Silver Wheaton Reports Earnings of US$23 Million and Record Operating Cash Flows of US$36 Million
2008-07-29 16:41:00
Silver Wheaton Reports Earnings of US$23 Million and Record Operating Cash Flows of US$36 Million
VANCOUVER, BRITISH COLUMBIA–(EMWNews – July 29, 2008) – Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) is pleased to announce net earnings of US$23.3 million (US$0.10 per share) and record operating cash flows of US$35.9 million (US$0.16 per share) for the second quarter of 2008.
SECOND QUARTER HIGHLIGHTS
– Net earnings of US$23.3 million (US$0.10 per share) from the sale of 2.9 million ounces of silver, compared to US$22.9 million (US$0.10 per share) from the sale of 3.1 million ounces of silver in 2007.
– Record operating cash flows of US$35.9 million (US$0.16 per share) compared with US$27.8 million (US$0.13 per share) in 2007.
– On April 30, 2008, pursuant to a letter agreement previously entered into, Augusta Resource Corporation (“Augusta”) elected to sell to Silver Wheaton 45% of the payable silver produced from its 100% owned Rosemont Copper Project in Arizona, for an upfront cash payment of US$165 million. The upfront payment will be made on a drawdown basis to fund mine construction, once all necessary permits have been received.
– On May 13, 2008, the Company entered into an agreement with Farallon Resources Ltd. (“Farallon”) to acquire 75% of the silver produced from Farallon’s Campo Morado property in Mexico, for the life of mine. Silver Wheaton will make total upfront cash payments of US$80 million in installments and, in addition, a per ounce cash payment of the lesser of US$3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the agreement.
– On June 2, 2008, the Company entered into an agreement with Aurcana Corporation (“Aurcana”) to acquire 50% of the silver produced from Aurcana’s La Negra mine in Mexico, for the life of mine. Subsequent to the quarter, Silver Wheaton has made the upfront cash payment of US$25 million and, in addition, a per ounce cash payment of the lesser of US$3.90 and the prevailing market price is due (subject to an inflationary adjustment) for silver delivered under the agreement.
– On June 24, 2008, the Company announced that it plans to raise up to C$136 million through an offer to induce early exercise of the first series and Series A publicly traded warrants.
– On June 24, 2008 the Company announced that it had entered into an amending agreement with existing lenders to increase the revolving bank debt available by US$100 million to US$400 million.
– During June 2008, the Company received its first silver deliveries under the Penasquito agreement in the amount of 6,660 ounces.
“This past quarter, we negotiated more silver stream agreements than any other quarter in our history,” said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. “With eight silver agreements completed and another soon to be, we have diversified our portfolio and expanded our relationships within the industry. The growing capital requirements associated with mine operators and development companies, combined with the challenges faced in attracting traditional sources of capital, create an environment that is ideally suited for Silver Wheaton’s business model. Accordingly, we expect to expand our portfolio of silver contracts even further in 2008. We are also very excited by the fact that Penasquito, our flagship asset, is proceeding well and that it delivered its first shipment of silver during the quarter. Penasquito promises to be a long-life, profitable asset for our Company.”
A conference call will be held Wednesday, July 30, 2008 at 11:00 am (Eastern Time) to discuss these results. To participate in the live call use one of the following methods:
Dial toll free from Canada or the US: 1-888-280-8771
Dial from outside Canada or the US: 1-416-641-6124
Dial toll free from parts of Europe: 800-6578-9898
Live audio webcast: www.silverwheaton.com
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and you can listen to an archive of the call by one of the following methods:
Dial toll free from Canada or the US: 1-800-408-3053
Dial from outside Canada or the US: 1-416-695-5800
Pass code: 3266186#
Archived audio webcast: www.silverwheaton.com
Silver Wheaton is the largest public mining company with 100% of its operating revenue from silver production. Silver Wheaton expects, based upon its current agreements, to have silver sales of between 13 million and 15 million ounces in 2008, increasing to 19 million ounces in 2009 and 25 million ounces in 2010.
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
This news release contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the future price of silver, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reserve determination and reserve conversion rates. 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”, “intends”, “anticipates” or “does not anticipate”, or “believes”, or variations of such words and phrases or state 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: risks related to the integration of acquisitions, the absence of control over mining operations from which Silver Wheaton purchases silver and risks related to these mining operations, including risks related to international operations, actual results of current exploration activities, actual results of current reclamation activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in the section entitled “Description of the Business – Risk Factors” in Silver Wheaton’s annual information form for the year ended December 31, 2007 incorporated by reference into Silver Wheaton’s Form 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C. Although Silver Wheaton has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Silver Wheaton does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.
Second Quarter Report
2008
Silver Wheaton
MANAGEMENT’S DISCUSSION AND ANALYSIS OF RESULTS OF OPERATIONS AND FINANCIAL CONDITION FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008
This Management’s Discussion and Analysis should be read in conjunction with the Company’s interim unaudited consolidated financial statements for the three and six months ended June 30, 2008 and related notes thereto which have been prepared in accordance with Canadian generally accepted accounting principles. In addition, the following should be read in conjunction with the 2007 audited consolidated financial statements, the related Management’s Discussion and Analysis and the 2007 Annual Information Form as well as other information relating to Silver Wheaton on file with the Canadian provincial securities regulatory authorities and on SEDAR at www.sedar.com. This Management’s Discussion and Analysis contains “forward looking” statements that are subject to risk factors set out in the cautionary note contained herein. All figures are in United States dollars unless otherwise noted. This Management’s Discussion and Analysis has been prepared as of July 29, 2008.
SECOND QUARTER HIGHLIGHTS
– Net earnings of $23.3 million ($0.10 per share) from the sale of 2.9 million ounces of silver, compared to $22.9 million ($0.10 per share) from the sale of 3.1 million ounces of silver in 2007.
– Record operating cash flows of $35.9 million (2007 – $27.8 million).
– On April 30, 2008, pursuant to a previously executed letter agreement, Augusta Resource Corporation (“Augusta”) elected to sell to Silver Wheaton 45% of the payable silver produced from its 100% owned Rosemont Copper Project in Arizona, for an upfront cash payment of $165 million. The upfront payment will be made on a drawdown basis to fund mine construction, once all necessary permits have been received.
– On May 13, 2008, the Company entered into an agreement with Farallon Resources Ltd. (“Farallon”) to acquire 75% of the silver produced from Farallon’s Campo Morado property in Guerrero State, Mexico, for the life of mine. Silver Wheaton will make total upfront cash payments of $80 million in installments and, in addition, a per ounce cash payment of the lesser of $3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the agreement.
– On June 2, 2008, the Company entered into an agreement with Aurcana Corporation (“Aurcana”) to acquire 50% of the silver produced from Aurcana’s La Negra mine in Queretaro State, Mexico, for the life of mine. Subsequent to the quarter, Silver Wheaton made an upfront cash payment of $25 million and, in addition, a per ounce cash payment of the lesser of $3.90 and the prevailing market price is due (subject to an inflationary adjustment) for silver delivered under the agreement.
– On June 24, 2008, the Company announced that it plans to raise up to C$136 million through an offer to induce early exercise of the first series and Series A publicly traded warrants.
– On June 24, 2008, the Company announced that it had entered into an amending agreement with existing lenders to increase the revolving bank debt available by US$100 million to US$400 million.
– During June 2008, the Company received its first silver deliveries under the Penasquito agreement in the amount of 6,660 ounces.
OVERVIEW
Silver Wheaton Corp. (“Silver Wheaton” or the “Company”) is the largest public mining company with 100% of its revenue from the sale of silver.
The Company has entered into eight long-term silver agreements with Goldcorp (Luismin mines and Penasquito project in Mexico), Lundin Mining (Zinkgruvan mine in Sweden), Glencore (Yauliyacu mine in Peru), Hellas Gold (Stratoni mine in Greece), Mercator (Mineral Park mine in Arizona), Farallon (Campo Morado property in Mexico), and Aurcana (La Negra mine in Mexico) whereby Silver Wheaton acquires silver production from the counterparties at a price of $3.90 per ounce, subject to inflationary adjustments. In addition, the Company has signed a binding letter agreement to acquire 45% of the silver produced from Augusta Resource Corporation’s Rosemont Copper project in Arizona for the life of mine. As a result, the primary drivers of the Company’s financial results are the volume of silver production at the various mines and the price of silver.
Silver Wheaton is listed on the New York Stock Exchange (symbol: SLW) and the Toronto Stock Exchange (symbol: SLW). In addition, the Company has share purchase warrants that trade on the Toronto Stock Exchange.
Based upon its current agreements, the Company expects to have annual silver sales of between 13 million and 15 million ounces in 2008, increasing to 19 million ounces in 2009 and 25 million ounces in 2010. Silver Wheaton is actively pursuing further growth opportunities.
SUMMARIZED FINANCIAL RESULTS
2008
Q2 Q1
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Silver sales ($000's) $ 49,675 $ 48,948
Ounces (000's) 2,864 2,819
Average realized silver
price ($'s per ounce) $ 17.35 $ 17.36
Total cash cost
($'s per ounce)(1) $ 3.93 $ 3.94
Net earnings ($000's) $ 23,276 $ 27,928
Earnings per share
Basic $ 0.10 $ 0.13
Diluted $ 0.09 $ 0.11
Cash flow from
operations ($000's) $ 35,887 $ 33,084
Total assets ($000's) $1,320,450 $1,205,704
Total liabilities ($000's) $ 513,757 $ 391,475
Shareholders' equity
($000's) $ 806,693 $ 814,229
2007
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Q4 Q3 Q2 Q1
Silver sales ($000's) $ 50,240 $ 39,598 $ 41,464 $ 44,132
Ounces (000's) 3,543 3,129 3,053 3,343
Average realized silver
price ($'s per ounce) $ 14.18 $ 12.66 $ 13.58 $ 13.20
Total cash cost
($'s per ounce)(1) $ 3.93 $ 3.90 $ 3.90 $ 3.90
Net earnings ($000's) $ 24,886 $ 19,184 $ 22,855 $ 24,937
Earnings per share
Basic $ 0.11 $ 0.09 $ 0.10 $ 0.11
Diluted $ 0.10 $ 0.08 $ 0.09 $ 0.10
Cash flow from
operations ($000's) $ 34,414 $ 27,102 $ 27,846 $ 29,899
Total assets ($000's) $1,208,474 $1,200,304 $ 748,696 $ 700,893
Total liabilities ($000's) $ 426,243 $ 440,514 $ 4,048 $ 2,787
Shareholders' equity
($000's) $ 782,231 $ 759,790 $ 744,648 $ 698,106
2006
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Q4 Q3
Silver sales ($000's) $ 43,651 $ 41,766
Ounces (000's) 3,534 3,520
Average realized silver
price ($'s per ounce) $ 12.35 $ 11.86
Total cash cost
($'s per ounce)(1) $ 3.90 $ 3.90
Net earnings ($000's) $ 23,762 $ 22,518
Earnings per share
Basic $ 0.11 $ 0.10
Diluted $ 0.10 $ 0.09
Cash flow from
operations ($000's) $ 29,829 $ 28,262
Total assets ($000's) $ 662,893 $ 638,123
Total liabilities ($000's) $ 21,354 $ 21,202
Shareholders' equity
($000's) $ 641,539 $ 616,921
1) Refer to discussion on non-GAAP measures
Changes in sales, net earnings and cash flow from operations from quarter to quarter are affected primarily by fluctuations in production at the mines and timing of shipments that are in the normal course of operations, as well as changes in the price of silver. Shareholders’ equity decreased during the three month period ended June 30, 2008 due to the effect of a decline in the market value of available-for-sale securities, which is reflected in the statement of comprehensive (loss) income for the quarter.
RESULTS OF OPERATIONS AND OPERATIONAL REVIEW
The Company currently has five business segments, the silver produced by the Luismin, Zinkgruvan, Yauliyacu and Stratoni mines, and corporate operations. The acquisition of silver from the Stratoni mine began in June 2007.
Three Months Ended June 30, 2008
Corpor-
Luismin Zinkgruvan Yauliyacu Stratoni ate Total
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Silver sales
($000's) $ 21,489 $ 9,398 $ 12,805 $ 5,983 $ - $ 49,675
Ounces (000's) 1,246 524 750 344 - 2,864
Average realized
silver price
($'s per ounce) $ 17.25 $ 17.93 $ 17.09 $ 17.38 $ - $ 17.35
Total cash cost
($'s per
ounce)(1) $ 3.95 $ 3.96 $ 3.90 $ 3.90 $ - $ 3.93
Net earnings
(loss) ($000's) $ 16,048 $ 6,501 $ 7,278 $ 3,371 $ (9,922) $ 23,276
Cash flow from
(used in)
operations
($000's) $ 16,569 $ 7,570 $ 9,883 $ 4,814 $ (2,949) $ 35,887
1) Refer to discussion on non-GAAP measures
Three Months Ended June 30, 2007
Corpor-
Luismin Zinkgruvan Yauliyacu Stratoni ate Total
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Silver sales
($000's) $ 18,427 $ 7,749 $ 11,575 $ 3,713 $ - $ 41,464
Ounces (000's) 1,394 539 844 276 - 3,053
Average realized
silver price
($'s per ounce) $ 13.22 $ 14.38 $ 13.71 $ 13.44 $ - $ 13.58
Total cash cost
($'s per
ounce)(1) $ 3.90 $ 3.90 $ 3.90 $ 3.90 $ - $ 3.90
Net earnings
(loss) ($000's) $ 12,446 $ 4,771 $ 5,208 $ 1,536 $ (1,106) $ 22,855
Cash flow from
(used in)
operations
($000's) $ 12,667 $ 5,688 $ 8,283 $ 2,371 $ (1,163) $ 27,846
1) Refer to discussion on non-GAAP measures
For the three months ended June 30, 2008, net income increased slightly, relative to 2007, with increased revenue being offset by higher costs attributable to corporate operations.
Revenue increased by almost 20% in the second quarter of 2008 relative to 2007, with the increased price realized on silver sales more than offsetting the lower volume of silver sales. For Q2 2008, the number of ounces sold was 13% lower than planned, due primarily to the continued mining of lower than reserve grade ore at Luismin.
The increased loss attributable to corporate operations was due primarily to a future income tax expense of $4.2 million in Q2 2008, compared to a future income tax benefit of $1.6 million in the comparable period of 2007. This future income tax expense is a non-cash item, and is offset by a future tax benefit in the same amount, that is reflected in the statement of other comprehensive income during the quarter.
Six Months Ended June 30, 2008
Corpor-
Luismin Zinkgruvan Yauliyacu Stratoni ate Total
---------------------------------------------------------------------------
Silver sales
($000's) $ 50,532 $ 15,087 $ 25,634 $ 7,370 $ - $ 98,623
Ounces (000's) 2,925 842 1,484 432 - 5,683
Average realized
silver price
($'s per ounce) $ 17.28 $ 17.92 $ 17.28 $ 17.04 $ - $ 17.36
Total cash cost
($'s per
ounce)(1) $ 3.95 $ 3.96 $ 3.90 $ 3.90 $ - $ 3.93
Net earnings
(loss) ($000's) $ 37,758 $ 10,436 $ 14,694 $ 4,088 $(15,772) $ 51,204
Cash flow from
(used in)
operations
($000's) $ 38,980 $ 11,724 $ 19,849 $ 5,486 $ (7,068) $ 68,971
1) Refer to discussion on non-GAAP measures
Six Months Ended June 30, 2007
Corpor-
Luismin Zinkgruvan Yauliyacu Stratoni ate Total
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Silver sales
($000's) $ 44,236 $ 14,645 $ 23,002 $ 3,713 $ - $ 85,596
Ounces (000's) 3,331 1,058 1,731 276 - 6,396
Average realized
silver price
($'s per ounce) $ 13.28 $ 13.84 $ 13.29 $ 13.44 $ - $ 13.38
Total cash cost
($'s per
ounce)(1) $ 3.90 $ 3.90 $ 3.90 $ 3.90 $ - $ 3.90
Net earnings
(loss) ($000's) $ 29,941 $ 8,799 $ 9,943 $ 1,536 $ (2,427) $ 47,792
Cash flow from
(used in)
operations
($000's) $ 31,461 $ 10,460 $ 16,251 $ 2,371 $ (2,798) $ 57,745
1) Refer to discussion on non GAAP measures
Net income for the six month period ended June 30, 2008 increased 7% relative to the comparable period in 2007, with a 15% increase in revenue being partially offset by higher costs associated with corporate operations, due primarily to increased non-cash future income tax expense ($5.8 million) and higher general and administrative expenses ($5.6 million).
Over the past two years, the number of silver ounces sold under each agreement was as follows:
2008 2007 2006
(Ounces 000's) Q2 Q1 Q4 Q3 Q2 Q1 Q4 Q3
------------------------------------------------------------------------
Luismin 1,246 1,679 1,682 1,900 1,394 1,937 2,147 2,213
Zinkgruvan 524 318 540 247 539 519 415 287
Yauliyacu 750 734 919 792 844 887 972 1,020
Stratoni(1) 344 88 402 190 276 - - -
------------------------------------------------------------------------
Total 2,864 2,819 3,543 3,129 3,053 3,343 3,534 3,520
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1) The acquisition of silver from the Stratoni mine began in June 2007.
SILVER INTERESTS
LUISMIN
On October 15, 2004, the Company entered into an agreement (amended on March 30, 2006) with Goldcorp Inc. (“Goldcorp”) to acquire 100% of the silver produced by Goldcorp’s Luismin mining operations in Mexico (owned at the date of the transaction) for a period of 25 years.
As at December 31, 2007, the Luismin mines had proven and probable reserves of 66.1 million ounces of silver, measured and indicated resources of 1.9 million ounces of silver and inferred resources of 183.2 million ounces of silver (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
For the three and six month periods ended June 30, 2008, silver sales revenue increased by 17% and 14% respectively, relative to the comparable periods of the prior year, with an increase in the realized silver price being partially offset by lower sales volumes. The lower sales volumes were due to current mining operations being carried out in lower grade areas of the ore body, with a return to higher grades expected in the future. This variability in ore grade mined is normal for mining operations and it is expected that over the life of mine the average ore grade mined will approximate the reserve grade. The Company’s cash flows and net earnings under the Luismin silver agreement for the three months ended June 30, 2008 were $16.6 million (2007 – $12.7 million) and $16.0 million (2007 – $12.4 million) respectively, and for the six months ended June 30, 2008 were $39.0 million (2007 – $31.5 million) and $37.8 million (2007 – $29.9 million) respectively.
ZINKGRUVAN
On December 8, 2004, the Company entered into an agreement to acquire 100% of the silver produced by Lundin Mining’s Zinkgruvan mining operations in Sweden for the life of mine.
As at December 31, 2007, Zinkgruvan had proven and probable silver reserves of 34.9 million ounces, measured and indicated silver resources of 16.5 million ounces and inferred silver resources of 9.8 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
For the three month period ended June 30, 2008, silver sales revenue increased by 21% relative to the comparable quarter of the prior year, primarily due to an increase in the realized silver price. For the six month period ended June 30, 2008, revenues were relatively unchanged relative to the comparable period of the prior year, with a 20% decrease in sales volume offsetting the increased silver price realized for the most recent period. The variability in the Zinkgruvan sales volumes is primarily due to the timing of shipments. The Company’s cash flows and net earnings under the Zinkgruvan silver agreement for the three months ended June 30, 2008 were $7.6 million (2007 – $5.7 million) and $6.5 million (2007 – $4.8 million) respectively, and for the six months ended June 30, 2008 were $11.7 million (2007 – $10.5 million) and $10.4 million (2007 – $8.8 million) respectively.
YAULIYACU
On March 23, 2006, the Company entered into an agreement with Glencore International AG (“Glencore”) to acquire up to 4.75 million ounces of silver per year for a period of 20 years, based on the production from Glencore’s Yauliyacu mining operations in Peru. In the event that silver produced at Yauliyacu in any year totals less than 4.75 million ounces, the amount sold to Silver Wheaton in subsequent years will be increased to make up for the shortfall, so long as production allows. During the term of the agreement, Silver Wheaton has a right of first refusal on any future sales of silver streams from the Yauliyacu mine and a right of first offer on future sales of silver streams from any other mine owned by Glencore at the time of the initial transaction. In addition, Silver Wheaton has an option to extend the 20 year term of the agreement in five year increments, on substantially the same terms as the existing agreement, subject to an adjustment related to silver price expectations at the time and other factors.
As at December 31, 2007, Yauliyacu had proven and probable silver reserves of 14.1 million ounces, measured and indicated silver resources of 38.5 million ounces and inferred silver resources of 80.9 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
For the three and six month periods ended June 30, 2008, silver sales revenue increased by 11% compared with 2007, with an increased realized silver price being partially offset by lower sales volumes. The lower sales volumes were due to current mining operations being carried out in lower grade areas of the ore body, with a return to higher grades expected in the future. This variability in ore grade mined is normal for mining operations and it is expected that over the life of mine the average ore grade mined will approximate the reserve grade. The Company’s cash flows and net earnings under the Yauliyacu silver agreement for the three months ended June 30, 2008 were $9.9 million (2007 – $8.3 million) and $7.3 million (2007 – $5.2 million) respectively, and for the six months ended June 30, 2008 were $19.8 million (2007 – $16.3 million) and $14.7 million (2007 – $9.9 million) respectively.
STRATONI
On April 23, 2007, the Company entered into an agreement with Hellas Gold S.A. (“Hellas Gold”), a subsidiary of European Goldfields Ltd. (“European Goldfields”), to acquire 100% of the silver produced from Hellas Gold’s Stratoni mining operations in Greece for the life of mine.
As at December 31, 2007, Stratoni had proven and probable silver reserves of 13.7 million ounces and inferred silver resources of 4.2 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
For the three and six month periods ended June 30, 2008, silver sales revenue increased by 61% and 98% respectively, relative to the comparable periods of the prior year. This increase in revenue reflects an increase in both the volume and sales price of silver sold. The increase in the volume of silver sold in the second quarter reflects silver that was produced in the prior quarter, but for which shipment was delayed. The Company’s cash flows and net earnings under the Stratoni silver agreement for the three months ended June 30, 2008 were $4.8 million (2007 – $2.4 million) and $3.4 million (2007 – $1.5 million) respectively, and for the six months ended June 30, 2008 were $5.5 million (2007 – $2.4 million) and $4.1 million (2007 – $1.5 million) respectively.
PENASQUITO
On July 24, 2007, the Company entered into an agreement to acquire 25% of the silver produced from Goldcorp’s Penasquito project in Mexico for the life of mine, for an upfront cash payment of $485 million. In addition, a per ounce cash payment of the lesser of $3.90 and the prevailing market price is due (subject to an inflationary adjustment commencing in 2011), for silver delivered under the agreement. Silver Wheaton is not required to fund any capital expenditures at Penasquito, including any expansion scenarios. Goldcorp has provided a completion guarantee to Silver Wheaton that the Penasquito mine will be constructed with certain minimum production criteria by certain dates.
As at August 9, 2007, Penasquito had proven and probable silver reserves of 864 million ounces, measured and indicated silver resources of 413 million ounces and inferred silver resources of 508 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
During the three months ended June 30, 2008, Silver Wheaton received its first delivery of silver under the Penasquito agreement amounting to 6,660 ounces of silver at a total cash cost of $3.90 per ounce, and sold it for an average price of $17.26 per ounce.
ROSEMONT
On April 30, 2008, pursuant to a binding letter agreement, Augusta Resource Corporation elected to sell to Silver Wheaton 45% of the payable silver produced from its wholly-owned Rosemont Copper Project located in Arizona, USA, for the life of mine. Pursuant to the letter agreement, Silver Wheaton will make upfront cash payments totaling $165 million, on a drawdown basis, to fund construction of the mine as construction milestones are achieved. There are no additional per ounce payments required in relation to silver delivered pursuant to this agreement.
The transaction is subject to (a) Augusta receiving all necessary permits to construct and operate a mine in accordance with their August 2007 Rosemont Feasibility Study (the “Feasibility Study”), (b) Augusta having entered into committed arrangements for sufficient financing to construct and operate the mine, and (c) execution by the parties of definitive agreements on or before August 29, 2008 as well as receipt of any required regulatory approvals and third-party consents. In addition, Augusta will provide a completion guarantee that the Rosemont mine will be constructed with certain minimum production criteria by certain dates.
Augusta expects production at the Rosemont project to start in 2011 with an average of 2.7 million ounces of silver produced each year over the mine life, currently expected to be a minimum of 18 years.
MINERAL PARK
On March 17, 2008, the Company entered into an agreement with Mercator Minerals Ltd. (“Mercator”), to acquire 100% of the silver produced from Mercator’s Mineral Park mine in Arizona, USA for the life of mine. On June 12, 2008, the Company made the upfront cash payment of $42 million required by the agreement, with such payment being drawn from existing credit facilities. In addition to the upfront cash payment, Silver Wheaton will make a per ounce cash payment of the lesser of $3.90 and the prevailing market price (subject to an inflationary adjustment), for silver delivered under the agreement. Mercator has provided a completion guarantee to Silver Wheaton, specifying a minimum production level by a certain date.
The Mineral Park mine currently produces copper from SX/EW leach operations, but construction is well underway on a flotation operation that will produce copper-silver and molybdenum concentrates. Mercator expects that concentrate production will commence during the third quarter of 2008 from a 25,000 tons per day operation, with production increasing to 50,000 tons per day approximately nine months later. All permits for the expansion are in place and the expected mine life is 25 years. Payable silver production is expected to average approximately 600,000 ounces per annum over the first 21 years of operations and the ore body is considered to have excellent exploration potential.
As at December 29, 2006, Mineral Park had proven and probable silver reserves of 35 million ounces, measured and indicated silver resources of 13 million ounces and inferred silver resources of 15 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
CAMPO MORADO
On May 13, 2008, the Company entered into an agreement with Farallon Resources Ltd. (“Farallon”), to acquire 75% of the silver produced from Farallon’s Campo Morado property in Guerrero State, Mexico for the life of mine. Silver Wheaton will make total upfront cash payments of $80 million in installments and, in addition, a per ounce cash payment of the lesser of $3.90 and the prevailing market price is due (subject to an inflationary adjustment), for silver delivered under the agreement. At June 30, 2008, $65 million of the $80 million upfront payment had been paid, with the remainder being due on a draw down basis to fund ongoing capital expenditures at the property.
Construction at the high-grade G-9 polymetallic deposit, the first deposit on the Campo Morado property to be developed, is well underway and Farallon is targeting production to begin by the fourth quarter of 2008. It will be an underground mine employing a drift and fill mining method to feed a flotation mill with a throughput capacity of 1,500 tonnes per day. According to a news release dated December 28, 2007, in addition to producing at least 1 million ounces of silver per year, the G-9 Project is expected to produce 120 million pounds of zinc, 15 million pounds of copper, 9,000 ounces of gold and 6 million pounds of lead per year. Discovered only in 2005, Farallon is still actively drilling the G-9 deposit and expanding the resource base, as illustrated with recent drill results.
As at February 29, 2008, Campo Morado had measured and indicated silver resources of 56 million ounces and inferred silver resources of 11 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
LA NEGRA
On June 2, 2008, the Company entered into an agreement with Aurcana Corporation (“Aurcana”), to acquire 50% of the silver produced from Aurcana’s La Negra mine in Queretaro State, Mexico for the life of mine. On July 4, 2008, following the satisfaction of required conditions precedent, Silver Wheaton made the upfront cash payment of $25 million.
In addition, a per ounce cash payment of the lesser of $3.90 and the prevailing market price is due (subject to an inflationary adjustment) for silver delivered under the agreement. Payment for the transaction was drawn from existing credit facilities.
As part of this agreement, Aurcana has also agreed to provide Silver Wheaton with a right to purchase silver produced from any future assets it may acquire, including its recently acquired Shafter Silver development project located in Texas, USA.
The La Negra mine is a 1,000 tonne per day polymetallic mine originally discovered, developed and operated for thirty years by Penoles S.A. de C.V. (“Penoles”). Aurcana has announced plans to increase production to 2,000 tonnes per day. The mine is currently in operation and silver deliveries to the Company will commence in the third quarter of 2008. Exploration potential at the La Negra mine is considered excellent and Aurcana is currently completing a 15,000 metre underground drill program, which has confirmed historical data and discovered new zones of mineralization. Annual silver production is expected to be up to 1.5 million ounces.
As at February 15, 2008, La Negra had proven and probable silver reserves of 0.6 million ounces, measured and indicated silver resources of 1.2 million ounces and inferred silver resources of 0.3 million ounces (as described in the Reserves and Resources section of this Management’s Discussion and Analysis).
CORPORATE
Three Months Ended Six Months Ended
June 30 June 30
(in thousands) 2008 2007 2008 2007
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General and administrative(1) $ 4,731 $ 2,298 $ 10,031 $ 4,468
Project evaluation 118 57 128 171
Interest expense 6 - 96 14
Interest income (94) (422) (176) (1,314)
Debt issue costs 738 287 782 300
Loss on mark-to-market of
warrants held 147 442 947 659
Other 58 93 106 58
Future income tax expense
(benefit) 4,218 (1,649) 3,858 (1,929)
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Corporate net loss $ 9,922 $ 1,106 $ 15,772 $ 2,427
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1) Stock based compensation
(a non-cash item) included
in General and
administrative $ 1,214 $ 613 $ 3,460 $ 1,099
General and administrative expenses totaled $4.7 million (six months – $10.0 million) during the three months ended June 30, 2008, compared with $2.3 million (six months – $4.5 million) in the comparable period of 2007. Of this, stock based compensation expense, a non-cash item, was $1.2 million (six months – $3.5 million) compared with $0.6 million (six months – $1.1 million) during 2007. Other general and administrative costs increased during the six months ended June 30, 2008, compared with 2007, primarily due to higher rent, salaries and insurance costs attributable to the reduced reliance on Goldcorp administratively. In addition, there was $0.9 million of non-recurring employment costs included in general and administrative expenses during the second quarter of 2008.
The Company incurred interest costs of $4.8 million (six months – $10.6 million) during the three months ended June 30, 2008, of which $4.8 million (six months – $10.5 million) related to the acquisition of Penasquito, Mineral Park and Campo Morado and was capitalized to the cost of the agreements.
Interest income during the quarter of $0.1 million (six months – $0.2 million) was the result of interest earned on cash balances held in short-term money market instruments compared with $0.4 million (six months – $1.3 million) during 2007. The average cash balance held by the Company was lower during the current year as the Company generally applies surplus cash balances to pay down the outstanding debt.
The warrants held by the Company for long-term investment purposes are marked-to-market each reporting period with any gain or loss reflected in net earnings. The loss recorded for the three months ended June 30, 2008 from the mark-to-market of the warrants held was $0.1 million (six months – $0.9 million) compared with $0.4 million (six months – $0.7 million) during 2007.
For the three months ended June 30, 2008, the Company has recorded a future income tax expense of $4.2 million (six months – $3.9 million) compared to a future income tax benefit of $1.6 million (six months – $1.9 million) for 2007 with a non-cash benefit (2007 – expense) in the same amount being reflected in the statement of comprehensive income. The Company’s future income tax expense or recovery in a given quarter is largely determined by changes in the unrealized gains recorded with respect to its long term investments. As a result of the decrease in these unrealized gains during the quarter, the future income tax liability declined significantly, increasing the Company’s valuation allowance on its future income tax assets, and resulting in a future income tax expense for the quarter.
NON-GAAP MEASURES – TOTAL CASH COSTS PER OUNCE OF SILVER CALCULATION
Silver Wheaton has included, throughout this document, certain non-GAAP performance measures, including total cash costs of silver on a sales basis. These non-GAAP measures do not have any standardized meaning prescribed by GAAP, nor are they necessarily comparable with similar measures presented by other companies. Cash costs are presented as they represent an industry standard method of comparing certain costs on a per unit basis. The Company believes that certain investors use this information to evaluate the Company’s performance. The data 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 GAAP. During the three months ended June 30, 2008, the Company’s total cash costs, which were equivalent to the Company’s Cost of Sales in accordance with GAAP, were $3.93 per ounce of silver (2007 – $3.90 per ounce).
LIQUIDITY AND CAPITAL RESOURCES
At June 30, 2008, the Company had cash and cash equivalents of $36.6 million (December 31, 2007 – $10.0 million) and a working capital deficiency of $10.6 million (December 31, 2007 – $23.2 million). The increase in cash and cash equivalents at the end of the quarter was due primarily to cash being held in anticipation of closing the transaction with Aurcana, which occurred on July 4, 2008. Included in the working capital deficiency at June 30, 2008 is the current portion of long-term bank debt of $28.6 million (December 31, 2007 – $28.6 million). Generally, the Company applies surplus cash to pay down amounts outstanding under the revolving bank debt facility, which is recorded as a long-term liability.
On July 24, 2007, the Company entered into a syndicated credit agreement to borrow $200 million under a non revolving term loan (the “Term Loan”) and up to $300 million under a revolving term loan (the “Revolving Loan”). The Revolving Loan and the Term Loan have 7 year terms with the Term Loan requiring equal quarterly principal repayments (together with accrued interest). In addition, Silver Wheaton has committed to pay down the Revolving Loan, within 61 days after the end of each fiscal quarter, by an amount equal to 90% of the increase, if any, in cash balances reported for the quarter. The Revolving Loan can be drawn down at any time to finance acquisitions or investments with $10 million being available for general corporate purposes.
On June 24, 2008 the Company announced that it had entered into an amending agreement to increase the revolving bank debt available by $100 million to $400 million. The Company paid upfront costs of $0.7 million in connection with this increase.
During the three months ended June 30, 2008, the Company generated operating cash flows of $35.9 million (six months – $69.0 million) compared with $27.8 million (six months – $57.7 million) during 2007.
During the three months ended June 30, 2008, the Company had net cash inflows from financing activities of $106.7 million (six months – $77.3 million). Additional borrowings under the revolving bank facilities amounted to $165.5 million (six months – $165.5 million) to fund the upfront payments required for the transactions with Farallon, Mercator and Aurcana. In addition, the Company repaid $7.1 million (six months – $14.2 million) and $51.9 million (six months – $78.3 million) of the balances outstanding on the Term Loan and Revolving Loan, respectively. As at June 30, 2008, the Company had $85.8 million available under its revolving credit facilities.
During the three months ended June 30, 2008, the Company had net cash outflows relating to investing activities of $112.5 million relating primarily to transactions with Farallon and Mercator.
In the opinion of management, cash flows, cash balances and available credit facilities are sufficient to support the Company’s normal operating requirements on an ongoing basis.
CONTRACTUAL OBLIGATIONS AND CONTINGENCIES
Silver Interests
In connection with the Luismin, Zinkgruvan and Stratoni silver agreements, the Company has committed to purchase 100% of the silver produced by each mine for a per ounce cash payment of the lesser of $3.95, $3.96 and $3.90 respectively, and the then prevailing market price, subject to an annual inflationary adjustment. This inflationary adjustment is subject to a minimum of 0.4% and a maximum of 1.65% per annum for Luismin and Zinkgruvan, and is fixed at 1.0% per annum for Stratoni. In connection with the Yauliyacu silver agreement, the Company has committed to purchase up to 4.75 million ounces of silver per year, based on production at the Yauliyacu mine, for a per ounce cash payment of $3.90, subject to an inflationary adjustment. This inflationary adjustment, which will begin in 2009, is subject to a minimum of 1.0% and a maximum of 1.65% per annum. In the event that silver produced at Yauliyacu in any year totals less than 4.75 million ounces, the amount sold to Silver Wheaton in subsequent years will be increased to make up for the shortfall, so long as production allows.
In connection with the Penasquito silver agreement, the Company has committed to purchase 25% of the silver produced by the Penasquito mine for a per ounce cash payment of the lesser of $3.90 and the then prevailing market price, subject to an inflationary adjustment. This inflationary adjustment, which will begin in 2011, is subject to a minimum of 0.4% and a maximum of 1.65% per annum.
In connection with the binding letter agreement with Augusta, the Company has committed to purchase 45% of the payable silver produced by the Rosemont Copper Project for an upfront payment of $165 million, and no ongoing per ounce payment.
In connection with the Campo Morado silver agreement, the Company has committed to purchase 75% of the silver produced by the Campo Morado Property for a per ounce cash payment of the lesser of $3.90 and the prevailing market price, subject to a one percent annual inflationary adjustment starting in the fourth year after production commences.
In connection with the La Negra silver agreement, the Company has committed to purchase 50% of the silver produced from the La Negra Mine for a per ounce cash payment of the lesser of $3.90 and the prevailing market price, subject to a one percent annual inflationary adjustment starting in the fourth year after production commences.
In connection with the Mineral Park silver agreement, the Company has committed to purchase 100% of the silver produced by the Mineral Park mine for a per ounce cash payment of the lesser of $3.90 and the then prevailing market price, subject to an annual inflationary adjustment of 1% beginning three years after a minimum production level has been met.
Other Contractual Obligations
(in thousands) 2008 2009-2011 2012-2013 After 2013 Total
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Bank debt(1) $ 14,280 $ 85,680 $ 57,120 $ 335,700 $ 492,780
Operating leases 231 1,426 990 1,626 4,273
Other 221 663 - - 884
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Total contractual
obligations $ 14,732 $ 87,769 $ 58,110 $ 337,326 $ 497,937
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1) Does not include payments of interest related to bank debt
Due to the size, complexity and nature of the Company's operations, various
legal and tax matters are outstanding from time to time. In the opinion of
management, these matters will not have a material effect on the Company's
consolidated financial position or results of operations.
SHARE CAPITAL
During the three months ended June 30, 2008, the Company received cash proceeds of $0.1 million (2007 – $2.9 million) from the exercise of 40,000 share purchase options (2007 – 968,500 share purchase options) at a weighted average exercise price of Cdn$3.25 per option (2007 – Cdn$3.25 per option). During the six months ended June 30, 2008, the Company received cash proceeds of $2.9 million (2007 – $4.8 million) from the exercise of 398,700 share purchase options (2007 – 1,652,333) at a weighted average exercise price of Cdn$5.11 per option (2007 – Cdn$3.26 per option). As of July 29, 2008, there were 223,857,914 outstanding common shares, 3,727,001 share purchase options and 162,944,039 share purchase warrants, which are convertible into 38,819,779 common shares.
On June 24, 2008, the Company filed a preliminary prospectus in each of the provinces of Canada and a registration statement in the United States of America to qualify the distribution of approximately 3 million new common share purchase warrants (“New Warrants”) to holders of two of its three series of publicly-traded warrants (the “Existing Warrants”). The New Warrants are being offered as an incentive to holders of Existing Warrants to exercise their Existing Warrants during a 20 business day early exercise period (the “Early Exercise Period”) expected to commence on or about August 8, 2008 and end on or about September 5, 2008. Assuming that all of the outstanding warrants are exercised during the early exercise period, the gross proceeds to the Company will be approximately C$136 million which will primarily be used to repay a portion of the Revolving Loan.
FINANCIAL INSTRUMENTS
During the quarter ended June 30, 2008, the Company has used a mixture of cash, short-term debt and long-term debt to maintain an appropriate capital structure, ensuring sufficient liquidity required to meet the needs of the business and the flexibility to continue growing through acquisition. The Company does not use interest rate contracts or other derivative financial instruments to manage the risks associated with its operations and therefore, in the normal course of business, it is inherently exposed to currency, interest rate and commodity price fluctuations.
The Company holds certain financial instruments as long-term investments and therefore is inherently exposed to various risk factors including currency risk, credit risk, market price risk and liquidity risk.
CHANGES IN ACCOUNTING POLICIES
CAPITAL DISCLOSURES AND FINANCIAL INSTRUMENTS – DISCLOSURES AND PRESENTATION
During the year, the Company adopted three new presentation and disclosure standards that were issued by the Canadian Institute of Chartered Accountants: Handbook Section 1535, Capital Disclosures (“Section 1535”), Handbook Section 3862, Financial Instruments – Disclosures (“Section 3862”) and Handbook Section 3863, Financial Instruments – Presentation (“Section 3863”).
Section 1535 requires the disclosure of both qualitative and quantitative information that enables users of financial statements to evaluate (i) an entity’s objectives, policies and processes for managing capital; (ii) quantitative data about what the entity regards as capital; (iii) whether the entity has complied with any capital requirements; and (iv) if it has not complied, the consequences of such non-compliance.
Sections 3862 and 3863 replace Handbook Section 3861, Financial Instruments – Disclosure and Presentation, revising and enhancing its disclosure requirements and carrying forward unchanged its presentation requirements for financial instruments. Sections 3862 and 3863 place increased emphasis on disclosures about the nature and extent of risks arising from financial instruments and how the entity manages those risks.
FUTURE CHANGES IN ACCOUNTING POLICIES
INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”)
In February 2008, the Canadian Accounting Standards Board (“AcSB”) confirmed that publicly listed companies will be required to adopt IFRS for interim and annual financial statements relating to fiscal years beginning on or after January 1, 2011, and in April 2008, the AcSB issued for comment its Omnibus Exposure Draft, Adopting IFRS in Canada. Early adoption may be permitted, however it will require exemptive relief on a case by case basis from the Canadian Securities Administrators.
The Company is currently in the process of developing an IFRS Conversion Plan and evaluating the impact of the transition to IFRS. The Company will continue to invest in training and resources throughout the transition period to facilitate a timely conversion.
RELATED PARTY TRANSACTIONS
On February 14, 2008, Goldcorp sold its entire 48% interest in Silver Wheaton by way of a secondary offering.
During the three months ended March 31, 2008, the Company purchased 1.7 million ounces (2007 – 1.9 million ounces) of silver from a subsidiary of Goldcorp at an average price of $3.95 per ounce (2007 – $3.90 per ounce), for total consideration of approximately $6.6 million (2007 – $7.6 million). During the six months ended June 30, 2007, the Company purchased 3.3 million ounces of silver from the subsidiary at a price of $3.90 per ounce, for total consideration of approximately $13.0 million.
CONTROLS AND PROCEDURES
DISCLOSURE CONTROLS AND PROCEDURES
Silver Wheaton’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the design and effectiveness of Silver Wheaton’s disclosure controls and procedures, as defined in the rules of the U.S. Securities and Exchange Commission and Canadian Securities Administrators, as of June 30, 2008. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that Silver Wheaton’s disclosure controls and procedures were effective as of June 30, 2008.
INTERNAL CONTROLS OVER FINANCIAL REPORTING
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal controls over financial reporting. Under the supervision of the Chief Financial Officer, the Company’s internal controls over financial reporting are designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles (“GAAP”). The Company’s controls include policies and procedures that:
– pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company;
– provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and
– provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the annual financial statements or interim financial statements.
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, believe that any disclosure controls and procedures or internal controls over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
There have been no significant changes in the Company’s internal controls over financial reporting that have materially affected, or are reasonably likely to materially affect, the Company’s internal controls over financial reporting.
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s internal controls over financial reporting using the framework and criteria established in Internal Control – Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has concluded that the internal controls over financial reporting were effective as of June 30, 2008.
OUTLOOK
The Company expects, based upon its current agreements, to have silver sales of between 13 million and 15 million ounces for the year ending December 31, 2008, increasing to 19 million ounces in 2009 and 25 million ounces in 2010.
The Company is unhedged and actively pursuing further growth opportunities.
RESERVES AND RESOURCES (1)
Proven and Probable Reserves (1,4,5,6,7,8,9,10,11,12,14)
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PROVEN PROBABLE PROVEN & PROBABLE
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Grade Contain- Grade Contain- Grade Contain-
Tonnes g ed Tonnes g ed Tonnes g ed
Silver Mt Ag/t M oz Mt Ag/t M oz Mt Ag/t M oz
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Luismin
San Dimas 1.60 387 19.9 3.08 378 37.5 4.68 381 57.3
Los Filos 33.71 3 3.7 55.31 3 5.2 89.02 3 8.8
San Martin 0.32 33 0.3 0.71 48 1.1 1.03 43 1.4
Zinkgruvan
(Zn) 8.31 114 30.4 2.25 62 4.5 10.56 103 34.9
Yauliyacu 1.41 89 4.0 2.30 136 10.0 3.72 118 14.1
Penasquito
(25%)
Mill 106.72 34 116.7 95.06 27 83.1 201.78 31 199.9
Heap Leach 10.53 21 7.1 17.08 16 9.0 27.61 18 16.1
Stratoni 1.90 193 11.8 0.31 190 1.9 2.22 193 13.7
Mineral
Park 315.88 3 29.0 81.33 2 6.4 397.21 3 35.4
La Negra
(50%) 0.14 77 0.3 0.10 70 0.2 0.24 74 0.6
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Total 223.3 158.9 382.3
Measured & Indicated Resources (1,2,3,4,5,6,7,8,9,10,11,12,14)
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MEASURED INDICATED MEASURED & INDICATED
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Grade Contain- Grade Contain- Grade Contain-
Tonnes g ed Tonnes g ed Tonnes g ed
Silver Mt Ag/t M oz Mt Ag/t M oz Mt Ag/t M oz
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Luismin
Los Filos 6.25 3 0.7 12.66 3 1.2 18.92 3 1.9
Zinkgruvan
(Zn) 0.55 24 0.4 3.68 109 12.9 4.23 98 13.3
Zinkgruvan
(Cu) - - - 3.10 32 3.2 3.10 32 3.2
Yauliyacu 0.46 91 1.3 4.67 248 37.2 5.13 234 38.5
Penasquito
(25%)
Mill 24.78 22 17.8 134.19 19 19.3 158.97 20 100.9
Heap Leach 1.97 7 0.4 8.67 7 2.0 10.64 7 2.4
Mineral
Park 54.33 1 1.5 126.71 3 11.6 181.04 2 13.1
Campo
Morado
(75%) 0.37 258 3.1 9.67 170 52.8 10.04 173 55.9
La Negra
(50%) 0.20 127 0.8 0.09 128 0.4 0.29 127 1.2
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Total 26.1 204.4 230.4
Inferred Resources (1,2,3,4,5,6,7,8,9,10,11,12,14)
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INFERRED
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Grade Contain-
Tonnes g ed
Silver Mt Ag/t M oz
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Luismin
San Dimas 17.55 324 183.0
Los Filos 2.39 3 0.2
San Martin 3.01 120 11.6
Zinkgruvan (Zn)
For more information, please contact
Silver Wheaton Corp.
Brad Kopp
Director, Investor Relations
1-800-380-8687
Email: [email protected]
Website: www.silverwheaton.comMajor Newsire & Press Release Distribution with Basic Starting at only $19 and Complete OTCBB / Financial Distribution only $89
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