Wheaton Precious Metals Reports Strong Growth IN Earnings and Cash Flow and Declares Fourth Quarterly Dividend of 2019
FOR IMMEDIATE RELEASE TSX: WPM
November 14, 2019 NYSE: WPM
WHEATON PRECIOUS METALS REPORTS STRONG GROWTH IN EARNINGS AND
CASH FLOW AND DECLARES FOURTH QUARTERLY DIVIDEND OF 2019
Vancouver, British Columbia – Wheaton Precious Metals™ Corp. (“Wheaton” or the “Company”)
is pleased to announce its results for the third quarter ended September 30, 2019. All figures are
presented in United States dollars unless otherwise noted.
In the third quarter of 201 9, Wheaton generated over $140 million in operating cash flow
resulting in adjusted net earnings of over $70 million, an increase of 31% and 107%,
respectively. In addition, Wheaton had attributable gold production of over 100,000 ounces and
remains on track for record annual gold production in 2019.
Operational Overview
Q3 2019 Q3 2018 Change
Ounces produced
Gold 104,175 106,255 (2.0)%
Silver 6,095 5,584 9.2 %
Palladium 5,471 8,817 (37.9)%
Gold equivalent 2 184,868 184,139 0.4 %
Ounces sold
Gold 94,766 89,242 6.2 %
Silver 4,484 5,018 (10.6)%
Palladium 4,907 3,668 33.8 %
Gold equivalent 2 155,049 154,815 0.2 %
Sales price per ounce
Gold $ 1,471 $ 1,210 21.6 %
Silver $ 17.09 $ 14.80 15.5 %
Palladium $ 1,535 $ 955 60.7 %
Cash costs per ounce 1
Gold 1 $ 424 $ 418 1.4 %
Silver 1 $ 5.16 $ 5.04 2.4 %
Palladium 1 $ 271 $ 169 60.2 %
Cash operating margin per ounce 1
Gold 1 $ 1,047 $ 792 32.2 %
Silver 1 $ 11.93 $ 9.76 22.2 %
Palladium 1 $ 1,264 $ 786 60.8 %
Revenue $ 223,595 $ 185,769 20.4 %
Net earnings $ 75,960 $ 34,021 123.3 %
Per share $ 0.17 $ 0.08 112.5 %
Adjusted net earnings 1 $ 72,692 $ 35,132 106.9 %
Per share 1 $ 0.16 $ 0.08 105.4 %
Operating cash flows $ 142,300 $ 108,413 31.3 %
Per share 1 $ 0.32 $ 0.24 33.3 %
Dividends declared 1 $ 40,197 $ 39,921 0.7 %
Per share $ 0.09 $ 0.09 0.0 %
All amounts in thousands except gold, palladium and gold equivalent ounces produced and sold, per ounce amounts and per share amounts.1
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Highlights
• Wheaton generated $142 million in operating cash flow in the third quarter of 2019, leading
to a reduction in net debt of $146 million.
• Attributable gold production was relatively unchanged primarily due to higher production at
Salobo and San Dimas being offset by lower production at the Stillwater mines due to
reported production for the third quarter of 2018 including some material processed in prior
periods.
• The increase in attributable silver production was primarily due to higher grades at
Peñasquito.
• The decrease in attributable palladium production was due to lower production at the
Stillwater mines due to reported production for the third quarter of 2018 including some
material processed in prior periods.
• The increase in gold sales volume was due to positive changes in the balance of payable
gold produced but not yet delivered to Wheaton, partially offset by lower production levels.
• The decrease in silver sales volume was due to negative changes in the bal ance of payable
silver produced but not yet delivered to Wheaton at Peñasquito, partially offset by the higher
production levels.
• The increase in adjusted net earnings was primarily due to higher margins resulting from
increased realized prices for gold, s ilver and palladium sales of 22%, 15% and 61%,
respectively.
• 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.
• In September, Wheaton joined the U nited Nations Global Compact and announced its
endorsement of the World Gold Council’s Responsible Gold Mining Principles,
demonstrating the company’s continued commitment to corporate sustainability.
Updating Production Guidance
• Wheaton is updating production guidance for 2019, with estimated attributable gold
production being increased to approximately 390,000 ounces due to continued
outperformance primarily from the Salobo mine, whil e estimated attributable silver
production has been adjusted to approximately 21 million ounces to reflect production
interruptions at the Peñasquito mine. Forecast palladium production in 2019 remains
unchanged at approximately 22,000 ounces.
• 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.
“Wheaton’s portfolio of high-quality, long-life assets continues to deliver strong results with over
$140 mi llion in operating cash flow generated in the third quarter of 2019,” said Randy
Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “Gold and silver
prices increased on average approximately 17% over the previous year, while our cash flow and
net earnings increased by over 30% and 100%, respectively. These solid results once again
demonstrate the strength of Wheaton’s business model, which focuses on reducing risk while
providing significant leverage to higher commodity prices.”
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Financial Review
Revenues
Revenue was $224 million in the third quarter of 2019, on sales volume of 94,800 ounces of
gold, 4.5 million ounces of silver and 4,900 ounces of palladium. This represents a 20%
increase from the $186 million of revenue generated in the third quarter of 2 018 due
primarily to (i) a 22% increase in the average realized gold price ($1,471 in Q3 2019
compared with $1,210 in Q3 2018); (ii) a 15% increase in the average realized silver price
($17.09 in Q3 2019 compared with $14.80 in Q3 2018); and (iii) a 6% inc rease in the
number of gold ounces sold; partially offset by (iv) an 11% decrease in the number of silver
ounces sold.
Costs and Expenses
Average cash costs¹ in the third quarter of 2019 were $424 per gold ounce sold, $5.16 per
silver ounce sold and $271 per palladium ounce sold, as compared with $418 per gold
ounce, $5.04 per silver ounce and $169 per palladium ounce during the comparable period
of 2018. This resulted in a cash operating margin¹ of $1,047 per gold ounce sold, $11.93 per
silver ounce sold and $1,264 per palladium ounce sold, an increase of 32%, 22% and 61%,
respectively, as compared with Q3 2018. The increase in the cash operating margin was
primarily due to a 22%, 15% and 61% increase in the average realized gold, silver and
palladium price, respectively, during Q3 2019 compared with Q3 2018.
Adjusted Net Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the third quarter of 2019 were $73
million ($0.16 per share) and $142 million ($0.32 per sha re¹), compared with adjusted net
earnings¹ of $35 million ($0.08 per share) and cash flow from operations of $108 million
($0.24 per share¹) for the same period in 2018, an increase of 107% and 31%, respectively.
Balance Sheet
At September 30, 2019, the Company had approximately $152 million of cash on hand and
$1.0 billion outstanding under the Company's $2 billion revolving term loan (the "Revolving
Facility"). The Company uses excess cash to pay down the Revolving Facility, and during
the three-month p eriod ended September 30, 2019, the Company has repaid $ 82 million
under the Revolving Facility. The average effective interest rate for the third quarter of 2019
was 4.02%.
Third Quarter Asset Highlights
Operational highlights for the quarter ended September 30, 2019, are as follows:
Salobo
In the third quarter of 2019, Salobo produced 73,600 ounces of attributable gold, virtually
unchanged relative to the third quarter of 2018 as higher throughput was almost completely
offset by lower grades and recovery. In Vale S.A.’s (“Vale”) Third Quarter 2019 Performance
Report, Vale reports that i n July, Salobo achieved all -time monthly production records for
copper and gold. Vale also noted that physical completion of the expansion at Salobo is now
27%, including the completion of the concrete foundations for the mill and primary crusher
bases and the arrival to site of the first loads related to the long-distance conveyor belt.
Peñasquito
In the third quarter of 2019, Peñasquito produced 2.0 million ounces of attributable silver, an
increase of approximately 93% relative to the third quarter of 2018 primarily due to higher
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grades. As per N ewmont Goldcorp Corporation’s (“Newmont”) third quarter MD&A,
production at Peñasquito was impacted by the operation being placed into care and
maintenance for 17 days in the third quarter of 2019 due to a blockade. The blockade was
lifted in early October 2019; a gradual ramp up of operations st arted in late October while
government-sponsored negotiations continue. Based on Newmont’s disclosure, the impact
of the illegal blockade on Wheaton’s third quarter attributable production was approximately
0.4 million silver ounces.
Sudbury
In the third quarter of 2019, Vale’s Sudbury mines produced 6,600 ounces of attributable
gold, an increase of approximately 2% relative to the third quarter of 2018 primarily due to
higher grades. Throughput at the Sudbury mines is typically lower in the third quarter as a
result of planned maintenance shutdowns occurring in the summer months. This was
consistent in 2018 and 2019.
Constancia
In the third quarter of 2019, Constancia produced 0.7 million ounces of attributable silver
and 5,200 ounces of attributable gold , an increase of approximately 1% and 42%,
respectively, relative to the third quarter of 2018 . As per Wheaton’s precious metals
purchase agreement with Hudbay Minerals Inc. (“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 20 20. Assuming
ore production does not begin until 2020, the Company will be entitled to receive an
additional 8,020 ounces of gold in 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 third quarter of 2019 and reported as production.
Stillwater
In the third quarter of 2019, the Stillwater mines produced 3,200 ounces of attributable gold
and 5,500 ounces of attributable palladium, a decrease of approximately 49% for gold and
38% for palladium relative to the third quarter of 2018 . The decreases relative to the third
quarter of 2019 was largely due to reported production for the third quarter of 2018 including
some material processed in prior periods. As part of the agreement, Wheaton was entitled to
the attributable gold and palladium production for which an offtaker payment was received
after July 1, 2018.
Other Gold
In the third quarter of 2019, total Other Gold attributable production was 4,300 ounces, a
decrease of approximately 36% relative to the third 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 . According to Pembridge Resources plc ’s news
release dated October 16, 2019, mining has restarted at Minto in October with milling
operations recommencing on October 10, 2019. Wheaton does not currently include any
additional production from Minto in its 2019 or five-year guidance.
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Other Silver
In the third quarter of 2019, total Other Silver attributable production was 2.2 million ounces,
a decrease of approximately 12% relative to the third quarter of 2018 . The decrease was
driven primarily by lower production from the Aljustrel mine partially offset by higher
production from Zinkgruvan.
Development Update – Rosemont
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 su ch 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. As such, Hudbay is working to
appeal the Court's decision to the U.S. Ninth Circuit Court of Appeals as the y evaluate next
steps for the project. As announced in August, Hudbay has suspended most of its early
works activities at Rosemont and has deferred the previously announced process to identify
a joint venture partner for Rosemont. Wheaton has not made any upfront payments to date
relative to Rosemont nor included any production from Rosemont in its five-year guidance.
Produced But Not Yet Delivered 3
As at September 30, 2019, payable ounces attributable to the Company produced but not
yet delivered amounted to 85,500 payable gold ounces, 4.2 million payable silver ounces
and 4,200 payable palladium ounces, an increase of 4,300 payable gold ounces and 0.7
million payable silver ounces and a decrease of 300 payable palladium ounces during the
three month period ended September 30, 2019. Payable gold ounces produced but not yet
delivered increased primarily as a result of a n increase related to the Salobo gold interest
partially offset by a decrease at Sudbury . Payable silver ounces produced but not yet
delivered increased slightly primarily as a result of increases related to the Peñasquito and
Antamina silver interests. Payable ounces produced but not yet deli vered to Wheaton 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.
Dividend
Fourth Quarterly Dividend
The fourth 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 December 4, 2019
and will be distributed on or about December 16, 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.
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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 fourth quarterly dividend, the
Company has elected to issue common shares under the DRI P 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.
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 care fully 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 is updating production guidance for 2019. Estimated attributable gold production has
been increased to approximately 390,000 ounces, up from 385,000 ounces previously forecast
due to continued outperformance primarily from the Salobo mine. Estimated attributable silver
production has been adjuste d to approximately 21 million ounces from 22.5 million ounces to
reflect production interruptions at the Peñasquito mine. 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 production 2 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 $152 million of cash and cash equivalents as at September 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
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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 Friday, November 15, 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: 6890657
Live audio webcast: Click here
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and available until November 22 , 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: 6890657
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 un der 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 and sales, including 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.
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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) 2019 2018 2019 2018
Sales $ 223,595 $ 185,769 $ 638,110 $ 597,421
Cost of sales
Cost of sales, excluding depletion $ 64,624 $ 63,202 $ 194,796 $ 182,195
Depletion 63,396 64,684 193,180 184,444
Total cost of sales $ 128,020 $ 127,886 $ 387,976 $ 366,639
Gross margin $ 95,575 $ 57,883 $ 250,134 $ 230,782
General and administrative 14,028 8,779 42,811 30,507
Impairment charges - - 165,912 -
Earnings from operations $ 81,547 $ 49,104 $ 41,411 $ 200,275
Gain on disposal of mineral stream interest - - - (245,715)
Other (income) expense (3,533) 1,301 (709) 1,157
Earnings before finance costs and income taxes $ 85,080 $ 47,803 $ 42,120 $ 444,833
Finance costs 11,871 12,877 39,123 27,351
Earnings before income taxes $ 73,209 $ 34,926 $ 2,997 $ 417,482
Income tax recovery (expense) 2,751 (905) 5,618 2,805
Net earnings $ 75,960 $ 34,021 $ 8,615 $ 420,287
Basic earnings per share $ 0.17 $ 0.08 $ 0.02 $ 0.95
Diluted earnings per share $ 0.17 $ 0.08 $ 0.02 $ 0.95
Weighted average number of shares
outstanding
Basic 446,802 443,634 445,598 443,188
Diluted 447,849 444,120 446,467 443,727