Wheaton Precious Metals 4Q Adjusted Profit Declines
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(Kitco News) - Streaming company Wheaton Precious Metals Corp. (TSX, NYSE: WPM) late Wednesday reported lower adjusted earnings in the fourth quarter as revenue fell year-on-year due on weaker prices of metals and lower silver production.
Adjusted net earnings were $36.7 million, or 8 cents per share, compared to $82.3 million, or 19 cents, in the year-ago period. Cash flow fell to $108.5 million, or 24 cents a share, compared to $165.1 million, or 37 cents, for the same period of 2017.
Fourth-quarter revenue fell to $196.6 million from $242.5 in the same period a year earlier, with the company blaming fewer silver ounces sold and lower silver and gold prices.
Still, the company maintained a quarterly dividend of 9 cents a share, payable around April 18 to shareholders of record as of the close of business on April 5.
Fourth-quarter gold production of 107,567 ounces was up from 96,474 in the same period a year earlier, while silver output slipped to 5.5 million ounces from 7.1 million. The company also posted 5,869 ounces of palladium output, compared to none a year earlier.
Wheaton said higher gold production for both the quarter and the year was mainly the result of the start of the San Dimas gold stream in May and the Stillwater precious-metals stream in July, as well as higher production at both Salobo and Constancia. However, silver production fell for both the quarter and full year primarily due to termination of the San Dimas silver stream in May, and all deliveries from the Lagunas Norte, Veladero and Pierina mines ceasing in March. For the year, there was also less production at Peñasquito due to lower throughput and planned lower grades from stockpiles during the commissioning of the now fully constructed Peñasquito pyrite leach project, the company said.
Prices fell year-on-year during the fourth quarter. Wheaton fetched $1,229 per ounce of gold, down from $1,277. Silver prices averaged $14.66, down from $16.75. The average palladium price was $1,137 an ounce.
For full-year 2018, adjusted net earnings were $213.8 million, or 48 cents per share, down from $276.8 million, or 63 cents, in the year-ago quarter. Cash flow was $477.4 million, or $1.08 per share, compared to $538.8 million, or $1.22 per share, for 2017.
For all of 2018, Wheaton listed record gold output of 373,239 ounces, up from 355,105, and silver output of 24.5 million ounces that was down from 28.3 million. The company had its first 8,717 ounces of palladium. All of the output exceeded the company’s guidance.
“In addition to our strong production and cash flow in 2018, we were also able to optimize the San Dimas stream, add two additional high-quality streams from low-cost, long-life mines and reach a settlement in our long-running tax dispute with the CRA [Canadian Revenue Agency],” said Randy Smallwood, president and chief executive officer.
“From the firm foundation that 2018 has provided, we expect our portfolio to now deliver steady organic growth for the foreseeable future, coming from increasing grades and better recoveries at Peñasquito, the Blitz project at Stillwater ramping up to full capacity, the development of the Pampacancha deposit at Constancia, the ongoing expansion of the Salobo mine, continued improvements at San Dimas, and now, the strong possibility of Rosemont coming into production,” Smallwood added.
Wheaton’s output for 2019 was projected at 365,000 ounces of gold, 24.5 million ounces of silver and 22,000 ounces of palladium, resulting in gold-equivalent production of some 690,000 ounces. For the five-year period ending in 2023, the company estimates average annual gold-equivalent output will be 750,000 ounces.
As of year-end, payable output attributable to the company but not yet delivered amounted to 77,500 gold ounces, 3.3 million silver ounces and 5,300 palladium ounces. This was a decrease of 100 gold ounces, an increase of 0.2 million silver ounces and an increase of 600 palladium ounces during the three-month period ending Dec. 31.
Among the highlights in the quarter, the company reached a settlement with the CRA for resolution of a tax appeal for the 2005 to 2010 tax years for income generated by subsidiaries outside of Canada. The principles will apply to years after 2010, Wheaton said.