Wheaton Precious Metals Announces Second Quarter Results FOR 2019 and Declares Third Quarterly Dividend of 2019
FOR IMMEDIATE RELEASE TSX: WPM
August 8, 2019 NYSE: WPM
WHEATON PRECIOUS METALS ANNOUNCES SECOND QUARTER RESULTS FOR
2019 AND DECLARES THIRD QUARTERLY DIVIDEND OF 2019
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”)
is pleased to announce its results for the second quarter ended June 30, 2019. All figures are
presented in United States dollars unless otherwise noted.
In the second quarter of 2019, Wheaton generated over $100 million in operating cash flow and
had attributable gold production of over 100,000 ounces. Through the first half of 2019, Wheaton
is on track for record annual gold production and reconfirms 2019 gold equivalent production
guidance.
Operational Overview
Q2 2019 Q2 2018 Change
Ounces produced
Gold 100,577 90,391 11.3 %
Silver (000's) 4,834 5,977 (19.1)%
Palladium 5,736 - n.a.
Ounces sold
Gold 90,077 87,140 3.4 %
Silver (000’s) 4,241 5,972 (29.0)%
Palladium 5,273 - n.a.
Sales price per ounce
Gold $ 1,320 $ 1,305 1.1 %
Silver $ 14.93 $ 16.52 (9.6)%
Palladium $ 1,381 $ n.a. n.a.
Cash costs per ounce 1
Gold 1 $ 420 $ 407 3.2 %
Silver 1 $ 5.14 $ 4.54 13.2 %
Palladium 1 $ 247 $ n.a. n.a.
Cash operating margin per ounce 1
Gold 1 $ 900 $ 898 0.2 %
Silver 1 $ 9.79 $ 11.98 (18.3)%
Palladium 1 $ 1,134 $ n.a. n.a.
Revenue $ 189,466 $ 212,400 (10.8)%
Net (loss) earnings $ (124,694) $ 318,142 n.a.
Per share $ (0.28) $ 0.72 n.a.
Adjusted net earnings 1 $ 44,808 $ 72,340 (38.1)%
Per share 1 $ 0.10 $ 0.16 (38.4)%
Operating cash flows $ 109,258 $ 135,200 (19.2)%
Per share 1 $ 0.25 $ 0.31 (19.4)%
Dividends declared 1 $ 40,133 $ 39,888 0.6 %
Per share $ 0.09 $ 0.09 0.0 %
All amounts in thousands except gold and palladium ounces produced and sold, per ounce amounts and per share amounts. 1
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Highlights
• The increase in attributable gold production was primarily due to the commencement of the
San Dimas gold stream effective May 10, 2018, and the Stillwater precious metals stream
effective July 1, 2018, as well as higher production at Sudbury.
• The decrease in attributable silver production was primarily due to the termination of the San
Dimas silver stream effective May 10, 2018 and lower production from Peñasquito due to an
illegal blockade.
• The increase in gold sales volume was due to the higher production levels, partially offset by
negative changes in the balance of payable gold produced but not yet delivered to Wheaton.
• The decrease in silver sales volume was due to the lower production levels coupled with
negative changes in the balance of payable silver produced but not yet delivered to
Wheaton.
• The net loss incurred during the current period was a result of a non-cash impairment
charge in the amount of $166 million relative to the Company’s Voisey’s Bay PMPA, while
during the prior period the Company terminated the previously owned San Dimas silver
purchase agreement, resulting in a gain on disposal of $246 million.
• The decrease in adjusted net earnings was primarily due to lower margins relative to San
Dimas, which was converted to a gold stream on May 10, 2018, lower sales relative to
Peñasquito resulting from the illegal blockade, lower sales relative to Salo bo resulting from
negative changes in ounces PBND and higher finance costs.
• Declared quarterly dividend of $0.09 per common share in accordance with Wheaton’s
setting of a minimum quarterly dividend of $0.09 per common share for the duration of 2019,
subject to the discretion of the Board of Directors.
Subsequent to the Quarter
• Hudbay Minerals Inc. (“Hudbay”) announced that the U.S. District Court for the District of
Arizona issued a ruling vacating and remanding the U.S. Forest Service’s issuance of the
Final Record of Decision for the Rosemont project in Arizona , such that Rosemont cannot
proceed with construction at t his time. Hudbay states that they believe that the Court has
misinterpreted federal mining laws and Forest Service regulations as they apply to
Rosemont and as such, they will be appealing the decision.
Reconfirming Gold Equivalent Production Guidance
• Wheaton’s estimated attributable production in 201 9 is on track to meet its forecast of
approximately 690,000 gold equivalent ounces 2; however, the mix of precious metals
production has been updated based on developments in the first half of the year.
Specifically, Wheaton now expects to produce approximately 385,000 ounces of gold, 2 2.5
million ounces of silver and 22,000 ounces of palladium.
• For the five-year period ending in 2023, the Company continues to estimate that average
annual gold equivalent production2 will amount to 750,000 ounces. A s a reminder, Wheaton
does not include any production from Rosemont in this five-year guidance.
“Wheaton once again generated strong operating cash flow in the second quarter at well over
$100 million,” said Randy Smallwood, President and Chief Executive Officer of Wheaton
Precious Metals. “We are unique in the streaming and royalty space as our curr ent revenue is
derived from 100% precious metals production with significant leverage to not only the price of
gold, but also to other precious metals including silver and palladium. As always, we remain
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focused on the sustainable management of our diverse portfolio of low-cost, long-life assets and
delivering superior shareholder value.”
Financial Review
Revenues
Revenue was $189 million in the second quarter of 2019, on sales volume of 90,100 ounces
of gold, 4.2 million ounces of silver and 5,300 ounces of palladium. This represents an 11%
decrease from the $212 million of revenue generated in the second quarter of 2018 due
primarily to (i) a 29% decrease in the number of silver ounces sold, (ii) a 10% decrease in
the average realized silver price ($14.93 in Q2 2019 compared with $16.52 in Q2 2018);
partially offset by (iii) the introduction of palladium sales effective Q3 2018, (iv) a 3%
increase in the number of gold ounces sold; and (v) a 1% increase in the average realized
gold price ($1,320 in Q2 2019 compared with $1,305 in Q2 2018).
Costs and Expenses
Average cash costs¹ in the second quarter of 2019 were $420 per gold ounce sold, $5.14
per silver ounce sold and $247 per palladium ounce sold, as compared with $407 per gold
ounce and $4.54 per silver ounce during the comparable period of 2018. This resulted in a
cash operating margin¹ of $900 per gold ounce sold, $9.79 per silver ounce sold and $1,134
per palladium ounce sold, a decrease of 18% per silver ounce sold while the cash operating
margin¹ per ounce of gold sold was virtually unchanged as compared with Q2 2018. The
decrease in the silver cash operating margin was primarily due to a 10% decrease in the
average realized silver price in Q2 2019 compared with Q2 2018.
Adjusted Net Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the second quarter of 2019 were
$45 million ($0.10 per share) and $109 million ($0.25 per share¹), compared with adjusted
net earnings¹ of $72 million ($0.16 per share) and c ash flow from operations of $135 million
($0.31 per share¹) for the same period in 2018, a decrease of 38% and 19%, respectively.
Balance Sheet
At June 30, 2019, the Company had approximately $87 million of cash on hand and $1.1
billion outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility"). The average effective interest rate for the second quarter of 2019 was 4.25%.
Asset Impairment
At the end of each reporting period, the Company assesses each precious metal purchase
agreement (“PMPA”) to determine whether any indication of impairment exists. If such an
indication exists, the recoverable amount of the precious metal purchase agreement is
estimated in order to determine the extent of the impairment (if any).
On June 11, 2018, the Company entered into an agreement (the “Voisey’s Bay PMPA”) to
acquire from a subsidiary of Vale S.A. (“Vale”) an amount of cobalt equal to 42.4% of the
cobalt production from its Voisey’s Bay mine in Canada, until the delivery of 31 million
pounds of cobalt and 21.2% of cobalt production thereafter for the life of mine for a total
upfront cash payment of $390 mil lion. Concurrently, Vale also entered into a streaming
agreement with Cobalt 27 Capital Corp. (“Cobalt 27”) on the Voisey’s Bay mine with similar
terms and conditions to the Voisey’s Bay PMPA.
On June 18, 2019, Cobalt 27 announced that it had entered into an agreement with Pala
Investments Limited (“Pala”) whereby Pala would acquire 100% of Cobalt 27’s issued and
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outstanding common shares. The implied price paid by Pala for Cobalt 27’s streaming
agreement on the Voisey’s Bay mine was significantly lower th an the original upfront cash
payment paid by Cobalt 27 to Vale at the time their agreement was entered into. The
estimated implied purchase price paid by Pala to acquire Cobalt 27’s Voisey’s Bay stream
was determined to be an indicator of impairment relati ve to the Company’s Voisey’s Bay
PMPA.
The Voisey’s Bay PMPA had a carrying value at June 30, 2019 , of $393 million.
Management estimated that the recoverable amount at June 30, 2019 , under the Voisey’s
Bay PMPA was $227 million, resulting in an impairment charge of $166 million.
Second Quarter Asset Highlights
During the second quarter of 2019 attributable production was 100,600 ounces of gold, 4.8
million ounces of silver and 5,700 ounces of palladium, representing an increase of 11% and a
decrease of 19% for gold and silver, respectively, as compared with the second quarter of 2018.
Operational highlights for the quarter ended June 30, 2019, are as follows:
Salobo
In the second quarter of 2019, Salobo produced 67,100 ounces of attributable gold, virtually
unchanged relative to the second quarter of 2018 as lower throughput and recoveries were
almost completely offset by higher grades. In Vale ’s Second Quarter 2019 Performance
Report, Vale reports that the ongoing expansion at Salobo continues to progress with the
completion of the earthworks in the crushing and flotation plants in the quarter.
Peñasquito
In the second quarter of 2019, Peñasquito produced 0.7 million ounces of attributable silver,
a decrease of approximately 45% relative to the second quarter of 2018 primarily due to
lower throughput result ing from an illegal blockade in the quarter partially offset by higher
grades. In April 2019, Newmont Mini ng Corporation and Goldcorp Inc. merged to form
Newmont Goldcorp Corporation (“Newmont”). On June 17, 2019, Newmont announced that
it was ramping up operations at Peñasquito following the lifting of the illegal blockade and
the establishment of a dialogue process sponsored by the national government. Newmont
also states that shipments from the mine have resumed and that during the 49-day
suspension of operations, the mine used the downtime to bring forward maintenance on a
variety of systems and equipment.
San Dimas
In the second quarter of 2019, San Dimas produced 11,500 ounces of attributable gold, an
increase of approximately 101% relative to the second quarter of 2018 as the San Dimas
gold stream was effective May 10, 2018 . According to First Majestic S ilver Corp.’s (“First
Majestic”) second quarter of 2019 production report, the San Dimas mill processed a total of
172,368 tonnes with average silver and gold grades of 312 g/t and 4. 32 g/t, respectively.
According to First Majestic, throughput was up 6% a nd silver and gold grades improved 9%
and 3%, respectively, compared to the prior quarter due to higher grades in the Jessica and
Victoria veins.
Sudbury
In the second quarter of 2019, Vale’s Sudbury mines produced 9,000 ounces of attributable
gold, an increase of approximately 39% relative to the second quarter of 2018 primarily due
to higher throughput. As a reminder, production in the second quarter of 2018 was impacted
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by the Coleman mine being shutdown down for unscheduled maintenance from November
2017 to April 2018.
Constancia
In the second quarter of 2019, Constancia produced 0.5 million ounces of attributable silver
and 4,500 ounces of attributable gold, a decrease of approximately 8% for silver production
and an increase of approximately 42% for gold production relative to the second quarter of
2018. As per Wheaton’s precious metals purchase agreement with Hudbay relating to
Constancia (the “Constancia PMPA”), s hould Hudbay fail to achieve a minimum level of
throughput at the Pampacancha satellite deposit during 2018, 2019 and 2020, Wheaton will
be entitled to an increased portion of gold from Hudbay. As per Hudbay’s MD&A for the first
quarter of 2019 , mining of the Pampacancha deposit is not expected to begin until later in
2020. Assuming ore production does not begin until 2020, the Company will be entitled to
receive an additional 8,020 ounces of gold in each of 2019 and 2020 relative to the
Constancia PMPA, with the deliveries to be made in quarterly installments, of which 2,005
ounces were received during the second quarter of 2019 and reported as production.
Other Gold
In the second quarter of 2019, total Other Gold attributable production was 4,800 ounces, a
decrease of approximately 36% relative to the second quarter of 2018. The decrease was
due primarily to the cessation of production at the Minto mine which was placed on care and
maintenance in the fourth quarter of 2018 . The Minto mine was sold by Capstone Mining
Corp. to Pembridge Resources plc (“Pembridge”) effective June 3, 2019. According to
Pembridge’s news release dated June 4, 2019, Pembridge expects to recommence
commercial production at Minto during the fourth quarter of 2019; however , Wheaton does
not include any additional production from Minto in its 2019 or five-year guidance.
Other Silver
In the second quarter of 2019, total Other Silver attributable production was 2.3 million
ounces, an increase of approximately 6% relative to the second quarter of 2018 . The
increase was driven primarily by higher production from the Zinkgruvan and Aljustrel mines
partially offset by lower production at Yauliyacu.
Development Update – Toroparu
Sandspring Resources Ltd. announced results from a Preliminary Economic Assessment
(“PEA”) of its Toroparu Gold Project in Guyana in a news release dated June 4, 2019, and
subsequently filed the PEA on July 23, 2019.
Produced But Not Yet Delivered 3
As at June 30, 2019, payable ounces attributable to the Company produced but not yet
delivered amounted to 80,700 payable gold ounces, 3.3 million payable silver ounces and
4,500 payable palladium ounces, representing an increase of 5,900 payable gold ounces, a
decrease of 0.2 million payable silver ounces and a decrease of 300 payable palladium
ounces during the three month period ended June 30, 2019 . Payable gold ounces produced
but not yet delivered increased primarily as a result of an increase related to the Salobo gold
interest. Payable silver ounces produced but not yet delivered decreased slightly primarily as
a result of a decrease related to the Peñasquito silver interest partially offset by a n increase
related to the Antamina silver interest. 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 both gold and palladium but
may vary from quarter to quarter due to a nu mber of mining operation factors including mine
ramp-up and timing of shipments.
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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.
Subsequent to the Quarter
Rosemont – Permitting
On August 1, 2019, Hudbay announced that the U.S. District Court for the District of Arizona
(“Court”) issued a ruling in the lawsuits challenging the U.S. Forest Service’s issuance of the
Final Record of Decision (“FROD”) for the Rosemont project in Arizona. The Court ruled to
vacate and remand the FROD such that Rosemont cannot proceed with construction at this
time. Hudbay stated that they believe that the Court has misinterpreted federal mining laws
and Forest Service regulations as they apply to Rosemont and as suc h, they will be
appealing the Court’s decision to the U.S. Ninth Circuit Court of Appeals. Hudbay indicates
that the FROD was issued in June 2017 after a thorough process of ten years involving 17
co-operating agencies at various levels of government, 16 hearings, over 1,000 studies, and
245 days of public comment resulting in more than 36,000 comments. Wheaton has not
made any upfront payments to date relative to Rosemont nor included any production from
Rosemont in its five-year guidance.
Dividend
Third Quarterly Dividend
The third quarterly cash dividend for 2019 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 23, 2019
and will be distributed on or about September 5, 2019.
Under the Company’s dividend policy, the quarterly dividend per common share is targeted to
equal approximately 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. To minimize volatility in quarterly dividends, the Company has
set a minimum quarterly dividend of $0.09 per common share for the duration of 2019.
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 , including direct deposit, 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
Wheaton’s estimated attributable precious metals production in 2019 is forecast to be
approximately 690,000 gold equivalent ounces 2. The mix of precious metals production has
been updated based on developments in the first half of the year. Specifi cally, Wheaton now
expects to produce approximately 385,000 ounces of gold, up from 365,000 ounces originally
forecast due to stronger than anticipated production from Salobo, and 22.5 million ounces of
silver, down from 24.5 million ounces as a result of the temporary shutdown of Peñasquito in the
second quarter of 2019 . Forecast production of palladium in 2019 remains unchanged at
approximately 22,000 ounces. For the five-year period ending in 2023, the Company estimates
that average annual gold equivalent production2 will amount to 750,000 ounces. As a reminder,
Wheaton does not currently include any production from Hudbay’s Rosemont project nor the
announced expansion at Salobo in its estimated average five-year production guidance4.
From a liquidity perspective, the $ 87 million of cash and cash equivalents as at June 30, 2019,
combined with 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 a dditional
accretive precious metal stream interests.
Webcast and Conference Call Details
A conference call and webcast will be held Friday, August 9, 2019 , 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: 6456709
Live audio webcast: Click here
Participants should dial in five to ten minutes before the call.
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The conference call will be recorded and available until August 16, 2019 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: 6456709
Archived audio webcast: Click here
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.
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 Commodity price assumptions for the gold equivalent production forecasts for 2019 and the five-year average are
unchanged since the original forecasts at $1,300 / ounce gold, $16 / ounce silver, $1,350 / ounce palladium, and $21
/ pound of cobalt.
3 Payable gold, silver and palladium ounces produced but not yet delivered are based on management estimates and
may be updated in future periods as additional information is received.
4 In preparing the long-term production forecast, Wheaton has considered the impact of Vale’s announced approval
of the Salobo III copper project, a brownfield expansion, which if completed as proposed, would increase processing
throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up (the “Salobo Expansion”). However, readers are
cautioned that Vale has not finalized its mine plan and as such, Wheaton has not included any production growth as
a result of the Salobo Expansion.