Wheaton River Minerals solidly in the black

Wheaton River Minerals (WRM-T) reported record earnings of US$142 million for 2004, as well as record gold, silver and copper reserves.

Earnings also increased in the fourth quarter, to US$56 million. That’s twice the amount earned in the corresponding quarter of 2003.

Wheaton River sold 606,500 gold-equivalent ounces last year, 156,400 more than in 2003. The total cash cost (net of byproduct copper sales) for 2004 was minus US$30 per oz. gold.

A large part of this negative cost is attributed to Wheaton’s 37.5% interest in the Alumbrera copper-gold mine in Argentina. Alumbrera is 50%-owned, and operated, by Xstrata (XSRAF-O); Northern Orion Resources (NNO-T) holds the remaining 12.5%.

Wheaton’s share of production at Alumbrera in 2004 incurred a total cash cost of minus US$371 per oz. gold. Wheaton’s share of production totalled 237,700 oz. gold and 145.9 million lbs. copper. If copper is treated as a co-product, cash costs at the mine rise to US$167 per oz. gold and US50 per lb. copper.

Xstrata accounts for Alumbrera’s production differently than Wheaton. Xstrata’s preliminary 2004 production results from Alumbrera resulted in a cash-cost (post-by-product credits) of US6 per lb. of copper.

In June, the Alumbrera mine increased reserves by 20%, equivalent to a mine life of 2.5 years at the current mining rate.

At the end of 2004, Wheaton River’s share of Alumbrera’s proven and probable reserve totalled 140 million tonnes grading 0.52 gram gold per tonne and 0.48% copper. The reserves were calculated using a gold price of US$350 per oz. and a copper price of US90 per lb.

Wheaton’s share of Alumbrera’s measured and indicated resource is 11.25 million tonnes grading 0.39 gram gold and 0.4% copper. Resources were calculated using a gold price of US$400 per oz. and a copper price of US$1 per lb.

Wheaton’s wholly owned Peak mine in Australia had a proven and probable reserve of 2.1 million tonnes grading 6 grams gold and 0.56% copper at the end of 2004. The measured and indicated resource stood at 1.7 million tonnes grading 4.1 grams gold and 1.26% copper. A gold price of US$375 per oz. and a copper price of US95 per lb. were used in the calculations.

In 2004, Peak produced 142,700 oz. gold and 6.7 million lbs. copper at a total cash cost of US$192 per oz. gold (net of byproduct copper). Net sales of gold were up 44% and copper sales were up 115%, compared with 2003. The average realized price of gold was US$413 per oz.; for copper, it was US$1.38 per lb.

Last year, the Luismin silver mine in Mexico produced 132,500 oz. gold and 6.7 million oz. silver at a total cash cost of US$162 per gold-equivalent ounce. The average realized price for gold was up 12% at US$410 per oz., whereas the realized price for silver rose 22% to US$5.93 per oz.

Production was up 9% at Luismin and sales increased 28%; sales revenue increased 38% to US$91.5 million.

At Dec. 31, Luismin had proven and probable reserves of 4.7 million tonnes grading 5.5 grams gold plus 3.5 million tonnes grading 355 grams silver. The measured and indicated resources were estimated at 10.5 million tonnes grading 1.76 grams gold.

Luismin’s reserves are contained in three areas: San Dimas, San Martin and Nukay. A tunnel is advancing on high-grade veins found at depth in the San Dimas area. Last year, the San Martin deposit began producing ore from the Cuerpo 31 deposit.

Wheaton acquired the Amapari deposit in Brazil in January 2004, and production is set to begin in the third quarter of 2005.

At year-end, Amapari had a proven and probable reserve of 20.6 million tonnes grading 2.3 grams gold. The measured and indicated resource stood at 3.3 million tonnes grading 1.9 grams gold.

Wheaton’s Los Filos deposit in Mexico had a measured and indicated resource of 88.2 million tonnes grading 0.89 gram gold at year-end, based on a gold price of US$400 per oz. The crush/leach resource included in this total was 51 million tonnes grading 1.28 grams gold.

In October, Wheaton River spun off its silver assets into a new company, Silver Wheaton (SLW-T). Chap Mercantile (which changed its name to Silver Wheaton) agreed to buy all the silver produced at its Luismin operations for a set price. Wheaton River owns 65% of this new silver company.

Yacimientos Mineros de Agua de Dionisio is the Argentinian statutory owner of the Alumbrera deposit and will earn 20% of the net (before tax) proceeds of the project once project capital, plus interest, has been recovered.

Wheaton River Minerals is merging with Goldcorp (G-T).