Home page: www.wheatonriver.com
Chart: http://bigcharts.marketwatch.com/quickchart/quickchart.asp?symb=CA%3AWRM&sid=1331580&o_symb=CA%3AWRM&freq=2&time=20
Business Summary
Wheaton River Minerals is a leading gold and precious metals producer with significant assets and operations in Mexico, Australia and Argentina. Based in Vancouver, British Columbia, Wheaton is the 8th largest gold producer in Canada, with a production of over 450,000 gold equivalent ounces per year at cash costs below USD 130 per ounce. As of June 30, 2003, proven and probable reserves totaled 4.2 million gold equivalent ounces and inferred resources exceeded 3.8 million gold equivalent ounces.
Australia
In Australia, the company operates the Peak mine, which is located 600 kilometers west of Sydney. This operation consists of several underground and open-pit ore bodies, and is expected to produce 110,000 ounces at a cash cost of less than USD 190. This mine has in excess of 700,000 ounces of gold in proven and probable reserves and successful exploration could increase this number. Wheaton acquired 100% of the Peak mine in March 2003.
Argentina
In Argentina, the company acquired a 25% interest in Bajo de la Alumbrera, a large open-pit gold and copper mine, in March 2003. Bajo de la Alumbrera is located in the northwest of Argentina, in the province of Catamarca. At the end of 2002, Wheaton's share of proven and probable reserves stood at 1.8 million ounces of gold and 1 billion pounds of copper. Wheaton's share of gold production in 2003 is expected to exceed 140,000 ounces, at a cash cost of negative USD 18 net of copper credits. This mine is expected to last in excess of 10 years.
Mexico
In Mexico, the company produces 195,000 gold equivalent ounces (100,000 oz gold and 5.8 million oz silver) at total cash costs of USD 187 per ounce. The largest operation, San Dimas, is a world-class epithermal vein system accounting for 70% of the production and the majority of Wheaton's inferred resources. These operations have consistently converted 90% of resources into reserves over the last 12 years. Wheaton acquired a 100% interest in the Mexican operations and its extensive exploration portfolio in June 2002.
Extensive Exploration potential in Mexico
Recent News:
WHEATON REPORTS 325% INCREASE IN PRODUCTION AND 66% REDUCTION IN CASH COSTS FOR 2003 Wheaton River Minerals Ltd. has reported a 325% increase in production to 450,000 gold equivalent ounces in 2003 compared to 106,000 gold equivalent ounces in 2002. In 2003, cash costs decreased by 66% to USD 62 per gold equivalent ounce, compared to USD 182 per ounce in 2002.
Reserves increased by over 600% to 5.3 million gold equivalent ounces and resources more than doubled.
Ian Telfer, Chairman & Chief Executive Officer of the company said: "2003 was a pivotal year of growth for Wheaton with production more than tripling in a period of rising gold prices. Present mine development activities in Brazil and Mexico will allow Wheaton to double production again by 2006. All operations have delivered and all have proven profitable. We believe our resources in Australia, Brazil and Mexico are only just beginning to be understood. We look forward to the year ahead and continue to believe we are in an environment in which gold, silver and copper prices will continue to rise. This will result in continued success for Wheaton and its shareholders."
2003 Operating Results
The company reported 2003 operating results as follows:
Luismin Operations
Continued investment into Luismin's San Dimas operations in Mexico has resulted in the lowest operating costs in the history of this prolific mining district. Increased exploration and development spending has produced some of the highest grades since the original San Luis vein was discovered over 100 years ago. Consolidation of processing operations into the Tayoltita mill was completed in 2003 and the San Antonio mill has ceased operating as planned. A 25% process capacity expansion at Tayoltita will be completed over the next two years.
At San Martin, 2003 saw the commencement of development into the Cuerpo 30 orebody, and the first delivery of ore from the neighboring San Pedrito project. Cuerpo 30 is a fault offset of the main San Martin orebody, and production grades to date have been higher than expected. Drilling continues testing the strike and dip extent of the orebody. A 20% increase in plant capacity is scheduled for 2004-2005.
Los Filos Project
At the recently acquired Los Filos Gold development project in Mexico, metallurgical, geotechnical, and condemnation drilling is underway. Independent Mine Consultants of Tuscon, Arizona has been selected as lead consultant for the preparation of a final feasibility study during 2004, with support from Golder Associates of Denver, Colorado and McLelland Labs of Reno, Nevada. Los Filos is scheduled to commence production in early 2006.
Peak Operations
The Peak Gold Mine in New South Wales was acquired by Wheaton in March 2003, and aggressive exploration resulted in seven drills exploring for and defining orebodies along the Great Cobar Shear, host of all the historic production in the district. The campaign was extremely successful, with the high grade Perseverance orebody being extended substantially to depth, and significant mineralization being encountered in the Peak Deeps area. The upper reaches of Perseverance began production in 2003, and mining methods were improved in the New Occidental orebody.
Alumbrera Operations
Bajo del la Alumbrera continues to achieve results better than the plan. Wheaton is excited about the reserve and mine plan review scheduled to be completed by July 2004, as current reserves and mine planning are based on USD 301 gold and USD 0.82 copper. With mineralization known to extend to depth below the current pit design, the potential to extend the life of Alumbrera is high in light of current gold and copper prices.
Amapari Project
Construction has commenced at the Amapari Gold project in Brazil, with site clearing, access road construction, and foundation preparation underway for the process facilities. Condemnation and final delineation drilling is underway, and further exploration is planned for the second half of 2004. Amapari is scheduled to start producing gold late in 2005.
Production Outlook
In 2004, Wheaton expects to produce approximately 540,000 gold equivalent ounces at a cash cost of less than USD 50 per ounce, based on current metal prices. By 2006, Wheaton plans to bring the Los Filos and Amapari projects into operation increasing overall production to 900,000 gold equivalent ounces at cash costs of less than USD 100 per ounce.
2003 Reserves and Resources
Through both acquisitions and investments, Wheaton has significantly increased proven and probable reserves at year-end 2003 to 5.3 million gold equivalent ounces, a six-fold increase over 2002. Measured and indicated resources increased to 2.6 million ounces of gold equivalent, and total resources increased by 230%.
Fundamental Considerations
We believe that this well-run company has the capacity to add significantly to Proven & Probable reserves over the coming years, while increasing production and reducing cash cost. In Mexico alone, the company has more than thirty exploration properties.
Technical Considerations
The president of Wheaton River believes that gold could hit $ 450 in 2004, an opinion we share.
The share price of Wheaton River had a spectacular rise since we recommended the company on April 29, 2003 at CAD 1.20.
"A long-term oriented investor should hold on, and those who have no positions should wait for a pull-back.", we said on October 3.
The pull-back that followed was short and shallow and it has certainly paid off to hold on.
We still believe that this company represents good value at present prices in this emerging precious metal bull-market especially now that the shares are trading substantially below the high reached at he beginning of last December.
Our recommendation: Buy !
Peter Zihlmann
www.pzim.com
investment@pzim.com
forex@pzim.com
March 8, 2004
Disclosure: The author has not been paid to write this article, nor has he received any other inducement to do so. The author is a shareholder in the company and will benefit from any increase in the company's share price. Disclaimer: The author's objective in writing this article is to invoke an interest on the part of potential investors in this stock to the point where they are encouraged to conduct their own further diligent research. Neither the information, nor the opinions expressed should be construed as a solicitation to buy or sell this stock. Investors are recommended to obtain the advice of a qualified investment advisor before entering into any transactions in the stock.