UPDATE 1-Silver Wheaton profit falls, shares down

Mon May 13, 2013 4:50pm EDT
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(Adds CEO interview, updates share price)

TORONTO May 13 (Reuters) - Shares of Silver Wheaton Corp fell more than 3.5 percent on Monday after quarterly earnings came in slightly below expectations and the company changed its dividend policy to tie the payout to performance over a whole year.

Silver Wheaton reported a 9 percent drop in first-quarter profit late on Friday, as silver equivalent sales lagged production and precious metal prices softened.

The Vancouver-based company, which helps finance mining projects in exchange for the right to buy future silver production at a set price, produced 8 million equivalent ounces, but sold just 6.9 million ounces due to delays in delivery.

While production climbed 19.5 percent in the first quarter, the average realized silver price fell 9 percent to $29.72 per ounce. Costs were 8 percent higher at $4.39 per ounce.

It expects sales to balance out through the second quarter.

Silver Wheaton also revised its dividend policy in an effort to smooth volatility. The dividend will now be based on the average cash generated by operating activities in the previous four quarters, rather than in just the single previous quarter.

Gold and silver prices dropped sharply in April, creating uncertainty in the precious metal market and that is weighing on the company's ability to make new streaming deals, said Chief Executive Randy Smallwood.

"This is an extremely volatile market right now," he told Reuters. "Everyone has been nervous about making decisions at any point in this market, because the potential for dramatic change is so high."   Continued...