Silver Wheaton Corp.
's (
SLW
) second-quarter 2012 earnings of 40 cents a share topped the Zacks
Consensus Estimate by 3 cents but trailed the year-ago quarter's
earnings of 42 cents. The Canada-based silver mining company said
that its profit fell 4.5% year over year to $141.4 million. A
decline in silver price weighed on the bottom line.
Revenues rose 3% year over year to a record $201.4 million, easily
beating the Zacks Consensus Estimate of $182 million. The growth
was fueled by a 36% rise in the number of silver equivalent ounces
sold to 6.9 million, partly offset by a 24% decline in silver
price. Silver equivalent ounces sold include 6.8 million ounces of
silver and 2,400 ounces of gold.
Attributable silver equivalent production jumped 10% year over year
to 6.7 million ounces including 6.5 million ounces of silver and
3,200 ounces of gold. The company noted that it ended the quarter
with attributable proven and probable silver reserves of 798
million ounces.
Average cash costs per silver equivalent ounce fell to $4.061 in
the second quarter from $4.141 a year ago. Cash operating margins
declined 27% year over year to $25.011 per silver equivalent ounce
due to lower realized price per silver equivalent ounce.
Silver Wheaton exited the quarter with cash and cash equivalents of
$1.1 billion, up roughly 57% year over year. Total debt declined
31% year over year to $64.3 million. Operating cash flows increased
3% year over year to $172.9 million.
The company recently announced that it has entered into an
agreement with
HudBay Minerals Inc.
(
HBM
) to acquire silver and gold production from two of the latter's
mines. Under the deal, Silver Wheaton will acquire 100% of the
silver produced from HudBay's 777 Mine in Canada and Constancia
Project in southern Peru. The company will also acquire 100% of the
gold produced from the 777 Mine until Constancia satisfies a
completion test or the end of 2016, whichever is later.
Silver Wheaton will pay HudBay $750 million for the acquisition, of
which $500 million is payable following the transaction closure.
The remaining two payments of $125 million each will be made upon
the satisfaction of specific conditions by Constancia. The company
will use its cash on hand to make the $500 million upfront payment.
Silver Wheaton noted that 777 and Constancia together will raise
its long-term average annual silver equivalent production by
roughly 4.9 million ounces. Average annual attributable production
from the 777 Mine is expected to be roughly 4.2 million silver
equivalent ounces until end-2016.
Factoring in the acquisition of these assets, the company increased
its silver equivalent production forecast for 2012 to roughly 28
million ounces from 27 million ounces.
Silver Wheaton currently retains a Zacks #3 Rank, which translates
into a short-term Hold rating.
HUDBAY MINERALS (HBM): Free Stock Analysis
Report
SILVER WHEATON (SLW): Free Stock Analysis
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