Wheaton Precious Metals Corp (WPM) 2011 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Silver Wheaton's 2011 third quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session.

(Operator instructions)

I would like to remind everyone that this conference call is being recorded on Wednesday, November 9, at 11.00 AM Eastern time. I will now turn the conference over to Mr. Brad Kopp, Senior Vice President of Investor Relations. Please go ahead.

Thank you, Jessica. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Silver Wheaton's President and Chief Executive Officer, and Gary Brown, our Senior Vice President and Chief Financial Officer. I'd like to bring to your attention that some of the commentary on today's call may contain forward-looking statements. There can be no assurance that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements.

Please refer to the section entitled Description of the Business - Risk Factors in Silver Wheaton's Annual Information Form which is available on SEDAR and in Silver Wheaton's Form 40-F on file with the US Securities and Exchange Commission. The annual information form sets out the material risk factors that could cause actual results to differ, including the assets of control over mining operations from which Silver Wheaton purchases silver, risks related to such mining operations, and the risk of a decline in silver prices. Lastly, it should be noted that all figures referred to on today's call are in US dollars unless otherwise noted. Now, I would like to turn the call over to Randy, our President and Chief Executive Officer.

Thank you, Brad, and thank you ladies and gentlemen for dialing into our third-quarter conference call. We are pleased to report that Silver Wheaton delivered another quarter of solid financial results. Continued strong silver prices combined with our unique business model of essentially fixing operating costs have resulted in operating cash flows more than doubling to $167 million over the quarter. This occurred despite silver sales continuing to lag production, something I will discuss in a bit more detail in a few minutes.

At quarter end, the Company had cash on hand of approximately $716 million, which reflects the third scheduled payment of $137.5 million that we made to Barrick in September for their Pascua-Lama project. With access to an additional $400 million undrawn revolving debt facility and expected strong future cash operating cash flows, Silver Wheaton remains very well-positioned to continue its goal of accretive growth by acquiring additional silver stream interests. Gary Brown, our CFO, will provide you a bit more detail on the quarterly financial review just shortly.

As many of you are aware, it has always been our goal to grow our Company first and through that growth develop its capacity for a sustainable long-term dividend policy that ultimately returns meaningful portion of cash flows to our shareholders. We previously communicated that we would increase our dividend once 2 criteria were met, the first being Penasquito nearing full production capacity. With Goldcorp's recent success, we are confident that this will be achieved in early 2012. Secondly, we wanted to ensure that we have sufficient cash on hand when combined with our revolving debt facility and other avenues would allow us to quickly execute on any sizable silver stream acquisitions and continued growing our Company. We believe that both of these objectives have been met and as such have decided it is now the ideal time to increase our dividend. And we are extremely pleased to announce the a dividend policy, innovative policy, which links quarterly dividend payments to operating cash flows in the prior quarter.

You may have seen in this morning's press release, we are now paying 20% of the previous quarter's operating cash flows that will be distributed to our shareholders in the form of a quarterly dividend. We're proud to say that a payout ratio equal to 20% operating cash flow is among the highest in the precious metal industry. This new policy is unique to the industry and provides shareholders with 5 key benefits. Increased yield. The new policy results in the tripling of our dividend from 0.03, or $0.03 per share, in the third quarter, to $0.09 per share in the fourth quarter, or more importantly, links the shareholders directly to our continued growth as we work our way towards 43 million ounces per year of production in 2015.

Direct silver price exposure. Our business model essentially fixed cash costs allows shareholders the benefit from increases in the silver price through these increased cash dividends along with the impact on our share prices. We also provide participation in sector leading production growth. As I mentioned, Silver Wheaton forecasts over 65% production growth over the next 4 years from within our current portfolio. With continued strong silver prices, this results in a significant growth of operating cash flows and therefore, continued growth in our dividends. Sustainability, very important here, as the policies directly tied to our operating cash flows, production risk is eliminated. And with our fixed cost business model and conservative capital structure, a dividend can be provided in virtually all silver price environments.

Flexibility. While this new dividend policy allows us to return a meaningful portion of cash flows to our shareholders, it also provides the Company with the cash it requires to continue creating long-term shareholder value by acquiring new high quality and accretive silver streams, thereby increasing the Company's industry-leading production profile. This new dividend policy also further differentiates our Company from a silver ETF, or exchange-traded fund. As it provides the investors with an added incentive to invest in Silver Wheaton, our yield has grown substantially.

As mentioned earlier, Silver Wheaton has one of the strongest production growth profiles in the sector. This is driven by the Company's current portfolio of world-class assets, including silver streams on Goldcorp's Penasquito mine and Barrick's Pascua-Lama project. As these mines reach full production capacity, it should result in increased future cash flows, which will give us added capacity, continue increasing our dividends as a percentage of cash flows in the years ahead.

With respect to production, during the quarter, several of our partners' mines continued their focus on ramping up silver production and working their way towards production. We remain confident of achieving our 2011 production guidance of between 25 million and 26 million silver equivalent ounces. Importantly, our 2 cornerstone assets, Goldcorp's Penasquito mine and Barrick's Pascua-Lama project will account for a significant portion of our short and long term growth, and both of these projects remain on schedule.

In Q3, Goldcorp continued to focus on ramping up metal production at Penasquito with ore grades of metallurgical recoveries as anticipated. Progress continued on the supplemental ore feed system in order to ensure a sufficient quality of pebble feed for the high pressure grinding roll circuit. During the month of September, the mill at Penasquito experienced, record monthly plant throughput in excess of 100,000 tons per day. And the mine remains on track to achieve its revised schedule of full production capacity, 130,000 tons per day, by the end of the first quarter in 2012. Once it's at full capacity, Silver Wheaton should receive about 7 million ounces per year from Penasquito, making it our largest contributor in the next year.

Barrick's world-class Pascua-Lama project, which is located on the border of Chile and Argentina, remains on schedule to enter production in mid-2013. At the end of the third quarter, over 50% of the peak production capital of $4.7 billion to $5 billion was already committed with earthworks in Chile and Argentina respectively 80% and 60% complete. Once in production, Pascua-Lama is forecast to be one of the largest and lowest cost gold mines in the world. It will also be Silver Wheaton's largest contributor of silver, of annual silver production, with approximately 9 million ounces per year over the first 5 years delivered to Silver Wheaton.

Lastly, Mercator Mineral Park mine, one of our smaller, yet more profitable silver streams, has reached yet another milestone in the third quarter when they completed construction of the Phase II expansion to 50,000 tons per day. During the quarter, the plant actually achieved throughput in excess of 60,000 tons per day averaging over 45,000 tons per day in the first 45 days of commissioning. We are very pleased with the progress being made at Mineral Park.

With respect to inventory build up, Silver Wheaton's operating cash flows more than doubled during the quarter despite sales lagging, continuing to lag production. Payable silver equivalent ounces produced but not delivered to Silver Wheaton by its partners increased by over 300,000 ounces, largely attributable to increased concentrate inventory at Glencore's Yauliyacu mine. As many of you are aware, in the second quarter of 2011, Glencore began replacing their bulk concentrate production, which was more difficult to sell and resulted in delayed deliveries. With separate and more marketable copper and lead concentrate production, the consistency and quantity of these new concentrates have now stabilized; however, shipments have yet to be commenced, in the third quarter. This resulted in increase in inventory of payable several by over 500,000 ounces at Yauliyacu.

At the end of the third quarter, approximately 1.8 million ounces of cumulative payable silver equivalent ounces that have been produced at Yauliyacu, but not yet delivered to Silver Wheaton. Approximately 900,000 ounces are attributable to the bulk concentrate, while just over 900,000 ounces are attributable to the new copper and lead concentrates. Roughly 50% of the remaining bulk concentrate is expected to be sold in the fourth quarter this year and actually I can confirm that has happened. Just recently they did ship off slightly more than 50% of that bulk concentrate with the remainder to be sold in early 2012. Glencore has begun shipping copper concentrates during the fourth quarter, while discussions between Glencore and prospective offtakers for the new lead concentrates are still ongoing; however, Glencore expects these discussions to be finalized in early 2012. In short, during 2012, Glencore anticipates a more consistent schedule of concentrate deliveries, which should result in more regular silver deliveries to Silver Wheaton.

On the Corporate Development side, our Company's ability consistently deliver among the highest cash operating margins in the precious metal industry, which is a direct result of our business model of essentially fixed operating cash costs continues to result in significant cash flow generation, particularly in the current environments of strong silver prices. Our new dividend policy returns a meaningful percentage of these cash flow to our shareholders while leaving us with significant capacity to achieve our long-term growth goals by acquiring new and accretive silver streams. In recent months, the resurgence of global economic turmoil has created tighter debt and equity markets, negatively impacting advanced exploration and development stage mining companies as an access to project financing. We are in a unique position to support these companies with their growth goals by providing a value-enhancing source of capital through silver stream agreements and as such our Corporate Development team continues to aggressively pursue high-quality and low-risk silver stream opportunities from around the globe in an effort to further expand our sector leading production growth profile.

To summarize, we believe that Silver Wheaton's new, unique and sustainable dividend policy further enhances Silver Wheaton's position as the premier investment vehicle for investors, designing exposure to a silver. We also remain confident in further developing Silver Wheaton's already dominant position in the metal streaming industry by acquiring additional accretive silver streams. Now, I'd like to pass call over to Gary Brown, our Senior Vice President and Chief Financial Officer to review our financial results in more detail. Go ahead, Gary.

Thank you, Randy, and good morning, ladies and gentlemen. Prior to reviewing Silver Wheaton's unaudited financial results for the 3 months ended September 30, 2011, I would like to remind everyone that all monetary figures discussed are denominated in US dollars unless otherwise noted. In addition, as 2011 is the first year that the Company's results have been prepared in accordance with International Financial Reporting Standards, some of the comparative figures have changed from what had previously been disclosed under Canadian GAAP.

Silver Wheaton's precious metal interests generated 6.1 million silver equivalent ounces of attributable production in the third quarter of 2011, representing a slight increase from the comparable period of the prior year. Payable silver equivalent ounces produced but not yet delivered by our partners increased by about 300,000 ounces in the third quarter resulting in a total of approximately 3.8 million payable ounces as of September 30, 2011. This increase was primarily the result of a continued buildup in concentrate inventories at the Yauliyacu mine, partially offset by a reduction in concentrate inventories at Penasquito.

For the third quarter of 2011, Silver Wheaton generated revenue of $185 million from the sale of 4.8 million ounces of silver and 6300 ounces of gold. This represented a 100% increase in revenue compared to the third quarter of 2010 with sales volume increasing by 9% and selling prices increasing by 83%. Earnings from operations for the third quarter of 2011 amounted to $151 million, representing a margin of 81% of revenue, compared with $61 million, or 66% of revenue for the third quarter of 2010. Cash, G&A expenses were $4.6 million in the third quarter of 2011, with the increase from the prior year relating primarily to cash compensation expenses. Excluding non-cash stock-based comp, the Company continues to expect G&A expenses to be in the range of $20 million to $21 million for 2011.

Under IFRS, the Company's warrants issued with an exercise price denominated in Canadian dollars are treated as financial liabilities on the balance sheet and are re-measured at fair value on a quarterly basis with all fair value changes being reflected in net earnings. This fair value adjustment resulted in a $45 million loss for the third quarter of the prior year. As all of these warrants with the Canadian dollar exercise price were exercised or expired prior to December 31, 2010, there was no fair value adjustment affecting the 2011 results. This fair value adjustment has no impact on cash flow. For purposes of comparison, we've included reference to adjusted earnings for the prior-year, which simply neutralizes the impact of this adjustment on net earnings.

Silver Wheaton generated net earnings in the third quarter of 2011 of $135 million, almost double the adjusted net earnings for the comparable period of the prior year. Similarly, operating cash flow increased by 137% to $167 million in Q3 2011, relative to comparable period of the prior year. Basic earnings per share for the third quarter of 2011 amounted to $0.38, almost doubling the adjusted earnings per share of $0.20 from the prior year. Operating cash flow per share amounted to $0.47 for the third quarter of 2011, an increase of 131% relative to the comparable period of the prior year. As previously discussed by Randy, 20% of the Company's operating cash flow generated each quarter will be returned to shareholders through dividends resulting in a $0.09 dividend per share to be paid in Q4 2011, tripling the dividend from prior quarters.

Breaking down the operating results further, during the third quarter of 2011, silver production and sales relative to San Dimas totaled approximately 1.2 million ounces, consistent with the third quarter of 2010. Zinkgruvan produced approximately 380,000 ounces of silver during the third quarter of 2011, representing a 25% decrease from the comparable of the prior year with such decrease being attributable to technical problems experienced in the grinding mills and the zinc lead plant. It is expected that normal mill throughput rates will resume in the fourth quarter of 2011. Silver sales for the third quarter of 2011 relating to Zinkgruvan totaled 319,000 ounces, compared to 635,000 ounces in the third quarter of 2010, with the decrease silver deliveries in the most recently completed quarter, due partially to the lower production levels and partially to the timing of concentrate shipments.

During the third quarter of 2011, Yauliyacu produced 608,000 ounces of silver, consistent with comparable quarter of the prior year, but delivered only 11,000 ounces to Silver Wheaton due to the challenges of Glencore's faced as a result of the shutdown of the Doe Run Peru's smelter. Attributable silver production relating to Penasquito was 1.2 million ounces in the third quarter of 2011, representing a slight decrease relative to the third quarter of 2010. Silver sales in the third quarter of 2011 related to Penasquito amounted to 1.4 million ounces compared to 692,000 ounces in the third quarter of the prior year with the difference between ounces produced and ounces sold being attributable to the timing of concentrate shipments with concentrate produced in prior quarters being shipped in Q3 2011.

As of September 30, 2011, approximately 570,000 ounces of cumulative payable silver has been produced at Penasquito, but not yet delivered to Silver Wheaton. The Cozamin mine produced 395,000 ounces and delivered 335,000 ounces of silver in the third quarter of 2011, representing a modest increase relative to the third quarter of the prior year. During the third quarter of 2011, silver production and sales relating to Silver Wheaton's interest in the Barrick mines amount to 794,000 ounces and 747,000 ounces respectively. This represented a 16% increase in production and a 40% increase in sales relative to the comparable quarter of the prior year.

Attributable silver production from other mines amounted to 1.3 million ounces in the third quarter of 2011, representing a 19% increase from the prior year, primarily attributable to Keno Hill and Campo Morado. Silver sales relating to other mines amounted to 770,000 ounces in the third quarter of 2011, slightly higher than reported for the third quarter of the prior year. The Minto mine produced 5,110 of gold during the third quarter of 2011, compared with 6,961 ounces in the comparable period of the prior year, with the decrease being due to the processing of lower grade material in recent quarters. Gold sales for Q3 2011 amounted to 6,280 ounces compared to 7,127 ounces in Q3 2010 with a lower sales volume reflecting the lower level of production partially offset by the shipment of gold bearing concentrate in the most recent quarter that had been produced in prior quarters.

During the third quarter of 2011, $4.6 million of interest was capitalized to the cost of the Barrick silver interest. Of this amount, $4.4 million relates to interest accreting on the discounted future payments due to Barrick, with the remainder being attributable to bank debt with foreign average interest rates of just over 1% in the quarter. As a reminder, the Company expects to capitalize all interest costs associated with currently outstanding obligations until the Pascua-Lama mine achieves commercial production. Overall, the company's cash balances increased by $14 million in the third quarter of 2011, comprised of $167 million of cash generated from operations offset by $15 million of cash used in financing activities and $138 million of cash outflows relating to investing activities.

Financing activities included $7 million of debt repayments and $11 million of dividend payments while the investing activities related primarily to the third scheduled installment being made to Barrick. As of September 30, 2011, the Company had $716 million of cash and cash equivalents on hand and $86 million of debt outstanding under the term debt facility. This cash balance combined with the $400 million of available credit under the Company's revolving credit facility, and the anticipation of strong future cash flows, positions the Company well to both sustain the recently announced dividend policy while at the same time executing on its growth strategy. That concludes the financial summary and with that I turn the call back over to Randy.

Thank you, Gary. Jessica, we will now open up this call for questions, please.

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session.

(Operator Instructions)

Dan Rollins, UBS Securities.

Good morning, everyone.

Just a couple quick questions. First, outside of timing of sales with regard to silver, was there any other factors that impacted the realized silver price during the quarter?

Yes. You're familiar with the agreement with Primero, where they get 50% of the silver over and above 3.5 million ounces; and so for the first month and six days, up until August 6, half the silver was to Primero's credit from San Dimas and half of that was delivered to us. After that, later in the quarter, we received 100% of the silver from San Dimas, and so that does put a bias towards the tail end of the quarter in terms of silver production. And with that the lower prices that we experienced at the tail end of the quarter also contributed to that lower pricing.

Okay. So, there's no short-term hedges impact or anything like that?

No.

Okay.

And then Gary, just quickly, how much corporate losses do you have available to shelter cash taxes from Keno Hill and Minto going forward?

I think we've got that disclosed in our financials. It's somewhere in the $65 million, $60 million to $70 million range.

Okay, perfect. I'll take a look. That's everything I have. Thanks, guys.

John Flanagan, Fundamental Equities.

Yes. I wonder in regard to the Glencore transaction, the switch to these other metals is a little unusual for me. Does that mean you'll still get in due course the equivalent amount of silver still at about $4 per ounce?

Yes, John. The mine traditionally produced a bulk concentrate that contained both copper and lead. So what they've done is -- because that bulk concentrate isn't as marketable, there is not as many smelters out there that can handle it, they've converted over to producing instead of the bulk concentrate now, a separate lead concentrate and a copper concentrate. These have much more marketability. There is much more demand for those concentrates, and the silver is contained in those. So we expect to get the same amount of silver out of that, and it will still be at the $3.90 plus the inflation, so it will be about $4 an ounce cost.

So you'd be back in normal flow by the start of next year?

Yes. We are going to gain when they move their bulk concentrate out, and we can confirm that they have shipped a large portion of that bulk concentrate out in the fourth quarter.

Okay.

Just recently, we just got notice. So the bulk concentrate inventory is going to get chewed up over the course of next year. In terms of normal flow, the copper concentrate is being shipped off. They are still working on their lead offtake agreements, and so they haven't finalized that. They are working, hoping to get that done toward the end of this year, and regular flow of lead concentrates by 2012.

Could I ask one financial question? The current portion of silver interest payments on the balance sheet, $128 million, is that the last payment in all your current programs?

Well, that's the last payment, the discounted value of the $137.5 million which is due to Barrick in Q3 of 2012. But I would remind you that we have commitments outstanding to both Augusta and Pan American. Augusta is related to the Rosemont project, which we've committed to provide $230 million to. And we've committed to provide $32.4 million to Pan American relative to their Loma de La Plata project. Those two commitments are contingent on permitting and financing, and so we've not reflected those as liabilities on our balance sheet.

Once they go into firm operation or startup, that would show up as long-term debt?

Once they achieve permitting and have secured construction financing and commence construction, we would start funding.

Okay.

But, it would be a pretty short burn rate, I think, for both of those projects.

Why is that?

Well, because we would pay the $230 million to Augusta as they incurred construction costs, and so we would advance that $230 million quite quickly.

Okay. Thanks a lot.

Steve Butler, Canaccord Genuity.

Good morning, guys.

Randy, you mentioned of course the discussion of Yauliyacu and the timing. That's good to hear. What's the rough split, going forward, between copper and lead cons in terms of the silver contained?

Both 30% into the copper cons and 70% into the lead cons. We do get a little bit of payable silver out of the zinc, but too small to even toss in there. About 1% or 2% is contained in the zinc concentrate that come out of there. But, as I said, 70% is in lead, 30% is in copper.

Okay. So, we will see, of course, copper starting up first, but a bigger impact from lead, starting when you finally negotiate and get those shipments going. Would that be -- would you expect them to get that lead shipments going in Q1 or Q2?

We are hopeful of Q1. It all comes down to them settling up offtake agreements that are satisfactory, and that's the challenge is they're working their way through that. There's a bit more demand for copper concentrate, such as they had no problem going into that market, but their objective is to have the offtake agreements settled out before the end of this year. And that would imply that Q1 we should start seeing regular net plus the inventory cleaned out.

Okay.

Gary, you mentioned, I think, some of the ounces produced, but not yet sold, i.e., in inventory at some of the assets apart from Yauliyacu. Of the 3.8 million ounce balance, 1.8 million we can say is Yauliyacu, and some are starting to clear out. You mentioned a number from Penasquito. I missed it. And/or if you have any of the other bigger balances of outstanding inventories? Thanks.

Yes, Steve.

It was 570,000 ounces to Penasquito. And the rest of the 3.8 million is just really across the board concentrate buildups.

Okay. And what's a good number to work on in terms of inventory balances. You're obviously going to have some level of inventory, Randy, but would you expect that to be at least a half that number on a go-forward basis of the 3.8 million ounce? In other words, what do you think can be a benefit to you in Q4 and into next year as you sort of whittle down, hopefully whittle down, or they whittle down their inventory balances a bit?

Well, we have -- this is kind of almost a balancing act. As Penasquito ramps ups its production levels, it will also have -- essentially these are pipelines, and as Penasquito gets up to 130,000 tons per day, they're going to have a lot more concentrate in the pipeline as they're shipping it off. So we do see dramatic improvement on the Yauliyacu side in terms of the inventory that has built up. But, at the same time, we're going to see some pressures on that inventory as Penasquito gets to full production capacities.

And some of our other assets, we've seen a bit of an increase in inventories. Mineral Park is an example of that, where we had a bit of a bump there, just because their production rates have climbed to such a high level now. And, we are quite happy with that, but it actually it just means that we have got a bigger working capital number. So I would say that we're probably down -- I would say, a smooth number, long term for us, is in the 3 million to 3.5 million ounce range in the inventory. It is key to point out that Pascua-Lama, when it comes on, produces a dore, where we don't have inventory issues. So we won't see the same issues on the inventory side as Pascua-Lama comes into production as we have seen from Penasquito.

Right. Okay. I forgot to mention. Let me be the first to congratulate you guys on the dividend policy. Thanks again, guys.

Todd Kapala, Addenda Capital.

Good morning, everyone.

Sorry to belabor the point. Actually, I was just going to ask a similar question about the inventory. So just a real quick one -- when we look at Q4, should we be looking for production and sales to be essentially in line? And for 2012, would it be your view that production and sales will line up based on the idea of having 3 million to 3.5 million ounces of silver in inventory? And just curious if eventually there will be some pickup there? And if there's any risk at all of some of these concentrates, the bulk concentrate not getting a market? I 'm thinking Yauliyacu, in particular.

The bulk concentrate, as I mentioned, we have just received confirmation that a large portion of that is just been shipped off and delivered. So we will have a dramatic reduction in Q4 on the bulk concentrate inventory. So that will be a positive in terms of the overall impact over the fourth quarter. As I said, though, with Penasquito climbing up, there probably will be a bit of an increase in inventory on that site as they fill their production pipeline.

Longer-term, we've got a couple of concentrate producers that are sort of ramping their way up. Mineral Park is one; of course Yauliyacu and Penasquito. With Yauli, the lead concentrate, once it gets going, the inventory itself should be cleared out there pretty fast too, once they get the offtake agreements signed. So that may not happen in the first quarter of 2012, but it will definitely happen, I would expect early in 2012. All depends on how soon, how long it takes them to get to a satisfactory offtake agreement for that lead concentrate. With concentrate, this is no different than working capital in a normal operating asset. Once these assets get to smooth levels of production, there's going to be a consistent sort of flow of concentrates that will be stuck in the transportation process, and will be produced, but not yet technically delivered to Silver Wheaton.

I would expect, traditionally what you see is that pipeline gets squeezed in the first quarter. Just operating assets, operating companies generally try and improve the overall sales performance and such, and so they will try clean out all the stockpiles and the inventories and such during the fourth quarter just to improve year end results. We've also seen a trend, though, in the first quarter where sometimes you wind up having a bit of a growth on the inventory side because they have squeezed it in the fourth quarter perhaps a little bit tighter than normal. So you will see, I would say traditionally, a bit of contraction on the inventory in Q4 and a bit of -- and it will expand back out in the first quarter, then get to sort of a stable level through the 2Q and Q3.

Okay. Thanks. That's helpful.

One last question just on the acquisition front. Would you look at financing a pure gold operation, or is that something that you'd want to make sure there's a silver component to the silver stream, or the stream itself, I should say?

Yes. Our focus is silver. It always has been silver. We see lots of our opportunities in the silver space. On top of that, there's two, three -- two companies that are focused in the gold space that do streaming transactions. And when we look at that, we just see more opportunities in the silver space. And we are more than happy to let the Francos and the Royals work in that gold space. We never close our eyes to it. We always like looking at what's happening around, but our focus is silver.

Okay, great. Appreciate that.

Jason Byun, RBC Capital Markets.

Good morning, guys.

Just had one question for you with regards to the new dividend policy. Do you foresee the new cash flow-only dividend policy to remain stable for the longer term? Or, would you potentially look at reviewing the policy, potentially next year upon elimination of the last bullet payment relating to the Pascua-Lama silver payment in Q3?

Yes. I think at this stage we are happy with the level that we have set it at. It provides us with the balance that we think is ideal between returning funds to shareholders and providing us with funds to grow. As Pascua-Lama achieves commercial production, we will revisit that and make sure that, that balance continues to be maintained.

Our principal objective in this Company is to continue growing through accretive transactions, and then through those accretive transactions and an increase in production will fund increases in the yield side. It comes both on the growth and the percentages.

Okay. Thanks very much, guys.

Thank you, and Operator, I think that's it for the questions. Thank you, ladies and gentlemen for dialing into our Q3 2011 conference call, and we look forward to speaking with you again. Thanks again.

Ladies and gentlemen, this concludes the conference call for today.