Wheaton Precious Metals Corp. press release
Wheaton Precious Metals Announces Solid Third Quarter Results for 2023
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Designated News Release THIRD QUARTER FINANCIAL RESULTS
VANCOUVER, BC , Nov. 9, 2023 /CNW/ - "The importance of having a diversified portfolio of high-quality, low-cost assets was evidenced by Wheaton's ability to deliver solid operating results in the quarter, despite the temporary suspension of one of our largest assets, which has since begun the safe ramp-up of operations. Strong outperformances from Salobo and Constancia, have not only offset challenges faced by others, but also contributed significantly to our overall success. As such, we are pleased to reiterate our annual production guidance range for 2023 of 600,000 to 660,000 gold equivalent ounces," said Randy Smallwood , President and Chief Executive Officer of Wheaton Precious Metals. "In this high interest rate environment, streaming continues to be one of the most competitive sources of capital, and our corporate development team remains exceptionally busy evaluating new opportunities. We remain resolutely committed to enhancing our portfolio with growth that is accretive and sustainable, benefiting all stakeholders."
Solid Financial Results and Strong Balance Sheet
Third quarter of 2023: $223 million in revenue, $171 million in operating cash flow, $116 million in net earnings and $121 million in adjusted net earnings 1 . A cash balance of $834 million and no debt as at September 30, 2023 , after making total upfront cash payments of $90 million relative to mineral stream interests in the quarter. Undrawn $2 billion revolving credit facility maturing on June 22, 2028 . Declared a quarterly dividend 1 of $0.15 per common share.
High Quality Asset Base
Streaming agreements on 18 operating mines and 14 development projects. 93% of attributable production from assets in the lowest half of their respective cost curves 2, 3 . 30 years of mine life based on Proven and Probable Mineral Reserves and potential additional mine life from mineral resource conversion and exploration 2 , 4 . Third quarter production increased quarter over quarter to 154,800 gold equivalent ounces 3 ("GEOs"), driven by strong outperformances at both Salobo and Constancia, and despite the temporary suspension at Peñasquito, highlighting the strength of our diversified portfolio. Average annual production guidance for 2023 of 600,000 to 660,000 GEOs 2,3 is maintained, with sector-leading growth over the next five to ten years. Accretive portfolio growth: Subsequent to the quarter, entered into a definitive agreement with Waterton Copper Corp. to acquire a silver stream on the Mineral Park mine for total cash consideration of $115 million . Acquired a 0.5% Net Smelter Royalty from Liberty Gold Corp., on the Black Pine Oxide Gold Project for total cash consideration of $3.6 million , along with an equity investment totalling $5 million in Liberty Gold at C$0.34 per share.
Leadership in Sustainability
Top Rankings: #1 out of 117 precious metals companies and ranked in the Global Top 50 companies by Sustainalytics, AA rated by MSCI, and Prime rated by ISS. Wheaton was recognized as Best Company for ESG & Sustainability (Metals & Mining) and runner-up for Best Company for Climate Reporting (Large Cap) by ESG Investing's Corporate ESG Awards.
Operational Overview
| (all figures in US dollars unless otherwise noted) | | | Q3 2023 | | | Q3 2022 | | Change | | | YTD 2023 | | | YTD 2022 | | | Change | | Units produced | | | | | | | | | | | | | | | | | | | Gold ounces | | | 105,436 | | | 72,078 | | 46.3 % | | | 261,635 | | | 216,574 | | | 20.8 % | | Silver ounces | | | 3,363 | | | 5,822 | | (42.2) % | | | 12,876 | | | 18,497 | | | (30.4) % | | Palladium ounces | | | 4,006 | | | 3,229 | | 24.1 % | | | 11,591 | | | 11,616 | | | (0.2) % | | Cobalt pounds | | | 183 | | | 226 | | (19.1) % | | | 458 | | | 596 | | | (23.1) % | | Gold equivalent ounces 3 | | | 154,800 | | | 153,025 | | 1.2 % | | | 444,597 | | | 473,868 | | | (6.2) % | | Units sold | | | | | | | | | | | | | | | | | | | Gold ounces | | | 74,426 | | | 62,000 | | 20.0 % | | | 212,325 | | | 224,238 | | | (5.3) % | | Silver ounces | | | 2,965 | | | 5,234 | | (43.4) % | | | 11,151 | | | 16,635 | | | (33.0) % | | Palladium ounces | | | 4,242 | | | 4,227 | | 0.4 % | | | 10,580 | | | 11,680 | | | (9.4) % | | Cobalt pounds | | | 198 | | | 115 | | 72.2 % | | | 786 | | | 851 | | | (7.6) % | | Gold equivalent ounces 3 | | | 119,030 | | | 135,179 | | (11.9) % | | | 375,248 | | | 460,026 | | | (18.4) % | | Change in PBND and Inventory | | | | | | | | | | | | | | | | | | | Gold equivalent ounces 3 | | | 22,438 | | | 4,460 | | (17,978) | | | 27,248 | | | (32,368) | | | (59,616) | | Revenue | | $ | 223,137 | | $ | 218,836 | | 2.0 % | | $ | 702,573 | | $ | 829,002 | | | (15.3) % | | Net earnings | | $ | 116,371 | | $ | 196,460 | | (40.8) % | | $ | 369,209 | | $ | 503,001 | | | (26.6) % | | Per share | | $ | 0.257 | | $ | 0.435 | | (40.9) % | | $ | 0.815 | | $ | 1.114 | | | (26.8) % | | Adjusted net earnings 1 | | $ | 121,467 | | $ | 93,878 | | 29.4 % | | $ | 368,481 | | $ | 401,168 | | | (8.1) % | | Per share 1 | | $ | 0.268 | | $ | 0.208 | | 28.8 % | | $ | 0.814 | | $ | 0.889 | | | (8.4) % | | Operating cash flows | | $ | 171,103 | | $ | 154,497 | | 10.7 % | | $ | 508,584 | | $ | 571,396 | | | (11.0) % | | Per share 1 | | $ | 0.378 | | $ | 0.342 | | 10.5 % | | $ | 1.123 | | $ | 1.266 | | | (11.3) % |
| All amounts in thousands except gold, palladium & gold equivalent ounces, and per share amounts . |
Financial Review
_Revenues _Revenue in the third quarter of 2023 was $223 million (65% gold, 32% silver, 2% palladium and 1% cobalt), with the $4 million increase relative to the prior period quarter being primarily due to a 16% increase in realized commodity prices, partially offset by lower sales volumes.
Revenue was $703 million in the nine months ended September 30, 2023 , representing a $126 million decrease from the comparable period of the previous year due primarily to an 18% decrease in the number of GEOs³ sold, resulting from lower production and relative changes in the GEOs³ produced but not yet delivered; partially offset by a 4% increase in the average realized gold equivalent³ price.
_Cash Costs and Margin _Average cash costs¹ in the third quarter of 2023 were $418 per GEO³ as compared to $451 in the third quarter of 2022. This resulted in a cash operating margin¹ of $1,457 per GEO³ sold, an increase of 25% as compared with the third quarter of 2022, a result of the higher realized price per ounce.
Average cash costs¹ for the nine months ended September 30, 2023 were $427 per GEO³ as compared to $448 in the comparable period of the previous year. This resulted in a cash operating margin¹ of $1,445 per GEO³ sold, a 7% increase from the comparable period of the previous year.
_Cash Flow from Operations _Operating cash flow in the third quarter of 2023 amounted to $171 million , with the $17 million increase due primarily to the higher realized price per GEO sold coupled with higher amounts of interest received in the third quarter of 2023.
Operating cash flows for the nine months ended September 30, 2023 amounted to $509 million , with the $63 million decrease from the comparable period of the previous year being due primarily to lower sales volumes, partially offset by higher amounts of interest received during the current year.
Balance Sheet (at September 30, 2023 )
Approximately $834 million of cash on hand During the third quarter of 2023, the Company made total upfront cash payments of $90 million relative to the mineral stream interests consisting of $70 million payment relative to the Blackwater Silver precious metals purchase agreement ("PMPA"); and a $20 million payment relative to the expansion of the Blackwater Gold PMPA
With the existing cash on hand coupled with the fully undrawn $2 billion revolving credit facility, 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.
Third Quarter Operating Asset Highlights
_Salobo: _In the third quarter of 2023, Salobo produced 69,000 ounces of attributable gold, an increase of approximately 56% relative to the third quarter of 2022, driven by higher throughput, with production from the third concentrator line commencing at the end of 2022, and higher recoveries. The prior year was also affected by planned and corrective maintenance being performed. In the third quarter of 2023, Salobo reached its highest production level since the fourth quarter of 2019 as the ramp-up of the Salobo III expansion continues to advance. Salobo is expected to reach a throughput capacity of 32 Mtpa in the fourth quarter of 2023 and full throughput capacity by the end of 2024.
_Antamina : _In the third quarter of 2023, Antamina produced 0.9 million ounces of attributable silver, a decrease of approximately 35% relative to the third quarter of 2022, primarily due to lower grades as per the mine plan.
_Peñasquito : _In the third quarter of 2023, Peñasquito had no production resulting from a suspension of operations at the mine which began on June 7, 2023 due to a labour dispute. On October 13, 2023 , Newmont Corporation ("Newmont") reached a definitive agreement to end the strike and has since begun the safe ramp-up of operations. Newmont expects to reach full operating capacity by the end of the fourth quarter.
_Constancia : _In the third quarter of 2023, Constancia produced 0.7 million ounces of attributable silver and 19,000 ounces of attributable gold, an increase of approximately 24% and 164%, respectively, relative to the third quarter of 2022. Record quarterly gold production combined with strong silver production are a result of significantly higher grades from mining the high-grade zones of the Pampacancha deposit, higher recoveries and higher throughput. As per Hudbay Minerals Inc. ("Hudbay"), production is expected to continue to benefit from higher grades in the fourth quarter of 2023.
_Sudbury : _In the third quarter of 2023, Vale's Sudbury mines produced 4,300 ounces of attributable gold, an increase of approximately 24% relative to the third quarter of 2022, due to higher grades which as per Vale, were partially offset by the annual planned maintenance activities at the Sudbury and Thompson mines and mills, as well as additional maintenance at the Sudbury refinery in the third quarter.
_Stillwater : _In the third quarter of 2023, the Stillwater mines produced 2,500 ounces of attributable gold and 4,000 ounces of attributable palladium, an increase of approximately 34% for gold and 24% for palladium relative to the third quarter of 2022, due primarily to the impact on production resulting from regional flooding that occurred in the second quarter of 2022.
_San Dimas : _In the third quarter of 2023, San Dimas produced 10,000 ounces of attributable gold, a decrease of approximately 15% relative to the third quarter of 2022, primarily due to lower grades, partially offset by higher throughput.
_Voisey's Bay: _In the third quarter of 2023, the Voisey's Bay mine produced 183,000 pounds of attributable cobalt, a decrease of approximately 19% relative to the third quarter of 2022, 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. Production in the third quarter was also impacted as a result of maintenance at the Long Harbour Refinery. Vale reports that physical completion of the Voisey's Bay underground mine extension was 88% at the end of the third quarter, with Reid Brook's bulk material handling system near mechanical completion, and the commissioning of sub-systems currently taking place. Vale achieved the first ore production from the Reid Brook deposit, the first of two underground mines to be developed in the project, in the second quarter of 2021. Eastern Deeps, the second deposit, has started to extract development ore from the deposit and is continuing its scheduled production ramp-up.
_Other Gold : _In the third quarter of 2023, total Other Gold attributable production was 700 ounces, a decrease of approximately 81% relative to the third quarter of 2022, primarily due to the closure of the Minto mine in May 2023 .
_Other Silver: _In the third quarter of 2023, total Other Silver attributable production was 1.8 million ounces, a decrease of approximately 6% relative to the third quarter of 2022, primarily due to the termination of the Yauliyacu PMPA.
_Aljustrel: _On September 12, 2023 , it was announced that as a result of low zinc prices, the production of zinc and lead concentrates at Aljustrel will be halted from September 24, 2023 until the second quarter of 2025.
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
_Blackwater Project: _On July 4, 2023 , Artemis announced receipt of the Fisheries Act Authorization for development of the Blackwater Project, which will facilitate the commencement of construction of water diversion structures and dams in the Davidson Creek valley which runs through the basin of the Blackwater tailings storage facility. On October 24, 2023 , Artemis announced that overall construction at the Blackwater mine was 45% complete as of September 30, 2023 . Project development continues to advance on the schedule, targeting first gold pour in the second half of 2024.
_Marmato Mine : _On July 12, 2023 , Aris Mining announced that they have received approval from the Corporación Autónoma Regional del Caldas, a regional environmental authority in Colombia , of the Environmental Management Plan, which now permits the development of the Marmato Lower Mine.
_Marathon Project : _On August 30, 2023 , Generation Mining Limited ("Gen Mining") received the Endangered Species Act permit issued by the Ministry of the Environment, Conservation and Parks. This permit includes conditions intended to minimize impacts to caribou and SAR bats, as well as to create an overall benefit for these species at risk. Additionally, in September 2023 , Gen Mining received the Environmental Compliance Approval issued by the Ministry of Environment, Conservations and Parks for air and noise emissions for the Marathon Project, and on November 7, 2023 , announced that the province of Ontario had accepted and filed the Closure Plan, representing another major milestone in the permitting process. Additional permits and approvals are expected to be received during the balance of 2023.
_Copper World Complex : _On September 8, 2023 , Hudbay announced the results of the enhanced pre-feasibility study for Phase I of its 100%-owned Copper World project in Arizona . After receipt of two outstanding permits which are expected in mid-2024, Hudbay intends to complete a minority joint venture partner process prior to commencing a definitive feasibility study. The opportunity to sanction Copper World is not expected until 2025 based on current estimated timelines. With the results from this pre-feasibility study, the Company has now incorporated gold in the mineral reserves and mineral resources statement on our website.
_Curipamba Project: _On September 11, 2023 , Adventus provided an update that the Constitutional Court of Ecuador declared that processing of an unconstitutionality claim filed by the indigenous group CONAIE and other complainants against Presidential Decree 754 that regulates environmental consultation for all public and private industries and sectors in Ecuador was a priority and set a public hearing for September 18, 2023 . Adventus has indicated that historically the Court can be expected to issue a resolution within two to three months following the public hearing commencement.
On October 2, 2023 , Adventus announced that the El Domo – Curipamba project has been issued a favourable Certificate of No Affect of Water by the Ministry of Environment and Water of the Government of Ecuador . This certificate and milestone allow the planned and designed projected infrastructure construction in an area with the presence of surface and ground water sources.
_Goose Project: _On September 18, 2023 , B2Gold provided a construction update on the Goose Project highlighting that the purchasing of materials and supplies needed to support the 2024 construction campaign has been completed and all materials have been provided to the ports for the 2023 sealift. Additionally, B2Gold reported that it remains on track to pour first gold in the first quarter of 2025, and that concrete and steel work in the mill area are progressing ahead of schedule.
Cangrejos Project
On October 18, 2023 , Lumina Gold Corp., ("Lumina") announced that the Cangrejos project is proceeding on schedule. Lumina has been actively executing its 2023 feasibility study drill plan with nine rigs currently at site. Lumina has signed contracts with several engineering companies for the advancement of the feasibility study. The feasibility study is expected to be completed in the first quarter of 2025.
Corporate Development
Black Pine Project
On September 10, 2023 , the Company acquired a new 0.5% Net Smelter Royalty ("NSR") from Liberty Gold Corp., ("Liberty Gold") on the Black Pine Oxide Gold Project ("Black Pine") for total cash consideration of $4 million . Liberty Gold has been granted an option to repurchase 50% of the NSR for $4 million at any point in time up to the earlier of commercial production at Black Pine or January 1, 2030 . The Company has been granted a Right of First Refusal on all royalties, streams or pre-pays that include precious metals pertaining to Black Pine. In addition, the Company made an equity investment of $5 million in Liberty Gold at C$0.34 per share.
Mineral Park Project
On October 24, 2023 , the Company announced that it had entered into a PMPA (the "Mineral Park PMPA") with Waterton Copper in respect of silver production from the Mineral Park mine located in Arizona, USA (the "Project" or "Mineral Park"). Under the Mineral Park PMPA, Wheaton will purchase 100% of the payable silver from Mineral Park for the life of the mine. Under the terms of the Mineral Park PMPA, the Company is committed to pay Waterton Copper total upfront cash consideration of $115 million in four payments during construction through three installments of $25 million and a final installment of $40 million . In addition, Wheaton will make ongoing payments for the silver ounces delivered equal to 18% of the spot price of silver until the value of the silver delivered, net of the production payment, is equal to the upfront consideration of $115 million , at which point the production payment will increase to 22% of the spot price of silver. The Company has also entered into a loan agreement to provide a secured debt facility of up to $25 million to the Mineral Park owner, an affiliate of Waterton Copper, once the full upfront consideration has been paid.
Sustainability
Ratings & Awards:
In the third quarter of 2023, Wheaton was recognized as Best Company for ESG & Sustainability (Metals & Mining) and runner-up for Best Company for Climate Reporting (Large Cap) by ESG Investing's Corporate ESG Awards.
Community Investment Program:
In the third quarter of 2023, the Tour De Cure Presented by Wheaton attracted over 1,500 riders and raised more than $7.1 million for the BC Cancer Foundation. In the third quarter of 2023, a number of new programs were established with First Majestic Silver. These include support for the operation of a community centre, improvements to a solid waste storage facility and the implementation of a recycling program, as well as the implementation and operation of wastewater treatment facilities in the community of Tayoltita. In addition, Wheaton also committed to assisting First Majestic Silver in providing internet access for several remote communities close to the mine.