Third Quarter and NINE Months Financial Results Wheaton Precious Metals Announces Record Operating Cash Flow, Revenue and Sales Volumes IN the First NINE Months of 2020
November 9, 2020 TSX: WPM
Vancouver, British Columbia NYSE: WPM
Designated News Release LSE: WPM
THIRD QUARTER AND NINE MONTHS FINANCIAL RESULTS
WHEATON PRECIOUS METALS ANNOUNCES RECORD OPERATING CASH FLOW,
REVENUE AND SALES VOLUMES IN THE FIRST NINE MONTHS OF 2020
“Wheaton’s high-quality portfolio of assets generated nearly $230 million in operating cash flow
in the third quarter alone, resulting in a record of over $555 million in the first nine months of 2020.
Given Wheaton’s unique dividend policy, the strong cash flow in the quarter resulted in a 20%
increase in our dividend ,” said Randy Smallwood, President and Chief Executive Officer of
Wheaton Precious Metals. “In addition, pr oduction in the third quarter rebounded strongly
following temporary suspensions of some operations as a result of the COVID -19 pandemic in
the prior quarter, and the Company is on track to meet the higher end of our guidance.”
“Wheaton continues to focus on delivering value to all of its stakeholders. To our partners and our
communities, we have now deployed approximately $3 million of our COVID-19 response fund to
support various programs globally. To our current shareholders, we substantially increased our
dividend and continued to advance numerous new streaming opportunities that would add
accretive growth to Wheaton’s portfolio. And finally, to those investors that do not own our shares
yet, we hope that our recently announced listing on the London Stock Exchange provides another
point of entry and makes it easier to invest in Wheaton.”
Third Quarter Highlights:
• Over $228 million in operating cash flow in the quarter, an increase of 60% relative to Q3
2019.
• Net debt1 reduced by $231 million resulting in a net debt position of $278 million.
• Attributable gold equivalent2 production was 171,900 ounces in the quarter with the slight
reduction relative to Q3 2019 primarily due to the mining of lower grade material at Salobo.
• Declared quarterly dividend1 of $0.12 per common share, a 20% increase from Q2 2020.
• Donated $3 million of the $5 million CSR Fund dedicated to combat COVID-19.
Operational Overview
(all figures in US dollars unless otherwise noted) Q3 2020 Q3 2019 Change
Ounces produced
Gold 91,770 103,624 (11.4)%
Silver 6,028 6,039 (0.2)%
Palladium 5,444 5,471 (0.5)%
Gold equivalent 2 171,370 183,394 (6.6)%
Ounces sold
Gold 90,101 94,766 (4.9)%
Silver 4,999 4,484 11.5 %
Palladium 5,546 4,907 13.0 %
Gold equivalent 2 157,478 155,116 1.5 %
Revenue $ 307,268 $ 223,595 37.4 %
Net earnings $ 149,875 $ 75,960 97 %
Per share $ 0.334 $ 0.170 96.5 %
Adjusted net earnings 1 $ 152,007 $ 69,914 117.4 %
Per share 1 $ 0.338 $ 0.156 116.3 %
Operating cash flows $ 228,099 $ 142,300 60.3 %
Per share 1 $ 0.508 $ 0.318 59.7 %
All amounts in thousands except gold, palladium and gold equivalent ounces produced and sold, per ounce amounts and per share amounts. 12
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Listing on the London Stock Exchange
On October 28, 2020, the Company’s common shares were admitted to the Standard Segment
of the Official List of the UK Financial Conduct Authority (“FCA”) and commenced trading on the
Main Market of the London Stock Exchange under the ticker symbol WPM.
Corporate Development – Marmato Project
On November 5, 2020, the Company announced that it had entered into the previously disclosed
precious metals purchase agreement (“PMPA”) with Caldas Gold Corp. (“Caldas Gold”) (TSX-V:
CGC) for the Marmato Project located in Colombia. Under the terms of the PMPA3, the Company
will acquire 6.5% of the gold production and 100% of the silver production until 190,000 ounces
of gold and 2.15 mi llion ounces of silver have been delivered, after which the stream drops to
3.25% of the gold production and 50% of the silver production for the life of mine.
Financial Review
Revenues
Revenue was $307 million in the third quarter of 2020 representing a 37% increase from the third
quarter of 2019 due primarily to a 35% increase in the average realized gold equivalent² price;
and a 2% increase in the number of gold equivalent² ounces sold.
Costs and Expenses
Average cash costs¹ in the third quarter of 2020 were $445 per gold equivalent² ounce as
compared to $417 in Q3 2019. This resulted in a cash operating margin¹ of $1,506 per gold
equivalent² ounce sold, an increase of 47% as compared with Q3 2019.
Balance Sheet (at September 30, 2020)
• Approximately $210 million of cash on hand.
• $488 million outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility").
• During Q3 2020, the Company has repaid $153 million under the Revolving Facility.
• During Q3 2020, the net debt¹ was reduced by $231 million to $278 million.
• The average effective interest rate for Q3 2020 was 1.24%.
Third Quarter Asset Highlights
Salobo: In the third quarter of 2020, Salobo produced 63,400 ounces of attributable gold, a
decrease of approximately 14% relative to the third quarter of 2019 due to lower grades. According
to Vale S.A.’s (“Vale”) Third Quarter 2020 Performance Report, physical completion of the Salobo
III mine expansion was 62% at the end of the third quarter. Vale reports that the expansion
remains on track to start up in the first half of 2022.
San Dimas: In the third quarter of 2020, San Dimas produced 9,200 ounces of attributable gold,
a decrease of approximately 18% relative to the third quarter of 2019 primarily due to the impact
of revising the silver to gold conversion ratio from 70:1 to 90:1 effective April 1, 2020 , as per the
PMPA4. The exchange ratio was reinstated to 70:1 during October 2020.
Antamina: In the third quarter of 2020, Antamina produced 1.5 million ounces of attributable
silver, an increase of approximately 24% relative to the third quarter of 2019 , primarily due to
higher grades and throughput, partially offset by lower recovery.
Stillwater: In the third quarter of 2020, Stillwater produced 5,400 ounces of attributable palladium
and 3,200 ounces of attributable gold , virtually unchanged relative to the third quarter of 2019 .
According to Sibanye -Stillwater Limited’s (“Sibanye -Stillwater”) Third Quarter 2020 Operating
Update, a review of t he Blitz project was conducted following the suspension of growth capital
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activities due to COVID-19, and the project is now expected to reach a steady state by 2024 , a
delay of up to two years. Sibanye-Stillwater also reports that the Fill the Mill project at the East
Boulder mine remains on schedule to be completed by the end of 2020.
Constancia: In the third quarter of 2020, Constancia produced 0.4 million ounces of attributable
silver and 3,800 ounces of attributable go ld, a decrease of approximately 37% and 27%,
respectively, relative to the third quarter of 2019, primarily due to lower grades. As per Wheaton’s
PMPA with Hudbay Minerals Inc. (“Hudbay”), the failure to achieve a minimum level of throughput
at the Pampacancha deposit during 2019 entitles Wheaton to an additional 8,020 ounces of gold
in 2020 (received in quarterly installments), of which 2,005 ounces of gold was received during
the third quarter of 2020 and included as production. According to Hudbay’s Third Quarter MD&A,
significant progress has been made on completing the Pampacancha individual land -user
agreements and, as of September 30, 2020, approximately 79% of the land has been vacated
and turned over to Hudbay. Hudbay expects a Pampacancha production start date of early 2021.
Other Gold : In the third quarter of 2020, total Other Gold attributable production was 7,100
ounces, an increase of approximately 66% relative to the third quarter of 2019, primarily due to
the resumption of mining at the Minto mine.
Other Silver: In the third quarter of 2020, total Other Silver attributable production was 2.1 million
ounces, virtually unchanged relative to the third quarter of 2019 , as stronger attributable
production at Aljustrel and Yauliyacu were offset by lower production at Zinkgruvan and Neves -
Corvo.
Keno Hill Restart: Alexco Resource Corp reported on September 15, 2020, that progress on site-
wide capital projects at the Keno Hill Silver District, including mill modifications and infrastructure
improvements, continues to be on pace for completion with mill commissioning and production of
silver concentrate in the fourth quarter of 2020.
Produced But Not Yet Delivered 5
As at September 30, 2020 , payable ounces attributable to the Company produced but not yet
delivered amounted to:
• 77,000 payable gold ounces, a decrease of 2,600 ounces during Q3 2020, primarily due to
a reduction during the period relative to the Sudbury mines.
• 3.4 million payable silver ounces, an increase of 0.2 million ounces during Q3 2020, primarily
due to an increase during the period relative to the Peñasquito mine partially offset by a
reduction at the Zinkgruvan mine.
• 4,600 payable palladium ounces, a decrease of 300 ounces during Q3 2020.
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.
Community Support and Response Fund to Combat the COVID-19 Pandemic
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 operates and around the mines from which Wheaton
receives precious metals. This fund is incremental to Wheaton's already active Comm unity
Investment Program that currently provides support to over 50 programs in multiple communities
around the world. As of September 30, 2020, the Company has made donations totalling
approximately $3 million under this program.
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Webcast and Conference Call Details
A conference call and webcast will be held Tuesday, November 10, 2020, starting at 11:00 am
(Eastern Time) 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: 888-231-8191
Dial from outside Canada or the US: 647-427-7450
Pass code: 7579702
Live audio webcast: link
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and available until November 17, 2020 at 11:59 pm (Eastern
Time). 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: 855-859-2056
Dial from outside Canada or the US: 416-849-0833
Pass code: 7579702
Archived audio webcast: link
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 ha s 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.
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 r isk 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 creates sustainable value through streaming.
Wheaton’s estimated attributable precious metals production in 20 20 is forecast to be between
655,000 and 685,000 gold equivalent ounces2. Wheaton expects to produce between 365,000
and 385,000 ounces of gold, 21.5 and 22.5 million ounces of silver, and 23,000 and 24,500 ounces
of palladium.
In accordance with Wheaton Precious Metals™ Corp.’s (“Wheaton Precious Metals”, “Wheaton”
or the “Company”) MD&A and financial statements, reference to the Company includes the
Company’s wholly owned subsidiaries.
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End Notes
1 Please refer to non-IFRS measures at the end of this press release.
2 Commodity price assumptions for the gold equivalent production and sales in 2020 are $1,500 / ounce gold, $18 /
ounce silver, and $2,000 / ounce palladium.
3 Under the PMPA with Caldas Gold, the Company will pay a total cash consideration of $110 million, $38 million of
which is payable upon closing and the remaining portion of which is payable during the construction of the Marmato
Deep Zone project, subject to receipt of required permits and licenses, sufficient financing having been obtained to
cover total expected capital expenditures, and other customary conditions. In addition, the Company will make
ongoing payments equal to 18% of the spot gold and silver price until the market value of gold and silver delivered to
the Company, net of the per ounce cash payment, exceeds the initial upfront cash deposit, and 22% of the spot gold
and silver price thereafter.
4 Under the terms of the PMPA, the Company is entitled to an amount equal to 25% of the payable gold production
plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to
silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than
50:1 or increases to more than 90:1 for a period of 6 months or more, then the "70" shall be revised to "50" or "90", as
the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a period of 6
months or more in which event the "70" shall be reinstated.
5 Payable gold, silver and palladium ounces 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.
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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) 2020 2019 2020 2019
Sales $ 307,268 $ 223,595 $ 810,012 $ 638,110
Cost of sales
Cost of sales, excluding depletion $ 70,119 $ 64,624 $ 202,238 $ 194,796
Depletion 60,601 63,396 184,104 193,180
Total cost of sales $ 130,720 $ 128,020 $ 386,342 $ 387,976
Gross margin $ 176,548 $ 95,575 $ 423,670 $ 250,134
General and administrative expenses 21,326 14,028 56,307 42,811
Impairment of mineral stream interests - - - 165,912
Earnings from operations $ 155,222 $ 81,547 $ 367,363 $ 41,411
Other (income) expense 2,624 (3,533) (1,340) (709)
Earnings before finance costs and income taxes $ 152,598 $ 85,080 $ 368,703 $ 42,120
Finance costs 2,766 11,871 14,519 39,123
Earnings before income taxes $ 149,832 $ 73,209 $ 354,184 $ 2,997
Income tax recovery (expense) 43 2,751 (3,601) 5,618
Net earnings $ 149,875 $ 75,960 $ 350,583 $ 8,615
Basic earnings per share $ 0.334 $ 0.170 $ 0.782 $ 0.019
Diluted earnings per share $ 0.332 $ 0.170 $ 0.779 $ 0.019
Weighted average number of shares
outstanding
Basic 449,125 446,802 448,484 445,598
Diluted 451,999 447,849 449,892 446,467
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Condensed Interim Consolidated Balance Sheets
As at
September 30
As at
December 31
(US dollars in thousands - unaudited) 2020 2019
Assets
Current assets
Cash and cash equivalents $ 209,834 $ 103,986
Accounts receivable 8,317 7,138
Other 3,647 43,628
Total current assets $ 221,798 $ 154,752
Non-current assets
Mineral stream interests $ 5,547,769 $ 5,734,106
Early deposit mineral stream interests 33,241 31,741
Mineral royalty interest 3,036 3,036
Long-term equity investments 254,462 309,757
Convertible notes receivable 10,836 21,856
Property, plant and equipment 6,542 7,311
Other 13,503 15,448
Total non-current assets $ 5,869,389 $ 6,123,255
Total assets $ 6,091,187 $ 6,278,007
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 16,760 $ 11,794
Current portion of performance share units 19,010 10,668
Current portion of lease liabilities 734 724
Other 83 41,514
Total current liabilities $ 36,587 $ 64,700
Non-current liabilities
Bank debt $ 487,500 $ 874,500
Lease liabilities 2,968 3,528
Deferred income taxes 206 148
Performance share units 11,245 8,401
Pension liability 1,343 810
Total non-current liabilities $ 503,262 $ 887,387
Total liabilities $ 539,849 $ 952,087
Shareholders' equity
Issued capital $ 3,638,234 $ 3,599,203
Reserves 113,553 160,701
Retained earnings 1,799,551 1,566,016
Total shareholders' equity $ 5,551,338 $ 5,325,920
Total liabilities and shareholders' equity $ 6,091,187 $ 6,278,007
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Condensed Interim Consolidated Statements of Cash Flows
Three Months Ended
September 30
Nine Months Ended
September 30
(US dollars in thousands - unaudited) 2020 2019 2020 2019
Operating activities
Net earnings $ 149,875 $ 75,960 $ 350,583 $ 8,615
Adjustments for
Depreciation and depletion 61,050 63,845 185,542 194,590
Gain on disposal of mineral royalty interest - (2,929) - (2,929)
Impairment charges - - - 165,912
Interest expense 1,795 10,885 11,289 36,473
Equity settled stock based compensation 1,319 1,447 4,127 4,259
Performance share units 9,325 4,803 11,734 5,004
Pension expense 265 - 533 -
Income tax expense (recovery) (43) (2,751) 3,601 (5,618)
Loss (gain) on fair value adjustment of share purchase
warrants held 1,107 (2) 845 5
Fair value (gain) loss on convertible note receivable 1,095 (386) (1,382) 677
Investment income recognized in net earnings (23) (205) (178) (745)
Other 567 (491) 513 1,890
Change in non-cash working capital 3,656 2,093 2,771 (421)
Cash generated from operations before income taxes and interest $ 229,988 $ 152,269 $ 569,978 $ 407,712
Income taxes recovered (paid) - (1,751) 70 (5,334)
Interest paid (1,912) (8,404) (12,745) (33,311)
Interest received 23 186 177 686
Cash generated from operating activities $ 228,099 $ 142,300 $ 557,480 $ 369,753
Financing activities
Bank debt repaid $ (153,000) $ (82,000) $ (387,000) $ (250,500)
Credit facility extension fees (6) (3) (1,373) (1,103)
Share purchase options exercised 2,763 12,662 20,779 33,055
Lease payments (132) (156) (438) (479)
Dividends paid (37,309) (32,609) (120,312) (96,124)
Cash (used for) generated from financing activities $ (187,684) $ (102,106) $ (488,344) $ (315,151)
Investing activities
Mineral stream interests $ (40) $ (9) $ (40) $ (183)
Early deposit mineral stream interests (750) (750) (1,500) (1,500)
Proceeds on disposal of mineral royalty interest - 9,000 - 9,000
Acquisition of long-term investments (10,671) - (10,671) (909)
Investment in associate - - - (132)
Proceeds on disposal of long-term investments 49,454 16,307 49,577 16,307
Dividend income received - 20 - 59
Other (363) (313) (691) (1,520)
Cash generated from (used for) investing activities $ 37,630 $ 24,255 $ 36,675 $ 21,122
Effect of exchange rate changes on cash and cash equivalents $ 25 $ (5) $ 37 $ 135
Increase in cash and cash equivalents $ 78,070 $ 64,444 $ 105,848 $ 75,859
Cash and cash equivalents, beginning of period 131,764 87,182 103,986 75,767
Cash and cash equivalents, end of period $ 209,834 $ 151,626 $ 209,834 $ 151,626