operating mines is in the lowest quartile of their respective cost curves. These mines have the capacity to stay operational even when commodity prices are weak, and should continue to deliver silver and gold to us in all phases of the commodity price cycle. Furthermore, in light of the asset writedowns seen recently across the mining industry, we performed a detailed evaluation of all of our silver and gold streams and determined that no impairments were necessary. And lastly, with the current challenges being faced by higher-cost, fourth-quartile producers, supply side pressure should provide support for higher precious metal prices over the medium-to-long term."

Financial Review

 

    Revenues
     
    Revenue was $166.9 million in the second quarter of 2013, on silver equivalent sales of 7.2 million ounces (5.1 million ounces of silver and 33,900 ounces of gold). This represents a 17% decrease from the $201.4 million of revenue generated in the second quarter of 2012, due primarily to a 21% decrease in the average realized silver equivalent price ($23.05 in Q2 2013 compared to $29.07 in Q2 2012), partially offset by a 4% increase in the number of silver equivalent ounces sold.
     
    Costs and Expenses
     
    Average cash costs1 in the second quarter of 2013 were $4.77 per silver equivalent ounce, compared with $4.06 during the comparable period of 2012. Cash costs rose year over year primarily due to an increase in gold sales (33,900 ounces in Q2 2013 compared to 2,400 ounces in Q2 2012) associated with Hudbay Minerals Inc.'s ("Hudbay") 777 mine and Vale S.A.'s (Vale) Sudbury and Salobo mines. The average cash cost per gold ounce1 was $391, or $6.31 per silver equivalent ounce2. This resulted in a cash operating marginof $18.28 per silver equivalent ounce, a reduction of 27% as compared to the second quarter of 2012. The decrease in the cash operating margin was largely due to a 21% decrease in the silver equivalent price realized in the second quarter of 2013 compared to the second quarter of 2012, as well as increased cash costs, as noted above.
     
    Earnings and Operating Cash Flows
     
    Net earnings in the second quarter of 2013 were $71.1 million ($0.20 per share), compared with $141.4 million ($0.40 per share) for the same period in 2012, a decrease of 50%. In the second quarter, a charge of $4.5 million was taken as a result of refinancing the Bridge Facility. Cash flow from operations in the second quarter of 2013 was $125.3 million ($0.35 per share1), compared to $172.9 million ($0.49 per share1) for the same period in 2012, a decrease of 28%. Earnings and cash flow were impacted by lower gold and silver prices, as well as increased costs due to an increase in gold sales, as noted above.
     
    Balance Sheet
     
    At June 30, 2013, the Company had approximately $36.3 million of cash on hand. On May 28, 2013, the Company announced the closing of a $1 billion non-revolving term loan, with a 3-year term, extendable by 1 year with the unanimous consent of lenders.  The proceeds were used to repay the remaining balance of $560 million under the Company's $1.5 billion Bridge Facility and $440 million outstanding under the Revolving Facility. The Bridge Facility was terminated following the repayment of the outstanding balance.
     
   

The combination of cash and ongoing operating cash flows, combined with the credit available under the Revolving Facility, positions the Company well to fund all outstanding commitments as well as provide flexibility to acquire additional accretive precious metal stream interests.

To read this report in full please click here.

Board of Directors has declared its third quarterly cash dividend payment for 2013 of US$0.10 per common share. The quarterly dividend will be paid to holders of record of its common shares as of the close of business on August 30, 2013, and will be distributed on or about September 12, 2013.

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