Wheaton Precious Metals Corp. press release

Wheaton Precious Metals Announces Record Revenue, Cash Flow and Sales Volume for the First Half of 2021

2021-08-12

TSX - Toronto Stock Exchange · Gold · Copper · Silver · Zinc · Palladium · Platinum · Cobalt · Canada

Canada NewsWire

TSX | NYSE | LSE: WPM

Designated News Release SECOND QUARTER 2021 FINANCIAL RESULTS

VANCOUVER, BC , Aug. 12, 2021 /CNW/ - "Wheaton once again delivered strong results in the second quarter and remains well on track to achieve 2021 guidance of 720,000 to 780,000 gold equivalent ounces. With record sales volumes in the first half of 2021, Wheaton generated both record revenue and cash flow of $655 million and $449 million , respectively. This solid performance reflects the underlying strength of our diversified, high-quality portfolio, and has resulted in an increase to our dividend for the fourth quarter in a row, an increase of 50% over the prior year," said Randy Smallwood , President and Chief Executive Officer of Wheaton Precious Metals Corp. "We continue to remain extremely active on the corporate development front, closing the previously announced precious metals stream on Capstone's Santo Domingo project and subsequent to the quarter, entering into an agreement on a new precious metals stream on Rio2's Fenix Gold project in Chile . In addition, we remain committed to sustainability and are proud to have published our annual sustainability report in the second quarter, highlighting our focus on delivering value to all of our stakeholders."

Second Quarter 2021 Highlights:

$216 million in operating cash flow during the second quarter. Record quarterly revenue of $330 million during the second quarter. Gold equivalent production 2 increased over 32% relative to Q2 2020. Declared quarterly dividend 1 of $0.15 per common share representing the fourth quarterly dividend increase in a row and a 50% increase relative to Q2 2020. Initial gold and silver production from the Pampacancha deposit at the Constancia mine. First gold and silver deliveries from the Marmato mine. Inaugural cobalt production from Voisey's Bay underground extension.

Operational Overview

| (all figures in US dollars unless otherwise noted) | | Q2 2021 | | Q2 2020 | Change | | Units produced | | | | | | | Gold ounces | | 90,290 | | 88,783 | 1.7 % | | Silver ounces | | 6,720 | | 3,651 | 84.1 % | | Palladium ounces | | 5,301 | | 5,759 | (8.0)% | | Cobalt pounds | | 379,757 | | - | n.a. | | Gold equivalent ounces 2 | | 194,140 | | 146,857 | 32.2 % | | Units sold | | | | | | | Gold ounces | | 90,090 | | 92,804 | (2.9)% | | Silver ounces | | 5,600 | | 4,729 | 18.4 % | | Palladium ounces | | 3,869 | | 4,976 | (22.2)% | | Cobalt pounds | | 394,623 | | - | n.a. | | Gold equivalent ounces 2 | | 176,700 | | 164,844 | 7.2 % | | Revenue | $ | 330,393 | $ | 247,954 | 33.2 % | | Net earnings | $ | 166,124 | $ | 105,812 | 57.0 % | | Per share | $ | 0.369 | $ | 0.236 | 56.4 % | | Adjusted net earnings 1 | $ | 161,626 | $ | 97,354 | 66.0 % | | Per share 1 | $ | 0.359 | $ | 0.217 | 65.4 % | | Operating cash flows | $ | 216,415 | $ | 151,793 | 42.6 % | | Per share 1 | $ | 0.481 | $ | 0.338 | 42.3 % |

| All amounts in thousands except gold, palladium & gold equivalent ounces and cobalt pounds produced & sold, per ounce/pound amounts & per share amounts. |

Subsequent to the Quarter – Corporate Development

_Fenix Gold Project: _On July 20, 2021 , the Company signed a non-binding term sheet with Rio2 Limited ("Rio2") to enter into a precious metals purchase agreement ("PMPA") in connection with the Fenix Gold project located in Chile . Under the terms of the proposed Fenix PMPA, the Company will acquire 6% of the gold production until 90,000 ounces have been delivered and 4% of the gold production until 140,000 ounces have been delivered, after which the stream drops to 3.5% for the life of mine. In addition, under the proposed Fenix PMPA, the Company will pay a total upfront cash consideration of $50 million , $25 million of which is payable upon closing, subject to certain conditions, and $25 million payable subject to Rio2's receipt of its Environmental Impact Assessment for the Fenix Gold project, and certain other conditions. In addition, the Company will make ongoing delivery payments equal to approximately 18% of the spot price until the value of gold delivered less the production payment is equal to the upfront consideration of $50 million , at which point the production payment will increase to 22% of the spot gold price. The entering into of the Fenix PMPA is subject to, among other matters, the negotiation and completion of definitive documentation.

Financial Review

_Revenues _Revenue was $330 million in the second quarter of 2021 representing a 33% increase from the second quarter of 2020 due primarily to a 24% increase in the average realized gold equivalent² price; and coupled with a 7% increase in the number of gold equivalent² ounces sold.

_Cash Costs and Margin _Average cash costs¹ in the second quarter of 2021 were $444 per gold equivalent² ounce as compared to $396 in Q2 2020. This resulted in a cash operating margin¹ of $1,426 per gold equivalent² ounce sold, an increase of 29% as compared with the second quarter of 2020.

Balance Sheet (at June 30, 2021 )

Approximately $235 million of cash on hand. The Company's $2 billion revolving term loan (the "Revolving Facility") remains fully repaid. During the quarter, the term of the Revolving Facility was extended by an additional year, with the facility now maturing on June 9, 2026 .

Second Quarter Asset Highlights

_Salobo: _In the second quarter of 2021, Salobo produced 55,600 ounces of attributable gold, a decrease of approximately 6% relative to the second quarter of 2020 due to lower grade, partially offset by higher throughput. According to Vale S.A.'s ("Vale") Second Quarter 2021 Performance Report, production was mainly impacted as the mine maintenance workshops continued to ramp up in the quarter after a broader review in the first quarter of 2021, which limited mine movement and feed grade available for the quarter. Vale further reports that physical completion of the Salobo III mine expansion was 77% at the end of the second quarter and is on track for start-up in the second half of 2022.

_Peñasquito: _In the second quarter of 2021, Peñasquito produced 2.0 million ounces of attributable silver, an increase of approximately 109% relative to the second quarter of 2020 as operations at the mine were temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic.

_Antamina: _In the second quarter of 2021, Antamina produced 1.6 million ounces of attributable silver, an increase of approximately 155% relative to the second quarter of 2020 as operations at the mine were temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic.

_San Dimas: _In the second quarter of 2021, San Dimas produced 11,500 ounces of attributable gold, an increase of approximately 89% relative to the second quarter of 2020, primarily due to operations being temporarily suspended during the second quarter of 2020 due to the COVID-19 pandemic coupled with the impact of changing the silver to gold conversion ratio from 70:1 to 90:1 from April 1, 2020 to October 15, 2020 , at which time it reverted to 70:1.

_Constancia: _In the second quarter of 2021, Constancia produced 0.5 million ounces of attributable silver and 5,500 ounces of attributable gold, an increase of approximately 85% and 59%, respectively, relative to the second quarter of 2020, which was primarily due to operations being temporarily suspended during the second quarter of 2020 due to the COVID-19 pandemic, and, for gold, the improved grades and recoveries as a result of the commencement of first ore production from the Pampacancha satellite deposit. According to Hudbay Minerals Inc.'s ("Hudbay") second quarter of 2021 MD&A, following the finalization of the remaining land user agreement and due to its short ramp-up period, Pampacancha achieved commercial production in April 2021 . On May 10, 2021 , Wheaton and Hudbay agreed to amend the Constancia streaming agreement so that Hudbay would no longer be required to deliver an additional 8,020 ounces of gold to Wheaton for not mining four million tonnes of ore from Pampacancha by June 30, 2021 . As part of this amendment, Hudbay has agreed to increase the fixed gold recoveries that apply to Constancia ore production from 55% to 70% during the reserve life of Pampacancha 3 .

_Sudbury : _In the second quarter of 2021, Vale's Sudbury mines produced 4,800 ounces of attributable gold, a decrease of approximately 48% relative to the second quarter of 2020, which was primarily due to lower grades and throughput, as operations at the mine were suspended due to a labour dispute, which lasted from June 1, 2021 to August 9, 2021 . Vale announced on August 3, 2021 that a new five-year collective bargaining agreement had been ratified with mine workers. The Sudbury PMPA had an effective date of February 28, 2013 with a term of 20 years. Under the provisions of the Sudbury PMPA, should the facilities at Sudbury be shut down for 60 or more cumulative days, exclusive of scheduled maintenance or shutdowns for periods of 20 days or less, the term of the Sudbury PMPA shall be extended for the same duration.

_Stillwater : _In the second quarter of 2021, the Stillwater mines produced 3,000 ounces of attributable gold and 5,300 ounces of attributable palladium, a decrease of approximately 8% for gold and 8% for palladium relative to the second quarter of 2020 due to lower grades.

_Other Gold: _In the second quarter of 2021, total Other Gold attributable production was 10,000 ounces, an increase of approximately 30% relative to the second quarter of 2020, primarily due production from the newly acquired Marmato stream.

_Other Silver: _In the second quarter of 2021, total Other Silver attributable production was 2.7 million ounces, an increase of approximately 47% relative to the second quarter of 2020, primarily due to higher production at Yauliyacu as prior year operations were temporarily suspended due to the COVID-19 pandemic coupled with the resumption of mining at Keno Hill and production from the newly acquired Cozamin and Marmato streams.

_Voisey's Bay: _In the second quarter of 2021, the Voisey's Bay mine produced 380,000 pounds of attributable cobalt. As at the end of the second quarter 2021, approximately 134,000 pounds of cobalt were held in inventory by Wheaton and 777,000 pounds were produced but not delivered. As per Vale's Second Quarter 2021 Performance Report, physical completion of the Voisey's Bay underground mine extension, which includes developing two underground mines - Reid Brook and Eastern Deeps - was 66% at the end of the second quarter. Reid Brook produced its first ore in June of 2021, and Vale reports that Eastern Deeps is expected to start up in 2022.

Produced But Not Yet Delivered 4

As at June 30, 2021 , payable ounces and pounds attributable to the Company produced but not yet delivered amounted to:

65,900 payable gold ounces, a decrease of 3,600 ounces during Q2 2021, primarily due to reductions during the period relative to the Salobo and Sudbury mines partially offset by an increase at the Constancia mine. 4.0 million payable silver ounces, an increase of 0.2 million ounces during Q2 2021, primarily due to increases during the period relative to the Yauliyacu and Constancia mines. 6,800 payable palladium ounces, an increase of 1,400 ounces during Q2 2021. 777,300 payable cobalt pounds, a decrease of 40,300 pounds during Q2 2021.

Detailed mine-by-mine production and sales figures can be found in the Appendix to this press release and in Wheaton's consolidated MD&A in the 'Results of Operations and Operational Review' section.

Corporate Development

On April 15, 2021 , the previously announced PMPA relative to the Marmato mine was closed, with the initial upfront cash consideration of $34 million being paid to Aris Gold Corporation on that date. On April 21, 2021 , the previously announced PMPA with Capstone Mining Corp. ("Capstone") relative to the Santo Domingo project was closed with the initial upfront cash consideration of $30 million being paid to Capstone on that date. On July 20, 2021 , the Company signed a non-binding term sheet with Rio2 to enter into a PMPA relative to the Fenix Gold project located in Chile .

Sustainability

_COVID-19 Community Support and Response Fund: _In the second quarter of 2020, Wheaton announced the launch of a $5 million Community Support and Response Fund (the "CSR Fund") to support global efforts to combat the COVID-19 pandemic and its impacts on our communities. The CSR Fund is designed to meet the immediate needs of the communities in which Wheaton and its mining partners operate. This fund is incremental to Wheaton's already active Community Investment Program that currently provides support to over 50 programs in multiple communities around the world. As of June 30, 2021 , the Company has made donations totalling approximately $4 million through the CSR Fund.

_2020 Sustainability Report: _In the second quarter of 2021, Wheaton published its annual sustainability report, a comprehensive disclosure outlining Wheaton's commitment to sustainability and environmental, social and governance ("ESG") performance.

_Partner CSR Program: _In the second quarter of 2021, Wheaton continued to support a wide range of programs with various mining partners. Wheaton committed to support the Enseña Peru educational program near the Antamina mine for another two years, bringing to a total of six years of Wheaton's support; continued to work with the Vale Foundation in supporting ten different programs focused on health, education, entrepreneurial support and community engagement opportunities near the Salobo mine; and, committed to the second phase of an agricultural and livestock development program previously supported by Wheaton and a new waste management program with Hudbay near the Constancia mine.

Webcast and Conference Call Details

A conference call and webcast will be held on Friday, August 13, 2021 starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call please use one of the following methods:

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

The accompanying slideshow will also be available in PDF format on the 'Presentations' page of the Wheaton Precious Metals website before the conference call.

The conference call will be recorded and available until August 20, 2021 at 11:59 pm ET . The webcast will be available for one year. You can listen to an archive of the call by one of the following methods:

This earnings release should be read in conjunction with Wheaton Precious Metals' MD&A and Financial Statements, which are available on the Company's website at www.wheatonpm.com and have been posted on SEDAR at www.sedar.com .

Mr. Wes Carson , P.Eng., Vice President, Mining Operations, is a "qualified person" as such term is defined under National Instrument 43-101 and has reviewed and approved the technical information disclosed in this news release.

Wheaton Precious Metals believes that there are no significant differences between its corporate governance practices and those required to be followed by United States domestic issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious Metals website at http://www.wheatonpm.com/Company/corporate-governance/default.aspx .

About Wheaton Precious Metals Corp. and Outlook

Wheaton is the world's premier precious metals streaming company with the highest-quality portfolio of long-life, low-cost assets. Its business model offers investors commodity price leverage and exploration upside but with a much lower risk profile than a traditional mining company. Wheaton delivers amongst the highest cash operating margins in the mining industry, allowing it to pay a competitive dividend and continue to grow through accretive acquisitions. As a result, Wheaton has consistently outperformed gold and silver, as well as other mining investments. Wheaton is committed to strong ESG practices and giving back to the communities where Wheaton and its mining partners operate. Wheaton creates sustainable value through streaming for all of its stakeholders.

Wheaton's estimated attributable production in 2021 is forecast to be 370,000 to 400,000 ounces of gold, 22.5 to 24.0 million ounces of silver, and 40,000 to 45,000 gold equivalent ounces 2 ("GEOs") of other metals, resulting in production of approximately 720,000 to 780,000 GEOs 2 , unchanged from previous guidance. For the five-year period ending in 2025, the Company estimates that average production will amount to 810,000 GEOs 5 . For the ten-year period ending in 2030, the Company estimates that average annual production will amount to 830,000 GEOs 5 .

In accordance with Wheaton Precious Metals™ Corp.'s ("Wheaton Precious Metals", "Wheaton" or the "Company") MD&A and financial statements, reference to the Company and Wheaton includes the Company's wholly owned subsidiaries.

End Notes

| _ | | | 1 | Please refer to non-IFRS measures at the end of this press release. Dividends declared in the referenced calendar quarter, relative to the financial results of the prior quarter. | | 2 | Commodity price assumptions for the gold equivalent production and sales in 2021 and long-term forecasts are $1,800 / ounce gold, $25 / ounce silver, and $2,300 / ounce palladium and $17.75 / pound cobalt. Other metal includes palladium and cobalt. | | 3 | If Hudbay mines and processes four million tonnes of ore from the Pampacancha deposit by December 31, 2021, the Company will make an additional deposit payment of $4 million to Hudbay. | | 4 | Payable gold, silver and palladium ounces and cobalt pounds produced but not yet delivered are based on management estimates only and rely upon information provided by the owners and operators of mining operations and may be revised and updated in future periods as additional information is received. | | 5 | Gold equivalent guidance based on the commodity prices outlined in note 2 above. Five- and ten-year guidance do not include optionality production from Pascua Lama, Navidad, Cotabambas, or additional expansions at Salobo outside of project currently in construction. In addition, five-year guidance also does not include any production from Rosemont, Toroparu, Kutcho, or the Victor project at Sudbury. |

Condensed Interim Consolidated Statements of Earnings

| | | Three Months Ended June 30 | Six Months Ended June 30 | | | | | | | | (US dollars and shares in thousands, except per share amounts - unaudited) | | 2021 | 2020 | 2021 | 2020 | | | | | | Sales | | $ | 330,393 | $ | 247,954 | $ | 654,512 | $ | 502,744 | | Cost of sales | | | | | | | | | | | Cost of sales, excluding depletion | | $ | 78,445 | $ | 65,211 | $ | 157,228 | $ | 132,119 | | Depletion | | | 70,308 | | 58,661 | | 140,482 | | 123,503 | | Total cost of sales | | $ | 148,753 | $ | 123,872 | $ | 297,710 | $ | 255,622 | | Gross margin | | $ | 181,640 | $ | 124,082 | $ | 356,802 | $ | 247,122 | | General and administrative expenses | | | 18,465 | | 21,799 | | 30,435 | | 34,981 | | Earnings from operations | | $ | 163,175 | $ | 102,283 | $ | 326,367 | $ | 212,141 | | Other (income) expense | | | (3,420) | | (3,366) | | (3,301) | | (3,963) | | Earnings before finance costs and income taxes | $ | 166,595 | $ | 105,649 | $ | 329,668 | $ | 216,104 | | | Finance costs | | | 1,357 | | 4,636 | | 2,930 | | 11,753 | | Earnings before income taxes | | $ | 165,238 | $ | 101,013 | $ | 326,738 | $ | 204,351 | | Income tax recovery (expense) | | | 886 | | 4,799 | | 1,388 | | (3,643) | | Net earnings | | $ | 166,124 | $ | 105,812 | $ | 328,126 | $ | 200,708 | | Basic earnings per share | | $ | 0.369 | $ | 0.236 | $ | 0.729 | $ | 0.448 | | Diluted earnings per share | | $ | 0.368 | $ | 0.235 | $ | 0.728 | $ | 0.447 | | Weighted average number of shares outstanding | | | | | | | | | | | Basic | | | 450,088 | | 448,636 | | 449,800 | | 448,217 | | Diluted | | | 451,203 | | 450,042 | | 450,869 | | 449,513 |