Wheaton Precious Metals Corp (WPM) 2014 Q4 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Silver Wheaton's 2014 Year-End Financial 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)

Thank you. I would like to remind everyone that this conference call is being recorded on Thursday, March 19, at 11 a.m. Eastern time. I will now turn the conference over to Patrick Drouin, Senior Vice President of Investor Relations. Please go ahead.

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, 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 assurances that forward-looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. In addition to our financial results cautionary note regarding forward-looking statements, please refer to the section entitled Risk Factors in Silver Wheaton's final prospectus dated March 9, 2015 which is available on SEDAR and on file with the US Securities and Exchange Commission.

The prospectus sets out the material risk factors that could cause actual results to differ, including among others, the absence of control over mining operations from which Silver Wheaton purchases silver or gold, risks related to such mining operations, and the risk of a decline in commodity prices. Lastly, it should be noted that all figures referred to on today's call are in US dollars unless otherwise noted.

Now I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Thank you, Patrick, and good morning ladies and gentlemen. In 2014, Silver Wheaton was proud to celebrate both its 10-year anniversary and the 10-year anniversary of precious metal streaming. Since the Company's inception, our streaming business model has shown a propensity to perform in all phases of the commodity price cycle, including the low points like we saw in 2014.

Despite the challenging markets that we all saw in 2014, the year was another solid one for Silver Wheaton in terms of cash operating margins, production, and sales. Even with a substantial drop in precious metal prices this past year, we continued to generate cash operating margins of over 70%, while maintaining one of the highest production levels in the silver industry.

As a result, operating cash flows were $431.9 million, down from 2013, but still reasonable given that the silver equivalent price dropped 20% during 2014. While Silver Wheaton's attributable production in 2014 was also down slightly to 35.3 million silver equivalent ounces, 2014 was still a very important year for our future growth, as we saw key milestones achieved at Constancia and Salobo, both of which I will discuss in a bit more detail shortly. We did achieve record sales of 32.9 million ounces in 2014, a 10% increase from the previous year.

Of course 2015 has started out strong, as we announced several weeks ago the acquisition of another 25% of the Salobo gold production from Vale. This adds to the 25% of production we acquired in 2013, giving us entitlement to 50% of all the gold produced at Salobo.

As a reminder, Salobo is the largest copper gold deposit ever found in Brazil, and even ignoring its excellent exploration potential, ranks in the top 15 copper gold deposits worldwide. It began operating in 2012 at a capacity of 12 million tons per annum, with an expansion in capacity to 24 million tons per annum completed in mid-2014. This expansion is expected to continue ramping up through 2015.

During 2014, the mine produced for us a record 40,000 ounces of gold, and now with 50% of the life of mine gold production from the Salobo mine, we are expecting average gold production in excess of 140,000 ounces per year for the first 10 years from this mine. Salobo is expected to be a lead contributor to our growth in 2015, and has significant expansion and exploration potential even beyond its over 40-year mine life.

At San Dimas, Primero had another excellent year of growth. They not only reported record production, but also completed one expansion, announced another expansion, and celebrated a continual string of exploration successes. Early in the year, Primero completed an expansion which increased the mine's throughput capacity from 2,150 to 2,500 tons per day.

Just as those additional tons are beginning to flow through the mill, Primero announced plans to expand further to 3,000 tons per day by the middle of 2016. The mine site operating team has performed very well, averaging 2,846 tons per day through the mill in the last quarter of 2014, nearly 14% higher than nameplate capacity. San Dimas contributed 5.8 million ounces to our production in 2014, and we look forward to its growth in 2015 and beyond.

Goldcorp's Penasquito mine became our largest producer in 2014, at over 7.3 million ounces of attributable silver, despite the water issued caused by this unprecedented drought in northern Mexico. Goldcorp has diligently pursued remedies to increase throughput, and is currently completing the northern well field, which should alleviate current water constraints once completed in mid-2015.

In addition, Goldcorp continues to focus on further opportunities at Penasquito. The next few years are exciting ones, as this asset begins to reach its full potential.

In December 2014, Silver Wheaton reached another milestone in its growth, as Hudbay began first production at its Constancia mine in Peru. Constancia is expected to ramp up to commercial production by mid-2015, and it's forecast to produce on average 35,000 ounces of gold and 2.4 million ounces of silver annually for Silver Wheaton for the first few years of full production.

Looking forward to 2015 and beyond, we are very positive on the organic growth embedded within our current portfolio. In 2015, we forecast 43.5 million ounces of silver-equivalent production. With the expansion of the Salobo mine and the ramp-up of the Constancia mine, we expect overall production growth from 2014 of over 40% over the next five years to reach 51 million ounces of silver-equivalent production by 2019.

All of this growth is fully funded, allowing us to use our significant free cash flows towards continued investments into the precious metals space. It is also worth noting that our 2019 forecast does not include any contribution from the Pascua-Lama or Rosemont projects.

These assets would add another 13 million silver-equivalent ounces of production to Silver Wheaton's credit once they come on line, and would only require an additional $230 million in capital. It is also worth highlighting that this 40% growth is organic, and does not account for any additional acquisitions in silver and/or gold streams.

On the corporate development front, we continue to focus on finding well-managed, high-quality assets, producing in the lowest half of their respective cost curves. In the current environment, we believe little capital is being invested by the industry, as major and mid-tier mining companies concentrate on shaving costs and focusing on profitability.

Consequently, many of the current opportunities under consideration are to help existing producers strengthen their balance sheets, to assist in asset acquisitions, and to provide support to single-asset companies. To complement Silver Wheaton's organic growth, we will continue searching for additional accretive opportunities.

In summary, 2014 was a significant year for Silver Wheaton, as we marked our 10-year anniversary. We now have 27 assets in our portfolio, and our streaming model has been adopted across the industry.

More importantly, Silver Wheaton shareholders now have 3.5 silver-equivalent ounces of reserves backing every share in the Company, much stronger than the 0.4 ounces backing every share back at the end of 2004. Even if we ignore the increase in precious metal prices over this time, Silver Wheaton has delivered nearly 900% growth in the amount of precious metal reserves backing every share over the last 10 years. This does not include the additional return provided by our dividend policy, which links our pay-out directly to operating cash flows, giving shareholders direct exposure to both precious metal prices and our production growth profile.

We forecast production of 43.5 million silver-equivalent ounces in 2015, growing to 51 million ounces in 2019. All of this growth is fully funded, with no further capital requirements.

With by far the strongest free cash flows in the entire streaming royalty space, and the remaining capacity in our $2-billion revolver, we have plenty of capacity for continued investments. We are very proud of the value created to date in Silver Wheaton, and we continue to work towards providing the best vehicle for investing into precious metals.

With that, I would like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer, to provide a bit more detail. Gary?

Thank you, Randy, and good morning, ladies and gentlemen. Prior to reviewing Silver Wheaton's unaudited financial results for the three months ended December 31, 2014, and the audited results for the year ended December 31, 2014, I would like to remind everyone that all monetary figures discussed are denominated in US dollars, unless otherwise noted.

The Company's precious metal interests generated attributable silver-equivalent production of 9 million ounces in the fourth quarter of 2014, 8% lower than production from the comparable period of the prior year, due primarily to lower production from the Penasquito and Minto mines, combined with the cessation in Q3 2014 of the supplemental silver deliveries by Goldcorp relating to San Dimas. Approximately 71% of this production related to silver, with the remainder relating to gold.

Silver-equivalent sales volumes amounted to 8.5 million ounces in Q4 2014, representing a 7% increase from Q4 2013, due primarily to increased gold deliveries from both the Sudbury and Salobo mines. Payable silver-equivalent ounces produced but not yet delivered by our partners amounted to approximately 4.8 million ounces as at December 31, 2014, representing a decrease of about 300,000 ounces during the quarter.

Revenue for the fourth quarter of 2014 amounted to $140 million, representing a 16% decrease from the comparable period of the prior year, with the 7% increase in sales volumes being more than offset by a 22% decrease in the average realized silver-equivalent selling price, which was $16.43 per ounce for Q4 of 2014. Earnings from operations for the fourth quarter of 2014 amounted to $61 million, representing a 33% decrease relative to the fourth quarter of 2013, with operating margins decreasing by 11% to 43% in the fourth quarter of 2014, with the decrease in margin being attributable to lower commodity prices.

Cash-based G&A expenses were $7 million in the fourth quarter of 2014, representing an increase of $2 million from Q4 of 2013, with such increase being primarily attributable to higher donations and increased costs relative to the Company's performance share units. Interest cost for the fourth quarter of 2014 amounted to $4.4 million, resulting in an effective interest rate on outstanding debt of 1.7%. All of this interest was capitalized to the Pascua-Lama and Constancia mineral interests, resulting in no interest being expensed in the calculation of net income.

Other expenses were just under $1 million for the fourth quarter of 2014, which was primarily attributable to stand-by fees on the revolving credit facility, which was completely undrawn for the quarter. Net earnings amounted to $52 million in the fourth quarter of 2014, compared to $94 million in the comparable period of the prior year, with basic earnings per share decreasing by 46% to $0.14 per share, from $0.26 per share in Q4 2013, with the decrease again being primarily attributable to declines in commodity prices. Operating cash flow for the fourth quarter of 2014 amounted to $94 million, or $0.26 per share, compared to $125 million, or $0.35 per share, in the fourth quarter of the prior year.

Based on the Company's dividend policy, the Company's Board has declared a dividend of $0.05 a share payable to shareholders of record on March 31, 2015. Under the dividend re-investment plan the Company recently implemented, the Board has elected to offer shareholders the option of having their dividends re-invested in newly issued common shares of the Company at a 3% discount to market.

During the fourth quarter of 2014, the value of the Company's long-term investment portfolio of shares in other publicly listed mining and mineral exploration companies decreased by $11 million, which has been reflected in the statement of other comprehensive income. For the year ending December 31, 2014, the Company achieved silver-equivalent production of 35.3 million ounces, consistent with the prior year. This stable production, combined with an estimated 1.2-million-ounce decrease over the year in silver-equivalent ounces produced by our partners but not yet delivered to Silver Wheaton, contributed to record sales volumes of 32.9 million silver-equivalent ounces.

Revenue for 2014 amounted to $620 million, compared with $706 million in 2013, with the 12% decrease being attributable to a 20% decrease in the average realized selling price, partially offset by a 10% increase in sales volumes. Earnings from operations decreased by 27% to $309 million, with margins falling to 50% of revenue in 2014, from 60% in 2013, due to lower commodity prices.

Cash flow from operations decreased by 19% to $432 million, compared to $534 million in 2013. This translated into operating cash flow per share of $1.20, compared to $1.50 in 2013.

Cash-based G&A expenses in 2014 totaled $30 million, including $3.5 million of expenses relating to the Company's performance share units. This represents an increase of less than $3 million from 2013, and is lower than Company guidance.

In 2014, the Company contributed approximately $3.2 million in support of a number of charitable causes, as part of our corporate social responsibility program. In this regard, significant contributions to BC-based charitable organizations were made to the BC Children's Hospital, St. Paul's Hospital Inner City Youth Program, the Street to Home Foundation's Affordable Housing Project, and the Britannia Mine Museum. We also made a significant contribution to the BC Cancer Foundation, and we're the presenting sponsor of the BC Ride to Conquer Cancer fundraiser.

In addition, during 2014 we initiated an exciting new corporate social responsibility program to help our partners contribute back to the mining communities in which they operate. In August, we announced the launch of the program by supporting projects led by two of our mining partners. Firstly, Primero has committed to building three recreational facilities for the town located near the San Dimas mine.

Furthermore, Barrick has committed to executing an irrigation project, which is expected to enhance water conservation and agricultural outputs in the communities located near the Valadero mine and the Pascua-Lama project. Silver Wheaton is making significant financial contributions to both of these important projects, which are expected to be completed in 2015. Providing this type of support not only helps demonstrate Silver Wheaton's commitment to good corporate citizenship, but also helps our partners improve their social license in the communities that they rely on, which is in everyone's best interest.

For 2015, the Company estimates that non-stock-based G&A expenses, which exclude expenses relating to the value of stock options granted and PSUs, will amount to $31 million to $33 million, with the increase from 2014 being largely attributable to increased personnel costs, combined with the Company's heightened commitment to corporate social responsibility initiatives.

During the third quarter of 2014, the Company recognized an impairment charge of $68 million relating to its silver interests in Mineral Park in Campo Morado. On December 31, 2014, the Company reached an agreement with Nyrstar resulting in the cancellation of the silver purchase agreement relating to Campo Morado, in exchange for cash consideration of $25 million, which equated to the carrying value of the asset. As such, no gain or loss was recognized in respect of this transaction.

Net earnings for 2014 adjusted to neutralize for the effect of the impairment charges amounted to $268 million, representing a 29% decrease from 2013, due primarily to the decline in commodity prices, with basic adjusted earnings per share amounting to $0.75 in 2014, compared to $1.06 in 2013. The operational highlights for the fourth quarter of 2014 included the following; attributable production and sales relative to the San Dimas mine amounted to 1.7 million and 1.6 million ounces of silver, respectively, during the fourth quarter of 2014, with the 12% decrease in production relative to comparable period of 2013 being attributable to the cessation of the supplemental silver deliveries from Goldcorp, partially offset by increased production from the mine, which is attributable to the expansion of the mill throughput capacity to 2,500 tons per day.

Primero has subsequently announced a further expansion to 3,000 tons per day, which is expected to be completed in the second quarter of 2016. It is also worth noting that the annual threshold over which Primero's entitled to retain 50% of the payable silver produced has risen from 3.5 million ounces to 6 million ounces effective August 6, 2014.

Penasquito generated attributable silver production of 1.6 million ounces during the fourth quarter of 2014, representing a 23% decrease from the comparable period of the prior year, with such being primarily attributable to the processing of lower-grade material. Goldcorp does anticipate returning to higher-grade portions of the open pit in 2015. Silver sales for the fourth quarter of 2014 relative to Penasquito amounted to 1.6 million ounces, compared to 1.4 million ounces in Q4 2013, with payable silver ounces produced but not yet delivered to Silver Wheaton decreasing by approximately 300,000 ounces in the quarter to approximately 900,000 ounces as at December 31, 2014.

With respect to the water availability at Penasquito, Goldcorp has stated that the Northern well field project is progressing on schedule, and is expected to be operational in the middle of this year. Attributable gold production relating to the Sudbury gold interest amounted to 9,000 ounces during the fourth quarter of 2014, or over 670,000 ounces on a silver-equivalent basis, representing a 30% increase due to the processing of higher-grade material.

Gold sales relative to Sudbury amounted to over 11,000 ounces in the fourth quarter of 2014, representing a 72% increase relative to the comparable quarter of the prior year. The increased sales volumes are attributable to a combination of higher production and a decrease in payable gold produced but not yet delivered to Silver Wheaton of almost 3,000 ounces during the fourth quarter of 2014. As at December 31, 2014, approximately 14,000 ounces of payable gold, or 1.1 million silver-equivalent ounces, had been produced at Sudbury, but not yet delivered to Silver Wheaton.

The Salobo gold interest produced over 12,000 ounces of attributable gold, or 915,000 silver-equivalent ounces during Q4 2014, an increase of 22% from the comparable quarter of the prior year, with such being attributable to the continued successful ramping up of the second line. The two lines operated at an average rate of approximately 67% of capacity during the fourth quarter of 2014.

Gold sales relating to Salobo amounted to over 14,000 ounces, or 1.1 million silver-equivalent ounces in Q4 2014, more than double the sales volume for the comparable quarter of the prior year. This increased sales volume is largely attributable to payable gold produced but not yet delivered to Silver Wheaton decreasing by almost 3,000 ounces during Q4 2014, compared to a 3,000-ounce increase in the comparable quarter of the prior year. As at December 31, 2014, approximately 5,000 ounces of payable gold, or 400,000 silver-equivalent ounces, have been produced relative to Salobo but not yet delivered to Silver Wheaton.

The Minto mine produced 3,400 ounces of gold during the fourth quarter of 2014, compared to 9,500 ounces in the fourth quarter of 2013, with the decrease being primarily attributable to the processing of lower-grade material. Payable gold delivered and sold relative to Minto amounted to approximately 3,700 ounces, almost doubling the volumes from the comparable period of the prior year, with payable gold produced at Minto but not delivered to Silver Wheaton increasing by over 7,000 ounces in the fourth quarter of 2013. As at December 31, 2014, approximately 5,500 ounces of gold, or 414,000 silver-equivalent ounces, have been produced relative to Minto, but not yet delivered to Silver Wheaton.

Overall, the Company's cash balances increased by $75 million in the fourth quarter of 2014, with the $94 million of cash flow from operations being partially offset by $17 million of dividend payments. As at December 31, 2014, the Company had $308 million of cash and cash equivalents on hand, and $1 billion of debt outstanding under the non-revolving term loan.

Subsequent to year end, the Company amended its revolving facility by increasing the available credit from $1 billion to $2 billion, and extending the term by two years, with the new maturity date being February 27, 2020. In addition, certain covenants were amended to provide the Company with additional financial flexibility. The Company used $685 million of proceeds drawn from this amended credit facility, together with cash on hand, to re-pay the $1 billion of debt previously outstanding under its non-revolving term loan, and terminated that loan.

In addition, on March 17, 2015, the Company closed the equity offering, receiving net proceeds of about $770 million. These proceeds, together with proceeds from drawings under the revolving facility, will be used to fund the $900-million up-front payment due to Vale relative to the recently announced transaction whereby Silver Wheaton acquired another 25% of the life-of-mine gold produced from Salobo.

The Company's cash position, strong forecast future operating cash flows, combined with the available credit capacity under the revolving facility, positions the Company well to satisfy its funding commitments, sustain its dividend policy, while at the same time providing flexibility to consummate additional accretive precious metal purchase agreements. Lastly, there has been no substantial change in the status of the audit of the Company's taxation years 2005 to 2010 by the Canada Revenue Agency.

That concludes the financial summary. With that, I turn the call back over to Randy.

Thank you, Gary. Operator, we'd like to open up the call to questions, please.

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

(Operator Instructions)

Your first question comes from the line of Andrew Quail from Goldman Sachs. Your line is now open.

Good morning Randy, Gary, and Patrick. Thanks for taking my question, and congratulations on a solid quarter, and some good events after the year end.

Thank you, Andrew.

Just a couple questions, small stuff. On Sandspring, can we get a quick update on that? Can you maybe Randy give us some color about if you guys are looking at further opportunities in this environment to do these early-stage developments?

Well, the environment definitely needs support like that. One of the challenges, of course, is commodity prices have hit, as we've seen, some pretty low marks in the overall spectrum.

With Sandspring, we're working with them. They're very close to getting the feasibility completed. We're working with them to advance -- set up a structure that works well in terms of keeping that project.

We're still a strong believer in the asset. We think it's not as well recognized in the market as it should be. We're working with Sandspring to do that. That type of structure is one that is well-suited for this environment, and we do have other options or other opportunities on that early-deposit structure, but we'll see where they go.

Is there a time line on the feasibility study on that?

In the current environment, they've parked themselves, put into neutral essentially right now, and waiting to come to a stronger market before they put further investments into it. That's what we're working more with them. There's no time line in terms of the feasibility.

Do you see -- with Penasquito, obviously it looks like it's going to improve into the second half of the year. Do you see those levels obviously being maintained through 2016 and even 2017, given the improvement in the water situation?

Definitely. Penasquito is set up -- some of the best grades in that deposit come in over the next three, four, five years. I really think that Penasquito is going to be hitting full stride over the next few years. With the efforts that Goldcorp, the whole team down there is putting into that asset, it's exciting to see it finally getting close to its full potentials.

There's obviously still work to be done there, but the work that is being done looks very promising. In terms of grade scheduling, it does look -- it also looks pretty exciting over the next few years. It's going to really come into its stride.

At 777, do you guys see -- had a little bit of a weaker quarter. Do you see that bouncing back over the next few quarters?

Yes, they had some problems with ground support. Safety is always number one. They've had to back away and let some of the pillars stabilize, so a shift into lower-grade regions. Now as that has been stabilized, and as they've got in the additional backfill to provide that additional support, they should be able to move back into those higher-grade zones. We think it's really just a scheduling issue.

Last one. Obviously, big gold deal post year-end, looks pretty good me. Do you guys -- obviously the percentage of gold is moving up versus silver. Is that something we expect over the next few years to eventuate even more?

We are still silver-focused. We think the streaming model works slightly better in the silver space, mainly because most silver is produced as a byproduct, and therefore more capacity.

I'll be honest, when I look at our corp dev portfolio, the stuff that we're looking at right now, it does have a bit of a gold bias to it. The gold sector is hurting a bit more than the base metal space.

That's one of the reasons why that we're seeing a bit more of it. There definitely seems to be a gold flavor to the corp dev portfolio that we're looking at right now.

Sounds good to me. Thanks very much, guys.

No problem, Andrew. Thank you for calling in.

Your next question comes from Dan Rollins from RBC Capital Markets. Your line is now open.

Thanks very much. Only a couple questions, and more just sort of house-cleaning. With the addition of -- additional Salobo acquisition, 25% stream there, then also the start-up of Constancia, is it still prudent to assume a 90% payable level for your production going forward, or should we see that slightly improve?

I would say it's prudent to just maintain that 90%. One of the things that we always run into is sort of as these things ramp up, there's always building up that pipeline. Any improvements that we see as these assets deliver more, as these higher-quality assets come into play, that will be a gradual. I think it would be prudent to stay at the 90%.

Then on Sudbury, you've had that stream for almost two years now. You've had a pretty big kick-up in production restated in Q3.

I guess it's now just over 12,000 ounces, up from just under 6,000 ounces at the end of what you reported Q3 reporting. Is that a more typical run rate now going forward for Sudbury with TauTona started, or what's going on there to drive that?

Well, TauTona is still not even at full capacity yet. They're still ramping up their production, and won't be at full capacity until towards the end of this year.

Quite literally, I can remember some conference calls we were trying to explain the fact that the pipeline takes a long time to fill at Sudbury. In terms of us, when we receive payment for the gold that gets sold, it's quite a few months afterward.

We saw that potential in this asset to out-perform. Based on our results to date, the last two years that we've now had the Sudbury stream in place, we are seeing it deliver substantively more gold than what Vale has forecast. It's something that we've seen in -- Vale tends to take a pretty conservative approach to their production estimates. It's refreshing in this industry.

Eventually sees further re-statement going forward as the stuff starts to flow through the system. I guess that's fully integrated, smeltered refineries at that complex, correct?

Exactly. It's about a four- to five-month pipeline between production and sales, so it takes a while for that to actually roll into the results. But yes, Sudbury is definitely delivering for us.

Okay. Then with Constancia starting up, it's safe to assume about a two- to three-month lag between production and sales delivered to your account?

That's right. Because again, it's copper off to a smelter, typical -- or copper concentrate off to a smelter. All precious metals are contained in that copper concentrate. It should be two- to three-month pipeline. We're not going to see a lot of sales out of Constancia in the first quarter or the first half of this year, but we will be -- we should be up to full stream by the end of this year, in terms of getting full credit for sales.

That's great, guys. I really appreciate the color. Congrats on a solid 2014, and best of luck over the next 10 years.

Thanks for calling in, Dan.

(Operator Instructions)

Your next question comes from Marc Heilweil from Spectrum Advisory Services. Please go ahead.

Yes. Can you give me -- I know this is a more general question, but mines close, or disasters happen and what, do you -- when you book a stream, do you set up any reserve for contingencies like that? How does the accounting work for --?

The best defense is to make sure you invest into assets that are in the lowest half of the respective cost curve, which means they're the most profitable mines. Because then we know that our partners and the industry as a whole will be very motivated to keep these mines going. They will always survive through the challenges that you see out there.

We don't set aside a reserve. But what we do really focus on in Silver Wheaton is making sure that the assets that we invest into have healthy operating margins. We recognize that if our partners aren't healthy and happy, then we're not healthy and happy. That's the best defense, Mark.

Just to add to that, we are not liable for any of the mine closure costs.

Right, oh, yes. Well, that's good. In your history, has it happened that your stream has fallen short because of some incident, or some problem with a mine closure?

No. We've had a couple of mines that have exhausted. All mines eventually do close. We've always returned a good rate of return on the investment into those mines. We've never fallen short.

That's terrific. Thanks for explaining that to me.

No problem, Mark. Thanks for calling in.

Your next question comes from Cosmos Chiu from CIBC. Your line is now open.

Good morning, Randy, Gary, Patrick and team, and thanks for hosting the call. I have a few questions here. Maybe first off on the balance sheet, maybe for Gary, would you be able to tell us a bit more detail in terms of how it stands today in terms of cash and debt? A lot has happened since December 2014, so I wondered hopefully what the cash level is versus what the debt level is?

Yes, Cosmos. That would be telegraphing what's happened during the quarter, and I'd prefer not to provide that insight until the quarter's released.

I guess I can work it out myself, Gary. You've given us an interim update on the debt level, $685 million. Has that changed, or I guess you can't really tell us?

Yes, we used a combination of cash on hand, the net proceeds from the equity offering, and drawings under the revised amended revolving credit facility to pay -- we will be using that to pay for the $900-million, up-front payment. That's going to be the most significant change, net of operating cash flows that we've generated in Q1 to date.

Okay. I'll make my own assumptions then. Thanks, Gary. Maybe moving on. In terms of -- I know this is a smaller stream for you guys, at least right now, but in terms of the Barrick streams, you've given us guidance of 2.2 million ounces in 2015, and that's a pretty substantial increase year over year. Can you maybe walk us through how that's -- what's driving that increase?

Because my understanding is that certainly at Lagunas Norte could be up slightly in 2015. However, that should be offset by lower Valadero, and of course Pierina's now done. I'm just wondering how 2015, the increase in 2015, what's driving it?

It's generally grade-related in terms of the scheduling. This is their own forecast that we've gone back, had a look at, and reviewed. We've been on site and had a look at, and we're comfortable with.

But it's generally grade-related. I know Valadero had some substantial lower grades through the course of 2014 than what they're used to dealing with. I think that's where a lot of that increase comes from.

We only have a lot of visibility on the gold grades. Maybe as you said, the silver grades are a little bit different?

Yes, there's multiple deposits at Valadero, some of which have better silver grades than the other. I think that's one of the reasons they are scheduling into a different pit. They of course are driven and scheduled on their gold grades. Silver is a pretty small portion of the overall value there.

We do definitely see differences from one pit to the other. I know the deposit they were mining through 2014 in Valadero was a very low silver grade deposit.

Great. That's all I have. Thank you.

Ladies and gentlemen, this concludes the Q&A portion of today's conference call.

Thanks, operator. 2015 will be an exciting year for Silver Wheaton, as we begin to bear the fruit of some of our recent investments. We are looking forward to seeing expansions at Salobo, San Dimas, and Constancia, and are also quite excited about the opportunities we're seeing for further acquisitions. Please stay tuned, and thank you for dialing in, everyone.

This concludes this conference call for today. Thank you for participating. Please disconnect your lines.