Wheaton Precious Metals Corp. press release
Wheaton Precious Metals Announces Record Revenue, Earnings and Cash Flow for the First Nine Months of 2021
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TSX | NYSE | LSE: WPM
Designated News Release THIRD QUARTER 2021 FINANCIAL RESULTS
VANCOUVER, BC , Nov. 4, 2021 /CNW/ - "Wheaton's diversified portfolio of high-quality, long-life assets continues to deliver strong results, including record revenue, earnings and cash flow in the first nine months of 2021. In addition, the Company declared a dividend of $0.15 per common share, a 25% increase relative to the prior year," said Randy Smallwood , President and Chief Executive Officer of Wheaton Precious Metals. "Strong year to date production, particularly driven by silver, has led the Company to narrow its annual guidance to 735,000 to 765,000 gold equivalent ounces, consistent with the previous midpoint of guidance."
Third Quarter 2021 Highlights:
Over $200 million in operating cash flow during the third quarter and a record $650 million in the first nine months of 2021. $269 million in revenue during the third quarter and a record $923 million in the first nine months of 2021. $137 million in adjusted net earnings during the third quarter and a record $460 million in the first nine months of 2021. Signed a non-binding term sheet with Rio2 Limited to enter into a precious metals purchase agreement in connection with the Fenix Gold project located in Chile . Strong financial position with approximately $372 million in cash on hand and $2 billion of additional capacity through the revolving credit facility as of September 30, 2021 . Declared quarterly dividend 1 of $0.15 per common share .
Operational Overview
| (all figures in US dollars unless otherwise noted) | | Q3 2021 | | Q3 2020 | Change | | Units produced | | | | | | | Gold ounces | | 85,941 | | 90,500 | (5.0)% | | Silver ounces | | 6,394 | | 6,028 | 6.1 % | | Palladium ounces | | 5,105 | | 5,444 | (6.2)% | | Cobalt pounds | | 370,522 | | - | n.a. | | Gold equivalent ounces 2 | | 184,918 | | 181,184 | 2.1 % | | Units sold | | | | | | | Gold ounces | | 67,649 | | 90,101 | (24.9)% | | Silver ounces | | 5,487 | | 4,999 | 9.8 % | | Palladium ounces | | 5,703 | | 5,546 | 2.8 % | | Cobalt pounds | | 131,174 | | - | n.a. | | Gold equivalent ounces 2 | | 152,432 | | 166,611 | (8.5)% | | Revenue | $ | 268,957 | $ | 307,268 | (12.5)% | | Net earnings | $ | 134,937 | $ | 149,875 | (10.0)% | | Per share | $ | 0.300 | $ | 0.334 | (10.2)% | | Adjusted net earnings 1 | $ | 137,087 | $ | 152,007 | (9.8)% | | Per share 1 | $ | 0.304 | $ | 0.338 | (10.1)% | | Operating cash flows | $ | 201,287 | $ | 228,099 | (11.8)% | | Per share 1 | $ | 0.447 | $ | 0.508 | (12.0)% |
| All amounts in thousands except gold, palladium & gold equivalent ounces and cobalt pounds produced & sold, per ounce/pound amounts & per share amounts. |
Reiterating Gold Equivalent Production Guidance
Wheaton's estimated attributable production in 2021 is now forecast to be approximately 735,000 to 765,000 gold equivalent ounces 2 ("GEOs") in line with previous guidance of 720,000 to 780,000 GEOs. However, given strong performances at Peñasquito, Antamina and Voisey's Bay, coupled with production being lower than expected at Salobo, Wheaton is adjusting the production mix by metal as per the table below. Longer term guidance remains unchanged at an average production of 810,000 GEOs for the five-year period ending 2025 and 830,000 GEOs for the ten-year period ending in 2030 3 .
| | Updated Guidance | Original Guidance | | Gold Ounces | 330,000 to 345,000 | 370,000 to 400,000 | | Silver Ounces('000s) | 25,500 to 26,500 | 22,500 to 24,000 | | Other Metals 2 (GEOs) | 45,000 to 55,000 | 40,000 to 45,000 | | Total GEOs 2 | 735,000 to 765,000 | 720,000 to 780,000 |
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 $269 million in the third quarter of 2021 representing a 12% decrease from the third quarter of 2020 due primarily to a 9% decrease in the number of gold equivalent² ounces sold, primarily the result of a large build-up of payable ounces produced but not yet delivered ("PBND") at Salobo; and a 4% decrease in the average realized gold equivalent² price.
_Cash Costs and Margin _Average cash costs¹ in the third quarter of 2021 were $410 per gold equivalent² ounce as compared to $421 in third quarter of 2020. This resulted in a cash operating margin¹ of $1,354 per gold equivalent² ounce sold, a decrease of 5% as compared with the third quarter of 2020.
Balance Sheet (at September 30, 2021 )
Approximately $372 million of cash on hand. The Company's $2 billion revolving term loan (the "Revolving Facility") remains fully repaid.
Third Quarter Asset Highlights
_Salobo: _In the third quarter of 2021, Salobo produced 55,200 ounces of attributable gold, a decrease of approximately 13% relative to the third quarter of 2020 due to lower throughput and grade. On October 22, 2021 , Vale S.A. ("Vale") announced the resumption of conveyor belt operations at Salobo, that was halted for 18 days due to a fire. Other activities, including mine and maintenance operations, continued as usual during this period but concentrate production was interrupted. Concentrate production resumed on October 22, 2021 and ramped up over a three day period. Vale further reports that physical completion of the Salobo III mine expansion was 81% at the end of the third quarter and is on track for start-up in the second half of 2022 .
_Peñasquito: _In the third quarter of 2021, Peñasquito produced 2.2 million ounces of attributable silver, an increase of approximately 9% relative to the third quarter of 2020, with throughput, grades and recoveries all being higher.
_Antamina: _In the third quarter of 2021, Antamina produced 1.5 million ounces of attributable silver, an increase of approximately 2% relative to the third quarter of 2020, primarily due to higher recoveries . Subsequent to the quarter, as per Compañía Minera Antamina S.A.'s (the operating company of Antamina) news release dated October 31, 2021 , operations at Antamina have been temporarily suspended to ensure the health and safety of its workforce and other stakeholders following recent protests in Peru .
_Constancia: _In the third quarter of 2021, Constancia produced 0.5 million ounces of attributable silver and 8,500 ounces of attributable gold, an increase of approximately 21% and 126%, respectively, relative to the third quarter of 2020. Silver production was higher primarily as a result of higher grades. The increase in gold production was primarily due to higher grades resulting from the commencement of ore production from the Pampacancha satellite deposit and the increase in fixed recoveries from 55% to 70%, partially offset by the receipt of 2,005 ounces in the third quarter of 2020 related to delays in accessing the Pampacancha deposit while no delay payment was received in 2021.
_Sudbury : _In the third quarter of 2021, Vale's Sudbury mines produced 500 ounces of attributable gold, a decrease of approximately 88% relative to the third quarter of 2020, which was primarily due to lower 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. As a result, the term of the agreement was extended by 69 days.
_Stillwater : _In the third quarter of 2021, the Stillwater mines produced 2,900 ounces of attributable gold and 5,100 ounces of attributable palladium, a decrease of approximately 7% for gold and 6% for palladium relative to the third quarter of 2020 due to lower grades.
_San Dimas: _In the third quarter of 2021, San Dimas produced 11,900 ounces of attributable gold, an increase of approximately 29% relative to the third quarter of 2020 , primarily due to higher throughput 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.
_Voisey's Bay: _In the third quarter of 2021, the Voisey's Bay mine produced 371,000 pounds of attributable cobalt. As at the end of the third quarter 2021, approximately 488,000 pounds of cobalt were held in inventory by Wheaton and 638,000 pounds were produced but not yet delivered. As per Vale's Third 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 70% at the end of the third quarter.
_Rosemont : _Hudbay announced on September 22, 2021 , the intersection of additional high-grade copper sulphide and oxide mineralization on its wholly-owned patented mining claims located within close proximity of its Rosemont copper project in Arizona ("Copper World"). To date, seven deposits have been identified at Copper World with a combined strike length of over seven kilometres. As of June 30, 2021 , approximately 166 holes were completed totaling over 91,000 feet of drilling. Hudbay expects to publish an initial inferred mineral resource estimate for Copper World before the end of 2021, and these mineral resource estimates will form the basis for a preliminary economic assessment ("PEA") expected to be released by Hudbay in the first half of 2022. The Copper World discovery is included in Wheaton's area of interest under the PMPA.
Produced But Not Yet Delivered 4
As at September 30, 2021 , payable ounces and pounds attributable to the Company produced but not yet delivered amounted to:
81,200 payable gold ounces, an increase of 15,000 ounces during Q3 2021 , primarily due to an increase during the period at the Salobo mine. 4.1 million payable silver ounces, virtually unchanged during Q3 2021, as decreases during the period at the Peñasquito mine were offset by an increase at the Yauliyacu mine. 5,600 payable palladium ounces, a decrease of 1,200 ounces during Q3 2021. 638,000 payable cobalt pounds, a decrease of 139,300 pounds during Q3 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.
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 social and economic impact of the COVID-19 pandemic. 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 September 30, 2021 , the Company has made donations totaling approximately $4 million through the CSR Fund.
_ESG Ratings: _Following recent rating updates, Wheaton's Sustainalytics 5 score further improved from 9.2 to 7.9 indicating reduced risk exposure and maintained its AA rating from MSCI 5 demonstrating Wheaton's continued leadership in ESG practices. Wheaton is currently ranked in the Global Top 50 out of more than 14,000 companies and #1 for precious metals out of 122 companies by Sustainalytics 5 .
_Partner CSR Program: _Wheaton continues to support a wide range of programs with mining partners including Vale, Glencore, Hudbay and First Majestic Silver focused on education, health, entrepreneurial support, and community engagement opportunities in the communities near the mines from which Wheaton receives precious metals. In the third quarter of 2021, a solar panel installation project was completed at a Knowledge Station run by the Vale Foundation in the community of Marabá, Brazil .
Webcast and Conference Call Details
A conference call and webcast will be held on Friday, November 5, 2021 starting at 8:00am PT / 11:00 am ET to discuss these results. To participate in the live call please use one of the following methods:
Dial toll free from Canada or the US: 1-888-664-6383 Dial from outside Canada or the US: 1-416-764-8650 Pass code: 61024959 Live audio webcast: Webcast URL
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 November 12, 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:
Dial toll free from Canada or the US: 1-888-390-0541 Dial from outside Canada or the US: 1-416-764-8677 Pass code: 024959# Archived audio webcast: Webcast URL
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 330,000 to 345,000 ounces of gold, 25.5 to 26.5 million ounces of silver, and 45,000 to 55,000 GEOs of other metals, resulting in production of approximately 735,000 to 765,000 GEOs, in line with previous guidance. For the five-year period ending in 2025, the Company estimates that average production will amount to 810,000 GEOs 3 . For the ten-year period ending in 2030, the Company estimates that average annual production will amount to 830,000 GEOs 3 .
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 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. 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 Rating current as of October 7, 2021, for Sustainalytics and as of September 23, 2021, for MSCI. |
Condensed Interim Consolidated Statements of Earnings
| | | Three Months Ended September 30 | Nine Months Ended September 30 | | | | | | | | (US dollars and shares in thousands, except per share amounts - unaudited) | | 2021 | | 2020 | | 2021 | | 2020 | | | Sales | | $ | 268,957 | $ | 307,268 | $ | 923,468 | $ | 810,012 | | Cost of sales | | | | | | | | | | | Cost of sales, excluding depletion | | $ | 62,529 | $ | 70,119 | $ | 219,757 | $ | 202,238 | | Depletion | | | 54,976 | | 60,601 | | 195,458 | | 184,104 | | Total cost of sales | | $ | 117,505 | $ | 130,720 | $ | 415,215 | $ | 386,342 | | Gross margin | | $ | 151,452 | $ | 176,548 | $ | 508,253 | $ | 423,670 | | General and administrative expenses | | | 13,595 | | 21,326 | | 44,030 | | 56,307 | | Earnings from operations | | $ | 137,857 | $ | 155,222 | $ | 464,223 | $ | 367,363 | | Other (income) expense | | | 1,108 | | 2,624 | | (2,194) | | (1,340) | | Earnings before finance costs and income taxes | $ | 136,749 | $ | 152,598 | $ | 466,417 | $ | 368,703 | | | Finance costs | | | 1,379 | | 2,766 | | 4,309 | | 14,519 | | Earnings before income taxes | | $ | 135,370 | $ | 149,832 | $ | 462,108 | $ | 354,184 | | Income tax (expense) recovery | | | (433) | | 43 | | 955 | | (3,601) | | Net earnings | | $ | 134,937 | $ | 149,875 | $ | 463,063 | $ | 350,583 | | Basic earnings per share | | $ | 0.300 | $ | 0.334 | $ | 1.029 | $ | 0.782 | | Diluted earnings per share | | $ | 0.299 | $ | 0.332 | $ | 1.026 | $ | 0.779 | | Weighted average number of shares outstanding | | | | | | | | | | | Basic | | | 450,326 | | 449,125 | | 449,977 | | 448,484 | | Diluted | | | 451,717 | | 451,999 | | 451,369 | | 449,892 |
Condensed Interim Consolidated Balance Sheets
| | As at September 30 | As at December 31 | | | | (US dollars in thousands - unaudited) | 2021 | 2020 | | | | Assets | | | | | | Current assets | | | | | | Cash and cash equivalents | $ | 372,450 | $ | 192,683 | | Accounts receivable | | 10,392 | | 5,883 | | Other | | 9,874 | | 3,265 | | Total current assets | $ | 392,716 | $ | 201,831 | | Non-current assets | | | | | | Mineral stream interests | $ | 5,505,663 | $ | 5,488,391 | | Early deposit mineral stream interests | | 34,741 | | 33,241 | | Mineral royalty interest | | 6,606 | | 3,047 | | Long-term equity investments | | 71,741 | | 199,878 | | Convertible notes receivable | | 15,489 | | 11,353 | | Property, plant and equipment | | 5,790 | | 6,289 | | Other | | 13,994 | | 13,242 | | Total non-current assets | $ | 5,654,024 | $ | 5,755,441 | | Total assets | $ | 6,046,740 | $ | 5,957,272 | | Liabilities | | | | | | Current liabilities | | | | | | Accounts payable and accrued liabilities | $ | 14,514 | $ | 13,023 | | Current portion of performance share units | | 13,348 | | 17,297 | | Current portion of lease liabilities | | 801 | | 773 | | Other | | 154 | | 76 | | Total current liabilities | $ | 28,817 | $ | 31,169 | | Non-current liabilities | | | | | | Bank debt | $ | - | $ | 195,000 | | Lease liabilities | | 2,258 | | 2,864 | | Deferred income taxes | | 276 | | 214 | | Performance share units | | 8,667 | | 11,784 | | Pension liability | | 2,369 | | 1,670 | | Total non-current liabilities | $ | 13,570 | $ | 211,532 | | Total liabilities | $ | 42,387 | $ | 242,701 | | Shareholders' equity | | | | | | Issued capital | $ | 3,685,032 | $ | 3,646,291 | | Reserves | | 50,769 | | 126,882 | | Retained earnings | | 2,268,552 | | 1,941,398 | | Total shareholders' equity | $ | 6,004,353 | $ | 5,714,571 | | Total liabilities and shareholders' equity | $ | 6,046,740 | $ | 5,957,272 |