Wheaton Precious Metals Announces Second Quarter Results FOR 2018 and Declares Third Quarterly Dividend of 2018
FOR IMMEDIATE RELEASE TSX: WPM
August 14, 2018 NYSE: WPM
WHEATON PRECIOUS METALS ANNOUNCES SECOND QUARTER RESULTS FOR
2018 AND DECLARES THIRD QUARTERLY DIVIDEND OF 2018
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”)
is pleased to announce its results for the second quarter ended June 30, 2018. All figures are
presented in United States dollars unless otherwise noted.
In the second quarter of 2018, Wheaton had net earnings of $318 million, which included a $246
million gain on the disposal of the San Dimas silver stream. In the first half of 2018, Wheaton had
record gold production from Salobo and generated over $260 million in cash flow. During the
second quarter, Wheaton completed the acquisition of a cobalt stream on Vale’s Voisey’s Bay
mine, and subsequent to the quarter, Wheaton closed a gold and palladium stream on Sibanye -
Stillwater’s Stillwater and East Boulder mines.
Operational Overview
Q2 2018 Q2 2017 Change
Ounces produced
Silver 6,091 7,192 (15.3)%
Gold 85,292 79,636 7.1 %
Ounces sold
Silver 5,972 6,369 (6.2)%
Gold 87,140 71,965 21.1 %
Sales price per ounce
Silver $ 16.52 $ 17.09 (3.3)%
Gold $ 1,305 $ 1,263 3.3 %
Cash costs per ounce 1
Silver 1 $ 4.54 $ 4.51 0.7 %
Gold 1 $ 407 $ 393 3.6 %
Cash operating margin per ounce 1
Silver 1 $ 11.98 $ 12.58 (4.8)%
Gold 1 $ 898 $ 870 3.2 %
Revenue $ 212,400 $ 199,684 6.4 %
Net earnings $ 318,142 $ 67,612 370.5 %
Per share $ 0.72 $ 0.15 380.0 %
Adjusted net earnings 1 $ 72,722 $ 66,624 9.2 %
Per share 1 $ 0.16 $ 0.15 8.8 %
Operating cash flows $ 135,200 $ 124,681 8.4 %
Per share 1 $ 0.31 $ 0.28 10.7 %
Dividends declared 1 $ 39,888 $ 30,926 29.0 %
Per share $ 0.09 $ 0.07 28.6 %
All amounts in thousands except gold ounces produced and sold, per ounce amounts and per share amounts.
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Highlights
• The decrease in attributable silver production and the increase in attributable gold production
for the three months ended June 30, 2018 , was primarily due to the termination of the San
Dimas silver purchase agreement and the entering into of the new San Dimas precious metals
purchase agreement effective May 10, 2018, with the silver production being further impacted
by the expiry of the streaming agreement relative to the Lagunas Norte, Veladero and Pierina
mines on March 31, 2018 , and lower production at Antamina primarily resulting from mine
sequencing.
• The decrease in silver sales volume for the three months ended June 30, 2018, was due to
the lower production levels, partially offset by positive changes in the balance of payable silver
produced but not yet delivered to Wheaton.
• The increase in gold sales volume for the three months ended June 30, 2018 , was primarily
the result of increased production levels coupled with positive changes in the balance of
payable gold produced but not yet delivered to Wheaton.
• Declared quarterly dividend of $0.09 per common share. This represents an increase of 29%
relative to the comparable period in 2017.
• On May 10, 2018, First Majestic Silver Corp. ("First Majestic") announced that they had closed
the previously announced acquisition of Primero Mining Corp. ("Primero"). In connection with
this acquisition, the Company has terminated the San Dimas silver purchase agreement and
entered into a new San Dimas precious metal purchase agreement with First Majestic ,
resulting in a gain on disposal of $246 million.
• On June 28, 2018, Wheaton completed the acquisition from Vale S .A. (“Vale”) of a fixed
percentage of cobalt production from the Voisey’s Bay mine starting in January 2021.
Subsequent to the Quarter
• On July 25, 2018 , the Company , th rough its wholly owned subsidiary Wheaton Precious
Metals International Ltd. (“Wheaton International”), completed the acquisition from Sibanye
Gold Limited (" Sibanye-Stillwater") of a fixed percentage of gold and palladium production
from the Stillwater and East Boulder mines (collectively “Stillwater”) effective July 1, 2018.
• On July 17, 20 18, the Company acquired 9.99% of the common shares of Adventus Zinc
Corporation ("Adventus") and acquired a right of first refusal on any new streaming or royalty
transactions on precious metals on the Adventus existing properties in Ecuador.
Reconfirming Production Guidance
• With the addition of the streams on Voisey’s Bay and Stillwater, Wheaton’s estimated
attributable production in 2018 is forecast to be approximately 355,000 ounces of gold, 22.5
million ounces of silver, and 10,400 ounces of palladium.
• Estimated average annual attributable production over the next five years (including 2018) is
anticipated to be approximately 385,000 ounces of gold, 25 million ounces of silver, 27 ,000
ounces of palladium, and starting in 2021, 2.1 million pounds of cobalt per year.
“Wheaton’s high-quality portfolio and strong margins generated over $260 million of operating
cash flow in the first half of 2018,” said Randy Smallwood, President and Chief Executive Officer
of Wheaton Precious Metals. “Since the beginning of the year , Wheaton made two substantial
acquisitions with new streams on Voisey’s Bay and Stillwater. We expect Stillwater to contribute
production and cash flow starting in the third quarter of 2018 and Voisey’s Bay starting in 2021 .
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These additions ideally fit within our existing portfolio as they are both high -margin and long-life
mines with significant exploration potential. Given our sector -leading cash flow and revolving
credit facility, Wheaton was able to consummate these tran sactions on an accretive basis for
shareholders without having to access additional sources of capital . Over the past eight years ,
we have only raised $1.6 billion in equity, while at the same time invest ed over $6.5 billion into
new streams and paid over $800 million in dividends.”
Financial Review
Revenues
Revenue was $212 million in the second quarter of 2018, on sales volume of 6.0 million
ounces of silver and 87,100 ounces of gold. This represents a 6% increase from the $200
million of revenue generated in the second quarter of 2017 due primarily to (i) a 21% increase
in the number of gold ounces sold; (ii) a 3% increase in the average realized gold price ($1,305
in Q2 2018 compared with $1,263 in Q2 2017); partially offset by (iii) a 6% decrease in the
number of silver ounces sold; and (iv) a 3% decrease in the average realized silver price
($16.52 in Q2 2018 compared with $17.09 in Q2 2017).
Costs and Expenses
Average cash costs¹ in the second quarter of 2018 were $4.54 per silver ounce sold and $407
per gold ounce sold, as compared with $4.51 per silver ounce and $393 per gold ounce during
the comparable period of 2017. This resulted in a cash operating margin¹ of $11.98 per silver
ounce sold and $898 per gold ounce sold, a decrease of 5% per silver ounce sold and an
increase of 3% per ounce of gold sold as compared with Q2 2017. The decrease in the silver
cash operating margin was primarily due to a 3% decrease in the average realized silver price
in Q2 2018 compared with Q2 2017 while the increase in the gold cash operating margin was
primarily due to a 3% increase in the average realized gold price during the same period.
Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the second quarter of 2018 were $73
million ($0.16 per share) and $135 million ($0.31 per share¹), compared with adjusted net
earnings¹ of $67 million ($0.15 per share) and cash flow from operations of $125 million ($0.28
per share¹) for the same period in 2017, an increase of 9% and 8%, respectively.
Balance Sheet
At June 30, 2018, the Company had approximately $93 million of cash on hand and $957
million outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility"). Subsequent to June 30, 2018, the Company used its Revolving Facility to fund the
$500 million for the acquisition of the stream on Stillwater.
Second Quarter Asset Highlights
During the second quarter of 2018, attributable production was 6.1 million ounces of silver and
85,300 ounces of gold, representing a decrease of 15% and an increase of 7%, as compared with
the second quarter of 2017.
Operational highlights for the quarter ended June 30, 2018, based upon counterparties’ reporting,
are as follows:
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Salobo
In the second quarter of 2018, Salobo produced 63,900 ounces of attributable gold, an
increase of approximately 11% relative to the second quarter of 2017 as higher recovery and
throughput were partially offset by lower grades. The Salobo plant operated at 100% of
capacity in the quarter.
Peñasquito
In the second quarter of 2018, Peñasquito produced 1.3 million ounces of attributable silver,
a decrease of approximately 15% relative to the second quarter of 2017 due to lower
production from the oxide heap leach . According to Goldcorp Inc .’s (“Goldcorp”) second
quarter of 2018 MD&A, lower production was a result of the planned transition from high-grade
ore in Phase 5D at the bottom of the Peñasco pit, to lower grade ore from stockpiles and the
remnants of Phase 5D. Production in Phase 5D was reportedly completed during the second
quarter of 2018, and equipment was refocused on accelerating stripping activities in Phase
6D and in the Chile Colorado pit.
According to Goldcorp, construction of the Pyrite Leach Project ("PLP") at Peñasquito has
been completed with commissioning further accelerated to the third quarter of 2018, now two
quarters ahead of schedule . As a result, Goldcorp has modified the production plan for the
third quarter with lower than planned mill throughput and low mill head grades, exclusively
from the surface stockpile, to accommodate the commissioning of a new major circuit, which
is the preferred mate rial to be processing during the commissioning phase where lower
recoveries are expected. Goldcorp further notes that a resequencing to higher grades and mill
tonnage in the fourth quarter, subsequent to the commissioning, is expected to allow the mine
to meet its full year gold production objectives.
Antamina
In the second quarter of 2018, Antamina produced 1.5 million ounces of attributable silver, a
decrease of approximately 23% relative to the second quarter of 2017 as expected due to
mine sequencing in the open pit.
San Dimas
In the second quarter of 2018, San Dimas produced 5,700 ounces of attributable gold and 0.6
million ounces of attributable silver. On May 10, 2018, First Majestic announced that they had
completed the previously announced acquisition of Primero. In connection with this
acquisition, Wheaton International terminated the existing San Dimas silver purchase
agreement with Primero (the “Primero SPA”) and entered into a new precious metals purchase
agreement with First Majestic relating to the San Dimas mine (the "San Dimas PMPA").
Attributable silver production in the quarter was in relation to the Primero SPA, and attributable
gold production was attributable to the San Dimas PMPA. Under the San Dimas PM PA,
Wheaton is entitled to 25% of gold production plus an additional amount of gold equal to 25%
of silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the
San Dimas mine2, and for each ounce of gold delivered, Wheaton will pay to First Majestic a
delivery payment equal to the lesser of $600/oz, subject to a 1% annual inflationary
adjustment, and the prevailing market price. First Majestic has provided a corporate guarantee
and security limited to San Dimas assets. As p art of the transaction, in addition to the new
stream, Wheaton received 20,914,590 First Majestic common shares with a fair value of $151
million. As reflected in the Company’s second quarter financial results, the termination of the
Primero SPA has resulted in a gain on disposal of $246 million to Wheaton.
Sudbury
In the second quarter of 2018, Vale’s Sudbury mines produced 4,900 ounces of attributable
gold, a decrease of approximately 34% relative to the second quarter of 2017 primarily due to
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lower grades and throughput. According to Vale’s second quarter of 2018 MD&A, the Coleman
mine was in a maintenance shutdown from November 2017 to April 2018.
Constancia
In the second quarter of 2018, Constancia produced 0.6 million ounces of attributable silver
and 3,200 ounces of attributable gold, an increase of approximately 9% and 37%,
respectively, relative to the second quarter of 2017. Increased silver and gold production was
primarily due to higher throughput and grades.
Other Silver
In the second quarter of 2018, total Other Silver attributable production was 2.2 million ounces,
a decrease of approximately 6% relative to the second quarter of 2017 . The decrease was
driven primarily by the cessation of attributable production from the Lagunas Norte, Veladero,
and Pierina mines as the silver purchase agreement with Barrick Gold Corp. (“Barrick”) related
to these mines expired on March 31, 2018.
Other Gold
In the second quarter of 2018, total Other Gold attributable production was 7,500 ounces, a
decrease of approximately 39% relative to the second quarter of 2017. The decrease was due
primarily to lower production at both the Minto and 777 mines.
Produced But Not Yet Delivered 31
As at June 30, 2018, payable ounces attributable to the Company produced but not yet
delivered³ amounted to 4.3 million payable silver ounces and 75,600 payable gold ounces,
representing a decrease of 0.6 million payable silver ounces and 6,400 payable gold oun ces
during the three month period ended June 30, 2018. Payable silver ounces produced but not
yet delivered decreased primarily as a result of decreases related to the San Dimas and
Peñasquito silver interests partially offset by a n increase related to the Yauliyacu silver
interest. Payable gold ounces produced but not yet delivered decreased primarily as a result
of a decrease related to the Salobo gold interest partially offset by increases related to the
San Dimas and 777 gold interests . Payable ounces produced but not yet delivered to the
Wheaton group of companies are expected to average approximately two months of
annualized production for silver and two to three months for gold but may vary from quarter to
quarter due to a number of mining operation factors including mine ramp -up and timing of
shipments.
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 Operationa l
Review’ section.
Voisey’s Bay
On June 28, 2018, the Company entered into an agreement to acquire from Vale an amount of
cobalt equal to 42.4% of the Voisey’s Bay cobalt production until the delivery of 31 million pounds
of cobalt and 21.2% of cobalt production thereafter for the life o f mine at a fixed 93.3% payable
rate for a total upfront cash payment of $390 million. In addition, Wheaton will make delivery
payments of 18% of the Metal Bulletin market price of cobalt (“cobalt spot price”) per pound of
cobalt delivered under the agreement until such time as the upfront cash payment is reduced to
zero, after which the per pound price paid will be 22% of the cobalt spot price per cobalt pound
delivered. Delivery of cobalt production will commence after January 1, 2021.
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Subsequent to the Quarter
Stillwater
On July 25, 2018, Wheaton International entered into an agreement to acquire from Sibanye-
Stillwater an amount of gold and palladium equal to a fixed percentage of gold and palladium
production from Stillwater starting on July 1, 2018 . Wheaton International has paid a total
upfront cash payment of $500 million and is entitled to an amount of gold equal to 100% of
Stillwater gold production for the life of mine and an amount of palladium equal to: 4.5% of
Stillwater palladium production until 375 ,000 ounces are delivered; thereafter, 2.25% of
Stillwater palladium production until 550 ,000 are delivered; and 1% of Stillwater palladium
production thereafter for the life of mine. In addition, Wheaton International will generally make
delivery payments of 18% of spot gold and palladium prices until such time as the upfront cash
payment is reduced to zero, after which the delivery payments will increase to 22% spot.
Acquisition of Adventus Shares
On July 17, 2018, the Company acquired 7,093,392 common shares of Adventus in a private
placement transaction, for a total purchase price of Cdn$6 million, representing 9.99% of
Adventus’ issued and outstanding common shares. Concurrently, the Company acqu ired a
right of first refusal on any new streaming or royalty transactions on precious metals on the
Adventus existing properties in Ecuador and a right of first offer on any subsequently acquired
properties in Ecuador.
Dividend
Third Quarterly Dividend
The third quarterly cash dividend for 2018 of US$0.09 will be paid to holders of record of
Wheaton Precious Metals common shares as of the close of business on August 29, 2018 and
will be distributed on or about September 13, 2018.
Under the Company’s dividend policy, the quarterly dividend per common share will be equal
to 30% of the average cash generated by operating activities in the previous four quarters
divided by the Company’s then outstanding common shares, all rounded to the nearest cent.
The declaration, timing, amount and payment of future dividends remain at the discretion of
the Board of Directors. This dividend qualifies as an ‘eligible dividend’ for Canadian income tax
purposes.
Dividend Reinvestment Plan
The Company has previously implemented a Dividend Reinvestment Plan (“DRIP”).
Participation in the DRIP is optional. For the purposes of this third quarterly dividend, the
Company has elected to issue common shares under the DRIP through treasury at a 3%
discount to the Average Market Price, as defined in the DRIP. However, the Company may,
from time to time, in its discretion, change or eliminate the discount applicable to Treasury
Acquisitions, as defined in the DRIP, or direct that such common shares be purchased in
Market Acquisitions, as defined in the DRIP, at the prevailing market price, any of which would
be publicly announced.
The DRIP and enrollment forms are available for download on the Company’s website at
www.wheatonpm.com, accessible by quick links directly from the home page, and can also
be found in the ‘investors’ section, under the ‘dividends’ tab.
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Registered shareholders may also enroll in the DRIP online through the plan agent’s self-
service web portal at:
https://www.canstockta.com/en/InvestorServices/Investor_Information/Issuer_List/IssuerDet
ail.jsp?companyCode=1501.
Beneficial shareholders should contact their financial intermediary to arrange enrollment. All
shareholders considering enrollment in the DRIP should carefully review the terms of the DRIP
and consult with their advisors as to the implications of enrollment in the DRIP.
This press release is not an offer to sell or a solicitation of an offer of securities. A registration
statement relating to th e DRIP has been filed with the U.S. Securities and Exchange
Commission and may be obtained under the Company’s profile on the U.S. Securities and
Exchange Commission’s website at http://www.sec.gov. A written copy of the prospectus
included in the registration statement may be obtained by contacting the Corporate Secretary
of the Company at 1021 West Hastings Street, Suite 3500, Vancouver, British Columbia,
Canada V6E 0C3.
Outlook – Reconfirming Guidance
Wheaton reconfirms its estimated attributable production forecast for 2018 of approximately
355,000 ounces of gold, 22.5 million ounces of silver, and 10 ,400 ounces of palladium .
Estimated average annual attributable production over the next five years (including 2018) is
anticipated to be approximately 385,000 ounces of gold, 25 million ounces of silver, 27,000
ounces of palladium, and starting in 2021, 2.1 million pounds of cobalt per year. As a reminder,
Wheaton does not include any production from Barrick’s Pascua -Lama project or Hudbay’s
Rosemont project in its estimated average five-year production guidance.
From a liquidity perspective, the $93 million of cash and cash equivalents as at June 30, 2018
combined wit h the liquidity provided by the available credit under the $2 billion Revolving
Facility and ongoing operating cash flows positions the Company well to fund all outstanding
commitments and known contingencies as well as providing flexibility to acquire add itional
accretive precious metal stream interests.
Webcast and Conference Call Details
A conference call and webcast will be held Wednesday, August 15, 2018, 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: 8248656
Live audio webcast: www.wheatonpm.com
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and available until August 22, 2018 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
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Dial from outside Canada or the US: 416-849-0833
Pass code: 8248656
Archived audio webcast: www.wheatonpm.com
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, Vice President, Mining Operations for Wheaton Precious Metals, 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.
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 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.
3 Payable silver and gold ounces produced but not yet delivered are based on management estimates and may be
updated in future periods as additional information is received.