Wheaton Precious Metals Corp (WPM) 2016 Q3 法說會逐字稿

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Silver Wheaton's 2016 third quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks there will be a short presentation followed by a question and answer session. (Operator Instructions). I would like to remind everyone that this conference call is being recorded on Thursday, November 10, 2016 at 11 AM Eastern Time.

I will now turn the conference call over to Mr. Patrick Drouin, Senior Vice President of Investor Relations. Please, go ahead.

Thank you, Operator. Good morning, ladies and gentlemen and thank you for participating in today's call. I am joined today by Randy Smallwood, Silver Wheaton's President and Chief Executive Officer, Gary Brown, Senior Vice President, and CFO, and Haytham Hodaly, SVP Corporate Development. I would like to bring to your attention that some of the commentary in today's call may contain forward-looking statements. There can be no assurances that forward-looking statements are 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 description of the business risk factors in Silver Wheaton's annual information form and the risks identify under risks and uncertainties in management's discussion and analysis both available on SEDAR and in Silver Wheaton's form 40-F and Silver Wheaton's form 6-K both on file with the US Securities and Exchange Commission.

The annual information form Q3 2016 management discussion and analysis and press release from last night set out the material assumptions and risk factors that could cause actual results to differ including among others; fluctuations in the price of commodity, the outcome of the challenge by the CRA of Silver Wheaton tax filings, the access of control over mining operations from which Silver Wheaton purchases silver or gold and risks related to such mining operations. 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 Smallwood, our President and Chief Executive Officer.

Thank you, Patrick and good morning, ladies and gentlemen. Thank you for dialing into our conference call to discuss our third quarter of 2016 results. I am happy to announce that Silver Wheaton has achieved yet another solid quarter with record gold production and gold sales. The record production in sales were driven by strong results from across our gold portfolio, but particularly strong from Salobo. In the third quarter we produced 109,000 ounces of gold and 7.7 million ounces of silver. From a sales perspective we sold over 85,000 ounces of gold and over 6 million ounces of silver. This represents record gold sales volume for a third consecutive quarter.

This quarter exemplifies the value of having a diversified portfolio backed by four corner stone assets that provide a secure foundation for our Company. Short falls from the San Dimas and Penasquito mines were offset by strong performances from the Salobo and Antamina mines. Speaking of the Salobo mine, we are very excited to have added an additional 25% of the life of mine gold coming from this cornerstone asset. For now a total of 75% of the life of mine gold production is from that Salobo mine.

We are also pleased to welcome Chuck Jeannes to our Board of Directors. Chuck brings a wealth of experience in the mining industry and will no doubt prove to be a available addition to our Board.

For the third quarter of 2016 quarterly silver production increased by 11% and gold production increased 86% from the previous year. Silver sales volumes decreased slightly by 7% and gold sales volumes increased by 77% from the previous year. For the second consecutive quarter I am pleased to report the averaged realized sale prices for silver and gold were up year-over-year at 30% and 18% respectively. As a result Silver Wheaton's revenue increased 52%, adjusted net earnings were up by 67% and operating cash flows increased by 62% compared to the third quarter of 2015.

With the increase in commodity prices our cash operating margin was strong around 70% resulting in operating cash flows of over $160 million during the quarter. We have now generated over $400 million in operating cash flow in the first nine months of this year.

With regard to cash flows our quarterly dividends continue to deliver 20% of the average cash generated by operating activities in the previous four quarters. As a result of increased cash flows driven by these record gold sales and the commodity prices our fourth quarterly dividend from 2016 rose to $0.06 cents per share. A 20% increase relative to the previous quarterly dividend.

Despite the volatility of this commodity market our dividend policy continues to prove its sustainability and its ability to deliver direct reward back to our shareholders. And with our portfolio of low cost, long life assets and the recent strength we have seen in precious metals prices, having a dividend policy linked directly to cash flow should bode will for continued increases in our dividends.

On the corporate development front in the third quarter of 2016 we acquired an additional amount of gold equal to 25% of the life of mine gold production from Vale's Salobo mine in Brazil which now entitles us to 75% of the gold production from this world class mine. This latest acquisition contributed immediate production sales and cash flow for Silver Wheaton as illustrated in the strong performance in this third quarter. As always Silver Wheaton continues to focus on acquiring accretive new streams from high quality and low cost mines. There are still a number of tangible opportunities that we are busy assessing and hope to pull some over the line in the very near future.

With the first nine months of 2016 behind us, we felt it important to update our guidance, especially in light of the strong performance from our gold streams. Gold production is now expected to total 335,000 ounces in 2016. Up from previous guidance of 305,000 ounces as our gold portfolio has shown a consistency to out perform.

Silver production is now expected to total 30 million ounces in 2016, down from previous guidance of 32 million ounces. Lower than expected results from San Dimas and Penasquito have been partially offset by better than expected results from Antamina.

In summary, the third quarter was an excellent example of the unparalleled quality of Silver Wheaton's portfolio. By acquiring streams with attractive economics during the downturn we reaped the robust cash flows when commodity prices turned. Cash flow from operations increased by over 60% relative to the same quarter last year while commodity prices climbed on average only about 25% over that same time period. We believe this clearly highlights the strength of our streaming business model and the leverage it delivers to high commodity prices.

Our production is founded on the highest quality portfolio streams in the industry under pinned by very low cost mining operations. We are also optimistic about our ability to capitalize on the favorable corporate development environment and to add additional top tier assets to our portfolio.

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. Good morning, ladies and gentlemen. The Company's precious metal interest produced 7.7 million ounces of silver and a record 109,200 ounces of gold in the third quarter of 2016. With respect to silver this represented an increase of 11% with production from the recently acquired Antamina stream being partially offset by decreased production from San Dimas and Penasquito. Gold production increased 86% primarily due to the 25% increase in the gold interest relative to Salobo combined with gold production at Minto increasing by over 12,000 ounces.

Sales volumes amounted to 6.1 million ounces of silver and 85,100 ounces of gold in Q3 2016, representing a 7% decrease for silver and a 77% increase for gold. The decrease in the silver sales volumes was attributable to changes in the balance of payable silver produced, but not yet delivered to Silver Wheaton partially offset by the increased production. The increase in gold sales volumes which represented a third consecutive quarterly record, was a attributable primarily to the increase in the Company's interest in gold production from Salobo as well as the increased production from Minto partially offset by changes in payable gold ounces produced, but not yet delivered to the Company.

As of September 30, 2016 approximately 3.8 million payable silver ounces and 63,300 payable gold ounces have been produced but not yet delivered to the Company representing an increase during the quarter of approximately 800,000 ounces of silver and 18,500 ounces of gold. It is important to remember that we estimate a normal level for ounces produced but not delivered to equate to approximately two months worth of payable production. The increase in the quantum of these ounces during the third quarter of 2016 brought the balance in line with our guidance.

Revenue for the third quarter of 2016 amounted to $233 million representing a 52% increase due to the increased gold sales volumes combined with the average selling prices increasing 30% for silver and 18% for gold. Of this revenue 51% was attributable to silver sales while 49% related to gold. Gross margin for the third quarter of 2016 increased by 61% to $99 million.

Cash-based G&A expenses amounted to $8 million in the third quarter of 2016 representing a $3 million increase from Q3 2015 due to a combination of higher legal costs relating to the Company's ongoing dispute with the CRA, and a higher accrued expense related to Company's outstanding performance share units. The Company currently estimates that non stock based G&A expenses which excludes expenses relating to the value of stock options granted, and PSU's, will be approximately $31 million to $32 million for 2016. Interest costs for the third quarter of 2016 amounted to $6 million resulting in an effective interest rate on outstanding debt of 2.27%. All of this interest was expensed in the calculation of net income.

This compares to $3 million of interest costs incurred in the prior year of which only $1 million was expensed with $2 million having been capitalized in relation to the Barrick silver interest. Net earnings amounted to $83 million in the third quarter of 2016 compared to a net loss of $96 million in Q3 2015. With the loss in the prior year reflecting impairment charges, net of tax effects amounting to $146 million. After negating the affect of these impairment charges adjusted net earnings in the third quarter of the prior year amounted to $50 million.

The $33 million increase in net earnings in the most recently completed quarter relative to the adjusted net earnings in Q3 2015 was attributable primarily to the higher gross margin being partially offset by higher G&A and interest costs.

Basic earnings per share increased 53% to $0.19 compared to adjusted basic earnings per share of $0.12 in the prior year. Operating cash flow for the third quarter of 2016 amounted to $162 million, or $0.37 a share, compared to $100 million, or $0.25 a share in the prior year. Representing a 48% increase on a per share basis, once again highlighting the accretiveness of the Company's acquisitions over the past year. Based on the Company's dividend policy the Company's Board has declared a dividend of $0.06 a share payable to shareholders of record on November 23, 2016, a 20% increase relative to the previous quarter. Under the dividend reinvestment plan the Board has elected to offer shareholders the option of having their dividends reinvested in newly issued common shares of the Company at a 3% discount to market.

The operational highlights for the third quarter of 2016 included the following.

Attributable silver production relative to the San Dimas mine decreased 11% to 1.3 million ounces due to lower throughput and grade. Silver sales volumes in Q3 2016 relative to San Dimas decreased 47% to 1.1 million ounces due to a combination of lower production and negative changes and payable ounces produced but not yet delivered to Silver Wheaton with such balances having decreased by approximately 600,000 ounces in the comparable period of the prior year.

Pinasquito generated 1.5 million ounces of attributable silver production in Q3 2016 representing a 29% decrease reflecting lower throughput grades and recoveries. However, Gold Corp. has indicated that mining has shifted from the lower grade, upper transitional ore into higher grade ore in the lower portion of the pit.

Additionally, Gold Corp. has indicated that throughput is expected to increase due to lower level of planned maintenance. Finally, the northern well field project has reportedly ramped up as expected and reached full design capacity in the fourth quarter of 2016. Antamina generated 1.5 million silver ounces of attributable production and 1.6 million ounces of silver sales in Q3 2016, with this stream having being added in the forth quarter of the prior year. The lower level of production relative to prior quarters was expected and is attributable to lower throughput and recoveries partially offset by higher grades.

It is important to highlight that Antamina is on track to well exceed the Company's original full year guidance. The (inaudible) mines produce 10,000 ounces of attributable gold during Q3 2016 representing an increase of 36% attributable primarily to higher grades and recoveries at the Coleman and Totten mines. Sales volume, relative to increased 84% to 12,300 ounces of gold due to a combination of increased production and positive changes in gold ounces produced, but not yet delivered to Silver Wheaton. Salobo production almost doubled to 68,200 ounces of attributable gold during Q3 2016 with such being primarily due to the increase in the Company's attributable gold interest from 50% to 75% effective July 1, 2016.

The two mines operated at an average rate of approximately 88% of capacity during the third quarter of 2016. Sales volume relating to Salobo increased 128% to 50,000 ounces of gold in Q3 2016 with such being attributable to the increased production partially offset by negative changes in gold ounces produced but not yet delivered to Silver Wheaton.

Other gold interests generated over 31,000 ounces of attributable gold production in Q3 2016. 99% higher than the prior year primarily due to record gold production from Minto combined with strong gold production from triple-7. Sales volumes from other gold interests increased 17% to 22,700 ounces in Q3 2016 with the increased production being largely offset by a build up in ounces produced, but not yet delivered in Q3 2016 compared to a significant reduction in such balances in Q3 2015. During the third quarter of 2016 the Company drew down $780 million on the revolving facility and dispersed $800 million relative to the closing of the previously announced amendment to the Salobo gold purchase agreement.

In addition, the Company received $20 million from the exercise of stock options, repaid $141 million of bank debt and dispersed $19 million in dividends. Overall net cash increased by $1 million in Q3 2016 resulting in cash and cash equivalent at quarter end of $126 million. This, combined with the $1.3 billion outstanding under the revolving facility resulted in a net debt position as of September 30, 2016 of just over $1.2 billion.

The Company's cash position, strong forecast future operating cash flows combined with available credit capacity under the revolving facility positions the Company well to satisfy its funding commitment, sustain it's dividend policy while at the same time providing flexibility to consummate additional accretive and precious metal purchase agreements.

Finally, there is no material update relative to the Company's ongoing dispute with the CRA. We continue to work diligently with council to advance the case as expeditiously as possible. That concludes the financial summary. And with that, I turn the call back over to Randy.

Thank you, Gary. Operator, we would like to open up this call for questions, please.

(Operator Instructions). Your first question comes from the line of Chris Terry, from Deutsche Bank. Please, go ahead.

Hi, guys. Just a couple of questions from me. Maybe for you, Randy. I guess the M&A cycle, and your ability to do deals as a ever evolving process. We've had a number of movements during the quarter. Just came to see what opportunities could be out there, whether you would look an little outside the traditional precious space and whether you're more focused on building up the optionality from an early stage projects or, like you said earlier, around quality assets in the portfolio that might already be producing? Just wanted your updated thoughts on where we are at?

Thanks, Chris. Yes, the one thing we would say is we remain focused 100% on precious metals and we see lots of opportunities in that. The one sort of change that I think we have seen over the last three or four months is that we are starting to see a few more development projects coming into play. Projects that are being invested back into, we're seeing money going back into the ground. For the last two or three years most of our opportunities have been balance sheet repairs so it would have been investing into existing assets that are already producing, and it is mainly just to raise capital to try to strengthen the balance sheets. We are definitely seeing a bit of a rebound at the base metal space and some strength there. We are starting to see some development projects where people are looking for construction capital.

It is something where I feel works very well because of the improvement to project IRR and how it manages risk for the actual construction company, the operator rate. I hope that continues to grow. The mining industry does need that investment. The early stage stuff, we remain active in looking at those things. I like the optionality it brings to us as a company and I think for reasonable dollars, for low dollars you get great exposure to some really good upside. The challenge is and you've heard this from probably every company you've talked to over the last while, the challenge is finding good quality projects.

There is not a lot of good quality, early stage expiration projects out there that meet our criteria and so we remain active in that space and hopeful to complete a few more of those things in the near term. We are still maintaining a pretty high standard of selectivity in terms of what we want to end up into.

Great. Thanks for that. And then just one for Gary. You talked through I think on the produced, but not yet delivered ounces. So just to be clear on that, you are saying that you're at roughly even levels right now, or do you expect that number to reverse a little in the fourth quarter given it built up in the third quarter?

At any given time we should have about two months worth of payable production sitting in various ports or [CON] sheds around the world and that's just sort of an average. Now what tends to happen leading into calendar year end is a lot of the mining companies try to get most of the CON sheds cleared out and we have traditionally seen a reduction in those balances in the fourth quarter. Although we wouldn't expect those balances to drop. Our forecast is not based on those ounces dropping in Q4. Traditionally we have seen that kind of behavior.

That makes sense and then one last one in terms of how you use the excess cash flow obviously we have the dividend policy firmly in place, assuming it will still be about debt pay back, but would you consider a buy back again, or is it really just focused on paying down debt and then having optionality for any M&A deals that come your way?

Yes, it is about -- any excess cash flow will go to repaying outstanding debt and recharging our ability to pursue creative acquisitions.

(Operator Instructions). Your next question comes from the line of Michael Gray, from Macquarie. Your line is open. Please, go ahead.

Good morning, guys. Thanks for taking my call. On the Salobo performance in Q3 the higher output, are you able to give us any color on what drills the performance? Was it sequential ramp up? Or softer ore?

As you know in terms of start ups, the second line is still sort of achieving it's peak production levels. And it comes back to a continued ramp up and the asset getting closer and closer to it's full capacity as it stands right now. We expect to see this on a continued basis. There is great scheduling and stuff like that but we see straight from this asset coming forward and it will continue to get better and better every quarter.

Thanks. And at San Dimas, with the primary team undergoing some labor/union challenges and focusing on simplifying the mine, to what extent are you concerned with the lower near term slower production? Do you see the operation turning around in a reasonable time frame?

San Dimas has hundreds of years of operating history. It's been going non-stop since I think the first mining there started way back in the 1500's, the 1600's, originally. It has a very long operating history. Primarily they are having challenges at this mine. It is a mine that needs to be invested into, but it has a very, very long history of rewarding investments very well. We are hopeful that Primero can make it through these challenges and I have to say I'm pretty impressed with the team they have got in place there now. There have been a lot of changes and they are doing the right things and we are watching it closely, but expect that they are going to continue to work toward trying to find a resolution in these issues.

Thanks. The final question maybe for Gary. On the operations, gold production, you mentioned Minto and triple-7, are you able to give as you break down on the gold production from those two assets?

Well, the amounts are relatively small. It's in our other section. For details like that perhaps off line?

Sure. Thanks, guys. Appreciate it.

Your next question comes from the line of Cosmos Chiu, from CIBC. Your line is open.

Thanks, Randy, Gary and team. A few questions. Again, on San Dimas, could you remind us once again how that Gold Corp. guarantee works?

Sure. The Gold Corp. guarantee, the mine used to be owned by Gold Corp. so when they sold it to Primero, because the status of Primero was at that time a one mine company versus Gold Corp., one of the provisions we acquired is Silver Wheaton from Gold Corp. when they sold the mine to Primero was that they would guarantee that Primero satisfied the terms of the contract. So quite literally it comes down to as long as they satisfy the terms of the Silver Purchase Agreement, then there is not an issue.

Randy, so it is not like a minimum guarantee? So in the case where if there is any kind of labor situation at San Dimas and there might be a temporary production suspension and you wouldn't get anything during that period?

That's right. All streaming agreements share operating risk. That's no different than any of our contracts. There is no minimums involved. It is just that we wanted to ensure that Primero satisfied the terms of the Silver Purchase Agreement.

Of course. And then as part of the -- when Gold Corp sold it to Primero as well, I guess you know Silver Wheaton right now has a role for any kind of future streaming agreement or similar transactions? (inaudible) Certainly Primero looks like a company that could need more money. Is this an asset where Silver Wheaton can foresee putting more money into, in terms of further investments? How would you look at that?

I don't see that. As it is right now we receive the bulk of the silver we share any silver under 6 million ounces, but under 6 million ounces is 100% ours. That asset itself is pretty fully burdened, from a stream. We want to make sure that all assets are healthy and with the challenges they're having right now it is not something that we would invest more money into in terms of expanding our stream exposure.

Okay. And I know it is in the back of the MD&A, could you maybe touch on the security that you have on the stream?

The security? Yes, sure. We have security at the asset level --

Actually, Cosmos, it's Gary here.

Hi, Gary.

We have full security package on all of the material assets of San Dimas operations along with Primero guarantees. And then as Randy just outlined, the subsidized, or supported by the Gold Corp guarantee.

Of course. And since I have you here, Gary, maybe one question for you. And, I don't know if you can answer this, but, certainly Antamina is having a very good year in 2016, but you are not the only royalty on there. Two days ago Franco-Nevada reported that on a quarter over quarter basis they reported an increase in Antamina contribution. On the other hand, you reported a decrease quarter over quarter. Should they match up? Or, is there a reason why they don't?

Hi, Cosmos, this is Patrick.

Hi, Patrick.

It is a nuance. I believe the reason they reported an increase, was they reported in gold equivalent ounces so it is a conversion factor between silver and gold. That's a silver stream they are reporting is gold equivalent. We report it silver is silver.

So, Patrick, they should really match up if it is metal to metal?

That's right. And the decrease is primarily due to them more being in (inaudible) zones in the third quarter which we'd anticipate in the fourth quarter as well. It is purely a mine plan. It was fully expected and part of our guidance.

Great. Thank you.

No problem, Cosmos, thank you.

Your next question comes from the line of Dan Rollins, from RBC Capital Markets. Please, go ahead.

Thanks very much. Randy, I wondered if you could go to the opportunity pipeline? It has been evolving quickly over the last nine to six months, nine months ago, six months ago it was about balance sheet repair. Can you maybe touch base what you are seeing now given we are seeing a lot of green and based on prices, fall prices have rebounded quite significantly? The opportunities that were there, are they still there on the table right now or have they pulled back those offer sheets or the bill to get those deals done right now?

That's what we have seen. Some of the companies that have balance sheet issues, the necessity isn't as strong as it was six to nine months ago. We've seen it across the board. It doesn't take much. All it takes is to have a look at some of these big diversified base metal driven companies. Their balance sheets are much stronger than they were six to nine months ago and that was the driving force behind doing streams back then. Now, what we are seeing is more corporate development stuff. More materials that are looking at investing dollars into the ground and trying to source that capital in terms of investing into new mines or expansion or even acquisitions. Mergers and acquisitions we are seeing a pick up in that space. It is healthy because it was always a concern if all you are doing is paying off past debts, this is an industry that constantly needs to reinvest into itself. We weren't seeing that the last couple years, but we are starting to see a bit of a wake up in that direction.

And then just with respect to the deals themselves, the industry has definitely evolved. A lot of the original deals are one off. A company would come to you and say okay, we want to do a stream. Are you seeing more of the deals being run in a process now going forward?

Yes, I mean, there are three principal streaming companies in this industry right now, but a lot of companies are trying to work their way into the space. There is no doubt from a seller's perspective the more people at the dance, at the auction, typically the better the price is. (inaudible) That's something we have seen for quite awhile. I would say that is pretty consistent for probably the last seven, eight years.

On the M&A side I know we talked about it a few years ago it could be a real potential area to get new deals done is to provide that sort of cash for a deal. Where do you see the building transacting on that type of acquisition? Is it something that could play a pretty good growth model for the industry, or is it a nice to have?

I think it is a nice to have. In terms of growth model for the industry as a whole M&A is swapping from one owner to another, right? In terms of a growth model, it's growth from one company, in terms of making an acquisition. But these are assets that are pretty well defined and they are just basically changing ownership. I have always felt the streaming model works the best at the project development stage. It dramatically reduces the risk from the operator side and dramatically improves the internal rate of return from the operators side. We think we've got an extra leg in terms of being a competitive source of capital in situations like that.

That sort of brings up another topic. We are potentially going to see some supply crunches over the next few years in some of the base metal areas. Have you started to have conversations with some of the companies about having to go after big capital intensive pit wall lay backs, expansions of millions of facilities to go after lower grade? Is that something you are now talking with the majors about potentially streaming becoming part of that financing package? Because, taking on more debt is still probably going to be pretty challenging.

That is some of the opportunities we are seeing. First thing that has to happen is those commodity prices have to climb and justify the investments. But we are starting to see that. Even today copper is doing much better than I have seen it in a long time. Both lead and zinc, definitely improving. We have seen zinc do well in the last six months. That is going to bring on these investment decisions that have to be made in terms of capital investments into these assets. I will say that it is a pretty skinny market out there, especially in the zinc space. There are not a lot of assets out there that you can invest into.

It is a challenge. When I look around and see where the next big zinc asset is coming from, there is a lot of projects out there that need a lot of investment before they will deliver anything to the actual market itself.

Perfect. That's all the questions I have. Thanks very much.

Thank you, Dan.

Your next question comes from the line of Andrew Kaip, from BMO. Please, go ahead.

Most of my questions have been asked, but I guess the one question I would have for you is, given the share price reaction to San Dimas today on the back of the results, when does your share price get back into a range where you feel comfortable at executing and buying back your shares again?

Oh on the buy back basis?

That's correct, yes.

It always comes down to where is the best place for us to invest our capital in terms of return to our shareholders. And right now with the opportunities that we see in front of us, our preference is to go in that direction. And so it really comes down to that decision. We always -- every time we make an acquisition we look at it and determine whether it is better to put the money into that acquisition or is it better to put it into our shares, or in the sense right now pay down debt. It is something that we constantly assess, but I don't see us in that position right now.

The reaction today, this is a bit of an odd market and we have had a few significant events over the last couple days. I don't know if I would be so persistent. San Dimas-- Primero reported their results yesterday morning and we had plenty of time to respond to the San Dimas update from that perspective. That was a pretty good read through in terms of what would have impacted it. So I would not point the actions today to San Dimas itself. As we've seen, the Company is still very strong. We have done relatively well. The only reason there is a slight miss is we've built up our inventory back to normal levels and back to the two months of production. So I would tend to point more toward the fact that this is a pretty volatile period with some of the events we have seen the last couple days.

But you are trading outside on the downside relative to many of your peers so there has to be something else driving you. I mean, the reality is -- or I would hope most investors understand the inventory build that would have had to have taken place with the additional 25%.

That's why we have conference calls like this. It is important for us to make sure they understand that. We had a good quarter. And we have set ourselves up nicely. As Gary mentioned earlier on in the fourth quarter we typically see our partners squeeze that produce, but not yet sold pipeline. We have had a good quarter here and it is something that would set us up for what should be a pretty good year-end. And across the board the fact that we've got assets out performing and assets under performing is one of the reasons we have a diversified portfolio. There's a lot of times I don't understand the market. This is one of them. When I look at our results I don't think that we should be out. I think it is a strong quarter.

Definitely. Thank you very much.

Thank you, Andrew. Thank young everyone for dialing in today. Silver Wheaton is on track for another record year of production and sales here in 2016. We continue to believe that Silver Wheaton offers the best option for gaining exposure to precious metals for a number of reasons. Firstly, being 100% focused on precious metals. Secondly, through our portfolio of long life, low cost streams. Thirdly, by offering a proven track record of accretive acquisitions such as the recent Salobo transaction. And finally, by delivering our shareholders optionality measured in ounces, not acres.

We do look forward to speaking with you all again soon. Thank you.

This concludes the conference call for today. Thank you for participating. Please disconnect your line.