TORONTO (miningweekly.com) – The world’s largest precious metals streaming firm Silver Wheaton has, for the first time, produced more than ten-million silver-equivalent ounces in a quarter, driven by its recent $900-million acquisition of a further 25% of gold from Vale’s Salobo mine, in Brazil, as well as the first gold/silver contributions from Hudbay Minerals’ Constancia mine, in Peru.

The silver- and gold-focused finance provider reported record attributable output of 10.4-million ounces, comprising 6.3-million ounces of silver and 55 100 oz of gold, for the quarter ended March 31, a 15% year-on-year increase.

However, sales volumes during the three months under review did not reflect the record output, which president and CEO Randy Smallwood ascribed to timing issues.

“We fully expect to see increased sales as the year progresses,” he told Mining Weekly Online in a telephone call on Friday. “We expect both of these streams to realise further gains over the coming year, as the Salobo mine is currently ramping up production after expanding in the middle of last year and the Constancia mine achieved commercial production on April 30 this year.”

During the first quarter, payable silver-equivalent ounces produced but not yet delivered to Silver Wheaton by its partners increased by 1.6-million ounces to about 6.5-million ounces, mainly owing to an increase in the Salobo gold purchase agreement.

Smallwood explained that payable ounces produced but not yet delivered to Silver Wheaton were expected to average about two to three months of annualised output, but it could vary from quarter to quarter owing to a number of mining operations factors including mine ramp-up and delays in shipments et cetera.

He noted that in the third and fourth quarters of 2014, the company had sold about 98% and 96% of production respectively, and that the company would expect a correction. "We normally guide for sales of about 90% of production. Whenever we get high sales in a quarter, it puts pressure on the following quarter," Smallwood said.

Vancouver-based Silver Wheaton reported net earnings of $49.4-million, or $0.13 a share, down 38% year-over-year when compared with net earnings of $79.8-million, or $0.22 a share, a year earlier. Cash flow from operations totalled $89.1-million, or $0.24 a share, down 22% on the cash flow from operations of $114.8-million, or $0.32 a share, recorded in the first quarter of 2014.

Earnings and cash flow continued to be impacted by lower gold and silver prices.

Silver Wheaton reported revenue for the period of $130.5-million, derived from the sale of 7.7-million silver-equivalent ounces, comprising 5.7-million ounces of silver and 28 400 oz of gold. This was 21% lower than the revenue of $165.4-million recorded in the first quarter of 2014, mainly owing to a 17% decrease in the average realised silver-equivalent price at $16.9/oz, compared with $20.38/oz in the same period last year, coupled with a 5% decrease in the number of silver-equivalent ounces sold.

Smallwood said the company looked forward to a prolonged period of significant organic growth without requiring any further capital. “Given our fully funded growth profile, this is the first of many production records over the coming years,” he stressed.

Silver Wheaton expected to produce 43.5-million silver-equivalent ounces this year.

The company was expecting to grow its 2019 attributable output by 40% over last year’s 35.3-million silver-equivalent ounces to 51-million ounces. This did not include the 13-million potential ounces from Hudbay’s Rosemont project, in Arizona, and Barrick Gold’s Pascua-Lama project, straddling the Chile–Argentina border, that could come on stream at that time.

Smallwood said the biggest challenge for the company this year was to regain higher valuations compared with its peers.