TSX: SLW
NYSE: SLW
VANCOUVER, July 30 /CNW/ - Silver Wheaton Corp. (TSX, NYSE:SLW) today
announced its unaudited results for the second quarter ended June 30, 2009.
SECOND QUARTER HIGHLIGHTS
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- Record attributable production of 4.0 million silver
equivalent ounces (3.8 million ounces of silver and 3,400 ounces of
gold) at a total cash cost of US$3.99(1) per silver ounce.
- During the quarter, approximately 1 million silver equivalent ounces
produced at the various mines and deliverable to Silver Wheaton under
the agreements, was not sold due primarily to the timing of
shipments. It is anticipated that these sales will be made by the
mines during the remainder of 2009, at which time Silver Wheaton will
take delivery and record a sale of the ounces.
- Net earnings of US$18.4 million (US$0.06 per share) from the sale of
2.9 million ounces of silver, compared to US$23.3 million
(US$0.10 per share) from the sale of 2.9 million ounces of silver in
2008.
- Operating cash flows of US$26.5 million (US$0.09 per share) compared
to US$35.9 million (US$0.16 per share) in 2008.
- Closed the acquisition of Silverstone Resources Corp. ("Silverstone")
through the issuance of 23,434,332 common shares and 1,367,364 share
purchase options of Silver Wheaton on conversion of previously issued
fully vested share purchase options of Silverstone. The transaction
was valued at approximately US$152 million and increased annual sales
by over 4 million silver equivalent ounces.
- On July 13, 2009, Goldcorp Inc. announced that construction of the
first sulphide process line at their Penasquito mine in Mexico is now
complete and commissioning work is advancing on schedule. Production
and shipment of first concentrates, including silver, are still
targeted for the second half of 2009.
1. Refer to discussion on non-GAAP measures at the end of this press
release
"I am very pleased with our performance during the second quarter," said
Peter Barnes, President and Chief Executive Officer of Silver Wheaton.
"Despite continued challenges in the global economy, Silver Wheaton is proud
to have achieved record attributable production during the quarter and we
remain on target to meet our 2009 sales guidance of 17 to 19 million silver
equivalent ounces for the year. Although our partners produced approximately 1
million silver equivalent ounces more during the quarter than we sold, this is
only a timing issue and we anticipate these sales will be recorded during the
second half of the year."
"In May, we closed the Silverstone acquisition which was accretive on all
key metrics, significantly increasing attributable silver reserves and
resources and boosting annual production levels by approximately 4 million
silver equivalent ounces. Already we are seeing further growth opportunities
from these mines, particularly the Minto mine, where they continue to have
spectacular exploration success."
"Last, but certainly not least, construction at the Penasquito mine is
going very well, with completion of the first sulphide process line on
schedule, and commissioning underway. Silver deliveries from Penasquito to
Silver Wheaton are targeted by year-end, crystallizing significant sales
growth over the next several years."
"With almost US$50 million of cash on hand at the end of the quarter, and
access to an undrawn US$400 million low-cost credit facility, we remain very
well positioned to continue delivering on our strategy of accretive growth."
Operating Results
Second quarter attributable silver production at the various mines set a
new record of approximately 4.0 million silver equivalent ounces. Sales in the
quarter were over 2.9 million silver equivalent ounces, and were impacted by a
number of shipping related issues, primarily at the Yauliyacu mine in Peru,
the Stratoni mine in Greece and the Minto mine in Canada.
Concentrate shipments from the Yauliyacu mine during the second quarter
were affected by the shut-down of the Doe Run Peru smelter, the largest buyer
of the concentrate produced at the mine. During the quarter, alternative
smelting arrangements were made for a portion of the stockpiled concentrates
at Yauliyacu. Silver Wheaton expects the shortfall in silver deliveries to be
made up over the remainder of 2009.
All concentrate shipments from the Stratoni mine occurred near the end of
the second quarter. As title to the concentrate had not yet passed to Silver
Wheaton, the related revenue was not recognized until July 2009.
Following the acquisition of Silverstone, no silver and gold shipments
were delivered under the Minto agreement during the quarter. Truck
transportation of concentrate is unavailable at the Minto mine for two periods
of eight to ten weeks beginning in April and October of each year as the Yukon
River breaks up and freezes, preventing access to the mine. As a result,
silver sales from the Minto mine will vary significantly from quarter to
quarter.
This earnings release should be read in conjunction with Silver Wheaton's
MD&A and Financial Statements which have been posted on SEDAR at www.sedar.com
and are available on the Company's website at www.silverwheaton.com.
Conference Call Details
A conference call will be held Friday, July 31, 2009, starting 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: 1-800-732-9307
Dial from outside Canada or the US: 1-416-644-3415
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: 1-877-289-8525
Dial from outside Canada or the US: 1-416-640-1917
Pass code: 21308834 followed by the
number sign
Archived audio webcast: www.silverwheaton.com
Share Purchase Warrants Expiring August 5, 2009
The Company advises holders of the common share purchase warrants (TSX:
SLW.WT)(the "Warrants") that the deadline for exercising the Warrants is
August 5, 2009. As of the date of this press release, the Warrants are trading
in-the-money. Warrant holders are entitled to receive one share of Silver
Wheaton upon exercise of 5 Warrants and payment of the exercise price of
C$4.00 prior to their expiry.
Warrant holders who hold their Warrants in the account of a brokerage
firm can instruct their broker to exercise the Warrants on their behalf.
If you are a registered warrant holder and have questions or require
assistance for the exercise of your Warrants, please contact CIBC Mellon at
1-800-387-0825.
About Silver Wheaton
Silver Wheaton is the largest silver streaming company in the world.
Forecast 2009 sales are 16 to 18 million ounces of silver and 17,000 ounces of
gold, for total sales of 17 to 19 million silver equivalent ounces, growing to
approximately 30 million ounces of silver and 20,000 ounces of gold, for total
sales of approximately 31 million silver equivalent ounces, by 2013.
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
The information contained herein 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 statements 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: fluctuations in the
price of silver, the absence of control over mining operations from which
Silver Wheaton purchases silver and risks related to these mining operations,
including risks related to fluctuations in the price of the primary
commodities mined at such operations, changes in laws and regulations
including taxation policies, actual results of mining and exploration
activities, 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 available
on SEDAR at www.sedar.com and in Silver Wheaton's Form 40-F on file with the
U.S. Securities and Exchange Commission in Washington, D.C.. Forward-looking
statements are based on assumptions management believes to be reasonable,
including but not limited to the continued operation of the mining operations
from which Silver Wheaton purchases silver, no material adverse change in the
market price of commodities, that the mining operations will operate in
accordance with their public statements and achieve their stated production
outcomes, and such other assumptions and factors as set out herein. 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.
CAUTIONARY LANGUAGE REGARDING RESERVES AND RESOURCES
Readers should refer to the Annual Information Form of Silver Wheaton for
the year ended December 31, 2008 and other continuous disclosure documents
filed by Silver Wheaton since January 1, 2009 available on SEDAR at
www.sedar.com, for further information on Mineral Reserves and Mineral
Resources, which is subject to the qualifications and notes set forth therein
as well as for additional information relating to Silver Wheaton more
generally. Mineral Resources which are not Mineral Reserves, do not have
demonstrated economic viability.
Cautionary Note to United States Investors Concerning Estimates of
Measured, Indicated and Inferred Resources: The information contained herein
uses the terms "Measured", "Indicated" and "Inferred" Resources. United States
investors are advised that while such terms are recognized and required by
Canadian regulations, the United States Securities and Exchange Commission
does not recognize them and expressly prohibits U.S. registered companies from
including such terms in their filings with the SEC. "Inferred Mineral
Resources" have a great amount of uncertainty as to their existence, and as to
their economic and legal feasibility. It cannot be assumed that all or any
part of an Inferred Mineral Resource will ever be upgraded to a higher
category. Under Canadian rules, estimates of Inferred Mineral Resources may
not form the basis of feasibility or other economic studies. United States
investors are cautioned not to assume that all or any part of Measured or
Indicated Mineral Resources will ever be converted into Mineral Reserves.
United States investors are also cautioned not to assume that all or any part
of an Inferred Mineral Resource exists, or is economically or legally
mineable. United States investors are urged to consider closely the disclosure
in Silver Wheaton's Form 40-F, a copy of which may be obtained from Silver
Wheaton or from http://www.sec.gov/edgar.shtml.
Consolidated Statement of Operations (unaudited)
(US dollars and shares Three Months Ended Six Months Ended
in thousands, except June 30 June 30
per share amounts - ---------------------------------------------------
unaudited) 2009 2008 2009 2008
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Sales $ 41,403 $ 49,675 $ 78,975 $ 98,623
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Cost of sales 11,764 11,261 24,304 22,356
Depletion 6,419 5,216 13,006 9,291
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18,183 16,477 37,310 31,647
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Earnings from operations 23,220 33,198 41,665 66,976
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Expenses and other income
General and
administrative(1) 4,433 4,849 9,011 10,159
Debt issue costs - 601 - 601
(Gain) loss on
mark-to-market of
warrants held (30) 147 (33) 947
Other 379 107 (862) 207
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4,782 5,704 8,116 11,914
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Earnings before tax 18,438 27,494 33,549 55,062
Future income tax
expense - 4,218 - 3,858
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Net earnings $ 18,438 $ 23,276 $ 33,549 $ 51,204
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1) Stock based
compensation
(a non-cash item)
included in general
and administrative $ 830 $ 1,214 $ 2,689 $ 3,460
Basic earnings per
share $ 0.06 $ 0.10 $ 0.12 $ 0.23
Diluted earnings per
share $ 0.06 $ 0.09 $ 0.12 $ 0.20
Weighted average number
of shares outstanding
Basic 297,973 223,744 284,205 223,505
Diluted 301,235 249,282 286,976 250,148
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Consolidated Balance Sheets (unaudited)
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June 30 December 31
(US dollars in thousands - unaudited) 2009 2008
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Assets
Current
Cash and cash equivalents $ 48,590 $ 7,110
Accounts receivable 3,202 772
Other 1,168 816
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52,960 8,698
Long-term investments 32,748 21,840
Silver and gold interests 1,373,679 1,238,368
Other 3,127 1,740
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$ 1,462,514 $ 1,270,646
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Liabilities
Current
Accounts payable $ 2,012 $ 1,396
Accrued liabilities 3,647 3,425
Current portion of bank debt 28,560 28,560
Other 935 -
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35,154 33,381
Bank debt 121,460 349,240
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156,614 382,621
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Shareholders' Equity
Issued capital and contributed surplus 1,035,761 662,115
Retained earnings 259,459 225,910
Accumulated other comprehensive income 10,680 -
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270,139 225,910
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1,305,900 888,025
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$ 1,462,514 $ 1,270,646
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Consolidated Statement of Cash Flows (unaudited)
Three Months Ended Six Months Ended
June 30 June 30
(US dollars in ---------------------------------------------------
thousands - unaudited) 2009 2008 2009 2008
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Operating Activities
Net earnings $ 18,438 $ 23,276 $ 33,549 $ 51,204
Items not affecting
cash
Depreciation and
depletion 6,482 5,216 13,130 9,291
Future income tax
expense - 4,218 - 3,858
Stock based
compensation 830 1,214 2,689 3,460
(Gain) loss on
mark-to-market of
warrants held (30) 147 (33) 947
Other (325) 62 190 36
Change in non-cash
operating working
capital 1,058 1,754 48 175
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Cash generated by
operating activities 26,453 35,887 49,573 68,971
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Financing Activities
Bank debt drawn down - 165,500 - 165,500
Bank debt repaid (7,140) (59,040) (227,780) (92,580)
Shares issued - - 230,424 -
Share issue costs (427) (24) (9,975) (24)
Warrants exercised 77 156 163 2,322
Share purchase options
exercised 1,502 131 1,589 2,060
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Cash (applied to)
generated by financing
activities (5,988) 106,723 (5,579) 77,278
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Investing Activities
Silver interests (1,276) (112,275) (4,647) (119,050)
Acquisition of
Silverstone Resources
Corp., net of cash
acquired 2,668 - 2,668 -
Other (72) (202) 16 (528)
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Cash applied to
investing activities 1,320 (112,477) (1,963) (119,578)
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Effect of exchange rate
changes on cash and cash
equivalents 61 (7) (551) (4)
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Increase in cash and
cash equivalents 21,846 30,126 41,480 26,667
Cash and cash
equivalents, beginning
of period 26,744 6,506 7,110 9,965
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Cash and cash
equivalents, end of
period $ 48,590 $ 36,632 $ 48,590 $ 36,632
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Results of Operations (unaudited)
Three Months Ended June 30, 2009
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Total
Average cash Cash
realized cost flow
price ($'s per Net from
Ounces Ounces ($'s per ounce) earnings opera-
produced(2) sold Sales ounce) (3) (loss) tions
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Silver
(000's)
Luismin 1,333 1,321 $18,475 $ 13.99 $ 4.02 $12,304 $13,166
Zinkgruvan 494 469 6,746 14.38 4.02 4,024 5,159
Yauliyacu 870 546 7,593 13.91 3.94 3,546 5,442
Stratoni 230 (5)(4) 143(4) n/a 3.90 178 80
Penasquito 162 130 1,853 14.28 3.90 1,041 1,347
Campo
Morado 217 92 1,177 12.73 3.90 367 817
Minto 30(5) (1)(4) (7)(4) 13.11 3.90 (3) 15
Cozamin 176(5) 213 2,935 13.78 4.00 1,090 3,388
Other(6) 259(5) 173 2,353 13.58 3.90 623 2,131
Corporate (4,782) (5,284)
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3,771 2,938 $41,268 $ 14.04 $ 3.99 $18,388 $26,261
Gold
Minto 3,408(5) 145(4) $ 135(4) $ 925 $ 300 $ 50 $ 192
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Silver
Equivalent
(000's)(7) 4,011 2,950 $41,403 $ 14.04 $ 3.99 $18,438 $26,453
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1) Ounces produced represent the quantity of silver and gold contained
in concentrate or dore prior to smelting or refining deductions.
2) Certain production figures are based on management estimates.
3) Refer to discussion on non-GAAP measures at the end of this press
release.
4) No concentrate shipments were made during the second quarter of 2009.
Amounts reflected above represent provisional invoice adjustments.
5) Quarterly production figures for Silverstone assets acquired have
been pro rated based on the number of days in the quarter following
the Silverstone acquisition.
6) Includes La Negra, Mineral Park and Neves-Corvo.
7) Gold ounces produced and sold are converted to a silver equivalent
basis on the ratio of the average silver price received to the
average gold price received during the period.
Three Months Ended June 30, 2008
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Total
Average cash Cash
realized cost flow
price ($'s per Net from
Ounces Ounces ($'s per ounce) earnings opera-
produced sold Sales ounce) (2) (loss) tions
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Silver
(000's)
Luismin 1,253 1,246 $21,489 $ 17.25 $ 3.95 $16,048 $16,569
Zinkgruvan 534 524 9,398 17.93 3.96 6,501 7,570
Yauliyacu 847 750 12,805 17.09 3.90 7,278 9,883
Stratoni 316 344 5,983 17.38 3.90 3,371 4,814
Penasquito 28 - - - - - -
Other(3) 17 - - - - - -
Corporate (9,922) (2,949)
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2,995 2,864 $49,675 $ 17.35 $ 3.93 $23,276 $35,887
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1) Ounces produced represent the quantity of silver contained in
concentrate or dore prior to smelting or refining deductions.
2) Refer to discussion on non-GAAP measures at the end of this press
release.
3) Includes La Negra.
Six Months Ended June 30, 2009
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Total
Average cash Cash
realized cost flow
price ($'s per Net from
Ounces Ounces ($'s per ounce) earnings opera-
produced(2) sold Sales ounce) (3) (loss) tions
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Silver
(000's)
Luismin 2,708 2,724 $35,649 $ 13.09 $ 4.02 $22,680 $24,698
Zinkgruvan 955 920 12,162 13.22 4.02 6,825 8,379
Yauliyacu 1,609 1,289 16,282 12.63 3.92 6,758 11,233
Stratoni 470 348 3,954 11.36 3.90 1,313 2,833
Penasquito 322 265 3,414 12.89 3.90 1,758 2,381
Campo
Morado 389 135 1,722 12.74 3.90 537 1,195
Minto 30(5) (1)(4) (7)(4) 13.11 3.90 (3) 15
Cozamin 176(5) 213 2,935 13.78 4.00 1,090 3,388
Other(6) 354(5) 203 2,729 13.40 3.90 657 2,389
Corporate (8,116) (7,130)
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7,013 6,096 $78,840 $ 12.93 $ 3.98 $33,499 $49,381
Gold
Minto 3,408(5) 145(4) $ 135(4) $ 925 $ 300 $ 50 $ 192
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Silver
Equivalent
(000's)(7) 7,253 6,108 $78,975 $ 12.93 $ 3.98 $33,549 $49,573
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1) Ounces produced represent the quantity of silver and gold contained
in concentrate or dore prior to smelting or refining deductions.
2) Certain Q2 2009 production figures are based on management
estimates.
3) Refer to discussion on non-GAAP measures at the end of this press
release.
4) No concentrate shipments were made during the period. Amounts
reflected above represent provisional invoice adjustments.
5) Production figures for Silverstone assets acquired have been pro
rated based on the number of days in the quarter following the
Silverstone acquisition.
6) Includes La Negra, Mineral Park and Neves-Corvo.
7) Gold ounces produced and sold are converted to a silver equivalent
basis on the ratio of the average silver price received to the
average gold price received during the period.
Six Months Ended June 30, 2008
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Total
Average cash Cash
realized cost flow
price ($'s per Net from
Ounces Ounces ($'s per ounce) earnings opera-
produced sold Sales ounce) (2) (loss) tions
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Silver
(000's)
Luismin 2,764 2,925 $50,532 $ 17.28 $ 3.95 $37,758 $38,980
Zinkgruvan 950 842 15,087 17.92 3.96 10,436 11,724
Yauliyacu 1,685 1,484 25,634 17.28 3.90 14,694 19,849
Stratoni 523 432 7,370 17.04 3.90 4,088 5,486
Penasquito 28 - - - - - -
Other(3) 17 - - - - - -
Corporate (15,772) (7,068)
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5,967 5,683 $98,623 $ 17.36 $ 3.93 $51,204 $68,971
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1) Ounces produced represent the quantity of silver contained in
concentrate or dore prior to smelting or refining deductions.
2) Refer to discussion on non-GAAP measures at the end of this press
release.
3) Includes La Negra.
Non-GAAP Measures - Total Cash Costs Per Ounce Of Silver & Gold
Calculation
Silver Wheaton has included certain non-GAAP performance measures,
including total cash costs of silver and gold 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, 2009, the
Company's total cash costs, which were equivalent to the Company's Cost of
Sales in accordance with GAAP, were $3.99 per ounce of silver and $300 per
ounce of gold (2008 - $3.93 per ounce of silver).
