Silver Wheaton (
) announced its Q4 and 2012 annual results on March 21. The company
reported record production and sales figures this year, primarily
due to the addition of the precious metals stream from Hudbay's 777
mine in the fourth quarter. The other factors were better ore grade
at Veladero and the fixed sharing mechanism at San
Dimas. Silver equivalent sales volumes in the fourth quarter
at 9.1 million ounces were almost 80% higher than the prior
quarter. This was due to higher production at San Dimas
and the delivery of silver produced at Yauliyacu, Penasquito and
777 in the previous quarter being accounted for in the fourth
quarter. Compared to Q4 2011, sales volumes increased by over
Silver Wheaton is targeting a steep production increase by 2017.
This growth is expected to come primarily from mines which are yet
to begin production but will contribute substantially once they do.
Also, the figure could rise further if the company is able to seal
more deals using its significant cash reserves and credit
facilities provided by banks.
our full analysis for Silver Wheaton
Performance In 2012
The company reported its highest ever annual attributable
production figure of 29.6 million silver equivalent ounces, an
increase of 17% over 2011. The figure includes 26.9 million ounces
of silver and 50,000 ounces of gold. Sales of silver equivalent
ounces rose by 30% over 2011 to reach 9.1 million ounces. It also
reported revenues of $849.6 million for the whole year, an increase
of 16% over the 2011 figure of $730 million. Net earnings for the
year stood at $586 million, a 7% increase over 2011 levels of $550
million. The increase in revenues and earnings came entirely as a
result of higher production and sales since the average realized
price per ounce of silver equivalent declined from $34.65 in 2011
to $31.09 in 2012.
With the recent additions of Hudbay and Vale, Silver Wheaton now
has just over 850 million silver ounces and almost 5 million gold
ounces, which when combined is more than 1.1 billion ounces of
silver equivalent reserves. This represents a 38% increase over
reserves in 2011.
Silver Wheaton is targeting production of 33.5 million silver
equivalent ounces in 2013 and 53 million ounces in 2017. This
increase is expected to be driven largely by contributions from
Hudbay's Constancia mine and Barrick Gold's Pascua Lama mine.
Further contributions will come from Vale's newly added Salobo and
Sudbury mines and Augusta's Rosemont mine. This figure could rise
further since the company has significant cash reserves and credit
facilities at hand, and is actively looking for more good deals to
add to its portfolio.
Does It Have The Financial Firepower For More
As on December 31, 2012, Silver Wheaton had $778 million in cash
and cash equivalents and $50 million of debt outstanding under the
term loan facility.
On February 28, the company obtained two new credit facilities.
These include a $1.5 billion bridge loan facility with a term of
one year and a $1 billion revolving credit facility having a five
year term. The two facilities replaced the prior term loan and the
$400 million revolving credit facility and repaid the $50 million
of term debt outstanding on December 31, 2012.
In addition, the company acquired two gold streams from Vale,
making $1.9 billion in upfront payments using a combination of cash
on hand and a $1.09 billion drawdown under the bridge facility. The
company's strong future cash flows combined with available credit
capacity, including $1 billion available under the new revolving
credit facility, position the company well. We think that it should
be able to satisfy its funding commitments, sustain its dividend
policy and conclude more metal purchase agreements.
have a price estimate for the company of $38
, which will be revised shortly to include details of the earnings
a company's products impact its stock price at Trefis