Although Silver Wheaton‘s (SLW-T, SLW-N) attributable production was 4 million oz. silver in the second quarter, the silver streaming company was unable to sell about 1 million oz. due to shipping issues.
Net earnings of US$18.4 million (US6¢ per share) from the sale of about 2.9 million oz. silver would have been significantly higher. Cash costs averaged US3.99 per silver equivalent oz.
Net earnings for the same period last year were higher at US$23.3 million (US10¢ per share) for the same amount of silver, 2.9 million oz.
Silver Wheaton expects to sell the 1 million oz. left over from the second quarter by the end of the year.
The shipping issues occurred at three mines. Concentrate shipments at Glencore International AG‘s Yauliyacu mine in Peru were affected by the shutdown of the Doe Run Peru smelter, which is the largest buyer of the concentrate produced at the mine. Silver Wheaton was able to make alternative smelting arrangements for some of the stockpiled concentrates and the company expects the shortfall in silver deliveries to be made up over the rest of the year.
Also affecting attributable production was the Stratoni polymetalic mine in Greece, owned by European Goldfields (EGU-T, EGU-L) (65%) and Greek construction company, Aktor, where concentrate shipments didn’t happen until the very end of the quarter. Silver Wheaton says title to the concentrate had not yet passed to Silver Wheaton so the revenue was not recognized in its books until July.
Silver Wheaton closed the acquisition of another silver streamer, Silverstone Resources, in the second quarter, a deal worth US$152 million that will bring the company 4 million extra oz. of silver a year. Through the deal, Silver Wheaton acquired a contract with Capstone Mining‘s (CS-T, CSFFF-O) Minto copper-gold-silver mine. No silver or gold shipments were delivered during the quarter from Minto but this will always be the case. The mine is located in the Yukon and truck transportation is impossible for eight to 10 weeks each year beginning in April and October because the Yukon River breaks up and freezes, preventing access to the mine. This means that concentrate sales from Minto will vary from quarter to quarter.
Silver Wheaton shares were trading up 35¢ today at $9.90 per share on a trading volume of 732,000 shares.
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