WHEATON PRECIOUS METALS ANNOUNCES THIRD QUARTER RESULTS FOR 2018 AND DECLARES FOURTH QUARTERLY DIVIDEND OF 2018 On track to exceed annual production guidance
FOR IMMEDIATE RELEASE TSX: WPM
November 14, 2018 NYSE: WPM
WHEATON PRECIOUS METALS ANNOUNCES THIRD QUARTER RESULTS
FOR 2018 AND DECLARES FOURTH QUARTERLY DIVIDEND OF 2018
On track to exceed annual production guidance
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”)
is pleased to announce its results for the third quarter ended September 30, 2018. All figures are
presented in United States dollars unless otherwise noted.
In the third quarter of 2018, Wheaton generated close to $110 million in operating cash flow, and
completed the acquisition of a gold and palladium stream on the Stillwater and East Boulder mines
(collectively “Stillwater”). During the third quarter, Wheaton received its first deliveries of gold and
palladium from Stillwater. Through the first nine month s of 2018, Wheaton had record gold
production and sales volumes, and is currently on track to exceed annual production guidance.
Operational Overview
Q3 2018 Q3 2017 Change
Ounces produced
Silver 5,701 7,595 (24.9)%
Gold 101,552 95,216 6.7 %
Palladium 8,817 - n.a
Ounces sold
Silver 5,018 5,758 (12.9)%
Gold 89,242 82,548 8.1 %
Palladium 3,668 - n.a
Sales price per ounce
Silver $ 14.80 $ 16.87 (12.3)%
Gold $ 1,210 $ 1,283 (5.7)%
Palladium $ 955 $ n.a. n.a
Cash costs per ounce 1
Silver 1 $ 5.04 $ 4.43 13.8 %
Gold 1 $ 418 $ 396 5.6 %
Palladium 1 $ 169 $ n.a. n.a
Cash operating margin per ounce 1
Silver 1 $ 9.76 $ 12.44 (21.5)%
Gold 1 $ 792 $ 887 (10.7)%
Palladium 1 $ 786 $ n.a. n.a
Revenue $ 185,769 $ 203,034 (8.5)%
Net earnings $ 34,021 $ 66,578 (48.9)%
Per share $ 0.08 $ 0.15 (46.7)%
Adjusted net earnings 1 $ 35,132 $ 66,578 (47.2)%
Per share 1 $ 0.08 $ 0.15 (47.4)%
Operating cash flows $ 108,413 $ 129,121 (16.0)%
Per share 1 $ 0.24 $ 0.29 (17.2)%
Dividends declared 1 $ 39,921 $ 44,201 (9.7)%
Per share $ 0.09 $ 0.10 (10.0)%
All amounts in thousands except gold and palladium ounces produced and sold, per ounce amounts and per share amounts.
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Highlights
• The decrease in attributable silver production for the three months ended September 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 (“First Majestic
PMPA”) effective May 10, 2018, the expiry of the streaming agreement relative to the Lagunas
Norte, Veladero and Pierina mines on March 31, 2018 , and lower production at Peñasquito
due to lower throughput and planned lower grades from stockpiles during the commissioning
of the now fully constructed Peñasquito Pyrite Leach Project (“PLP”).
• The increase in attributable gold production for the three months ended September 30, 2018,
was primarily due to the entering into of the First Majestic PMPA, the acquisition of the new
gold stream at Stillwater, partially offset by lower production at both Salobo and Minto.
• The decrease in silver sales volume for the three months ended September 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 September 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.
• On July 25, 2018 , the Company , through 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 Stillwater effective July 1, 2018.
Reconfirming 2018 Production Guidance
• Wheaton’s estimated attributable production in 2018 is on track to exceed its guidance of
approximately 355,000 ounces of gold, 22.5 million ounces of silver and 10 ,400 ounces of
palladium.
Subsequent to the Quarter
• On October 24, 2018, Vale S.A. (“Vale”) announced the approval of the Salobo III mine
expansion, which if completed as proposed, would increase processing throughput capacity
from 24 million ton nes per annum (“Mtpa”) to 36 Mtp a once fully ramped up (the “Salobo
Expansion”).
“Our robust precious metals business continued to grow in the third quarter with the first
production of gold and palladium from our latest stream, Stillwater, exceeding our expectations.
With the addition of Stillwater, Wheaton had record gold production and sales volume in the first
nine months of 2018 resulting in operating cash flow of almost $370 million .” said Randy
Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “In addition, we
believe we are currently well positioned to exceed our production guidance for 2018. Finally, we
also look forward to Vale pursuing their announced expansion of the Salobo mine in Brazil. Salobo
has proven itself to be an exceptional mine, delivering metal to both Vale and Wheaton at a low
cost.”
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Financial Review
Revenues
Revenue was $186 million in the third quarter of 2018, on sales volume of 5.0 million ounces
of silver, 89,200 ounces of gold and 3,700 ounces of palladium. This represents a 9%
decrease from the $203 million of revenue generated in the third quarter of 2017 due primarily
to (i) a 13% decrease in the number of silver ounces sold; (ii) a 12% decrease in the average
realized silver price ($14.80 in Q3 2018 compared with $16.87 in Q3 2017); and (iii) a 6%
decrease in the average realized gold price ($1,210 in Q3 2018 compared with $1,283 in Q3
2017); partially offset by (iv) an 8% increase in the number of gold ounces sold; and (v) the
first sales of palladium.
Costs and Expenses
Average cash costs¹ in the third quarter of 2018 were $5.04 per silver ounce sold, $418 per
gold ounce sold and $169 per palladium ounce sold, as compared with $4.43 per silver ounce
and $396 per gold ounce during the comparabl e period of 2017. This resulted in a cash
operating margin¹ of $9.76 per silver ounce sold, $792 per gold ounce sold and $786 per
palladium ounce sold, a reduction of 22% and 11% for silver and gold, respectively, as
compared with Q3 2017. The decrease in the cash operating margin was primarily due to a
12% decrease in the average realized silver price and a 6% decrease in the average realized
gold price in Q3 2018 compared with Q3 2017.
Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flo w from operations in the third quarter of 2018 were $35
million ($0.08 per share) and $108 million ($0.24 per share¹), compared with $67 million ($0.15
per share) and $129 million ($0.29 per share¹) for the same period in 2017, a decrease of
47% and 16%, respectively.
Balance Sheet
At September 30, 2018, the Company had approximately $119 million of cash on hand and
$1.4 billion outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility").
Third Quarter Asset Highlights
During the third quarter of 2018, attributable production was 5.7 million ounces of silver, 101,600
ounces of gold and 8,800 ounces of palladium, representing a decrease of 25% and an increase
of 7% for silver and gold, respectively, as compared with the third quarter of 2017.
Operational highlights for the quarter ended September 30, 2018, based upon counterparties’
reporting, are as follows:
Salobo
In the third quarter of 2018, Salobo produced 68,600 ounces of attributable gold, a decrease
of approximately 6% relative to the third quarter of 2017 due to slightly lower grades as
expected due to mine sequencing in the open pit . As discussed below, subsequent to the
quarter, Vale announced the approval of the Salobo Expansion.
Peñasquito
In the third quarter of 2018, Peñasquito produced 1.0 million ounces of attributable silver, a
decrease of approximately 36% relative to the third quarter of 2017 due to lower throughput
and planned lower grades from stockpiles during the commissioning of the now fully
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constructed PLP. According to Goldcorp Inc.’s (“Goldcorp”) third quarter of 2018 MD&A, lower
production was a result of the planned transition from higher grade ore in the Peñasco pit to
lower grade ore from stockpiles during the first three quarters of 2018. This transit ion
facilitated the stripping campaign in the Peñasco pit and the pre -stripping campaign in the
newly developed Chile Colorado pit. Goldcorp further notes that production in the third quarter
of 2018 was impacted by a reduction in mill throughput as much harder low-grade stockpiles
were processed during commissioning of the Carbon Pre-flotation plant, a component of the
PLP.
According to Goldcorp, commissioning of the PLP commenced, with commercial production
expected in the fourth quarter of 2018 . In addition, Goldcorp reports that substantially all of
Peñasquito’s production in the fourth quarter will come from higher grade ore from the main
Peñasco pit.
Antamina
In the third quarter of 2018, Antamina produced 1.5 million ounces of attributable silver, a
decrease of approximately 15% relative to the third quarter of 2017 as expected due to mine
sequencing in the open pit.
San Dimas
In the third quarter of 2018, San Dimas produced 10,600 ounces of attributable gold .
According to Firs t Majestic Silver Corp.’s (“First Majestic”) third quarter of 2018 production
report, silver equivalent production in the quarter increased 90% relative to the prior quarter
due to increased throughput as some of the lower grade stopes that were deemed
uneconomical under the old streaming agreement have now become economical under the
new streaming agreement. First Majestic also highlighted increased recoveries as a result of
an additional agitator tank being installed in September which increases retention times.
Sudbury
In the third quarter of 2018, Vale’s Sudbury mines produced 6,000 ounces of attributable gold,
a decrease of approximately 30% relative to the third quarter of 2017 primarily due to lower
throughput caused by a planned maintenance shutdown in August (planned maintenance in
2017 occurred in June).
Constancia
In the third quarter of 2018, Constancia produced 0.7 million ounces of attributable silver and
3,300 ounces of attributable gold, an increase of approximately 19% and 31%, re spectively,
relative to the third quarter of 2017. Increased silver and gold production was primarily due to
record mill throughput and higher grades.
Stillwater
In the third quarter of 2018, Stillwater produced 6,400 ounces of attributable gold and 8,800
ounces of attributable palladium. On July 25, 2018, the Company, through its wholly owned
subsidiary Wheaton International, completed the acquisition from Sibanye-Stillwater of a fixed
percentage of gold and palladium production from Stillwater. As p art of the agreement,
Wheaton is entitled to the attributable gold and palladium production for which an offtaker
payment was received after July 1, 2018, resulting in reported production for the third quarter
including some material processed in the previ ous quarter. Wheaton’s 2018 production
guidance for Stillwater was approximately 5,400 ounces of gold and 10,400 ounces of
palladium. For more details on the acquisition, please refer to Wheaton’s news release dated
July 16, 2018.
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Other Silver
In the third quarter of 2018, total Other Silver attributable production was 2.4 million ounces,
a decrease of approximately 4% relative to the third 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, and lower production at Zinkgruvan, partially offset
by the start-up of attributable production at the Aljustrel mine.
Other Gold
In the third quarter of 2018, total Other Gold attributable production was 6,700 ounces, a
decrease of approximately 41% relative to the third quarter of 2017 . The decrease was due
primarily to lower production at both the 777 and Minto mines. As per Capstone Mining Corp’s
(“Capstone”) news release dated October 11, 2018, the agreement under which Capstone
had agreed to sell its Minto mine to Pembridge Resources plc has been term inated. In
conjunction with this, Capstone has elected to place the Minto mine on care and maintenance
while Capstone seeks alternatives to preserve and maximize the value of the Minto mine.
Produced But Not Yet Delivered 21
As at September 30, 2018, payable ounces attributable to the Company produced but not yet
delivered amounted to 4.5 million payable silver ounces, 77,100 payable gold ounces and
4,700 payable palladium ounces, representing an increase of 0.2 million payable silver ounces
and 100 payable gold ounces during the three -month period ended September 30, 2018 .
Payable silver ounces produced but not yet delivered increased primarily as a result of
increases related to the Peñasquito and Antamina silver interests partially offset by a decrease
related to the Yauliyacu silver interest. Payable gold ounces produced but not yet delivered
increased primarily as a result of increases related to the Stillwater and Sudbury gold interests
partially offset by decreases related to the Minto 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 both
gold and palladium 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 Operational
Review’ section.
Subsequent to the Quarter
Salobo Expansion
As per Vale’s third quarter 2018 MD&A, on October 24, 2018, Vale’s Board of Directors
approved the Salobo Expansion, a brownfield expansion, which if completed as proposed,
would increase processing throughput capacity to 36 Mtpa. Wheaton International first entered
into a gold purchase agreement with Vale in respect of the Salobo mine in 2013 and made
subsequent amendments to the agreement in 2015 and 2016 (the “Gold Agreement”). As part
of the Gold Agreement, i f actual throughput is expanded above 28 Mtpa within a
predetermined period, and depending on the grade of material processed, Wheaton will be
required to make an additional payment to Vale based on a set fee schedule. As proposed,
the Salobo Expansion would increase throughput capacity from 24 Mtpa to 36 Mtpa once fully
ramped up. Vale has approved the investment of US$1.1 billion in the Salobo Expansion, with
a start-up scheduled for the first half of 2022 and an estimated ramp-up of 15 months. Vale
has indicated that the Salobo Expansion will encompass a third concentrator and will use
Salobo’s existing infrastructure. As agreed to as part of the original Gold Agreement and based
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on Vale’s disclosure relating to size and timing of the Salobo Expansion, the Company
estimates that a n expansion payment of between $550 million to $6 50 million would be
payable. Given Vale’s proposed schedule, this payment would likely be made in 2023.
Dividend
Fourth Quarterly Dividend
The fourth 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 November 30, 2018
and will be distributed on or about December 13, 2018.
Under the Company’s dividend policy, the quarterly dividend per common shar e 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 di vidends 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 fourth 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.
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.
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Outlook
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 approx imately 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 Rose mont
project in its estimated average five-year production guidance.
From a liquidity perspective, the $ 119 million of cash and cash equivalents as at September
30, 2018 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
additional accretive precious metal stream interests.
Webcast and Conference Call Details
A conference call and webcast will be held Thursday, November 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: 7977429
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 November 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
Dial from outside Canada or the US: 416-849-0833
Pass code: 7977429
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.
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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 Payable silver, gold 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.