Wheaton Precious Metals Reports 1Q Profit, Deal With First Majestic
(Kitco News) - Wheaton Precious Metals Corp. (TSX, NYSE:WPM) late Thursday reported higher first-quarter adjusted earnings and alsoannounced a new streaming agreement with First Majestic Silver Corp.(NYSE: AG; TSX: FR).
Excluding special items, adjusted net earnings were $70million, or 16 cents per share, compared with $61 million, or 14 cents, for thesame period in 2017.
Net earnings were $68 million, or 15cents, up from $61 million, or 14 cents.
Revenue of $199 million was up from $198 million in theyear-ago period, with the lift coming from a 21% increase in the number ofsilver ounces sold to 6.3 million and a 10% increase in the average realizedgold price to $1,330 an ounce. This was partly offset by fewer gold ounces soldand 4% decline in the average silver price, the company said.
First-quarter production was 7.4 million ounces of silver, ayear-on-year increase of 12%, Silver Wheaton reported. This was primarily dueto higher production from the San Dimas mine, partially offset with the expiryof the Cozamin silver-purchase agreement on April 4, 2017. Gold productiontotaled 79,657 ounces, a decrease of 4.9%, mainly due to lower production atthe Minto and Sudbury mines.
As of the end of the third quarter, payable ouncesattributable to Silver Wheaton produced but not yet delivered amounted to 4.8million silver ounces and 84,800 gold ounces, the company said. A dividend of 9cents per share will be paid to holders of record as of the close of businesson May 25 and will be distributed around June 7.
“We are encouraged by the sharp rebound in production at SanDimas and welcome First Majestic as a partner,” said Randy Smallwood, presidentand chief executive officer. “With this strong foundation in place, we continueto advance a number of new opportunities for additional accretive growth thatwe believe will deliver long-term value to our shareholders.”
On Thursday, First Majestic Silver Corp. announced that it closedthe previously announced acquisition of Primero Mining Corp. In connection withthis, Silver Wheaton has terminated the existing San Dimas silver-purchaseagreement and entered into a new San Dimas precious-metal purchase agreementwith First Majestic.
The precious-metals purchase agreement will cover 25% of gold production plus anadditional amount of gold equal to 25% of silver production converted to goldat a fixed gold-to-silver exchange ratio of 70:1 from San Dimas. There are provisionsto adjust the gold-silver ratio if the average moves above 90:1 or below 50:1 fora period of six months. Also, for each ounce of gold delivered, WheatonInternational will pay to First Majestic a production payment equal to thelesser of $600 an ounce, subject to a 1% annual inflationary adjustment, andthe prevailing market price.
First Majestic alsoissued nearly 21 million of its shares to Wheaton International.
By Allen SykoraFor Kitco News
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