Silver Wheaton Corp.
TSX : SLW
NYSE : SLW

Silver Wheaton Corp.

February 19, 2009 06:30 ET

Silver Wheaton Reports 2008 Financial Results

VANCOUVER, BRITISH COLUMBIA--(Marketwire - Feb. 19, 2009) - Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) is pleased to announce its unaudited results for the fourth quarter and the year ended December 31, 2008. Annual net earnings were US$17.3 million (US$0.07 per share), after giving effect to a US$65.1 million (US$0.28 per share) non-cash write-down of long term investments, and operating cash flows were US$111.1 million (US$0.48 per share).

2008 HIGHLIGHTS (12 Months)

- Net earnings of US$17.3 million (US$0.07 per share) from the sale of 11.1 million ounces of silver, after recording a US$65.1 million (US$0.28 per share) non-cash write-down of long term investments, compared to US$91.9 million (US$0.41 per share) from the sale of 13.1 million ounces of silver in 2007.

- Operating cash flows of US$111.1 million (US$0.48 per share), compared to US$119.3 million (US$0.54 per share) in 2007.

- With four new silver stream agreements completed in 2008, and the world class Penasquito project commencing production, annual silver sales are expected to increase to 15 to 17 million ounces in 2009 and to approximately 30 million ounces by 2013.

- In February 2008, Goldcorp sold its entire 48% interest in Silver Wheaton, on a bought deal basis, for aggregate gross cash proceeds of C$1.6 billion.

- In June 2008, an amending agreement was entered into with existing lenders to increase the revolving bank debt available by US$100 million to US$400 million.

- In September 2008, an early exercise of the Company's share purchase and series "A" publicly traded warrants was successfully completed. The Company received gross cash proceeds in excess of C$120 million which were used to pay down outstanding bank debt.

- Subsequent to year-end, gross proceeds of C$287.5 million were raised by way of a bought deal equity financing through the issuance of 35,937,500 common shares. The proceeds were primarily used to repay outstanding debt under the revolving bank loan facility, and are available to fund future acquisitions of silver interests.

FOURTH QUARTER HIGHLIGHTS (3 Months)

- Net loss of US$54.2 million (US$0.22 per share) from the sale of 2.7 million ounces of silver, after recording a US$64.0 million (US$0.26 per share) non-cash write-down of long term investments, compared to US$24.9 million (US$0.11 per share) from the sale of 3.5 million ounces of silver in 2007.

- Operating cash flows of US$15.5 million (US$0.06 per share), compared to US$34.4 million (US$0.15 per share) in 2007.

- In October 2008, the Company entered into an agreement with Alexco Resource Corp. ("Alexco") to acquire 25% of the silver produced from Alexco's Keno Hill project located in the Yukon Territory, Canada, for the life of mine. Silver Wheaton will make total upfront cash payments of US$50 million, of which US$15 million had been paid by December 31, 2008, with a per ounce cash payment of the lesser of US$3.90 (subject to an inflationary adjustment) and the prevailing market price being due for silver delivered under the agreement.

"With the onset of the global economic crisis, the strength of Silver Wheaton's business model has been clearly demonstrated," said Peter Barnes, President and Chief Executive Officer of Silver Wheaton. "Despite a year of significant challenges, including less than anticipated silver deliveries from the Luismin mines in Mexico, we have continued to diversify our silver stream portfolio and have laid the groundwork for a significant increase in silver sales in 2009. With annual silver sales from our existing assets expected to approach 30 million ounces by 2013, our organic growth profile is unrivaled. In the last 6 months we have raised gross proceeds of more than US$340 million, to pay down our revolving credit facility in full and to give us the financial flexibility to pursue further accretive growth opportunities with low-cost mines in current production."

2009 and Five Year Silver Sales Forecast

The Company estimates, based upon its current agreements, to have annual silver sales of 15 to 17 million ounces in 2009, increasing to approximately 30 million ounces by 2013. Mine-by-mine actual 2008 silver sales and forecast 2009 silver sales are as follows:



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Silver Sales
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2008 Actual 2009 Forecast
Mine ('000 ozs) ('000 ozs)
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Luismin(i) 5,434 5,700 - 6,200
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Yauliyacu 2,777 2,900 - 3,500
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Zinkgruvan 1,563 1,800 - 2,100
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Stratoni 947 1,600 - 1,700
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Penasquito - heap leach 288 800 - 1,000
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- mill - 600 - 700
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Campo Morado, Mineral Park, La Negra 128 1,600 - 1,800
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Total 11,137 15,000 - 17,000
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(i) includes the San Dimas, Los Filos and San Martin mines


As several mines continue to ramp up production throughout 2009, silver sales are anticipated to be more heavily weighted towards the second half of the year. Silver sales are forecast to be approximately 3 million ounces in the first quarter of 2009.

A conference call will be held Thursday, February 19, 2009 at 11:30 am (Pacific Time) to discuss these results. To participate in the live call use one of the following methods:

Dial toll free from Canada or the US: 1-888-280-8771

Dial from outside Canada or the US: 1-416-695-9761

Dial toll free from parts of Europe: 800-4222-8835

Live audio webcast: www.silverwheaton.com

Participants should dial in five to ten minutes before the call.

The conference call will be recorded and you can listen to an archive of the call by one of the following methods:

Dial toll free from Canada or the US: 1-800-408-3053

Dial from outside Canada or the US: 1-416-695-5800

Pass code: 3281209#

Archived audio webcast: www.silverwheaton.com

CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS

This news release contains "forward-looking statements" within the meaning of the United States Private Securities Litigation Reform Act of 1995 and applicable Canadian securities legislation. Forward-looking statements include, but are not limited to, statements with respect to the future price of silver, the estimation of mineral reserves and resources, the realization of mineral reserve estimates, the timing and amount of estimated future production, costs of production, reserve determination and reserve conversion rates. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as "plans", "expects" or "does not expect", "is expected", "budget", "scheduled", "estimates", "forecasts", "intends", "anticipates" or "does not anticipate", or "believes", or variations of such words and phrases or state that certain actions, events or results "may", "could", "would", "might" or "will be taken", "occur" or "be achieved". Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Silver Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to: risks related to the integration of acquisitions, the absence of control over mining operations from which Silver Wheaton purchases silver and risks related to these mining operations, including risks related to international operations, actual results of current exploration activities, actual results of current reclamation activities, conclusions of economic evaluations, changes in project parameters as plans continue to be refined, as well as those factors discussed in the section entitled "Description of the Business - Risk Factors" in Silver Wheaton's annual information form for the year ended December 31, 2007 incorporated by reference into Silver Wheaton's Form 40-F on file with the U.S. Securities and Exchange Commission in Washington, D.C. Although Silver Wheaton has attempted to identify important factors that could cause actual results to differ materially from those contained in forward-looking statements, there may be other factors that cause results not to be as anticipated, estimated or intended. There can be no assurance that such statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward-looking statements. Silver Wheaton does not undertake to update any forward-looking statements that are incorporated by reference herein, except in accordance with applicable securities laws.



Consolidated Statement of Operations (unaudited)

Years Ended December 31
(US dollars and shares in thousands,
except per share amounts) 2008 2007 2006
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Silver sales $ 166,719 $ 175,434 $ 158,541
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Cost of sales 43,890 51,059 52,772
Depreciation and amortization 19,491 21,705 16,538
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63,381 72,764 69,310
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Earnings from operations 103,338 102,670 89,231
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Expenses and other income
General and administrative(1) 16,448 9,700 5,700
Project evaluation 866 360 211
Interest expense 116 - -
Interest income (320) (1,508) (3,221)
Debt issue costs 601 - 717
Loss on mark-to-market of long-term
investments held 65,066 1,839 -
Other 396 395 604
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83,173 10,786 4,011
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Earnings before tax 20,165 91,884 85,220
Future income tax expense(2) 2,913 22 -
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Net earnings $ 17,252 $ 91,862 $ 85,220
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1) Stock based compensation (a
non-cash item) included in General
and administrative $ 5,530 $ 2,735 $ 1,768
2) A non-cash item

Basic earnings per share $ 0.07 $ 0.41 $ 0.40
Diluted earnings per share $ 0.07 $ 0.37 $ 0.37
Weighted average number of shares
outstanding

- basic 232,855 221,909 210,538
- diluted 249,244 246,728 232,566
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Consolidated Balance Sheets (unaudited)

December 31 December 31
(US dollars and shares in thousands) 2008 2007
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Assets
Current
Cash and cash equivalents $ 7,110 $ 9,965
Accounts receivable 772 1,428
Other 816 303
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8,698 11,696

Long-term investments 21,840 119,409
Silver interests 1,238,368 1,075,023
Other 1,740 2,346
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$ 1,270,646 $ 1,208,474
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Liabilities
Current
Accounts payable $ 1,396 $ 1,021
Accrued liabilities 3,425 5,362
Current portion of bank debt 28,560 28,560
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33,381 34,943

Bank debt 349,240 391,300
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382,621 426,243
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Shareholders' Equity

Common shares, share purchase options, restricted
share units and warrants 662,115 540,061

Retained earnings 225,910 208,658
Accumulated other comprehensive income - 33,512
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225,910 242,170
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888,025 782,231
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$ 1,270,646 $ 1,208,474
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Consolidated Statement of Cash Flows (unaudited)

Years Ended December 31
(US dollars in thousands) 2008 2007 2006
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Operating Activities
Net earnings $ 17,252 $ 91,862 $ 85,220
Items not affecting cash
Depreciation and amortization 19,491 21,705 16,538
Stock based compensation 5,530 2,735 1,768
Loss on mark-to-market of long
term investments held 65,066 1,839 -
Debt issue costs - - 950
Future income tax expense 2,913 22 -
Other 398 125 (221)

Change in non-cash operating
working capital 492 973 467
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Cash generated by operating
activities 111,142 119,261 104,722
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Financing Activities
Bank debt drawn down 198,500 446,000 125,000
Bank debt repaid (240,560) (26,140) (125,000)
Promissory note repaid - (20,000) -
Debt issue costs - - (1,124)
Shares issued - - 175,150
Share issue costs (1,939) - (7,793)
Warrants exercised 115,796 293 280
Share purchase options exercised 2,667 7,347 7,018
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Cash generated by financing
activities 74,464 407,500 173,531
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Investing Activities
Purchase of long-term investments (3,921) (17,003) (50,813)
Silver interests (184,532) (557,940) (285,408)
Deferred project evaluation (9) (1,253) -
Other (418) (828) -
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Cash applied to investing
activities (188,880) (577,024) (336,221)
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Effect of exchange rate changes
on cash and cash equivalents 419 234 221
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(Decrease) increase in cash and
cash equivalents (2,855) (50,029) (57,747)
Cash and cash equivalents,
beginning of year 9,965 59,994 117,741
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Cash and cash equivalents, end
of year $ 7,110 $ 9,965 $ 59,994
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Results of Operations (unaudited)

Three Months Ended December 31, 2008
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Average Total
realized cash
silver cost
price (US$'s Net Cash flow
Silver (US$'s per earnings from
sales Ounces per ounce) (loss) operations
(US$000's) (000's) ounce) (1) (US$000's) (US$000's)
--------------------------------------------------------------------------

Luismin $ 13,265 1,312 $ 10.11 $ 4.02 $ 7,442 $ 7,989
Zinkgruvan 2,953 303 9.75 3.96 1,277 1,524
Yauliyacu 6,288 602 10.45 3.90 1,848 3,940
Stratoni 3,550 262 13.55 3.90 1,562 2,267
Penasquito 1,960 190 10.32 3.90 760 1,220
La Negra 709 69 10.28 3.90 (71) 160
Corporate - - (67,011) (1,654)
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$ 28,725 2,738 $ 10.49 $ 3.97 ($54,193) $ 15,446
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Three Months Ended December 31, 2007
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Average Total
realized cash
silver cost
price (US$'s Net Cash flow
Silver (US$'s per earnings from
sales Ounces per ounce) (loss) operations
(US$000's) (000's) ounce) (1) (US$000's) (US$000's)
--------------------------------------------------------------------------

Luismin $ 23,787 1,682 $ 14.14 $ 3.95 $ 16,486 $ 17,147
Zinkgruvan 7,721 540 14.30 3.92 4,725 5,290
Yauliyacu 13,082 919 14.24 3.90 6,150 9,499
Stratoni 5,650 402 14.05 3.90 2,478 3,999
Corporate - - (4,953) (1,521)
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$ 50,240 3,543 $ 14.18 $ 3.93 $ 24,886 $ 34,414
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Year Ended December 31, 2008
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Average Total
realized cash
silver cost
price (US$'s Net Cash flow
Silver (US$'s per earnings from
sales Ounces per ounce) (loss) operations
(US$000's) (000's) ounce) (1) (US$000's) (US$000's)
--------------------------------------------------------------------------

Luismin $ 81,293 5,434 $ 14.96 $ 3.97 $ 57,464 $ 59,735
Zinkgruvan 23,476 1,563 15.02 3.96 14,840 17,773
Yauliyacu 42,634 2,777 15.35 3.90 22,159 31,806
Stratoni 14,418 947 15.22 3.90 7,233 10,345
Penasquito 3,411 288 11.84 3.90 1,591 2,287
La Negra 1,487 128 11.62 3.90 51 988
Corporate - - (86,086) (11,792)
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$ 166,719 11,137 $ 14.97 $ 3.94 $ 17,252 $ 111,142
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Year Ended December 31, 2007
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Average Total
realized cash
silver cost
price (US$'s Net Cash flow
Silver (US$'s per earnings from
sales Ounces per ounce) (loss) operations
(US$000's) (000's) ounce) (1) (US$000's) (US$000's)
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Luismin $ 92,284 6,913 $ 13.35 $ 3.91 $ 62,532 $ 65,782
Zinkgruvan 25,315 1,845 13.72 3.90 15,109 17,991
Yauliyacu 46,055 3,442 13.38 3.90 20,088 32,632
Stratoni 11,780 868 13.57 3.90 4,941 8,337
Corporate - - (10,808) (5,481)
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$ 175,434 13,068 $ 13.42 $ 3.91 $ 91,862 $ 119,261
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Note 1. Silver Wheaton has included, throughout this document, a non-GAAP performance measure, total cash costs of silver on a sales basis. This non-GAAP measure does not have any standardized meaning prescribed by GAAP, nor is it necessarily comparable with similar measures presented by other companies. Cash costs are presented as they represent an industry standard method of comparing certain costs on a per unit basis. The Company believes that certain investors use this information to evaluate the Company's performance. The data is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with GAAP. During the year ended December 31, 2008, the Company's total cash costs, which were equivalent to the Company's Cost of Sales in accordance with GAAP, were $3.94 per ounce of silver (2007 - $3.91 per ounce).

Silver Wheaton is a trademark of Silver Wheaton Corp.

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