Wheaton Precious Metals Corp. press release
Wheaton Precious Metals Maintains Strong Cash Operating Margins in the Third Quarter of 2022
TSX - Toronto Stock Exchange · Gold · Copper · Silver · Zinc · Palladium · Platinum · Cobalt · Canada
Canada NewsWire
Designated News Release THIRD QUARTER 2022 FINANCIAL RESULTS
TSX | NYSE | LSE: WPM
VANCOUVER, BC , Nov. 3, 2022 /CNW/ - "At Wheaton, we focus on building a sustainable company that provides investors with profitable, long-term exposure to precious metals. While inflationary pressures have impacted all sectors of the economy, especially mining, Wheaton has maintained cash operating margins of over 75% year to date, highlighting the strength of our streaming business model," said Randy Smallwood , President and Chief Executive Officer of Wheaton Precious Metals. "Despite some recent challenges, we are pleased with the improvements we have seen over the third quarter in our diverse portfolio of high-quality assets, which is forecast to deliver significant organic growth over the next five years and sustained precious metals production for decades to come. We also are very optimistic that we can continue to add accretive new streams to the portfolio given the number of opportunities that we are currently reviewing coupled with one of the strongest balance sheets in the sector."
Solid Financial Results and Strong Balance Sheet
$219 million in revenue and $154 million in operating cash flow in the quarter $197 million in net earnings and $94 million in adjusted net earnings 1 in the quarter A cash balance of $495 million and no debt as at September 30, 2022 Extended the maturity date of the undrawn US$2 billion revolving credit facility to July 18, 2027 Declared a quarterly dividend 1 of $0.15 per common share
High Quality Asset Base
Streaming agreements on 21 operating mines and 13 development projects 85% of attributable production from assets in the lowest half of their respective cost curves 2 29 years of mine life based on Proven and Probable Mineral Reserves and potential additional mine life from mineral resource conversion and exploration 3 Average annual production for the ten-year period ending December 31, 2031 , is expected to be approximately 850,000 GEOs 2 ,4 Completed the previously disclosed termination of the Keno Hill precious metal purchase agreement ("PMPA") for $141 million , resulting in an impairment reversal of $10 million and a gain on disposition of $104 million Announced the proposed termination of the Yauliyacu PMPA for $150 million , less the aggregate value of any deliveries to Wheaton of silver produced in 2022 prior to closing
Leadership in Sustainability
Top Rankings: #1 out of 119 precious metals companies and Global Top 50 out of over 14,900 multi-sector companies by Sustainalytics, AA rated by MSCI, and Prime rated by ISS Commitment to Net-Zero Carbon Emissions by 2050 supported by interim targets covering all material emissions including Scope 3 Established a sustainability linked element in connection with the extension of the revolving credit facility Recognized as one of the Best 50 Corporate Citizens in Canada by Corporate Knights Recognized by ESG Investing for Best Climate Related Reporting (Mid Cap) Supported flood relief to local communities near the Stillwater mine in Montana Presenting sponsor of BC Cancer Foundation's Tour de Cure supporting cancer research
Operational Overview
| (all figures in US dollars unless otherwise noted) | | | Q3 2022 | | | Q3 2021 | | Change | | | YTD 2022 | | | YTD 2021 | | | Change | | Units produced | | | | | | | | | | | | | | | | | | | Gold ounces | | | 73,508 | | | 85,624 | | (14.2) % | | | 218,004 | | | 254,225 | | | (14.2) % | | Silver ounces | | | 5,883 | | | 6,349 | | (7.3) % | | | 18,645 | | | 19,643 | | | (5.1) % | | Palladium ounces | | | 3,229 | | | 5,105 | | (36.7) % | | | 11,616 | | | 16,175 | | | (28.2) % | | Cobalt pounds | | | 226 | | | 370 | | (39.0) % | | | 596 | | | 1,912 | | | (68.8) % | | Gold equivalent ounces 2 | | | 159,852 | | | 183,012 | | (12.7) % | | | 491,088 | | | 570,040 | | | (13.9) % | | Units sold | | | | | | | | | | | | | | | | | | | Gold ounces | | | 62,000 | | | 67,649 | | (8.4) % | | | 224,238 | | | 232,843 | | | (3.7) % | | Silver ounces | | | 5,234 | | | 5,487 | | (4.6) % | | | 16,635 | | | 17,744 | | | (6.3) % | | Palladium ounces | | | 4,227 | | | 5,703 | | (25.9) % | | | 11,680 | | | 14,703 | | | (20.6) % | | Cobalt pounds | | | 115 | | | 131 | | (12.2) % | | | 851 | | | 658 | | | 29.3 % | | Gold equivalent ounces 2 | | | 138,824 | | | 149,862 | | (7.4) % | | | 475,259 | | | 498,635 | | | (4.7) % | | Change in PBND and Inventory | | | | | | | | | | | | | | | | | | | Gold equivalent ounces 2 | | | 6,620 | | | 17,659 | | 11,039 | | | (32,497) | | | 22,375 | | | 54,872 | | Revenue | | $ | 218,836 | | $ | 268,957 | | (18.6) % | | $ | 829,002 | | $ | 923,468 | | | (10.2) % | | Net earnings | | $ | 196,460 | | $ | 134,937 | | 45.6 % | | $ | 503,001 | | $ | 463,063 | | | 8.6 % | | Per share | | $ | 0.435 | | $ | 0.300 | | 45.0 % | | $ | 1.114 | | $ | 1.029 | | | 8.3 % | | Adjusted net earnings 1 | | $ | 93,878 | | $ | 137,087 | | (31.5) % | | $ | 401,168 | | $ | 459,848 | | | (12.8) % | | Per share 1 | | $ | 0.208 | | $ | 0.304 | | (31.6) % | | $ | 0.889 | | $ | 1.022 | | | (13.0) % | | Operating cash flows | | $ | 154,497 | | $ | 201,287 | | (23.2) % | | $ | 571,396 | | $ | 649,856 | | | (12.1) % | | Per share 1 | | $ | 0.342 | | $ | 0.447 | | (23.5) % | | $ | 1.266 | | $ | 1.444 | | | (12.3) % |
| All amounts in thousands except gold, palladium & gold equivalent ounces, and per share amounts. |
Third Quarter Operating Asset Highlights
_Salobo: _In the third quarter of 2022, Salobo produced 44,200 ounces of attributable gold, a decrease of approximately 20% relative to the third quarter of 2021, primarily due to lower grades and recovery. According to Vale S.A.'s ("Vale"), plant performance improved relative to the second quarter of 2022 despite additional planned and corrective maintenance performed in the third quarter. Vale plans for maintenance activities to continue in the fourth quarter of 2022 to further improve plant reliability.
Vale reports that physical completion of the Salobo III mine expansion was 98% at the end of the third quarter. Progress in the third quarter included the primary crushing circuit being fully commissioned, hot commissioning of the conveyor system, and commencement of wet commissioning of the flotation circuit.
_Antamina : _In the third quarter of 2022, Antamina produced 1.4 million ounces of attributable silver, a decrease of approximately 11% relative to the third quarter of 2021, primarily due to lower grades as per the mine plan.
_Peñasquito : _In the third quarter of 2022, Peñasquito produced 2.0 million ounces of attributable silver, a decrease of approximately 7% relative to the third quarter of 2021 with lower recovery and grades as per the mine plan.
_Constancia : _In the third quarter of 2022, Constancia produced 0.6 million ounces of attributable silver and 7,200 ounces of attributable gold, an increase of approximately 8% for silver production and a decrease of approximately 16% for gold production relative to the third quarter of 2021, with the increase in silver being primarily due to higher throughput and the decrease in gold production being primarily due to the mining of lower-grade material resulting from mine sequencing.
_Sudbury : _In the third quarter of 2022, Vale's Sudbury mines produced 4,700 ounces of attributable gold, an increase of approximately 3109% relative to the third quarter of 2021, primarily due to operations at the mine being temporarily suspended due to a labour dispute which lasted from June 1, 2021 to August 9, 2021 . Vale reports that in the third quarter, the first phase of the Copper Cliff Complex South Mine Project was opened, including the development of more than 12km of tunnels to reunite the south and north shafts of the mine, which is expected to nearly double ore production at the Copper Cliff Mine. The Copper Cliff Mine has historically represented approximately 20% of attributable production for Wheaton from Sudbury .
_Stillwater : _In the third quarter of 2022, the Stillwater mines produced 1,800 ounces of attributable gold and 3,200 ounces of attributable palladium, a decrease of approximately 38% for gold and 37% for palladium relative to the third quarter of 2021. As per Sibanye-Stillwater Limited, regional floods impacted the Stillwater operations on June 13, 2022 , including damage to bridges and the access road to the Stillwater mine. Operations at the Stillwater mine, which accounts for 60% of the mined production from the Stillwater operations, were suspended for seven weeks, but resumed on July 29 , 2022. Access to the East Boulder mine and the Columbus metallurgical facilities remains intact and both facilities continued operating during the flooding events.
_San Dimas : _In the third quarter of 2022, San Dimas produced 11,800 ounces of attributable gold, virtually unchanged relative to the third quarter of 2021, primarily due to lower throughput offset by higher grades. According to First Majestic Silver Corp., silver and gold grades were higher in the third quarter compared to the prior quarter due to improvements in dilution control from the long hole stoping in the Jessica and Regina veins and due to initial production from the Perez vein commencing in July.
_Other Gold : _In the third quarter of 2022, total Other Gold attributable production was 3,700 ounces, a decrease of approximately 46% relative to the third quarter of 2021, primarily due to the closure of the 777 mine in June 2022 .
_Other Silver: _In the third quarter of 2022, total Other Silver attributable production was 1.9 million ounces, a decrease of approximately 8% relative to the third quarter of 2021, primarily due to lower production at Aljustrel (grades) and Stratoni (placed into care and maintenance).
_Voisey's Bay: _In the third quarter of 2022, the Voisey's Bay mine produced 226,000 pounds of attributable cobalt, a decrease of approximately 39% relative to the third quarter of 2021, primarily due to mining lower grade material during the ongoing transitional period between the depletion of the Ovoid open-pit mine and ramp-up to full production of the Voisey's Bay underground project. Vale reports that physical completion of the Voisey's Bay underground mine extension was 78% at the end of the third quarter. Progress in the third quarter included surface activities being well advanced with the port fuel tanks installed and Eastern Deeps mine fresh air infrastructure completed, and in the underground, the Reid Brook bulk Material Handling System advancing on schedule.
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.
Third Quarter Development Asset Highlights
_Goose Project : _Sabina Gold & Silver Corp. ("Sabina") announced a formal construction decision for the Goose Project. Sabina noted that the project will be in a position to commence full construction in early 2023 with first production expected in 2025.
_Blackwater Project __: _Artemis Gold Inc. ("Artemis") announced the commencement of site preparation work at the plant site including site clearing, bulk earthworks and sediment/erosion control. Artemis believes the Blackwater plant site will start major construction works in the first quarter of 2023.
_Marathon Project : _Generation Mining Limited ("Gen Mining") delivered the environmental assessment report for the Marathon Project to federal and provincial ministers and announced the purchasing of an unused, surplus SAG mill and ball mill. Gen Mining anticipates starting construction late in the first quarter of 2023.
_Curipamba Project __: _Adventus Mining Corporation ("Adventus") announced an Investment Protection Agreement commitment declaration by the Government of Ecuador indicating a significant milestone in the development of the Curipamba Project. Adventus plans for a formal construction commencement in the second quarter of 2023.
Portfolio Optimization
_Keno Hill: _On September 7, 2022 , Hecla Mining Company ("Hecla") completed the previously announced acquisition of all the outstanding common shares of Alexco. In connection with this acquisition, the Company entered into an agreement with Hecla to terminate the Keno Hill PMPA effective September 7, 2022 , in exchange for 34,800,989 common shares of Hecla valued at $141 million (the " Hecla shares"[5]), resulting in an impairment reversal of the Keno Hill PMPA in the amount of $10 million and a gain on disposal of $104 million .
_Yauliyacu: _On August 18, 2022 , the Company announced that it had entered into an agreement with Glencore plc ("Glencore") to terminate its silver stream on the Yauliyacu Mine in Peru for a cash payment of $150 million , less the aggregate value of any deliveries to Wheaton, prior to closing, of silver produced subsequent to December 31, 2021 . Wheaton has agreed to terminate the stream in order to help facilitate the sale by Glencore of the Yauliyacu Mine. As at September 30, 2022 , the net termination payment is estimated to be approximately $136 million . The closing of the transaction is contingent on Glencore divesting the Yauliyacu mine by December 31, 2022 and certain other customary conditions. Glencore retains the option to terminate the silver stream even if it does not divest the Yauliyacu mine by December 31, 2022 .
Financial Review
_Revenues _Revenue was $219 million in the third quarter of 2022 representing an 19% decrease from the third quarter of 2021 due primarily to a 12% decrease in the average realized gold equivalent² price; and a 7% decrease in the number of GEOs² sold.
Revenue was $829 million in the nine months ended September 30, 2022 , representing a 10% decrease from the comparable period of the previous year due primarily to a 5% decrease in the number of gold equivalent² ounces sold; and a 6% decrease in the average realized gold equivalent² price.
_Cash Costs and Margin _Average cash costs¹ in the third quarter of 2022 were $439 per GEO² as compared to $417 in the third quarter of 2021. This resulted in a cash operating margin¹ of $1,137 per GEO² sold, a decrease of 17% as compared with the third quarter of 2021.
Average cash costs¹ for the nine months ended September 30, 2022 were $433 per GEO² as compared to $441 in the comparable period of the previous year. This resulted in a cash operating margin¹ of $1,311 per GEO² sold, a 7% decrease from the comparable period of the previous year.
Balance Sheet (at September 30, 2022 )
Approximately $495 million of cash on hand. During the third quarter of 2022, the Company made upfront cash payments totaling $47 million relative to PMPA's. The Company extended its existing undrawn $2 billion revolving term loan with its maturity date now July 18, 2027 . As part of the extension, Wheaton added a sustainability-linked element which may impact the interest rate paid on drawn amounts and standby fees. The Company is well positioned to fund all outstanding commitments and known contingencies as well as providing flexibility to acquire additional accretive mineral stream interests.
Sustainability
Community Investment Program:
In the third quarter, Wheaton Precious Metals International Ltd. ("Wheaton International") in partnership with Sibanye-Stillwater Limited, donated funds to support flood relief in the community of Nye , which is the closest town to the Stillwater mine in Montana . Funds were used to clean up debris and support other flood-related recovery efforts and to support families in financial need whose houses were damaged. In the third quarter, new reading rooms were opened in the state of Maranhāo, Brazil , as part of the Routes and Literary Network project that is maintained by the Vale Foundation in partnership with Wheaton International and the Associação Cidade Escola Aprendiz. The new reading rooms benefit 1,800 students from three different schools. On August 27 th , the Tour de Cure, presented by Wheaton Precious Metals, raised CA$6.3 million for the BC Cancer Foundation. The event is B.C.'s largest cycling fundraiser attracting over 1,100 participants. Since 2014, Wheaton has donated over CA$3.2 million towards crucial advancements in cancer research and care. In addition, the Silver Bullets, Wheaton's cycling team comprised of employees, friends and family have collectively raised over CA$2 million through the Tour de Cure.
_Sustainability-Linked Revolving Credit Facility: _Wheaton has added a sustainability-linked element in connection with the extension to its existing undrawn US$2 billion revolving credit facility, underscoring Wheaton's commitment to sustainability initiatives. Under the renewed revolving credit facility, the interest rate paid on drawn amounts and standby fees will be adjusted based upon Wheaton's performance in three sustainability-related areas including climate change, diversity and overall sustainability performance.
Webcast and Conference Call Details
A conference call and webcast will be held on Friday, November 4, 2022 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: 30587457 Live webcast: Webcast URL
The accompanying slideshow will also be available in PDF format on the 'Events' page of the Wheaton Precious Metals website before the conference call.
The conference call will be recorded and available until November 11, 2022 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: 587457 # Archived 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, Neil Burns , P.Geo., Vice President, Technical Services for Wheaton Precious Metals and Ryan Ulansky , P.Eng., Vice President, Engineering, are a "qualified person" as such term is defined under National Instrument 43-101, and have reviewed and approved the technical information disclosed in this news release (specifically Mr. Carson has reviewed production figures, Mr. Burns has reviewed mineral resource estimates and Mr. Ulansky has reviewed the mineral reserve estimates).
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 http://www.silverwheaton.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 for 2022 is forecast to be 300,000 to 320,000 ounces of gold, 22.5 to 24.0 million ounces of silver, and 35,000 to 40,000 gold equivalent ounces 2 ("GEOs"), resulting in production of approximately 640,000 to 680,000 GEOs 2 . As a result of the proposed termination of the Yauliyacu PMPA, the Company now expects average annual production for the five-year period ending December 31, 2026 , to be approximately 800,000 GEOs 2, 4 (from 820,000 GEOs 2, 4 previously) and for the ten-year period ending December 31, 2031 , to be approximately 850,000 GEOs 2 , 4 (from 870,000 GEOs 2, 4 previously).