WHEATON PRECIOUS METALS ANNOUNCES RECORD REVENUE AND SALES VOLUMES IN THE FIRST HALF OF 2020 “Wheaton’s high -quality portfolio of assets delivered solid results in the first half of 2020
August 12, 2020 TSX: WPM
Vancouver, British Columbia NYSE: WPM
Designated News Release
WHEATON PRECIOUS METALS ANNOUNCES RECORD REVENUE
AND SALES VOLUMES IN THE FIRST HALF OF 2020
“Wheaton’s high -quality portfolio of assets delivered solid results in the first half of 2020
generating over $500 million in revenue and nearly $330 million in operating cash flow. While
production in the second quarter was impacted by temporary shutdowns of some operations as
a result of the COVID-19 pandemic, sales volumes remained strong, resulting in a record 322,000
gold equivalent ounces sold in the first half of 2020,” said Randy Smallwood, President and Chief
Executive Officer of Wheaton Precious Metals. “At Wheaton, our success is not only measured in
terms of financial results, but also in our ability to make a difference. In that regard, during the
quarter we established a dedicated fund to help address the impacts of COVID-19, which to date
has helped to provide food security, medical services and supplies, and economic opportunities
to those in need. The majority of these funds are dedicated to the communities around our
partners’ operations, and not only help to alleviate the near-term impacts of the pandemic, but
also leave positive, sustainable benefits."
Second Quarter Highlights:
• Over $151 million in operating cash flow in the quarter, an increase of nearly 40%.
• Net debt1 reduced by $80 million resulting in a net debt position of $509 million.
• Attributable gold equivalent2 production was 140,000 ounces in the second quarter, with the
reduction being due to the temporary shutdown of various mines resulting from COVID-19.
• Signed a non-binding term sheet on the Marmato Project with Caldas Gold Corp.
• Declared quarterly dividend1 of $0.10 per common share.
• Donated $2 million of the previously announced $5 million Community Support and
Response Fund dedicated to combatting the COVID-19 pandemic.
Operational Overview
(all figures in US dollars unless otherwise noted) Q2 2020 Q2 2019 Change
Ounces produced
Gold 88,631 100,908 (12.2)%
Silver 3,650 4,821 (24.3)%
Palladium 5,759 5,736 0.4 %
Gold equivalent 2 140,112 166,399 (15.8)%
Ounces sold
Gold 92,804 90,077 3.0 %
Silver 4,729 4,241 11.5 %
Palladium 4,976 5,273 (5.6)%
Gold equivalent 2 156,188 148,004 5.5 %
Revenue $ 247,954 $ 189,466 30.9 %
Net earnings (loss) $ 105,812 $ (124,694) n.a.
Per share $ 0.236 $ (0.280) n.a.
Adjusted net earnings 1 $ 97,354 $ 41,958 132.0 %
Per share 1 $ 0.217 $ 0.094 130.5 %
Operating cash flows $ 151,793 $ 109,258 38.9 %
Per share 1 $ 0.338 $ 0.245 38.0 %
Dividends paid 1 $ 44,861 $ 40,133 11.8 %
Per share $ 0.10 $ 0.09 11.1 %
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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Revised Production Guidance
Wheaton is providing a revised 2020 production forecast as all mining partners have now resumed
operations that were previously suspended as a result of the COVID -19 pandemic. During the
second quarter of 2020, six of our mining partners’ operations located in Mexico and Peru on
which the Company has precious metal purchase agreements (“ PMPA”s) were temporaril y
suspended due to government restrictions focused on reducing the spread of COVID -19,
consisting of the Constancia, Yauliyacu, San Dimas, Los Filos, Peñasquito and Antamina mines.
The revised 2020 and long-term forecasts assume that operations will contin ue throughout the
remainder of the year without major interruptions. Wheaton’s long -term production forecast
remains unchanged at 750,000 gold equivalent ounces (“GEO”s) per year on average between
2020 and 2024.
Metal Produced3 Revised 2020
Forecast
Original 2020
Forecast
Annual average
(2020-2024)
Gold Ounces 365,000 to 385,000 390,000 to 410,000
Silver Ounces (‘000s) 21,500 to 22,500 22,000 to 23,500
Palladium Ounces 23,000 to 24,500 23,000 to 24,500
Gold Equivalent Ounces2 655,000 to 685,000 685,000 to 725,000 750,000
Corporate Development – Marmato Project
On June 22, 2020, the Company announced that it had signed a non -binding term sheet with
Caldas Gold Co rp. ("Caldas Gold") to enter into a PMPA for the Marmato Project located in
Colombia. Under the terms of the proposed PMPA, 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 million 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. Under the proposed PMPA, 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 delivery payments equal to approximately 20% of the spot price s
over the life of the mine. The entering into of the PMPA is subject to, among other matters, t he
negotiation and completion of definitive documentation.
Community Support and Response Fund to Combat the COVID-19 Pandemic
During the quarter, Wheaton announced the launch of a $5 million Community Support and
Response Fund (the “CSR Fund”) to support the 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 Community Investment
Program that currently provides support to over 50 programs in multiple communities around the
world. As of June 30, 2020, the Company has made donations totalling $2 million under this
program.
Financial Review
Revenues
Revenue was $248 million in the second quarter of 2020 representing a 31% increase from the
second quarter of 2019 due primarily to a 24% increase in the average realized gold equivalent²
price; and a 6% increase in the number of gold equivalent² ounces sold.
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Costs and Expenses
Average cash costs¹ in the second quarter of 2020 were $418 per gold equivalent² ounce as
compared to $412 in Q2 2019. This resulted in a cash operating margin¹ of $1,170 per gold
equivalent² ounce sold, an increase of 35% as compared with Q2 2019.
Balance Sheet (at June 30, 2020)
• Approximately $132 million of cash on hand.
• $641 million outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility").
• During Q2 2020, the Company has repaid $75 million under the Revolving Facility.
• During Q2 2020, the net debt¹ was reduced by $80 million to $509 million.
• The average effective interest rate for Q2 2020 was 1.97%.
Second Quarter Asset Highlights
Salobo: In the second quarter of 2020, Salobo produced 59,100 ounces of attributable gold, a
decrease of approximately 12% relative to the second quarter of 2019 due to lower throughput as
operations were impacted as a result of increased absenteeism during the quarter resulting from
the COVID-19 pandemic. According to Vale S.A.’s (“Vale”) Second Quarter 2020 Performance
Report, physical completion of the Salobo III mine expansion was 54% at the end of the second
quarter. As a preventive measure related to the COVID-19 pandemic, non-critical works at the
expansion were suspended in late March 2020, with their gradual resumption starting in May
2020. Vale reports that the expansion remains on track to start up in the first half of 2022.
Peñasquito: In the second quarter of 2020, Peñasquito produced 1.0 million ounces of
attributable silver, an increase of approximately 39% relative to the second quarter of 2019 when
production was impacted by an illegal blockade of the mine. Operations at the Peñasquito mine
were temporarily suspended during the quarter as a result of the Mexican government regulations
related to the COVID-19 pandemic. As per Newmont Corporation’s Second Quarter MD&A, both
mill and mining activities at Peñasquito began ramping back up at the beginn ing of June and
reached pre-COVID-19 record levels in the plant by mid-June.
San Dimas: In the second quarter of 2020, San Dimas produced 6,100 ounces of attributable
gold, a decrease of approximately 47% relative to the second quarter of 2019 primarily due to
lower throughput coupled with the impact of revising the silver to gold conversion ratio from 70:1
to 90:1 effective April 1, 2020 , as per the PMPA. Operations at the San Dimas mine were
temporarily suspended during the quarter resulting from the COVID-19 pandemic, with operations
resuming after the Mexican government’s decision to allow mining to restart on May 23, 2020. In
addition, First Majestic Silver (“First Majestic”) reports that mill modernization and optimization
programs have resumed at San Dimas, including the mid -May delivery of the 3,000 tonnes per
day high intensity grinding mill (“HIG”) and several components. As a result of the temporary
suspension during the quarter, First Majestic expects the assembly and installation of the new
HIG mill to be completed in the second quarter of 2021.
Antamina: In the second quarter of 2020, Antamina produced 0.6 million ounces of attributable
silver, a decrease of approximately 54% relative to the second quarter of 2019 , primarily due to
lower throughput as operations at the mine were temporarily suspended during the quarter as a
result of the COVID-19 pandemic. The Antamina mine reportedly resumed operations on May 26,
2020, and ramped to full production in June.
Constancia: In the second quarter of 2020, Constancia produced 0.3 million ounces of
attributable silver and 3,500 ounces of attributable gold, a decrease of approximately 54% and
23%, respectively, relat ive to the second quarter of 2019 , primarily due to lower throughput as
operations at the mine were temporarily suspended during the quarter as a result of the COVID-
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19 pandemic. As per Wheaton’s PMPA with Hudbay Minerals Inc. , 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 second quarter of 2020 and included as production.
Other Gold: In the second quarter of 2020, total Other Gold attributable production was 7,700
ounces, an increase of approximately 60% relative to the second quarter of 2019 , primarily due
to the resumption of mining at the Minto mine.
Other Silver: In the second quarter of 2020, total Other Silver attributable production was 1.8
million ounces, a decrease of approximately 19% relative to the second quarter of 2019, primarily
due to the temporary suspension of operations at the Yauliyacu mine as a result of the COVID-
19 pandemic.
Keno Hill Restart: In addition, Alexco Resource Corp (“Alexco”) reported on June 24, 2020 , its
intent to recommence mining operations in the Keno Hill Silver District (“Keno Hill”) with ore
production, mill commissioning, and concentrate sales planned for Q4 2020. Subsequent to the
quarter, Alexco announced that it had received the final amende d and renewed Water Use
License for Keno Hill. Wheaton is entitled to 25% of the payable silver production from Keno Hill.
In order to help facilitate the resumption of mining, Wheaton agreed to modify the PMPA as it
relates to the delivery payment per oun ce of silver in exchange for 2 million common share
purchase warrants from Alexco.
Produced But Not Yet Delivered 4
As at June 30, 2020, payable ounces attributable to the Company produced but not yet delivered
amounted to:
• 79,500 payable gold ounces, a decrease of 8,900 ounces during Q2 2020, primarily due to
a draw down during the period relative to the Salobo mine.
• 3.1 million payable silver ounces, a decrease of 1.8 million ounces during Q2 2020, primarily
due to decreases during the period relative to the Peñasquito, Antamina and Yauliyacu
mines, all of which had their operations temporarily suspended during the quarter.
• 4,900 payable palladium ounces, virtually unchanged from the balance at Q1 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.
Webcast and Conference Call Details
A conference call and webcast will be held Thursday, August 13, 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: 1968427
Live audio webcast: link
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and available until August 20, 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:
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Dial toll free from Canada or the US: 855-859-2056
Dial from outside Canada or the US: 416-849-0833
Pass code: 1968427
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 sig nificant 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 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 creates sustainable value through streaming.
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.
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 In order to maintain consistency with the original guidance, commodity price assumptions for the gold equivalent
production and sales in 2020 are unchanged at $1,500 / ounce gold, $18 / ounce silver, and $2,000 / ounce
palladium.
3 Ounces produced represent the quantity of silver, gold , palladium and cobalt contained in concentrate or doré prior
to smelting or refining deductions.
4 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 (Loss)
Three Months Ended
June 30
Six Months Ended
June 30
(US dollars and shares in thousands, except per share
amounts - unaudited) 2020 2019 2020 2019
Sales $ 247,954 $ 189,466 $ 502,744 $ 414,515
Cost of sales
Cost of sales, excluding depletion $ 65,211 $ 60,957 $ 132,119 $ 130,171
Depletion 58,661 61,404 123,503 129,785
Total cost of sales $ 123,872 $ 122,361 $ 255,622 $ 259,956
Gross margin $ 124,082 $ 67,105 $ 247,122 $ 154,559
General and administrative expenses 21,799 12,249 34,981 28,784
Impairment of mineral stream interests - 165,912 - 165,912
Earnings from operations $ 102,283 $ (111,056) $ 212,141 $ (40,137)
Other (income) expense (3,366) 3,090 (3,963) 2,824
Earnings before finance costs and income taxes $ 105,649 $ (114,146) $ 216,104 $ (42,961)
Finance costs 4,636 13,306 11,753 27,252
Earnings before income taxes $ 101,013 $ (127,452) $ 204,351 $ (70,213)
Income tax recovery (expense) 4,799 2,758 (3,643) 2,868
Net earnings (loss) $ 105,812 $ (124,694) $ 200,708 $ (67,345)
Basic earnings per share $ 0.236 $ (0.280) $ 0.448 $ (0.151)
Diluted earnings per share $ 0.235 $ (0.279) $ 0.447 $ (0.151)
Weighted average number of shares
outstanding
Basic 448,636 445,769 448,217 445,083
Diluted 450,042 446,470 449,513 445,815
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Condensed Interim Consolidated Balance Sheets
As at
June 30
As at
December 31
(US dollars in thousands - unaudited) 2020 2019
Assets
Current assets
Cash and cash equivalents $ 131,764 $ 103,986
Accounts receivable 3,244 7,138
Current taxes receivable - 124
Other 45,267 43,504
Total current assets $ 180,275 $ 154,752
Non-current assets
Mineral stream interests $ 5,610,603 $ 5,734,106
Early deposit mineral stream interests 32,491 31,741
Mineral royalty interest 3,036 3,036
Long-term equity investments 262,798 309,757
Investment in associates 479 882
Convertible notes receivable 24,333 21,856
Property, plant and equipment 6,647 7,311
Other 13,382 14,566
Total non-current assets $ 5,953,769 $ 6,123,255
Total assets $ 6,134,044 $ 6,278,007
Liabilities
Current liabilities
Accounts payable and accrued liabilities $ 9,447 $ 11,794
Current taxes payable 35 -
Current portion of performance share units 14,355 10,668
Current portion of lease liabilities 718 724
Other 41,513 41,514
Total current liabilities $ 66,068 $ 64,700
Non-current liabilities
Bank debt $ 640,500 $ 874,500
Lease liabilities 3,054 3,528
Deferred income taxes 186 148
Performance share units 6,215 8,401
Pension liability 1,078 810
Total non-current liabilities $ 651,033 $ 887,387
Total liabilities $ 717,101 $ 952,087
Shareholders' equity
Issued capital $ 3,626,211 $ 3,599,203
Reserves 113,658 160,701
Retained earnings 1,677,074 1,566,016
Total shareholders' equity $ 5,416,943 $ 5,325,920
Total liabilities and shareholders' equity $ 6,134,044 $ 6,278,007
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Condensed Interim Consolidated Statements of Cash Flows
Three Months Ended
June 30
Six Months Ended
June 30
(US dollars in thousands - unaudited) 2020 2019 2020 2019
Operating activities
Net earnings (loss) $ 105,812 $ (124,694) $ 200,708 $ (67,345)
Adjustments for
Depreciation and depletion 59,140 61,871 124,492 130,745
Impairment charges - 167,561 362 167,561
Interest expense 3,515 12,434 9,494 25,586
Equity settled stock based compensation 1,305 1,456 2,808 2,813
Performance share units (868) 793 2,409 201
Pension expense 233 - 268 -
Income tax expense (recovery) (4,799) (2,758) 3,643 (2,868)
Loss on fair value adjustment of share purchase warrants
held (333) 7 (262) 7
Share in losses of associate - - 41 62
Fair value (gain) loss on convertible note receivable (3,267) 1,934 (2,477) 1,063
Investment income recognized in net earnings (37) (297) (155) (539)
Other 264 242 (456) 670
Change in non-cash working capital (5,505) 4,659 (885) (2,511)
Cash generated from operations before income taxes and interest $ 155,460 $ 123,208 $ 339,990 $ 255,445
Income taxes recovered (paid) (19) (24) 70 (3,586)
Interest paid (3,685) (14,200) (10,833) (24,907)
Interest received 37 274 154 500
Cash generated from operating activities $ 151,793 $ 109,258 $ 329,381 $ 227,452
Financing activities
Bank debt repaid $ (75,000) $ (88,000) $ (234,000) $ (168,500)
Credit facility extension fees (7) - (1,367) (1,100)
Share purchase options exercised 11,094 5,502 18,016 20,393
Lease payments (139) (153) (306) (323)
Dividends paid (83,003) (63,515) (83,003) (63,515)
Cash (used for) generated from financing activities $ (147,055) $ (146,166) $ (300,660) $ (213,045)
Investing activities
Mineral stream interests $ - $ - $ - $ (174)
Early deposit mineral stream interests - (750) (750) (750)
Acquisition of long-term investments - (909) - (909)
Investment in associate - (132) - (132)
Proceeds on disposal of long-term investments 123 - 123 -
Dividend income received - 23 - 39
Other (71) (53) (328) (1,207)
Cash generated from (used for) investing activities $ 52 $ (1,821) $ (955) $ (3,133)
Effect of exchange rate changes on cash and cash equivalents $ 298 $ 130 $ 12 $ 141
Increase (decrease) in cash and cash equivalents $ 5,088 $ (38,599) $ 27,778 $ 11,415
Cash and cash equivalents, beginning of period 126,676 125,781 103,986 75,767
Cash and cash equivalents, end of period $ 131,764 $ 87,182 $ 131,764 $ 87,182