Hedge funds’ bullish bets on gold jump to four-year high
Hedge funds and other large speculators boosted their net-long position in gold.
Vancouver, British Columbia – Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) (TSX:SLW) (NYSE:SLW) is pleased to announce its results for the second quarter ended June 30, 2016. All figures are presented in United States dollars unless otherwise noted.
Silver Wheaton produced over 130,000 ounces of gold in the first half of 2016 –substantially more than the first half of 2015 at 103,700 ounces and almost twice the first half of 2014 production of 66,600 ounces. Furthermore, gold sales were at a second-consecutive record level in the quarter at over 70,000 ounces, driven by record gold sales at Salobo.
SECOND QUARTER HIGHLIGHTS
Attributable production in Q2 2016 of 7.6 million ounces of silver and 70,200 ounces of gold, respectively, compared with 7.2 million ounces of silver and 50,100 ounces of gold in Q2 2015, an increase of 5% and 40%, respectively.
On a silver equivalent basis¹ and gold equivalent basis¹ attributable production in Q2 2016 was 12.9 million silver equivalent ounces (“SEOs”) or 171,300 gold equivalent ounces (“GEOs”), compared with 10.8 million SEOs or 149,100 GEOs in Q2 2015, an increase of 18% and 15%, respectively.1
Attributable sales volume in Q2 2016 of 7.1 million ounces of silver and a record 70,800 ounces of gold, compared with 5.6 million ounces of silver and 61,000 ounces of gold in Q2 2015, an increase of 28% and 16%, respectively.
On a silver equivalent basis¹ and gold equivalent basis¹, attributable sales volume in Q2 2016 was 12.5 million SEOs or 165,900 GEOs, compared with 10.0 million SEOs or 137,600 GEOs in Q2 2015, an increase of 24% and 21%, respectively.
As at June 30, 2016, payable ounces attributable to the Company produced but not yet delivered³ amounted to 2.6 million payable silver ounces and 28,500 payable gold ounces, representing a decrease of 0.4 million payable silver ounces and 5,200 payable gold ounces during the three month period ended June 30, 2016.
Revenues of $212 million in Q2 2016 compared with $164 million in Q2 2015, representing an increase of 29%.
Average realized sale price per ounce sold in Q2 2016 of $17.18 per ounce of silver and $1,267 per ounce of gold representing an increase of 5% and 6%, respectively,
compared to Q2 2015.
Net earnings of $60 million ($0.14 per share) in Q2 2016 compared with $54 million ($0.13 per share) in Q2 2015, representing an increase of 12%.
Operating cash flows of $134 million ($0.31 per share²) in Q2 2016 compared with $109 million ($0.27 per share²) in Q2 2015, representing an increase of 23%.2
Cash operating margin² in Q2 2016 of $12.72 per silver ounce sold and $866 per gold ounce sold, representing an increase of 5% and 8%, respectively, as compared with Q2 2015.
Average cash costs² in Q2 2016 were $4.46 and $401 per ounce of silver and gold, respectively.
Declared quarterly dividend of $0.05 per common share.
On April 14, 2016, the Company completed a bought-deal common share financing, whereby a total of 38,105,250 common shares (inclusive of the underwriters’ overallotment option) of Silver Wheaton were sold at a price of $16.60 per share, for total net proceeds of approximately $607 million.
Asset Highlights
o Goldcorp Inc. (“Goldcorp”) has approved the Pyrite Leach Project (“PLP”) at Peñasquito with commercial production expected in the first quarter of 2019.
The PLP is expected to add annual incremental silver production of
approximately 1 to 1.5 million ounces net to Silver Wheaton that is currently not
included in the Company’s guidance.
o Peñasquito production was significantly lower relative to Q2 2015 due to a
variety of factors including planned lower ore grades and recovery as part of
mine sequencing, a planned shutdown of 10 days in Q2 2016 for maintenance,
and a longer than anticipated period to ramp the plant up to full production due
to a variety of restart issues.
o The Sudbury mines produced a record 14,900 ounces of attributable gold in Q2
2016, an increase of approximately 82% relative to Q2 2015, due to higher
grades and associated mill recoveries.
Events Subsequent to the Quarter
o On August 2, 2016, Silver Wheaton’s wholly-owned subsidiary, Silver Wheaton
(Caymans) Ltd. (“SWC”), agreed to acquire from a subsidiary of Vale S.A.
(“Vale”) an additional amount of gold equal to 25% of the life-of-mine gold
production from the Salobo mine, located in Brazil.
“Silver Wheaton continues to be focussed on building a high-quality portfolio of assets that provides a secure foundation during uncertain and volatile times in the precious metals price cycle, but also reap even more robust cash flows when commodity prices turn,” said Randy Smallwood, President and Chief Executive Officer of Silver Wheaton. “With commodity prices rebounding in the second quarter, we were well positioned with the largest precious metals streaming portfolio in the industry, resulting in over $130 million in operating cash flow.”
“Salobo was once again our strongest asset in the quarter, generating record gold sales for us. Given its continued outperformance since we acquired the first stream in 2013, it should come as no surprise that Silver Wheaton seized the opportunity to add an additional 25% of the gold from the Salobo mine just last week. With the additional gold from Salobo and silver from the recently added Antamina mine, which has surpassed even our expectations for three consecutive quarters, we look forward to demonstrating to investors how powerful our cash flow generation can be in an environment of increasing precious metals prices.”
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