Q4 2022 Wheaton Precious Metals Corp Earnings Call
Speaker 1: And in addition, reference to Wheaton or Wheaton Precious Metals on this call includes Wheaton Precious Metals Corp and or its wholly owned subsidiaries as applicable. Now I'd like to turn the call over to Randy Smallwood, our president and chief executive officer.
Speaker 2: Thank you, Patrick, and good morning, everyone. Thank you for joining us today to discuss Wheaton's fourth quarter and year-end results for 2022. Thank you
Speaker 2: During 2022, we remained extremely active as we added more streams, optimized our current portfolio, and made several industry-leading commitments on the sustainability front.
Speaker 2: While gold held historically high levels throughout the year, inflationary pressures had a significant impact on traditional miners, resulting in their margins being compressed.
Speaker 2: Wheaton, however, continued to deliver cash operating margins of 75% in the fourth quarter, reflecting the resilience of our business model.
Speaker 2: From a financial perspective, in the fourth quarter, Wheaton generated $236 million in revenue.
Speaker 2: $172 million in operating cash flow, and $166 million in net earnings, as Gary will discuss shortly.
Speaker 2: This solid performance contributed to our record annual dividend distribution of $237 million to shareholders.
Speaker 2: As we continue to see a healthy appetite for streaming as a source of capital for the mining industry, we are actively pursuing a number of new accretive opportunities.
Speaker 2: Furthermore, we have demonstrated our continued willingness to identify strategic opportunities both externally and within our portfolio that create value for our shareholders.
Speaker 2: To that end, in the quarter, we completed the previous announced sale of the Ialiaku stream back to Glencore for $132 million.
Speaker 2: a continuation of our portfolio optimization efforts, which also saw us sell the Kino Hillstream for $141 million earlier in the year.
Speaker 2: The sale of Yaliaku and Kino hill streams contributed to the overall quality of our portfolio, where now 93% of Wheaton's production comes from assets that fall in the lowest half of the cost curve.
Speaker 2: In addition, the sale of these assets positions Wheaton with one of the strongest balance sheets in the industry.
Speaker 2: and we enter 2023 exceptionally well positioned to deliver long-term shareholder value through the significant organic growth profile that is already embedded into our portfolio.
Speaker 2: as well as through additional accretive acquisitions.
Speaker 2: We can continue to demonstrate our leadership in sustainability with sector-leading scores, including a double A rating from MSCI and a genuine number one rating in precious metals from Sustainalytics.
Speaker 2: I would now like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer, who will provide more details on our results. Gary. Thank you, Randy, and good morning, ladies and gentlemen. The company's precious metal interests...
Speaker 2: produced 148,300 gold equivalent ounces or GEOS in the fourth quarter of 2022. Relative to the fourth quarter of the prior year, this represented a decrease of 20%, primarily due to lower production from Salobo, Penasquito, and Boise's Bay, coupled with the closure of the Stratoni and 777 mines.
Speaker 2: and the termination of the Keno Hill and Yaliaka streams.
Speaker 2: Revenue for the fourth quarter of 2022 amounted to $236 million, representing a 15% decrease relative to Q4 2021, due to the combination of a 10% decrease in sales volumes and a 6% drop in commodity prices.
Speaker 2: Of this revenue, 50% was attributable to Gold, 45% Silver, 3% Palladium and 2% Cobalt.
Speaker 2: As at December 31, 2022, approximately 112,000 GEOs were in PB&D, in addition to Cobalt inventory amounting to 12,000 GEOs, with a combined figure of 124,000 GEOs representing approximately 2.3 months of payable production.
Speaker 2: This balance is 24,000 GEOS lower than the average over the preceding four quarters.
Speaker 2: Gross margin for the fourth quarter of 2022 decreased 20% to $121 million, reflecting not only the 15% decrease in revenues, but also a higher proportion of sales volumes being attributed to streams with a higher unit cost, coupled with a cobalt inventory write-down.
Speaker 2: GNA expenses and donations amounted to $11 million in the fourth quarter of 2022, virtually unchanged from Q4 2021.
Speaker 2: During the fourth quarter of 2022, the company terminated its Ialiaku stream, resulting in a gain on disposal of $51 million.
Speaker 2: including the Yalayaki disposition, net earnings amounted to 166 million dollars.
Speaker 2: neutralizing for the Aliaka disposition together with other anomalous items.
Speaker 2: Adjusted net earnings amounted to $104 million compared to $132 million in Q4 2021, with the decrease being attributable to the lower gross margin.
Speaker 2: Basic adjusted earnings per share amounted to 23 cents compared to 29 cents per share in the prior year. Operating cash flow for the fourth quarter of 2022 amounted to $172 million or 38 cents per share compared to $195 million or 43 cents per share in the prior year, representing a 12% decrease on a per share basis.
Speaker 2: Based on the company's dividend policy, the company's board has declared a dividend of $0.15 a share payable to shareholders of record on April 6, 2023.
Speaker 2: During the fourth quarter of 2022, the company received $132 million in exchange for the termination of the Yali-Yaku stream, dispersed $60 million in dividends, invested $31 million relative to the Goose Project, and $13 million relative to the Kurapamba Project.
Speaker 2: highlighting that these projects are advancing, fueling Wheaton's future organic growth.
Speaker 2: Overall, net cash inflows amounted to $201 million in Q4 2022, resulting in cash and cash equivalents at December 31 of $696 million.
Speaker 2: Looking at our annual results, for the year ended December 31st, 2022, production amounted to 638,000 GEOs. Revenue amounted to $1.1 billion, representing an 11% decrease relative to 2021, due to the combination of lower sales volumes and commodity prices.
Speaker 2: Of this revenue, 50% was attributable to gold, 44% silver, 3% palladium and 3% cobalt. Gross margin decreased 14% to $565 million. G&A expenses amounted to $36 million and donations amounted to $6 million.
Speaker 2: with a total of $42 million being virtually unchanged from 2021.
Speaker 2: However, this was $5 million below the lower end of our original guidance, primarily due to lower professional fees and employee compensation costs.
Speaker 2: For 2023, the company expects that G&A expenses and donations will amount to $47 to $50 million, with the increase from 2022 being attributable primarily to higher marketing and due diligence costs, in addition to costs associated with the company's ATM program.
Speaker 2: During 2022, the company terminated the Keno Hill stream in exchange for $141 million of Hekla Comisock. Together with the disposal of the Yaliaku stream, the total income inclusion reflected in our annual results from these two dispositions amounted to $166 million.
Speaker 2: Basic adjusted earnings per share decreased 15% to $1.12 compared to $1.32 in 2021. From a cash flow perspective, the company generated $743 million on operating cash flow, a decrease of 12%, primarily due to the lower sales volumes and commodity prices.
Speaker 2: This translated into operating cash flow per share of $1.65 compared to $1.88 in 2021.
Speaker 2: In addition, the company distributed $237 million of dividends in 2022, received $132 million in proceeds from the disposal of the Yalayaka stream, and dispersed $152 million in upfront payments relative to our portfolio of development stage projects.
Speaker 2: Overall, cash increased by $470 million during 2022. The $696 million cash balance as at December 31, 2022, combined with the capacity provided by the undrawn $2 billion revolving credit facility and the strong forecast offering in cash flows.
Speaker 2: positions the company very well to satisfy its funding commitments and sustain its dividend policy, while at the same time having the flexibility to consummate additional accretive precious metal purchase agreements.
Speaker 2: That concludes the financial summary. And with that, I turn the call over to Wes.
Speaker 3: Thanks, Gary. Good morning.
Speaker 2: Overall production in the fourth quarter came in lower than expected with weaker production from Salobo and Constantia offset by higher than expected performance from Antimina. In the fourth quarter, Salobo produced 37,900 oz of attributable gold, a decrease of 21% relative to the fourth quarter of 2021 due to lower throughput and grades.
Speaker 2: Valley reported that production was lower than expected due to reduced plant availability during the quarter caused by additional planned and corrective maintenance.
Speaker 2: That being said, Vale also reported that Slowboat 3-mine expansion was physically completed at the end of the fourth quarter, with the first line starting up during the quarter and the second line expected to start in the first quarter of 2023.
Speaker 2: Subsequent to the quarter, Wheaton and Valet agreed to amend the solo PMPA to adjust the expansion payment terms in order to provide increased flexibility for the ramp-up of the expansion while also maintaining an incentive for Valet to maximize grade on an annual basis. During the quarter, Constanciop produced 700,000 ounces of attributable silver and 10,500 ounces of attributable gold.
Speaker 2: an increase of approximately 13% and 6% respectively.
Speaker 2: approximately 13% and 6% respectively, relative to the fourth quarter of 2021.
Speaker 2: The increase in both silver and gold production was due to higher grades resulting from additional ore production from the Popekancha satellite deposit.
Speaker 2: Gold production was lower than expected during the quarter as a result of short term changes in the mine plan that prioritized lower grade stockpiles and shorter haul distances.
Speaker 2: These changes were implemented as HUD-Bé was forced to ration fuel during the period of nationwide social unrest and road blockades following the change in Peru's political leadership in December 2022.
Speaker 2: These changes did however allow HUD-BETA to continue to operate the process plan continuously through the quarter.
Speaker 2: During the fourth quarter, Antimida produced 1.1 million ounces of attributable silver, a decrease of 19% relative to the fourth quarter of 2021, primarily due to lower grades.
Speaker 2: as per the mine plan. Antimina did however continue to exceed expected production for 2022 driven primarily by increased productivity and better than expected mine grades.
Speaker 2: Additionally, in 2022, Antavina submitted a modification of environmental impact assessment to the Peruvian regulators to extend its wildlife from 2028 to 2036. The regulatory review process is progressing as scheduled, with an approval anticipated in the second half of 2023.
Speaker 2: Ween's estimated attributable production in 2023 is forecast to be 320,000 to 350,000 ounces of gold, 20 to 22 million ounces of silver and 22,000 to 25,000 GEOs of other metals, resulting in production of approximately 600,000 to 660,000 GEOs.
Speaker 2: For the five-year period ending in 2027, the company estimates that average production will amount to 810,000 GEOs, and for the 10-year period ending in 2032, the company estimates that the average annual production will amount to 850,000 GEOs. This includes organic growth of over 40% with total production from our current portfolio and current growth of over 40% from the previous year.
Speaker 4: high-quality portfolio proved to be resilient and was distinguished by several key highlights including...
Speaker 4: sector leading five-year organic growth, or production growth of over 40%, with approximately two-thirds of that growth coming from mines that are already in operation.
Speaker 4: Accretive growth, emphasized by the addition of four new streams that will collectively provide over 65,000 gold equivalent ounces of annual production.
Speaker 4: Continued portfolio optimization efforts, enhancing, improving the quality of our asset base, and contributing to one of the strongest balance sheets in the industry.
Speaker 4: record annual dividend
Speaker 4: And lastly, continued leadership in sustainability with sector-leading ESG ratings.
Speaker 4: With that, I would like to open up the call for questions. Operator? Through you.
Speaker 5: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you would like to ask a question, please press star, then the number 1 on your touch tone phone. If you would like to withdraw your question, press the star followed by the 2.
Speaker 5: There will be a brief pause while we compile the Q&A roster.
Speaker 5: The first question comes from Brian McArthur of Raymond James. Please go ahead.
Speaker 5: The first question comes from Brian McArthur of Raymond James. Please go ahead.
Speaker 6: Good morning. I have a couple of questions. Can I just on the revised syllable three payment do they still have to do a 90-day trial run to execute that like like they did in the old one or is the what I call the stop that dated January 21st or January 1st next year
Speaker 6: So in your financials, you sort of do put the full 552 million as an obligation this year. So does that imply you're reasonably comfortable they're going to get those 35 million tons with that 90-day run this year?
Speaker 2: I'll let Gary take that one. Yeah, hey Brian . Look, we're always trying to be conservative in the way that we frame the timing associated with the payment of those upfront payments. And so, you know, we're continuing.
Speaker 4: levels. So I think we have to reflect that possibility in terms of, as Gary said, maintaining a conservative forecast. I would be very happy if we had to make the whole payment this year. But realistically there's a lot of work to do down there yet.
Speaker 6: Vale has definitely got the desire. It's a matter of there's a lot of work yet to do. So we'll see how it goes. Great, thanks. Very clear. And then at some, there has been talks historically about a syllable for, is there anything changed if there's anything more to happen there as a result of this agreement? There's nothing different?
Speaker 4: Nothing has changed. You can still see Slobo for on their longer term vision within the Valet production objectives. So it's still there referenced, but there's been no progress on that front.
Speaker 6: the question. Great thanks. And if I could just ask one other topic, the triple seven refundable deposit. I've got two questions. One just just you put some numbers in there, just getting rates and all the rest of it. Do you actually get payment over time through 2052? And the second thing is kind
Speaker 6: I mean, most of your contracts I realize are life of mine, they're long dated. But there are any other contracts here where there might be a situation where if you don't get the upfront pack, there's a true up like this one. And I guess where I'm going with it, you have a very good chart in the back that sort of shows upfront payments for your deposits and how much you've got back. But if I look at Sudbury.
Speaker 6: which maybe has 10 years left.
Speaker 6: depending on what happens, you may or may not get there. Would it have a true up thing if I want to call it that, like the triple seven one does? Or maybe you can't comment on that for confidentiality?
Speaker 4: Yeah, I mean, you know, some of our contracts are structured in that method where there is a minimum amount, you know, focused around the deposit. I will say, and all you have to do is go back and look, Hudd Bay did not have as much exploration success at 777 as we anticipated and we did have to take a write down on that asset in years past.
Speaker 4: strong partner of ours. We do a lot of work with them, obviously Constancias and and other, you know, the Copper World Rosemont. We've got a lot of other discussions coming up with them and so you know it is a partnership with Hutt Bay and you know that's the way it's structured through this contract but it is something that 2052 is a long ways away.
Speaker 2: So and just add to that Brian We won't be receiving any money in between well, we don't get paid until the until 2052 assuming that we don't come to some other arrangement with with that day
Speaker 6: Great, thank you very much. That's very clear. I appreciate it. Yep, thanks Brian .
Speaker 5: Thank you. The next question comes from Lawson Winder of Bank of America Securities. Please go ahead.
Speaker 7: Hey Randy, Gary and team, good morning. Thanks for the update here. I wanted to ask one follow-up on Solovo. Valet has guided to Solovo 3, achieving full capacity to Q4 24. I was curious, based on your understanding, when they say full capacity, is that the 35 million?
Speaker 8: what they've got in there.
Speaker 8: is that ramping up to full production by the end of next year is that 36 million tons that they're getting to. So if you remember what's in there is actually this 90-day test can be done at any time, which actually allows them to operate at that level earlier on. So the full year is definitely, it'll take them a little bit longer to get to that. And we've got big data.
Speaker 7: of in the latter part of the guidance is where that comes in in terms of the five-year guidance to be specific. Could you maybe just sort of clarify when more precisely you have Copper World and Rosemont coming into that five-year guidance? Is that end of 27 or that early 27? Yeah, let's just leave it at the latter, latter, latter portion of the five-year guidance.
Speaker 4: and so we've had to sort of try and reflect that. But we do think that things are lining up quite nicely to have a bit of an impact but a very small impact on 2027.
Speaker 8: We are staying in really close contact with Hud Bay as they work through this pre- feasibility study that they've announced as well and we're expecting that about mid this year and that kind of gives you a better idea as these things move through and we'll just continue to work
Speaker 7: Okay, yeah, fantastic. And then just 1 follow up then on Rosemont in terms of the discussions. I mean, both both sides you and they have indicated that there would. There will be some sort of discussion around what the. What the agreement looks like, and there's this potential for some sort of. Amendment to the agreement.
Speaker 4: From your point of view, is it looking like it could become a larger piece of the portfolio for Wheaton or a smaller piece of the portfolio? Well, we already get a hundred percent of all the silver and gold from the asset. That's not going to change with respect to over and above that.
Speaker 4: If you look at the copper world, the numbers that have been put out to date, and that is of course subject to continued studies down there, but it looks like it's about two-thirds of what we were expecting out of the original Rosemont concept. And so, I think that's, you know, we've just got to sit down and hammer that out, but we are sort of waiting for a bit more clarity in terms of their path going forward.
Speaker 4: As I said, it's a good strong relationship with Peter and the team over at Hutt Bay. As they get a little bit more firm as to their plans going forward, that's when we'll sit down and get a little bit more firm in terms of how the contract is going to be adjusted to reflect that difference.
Speaker 4: And so, again, continue working with them as partners.
Speaker 7: And then I guess once they have this study out later in the first half of this year, I mean would that be kind of the firmness that you'd be looking for to sit down and sort of finalize this?
Speaker 4: Yeah, ideally sometime this year they'd like the clarity so that they know what they need to do in terms of a go-forward basis and so you know should be happening within this year.
Speaker 7: Okay, fantastic. Great start to the year. Take care, guys.
Speaker 9: Thanks, Lachlan.
Speaker 5: Once again, ladies and gentlemen, if you do have a question, please press star 1 at this time. as
Speaker 5: The next question comes from Martin Pradier of the...
Speaker 5: Please go ahead.
Speaker 10: Hi, thank you for taking my question. The first question is, you mentioned that in Xalobo the throughput is expected to increase 50%. What is your payment?
Speaker 10: but the grades are also coming down.
Speaker 4: So, what is the expected increase in production or what is the difference in grades from the previous grades? Well, and it's not a simple answer because one of the variables that comes into play is the amount of stockpiling that they do of low-grade material. And to be honest, you know, they've...
Speaker 4: They've committed towards trying to strive towards maintaining higher grade feed through the mill, but it's a function of how much low-grade they stockpile, which then itself is a function of mining capacity and how much material they can move, both waste material, low-grade stockpile material, and mill feed material. So there's a lot of variables moving there.
Speaker 4: that higher grade. So, we think that, I mean, it's not our payment that should incentivize Valet to maximize that. It just makes common sense for them to stockpile, continue stockpiling low-grade material and move higher-grade material through. But, it's really tough to push that out.
Speaker 4: That being said, you're right, the overall grades are going to continue pushing down on this deposit as it gets a little bit more mature. A 50% increase in throughput capacity is not going to be a 50% increase in metal production.
Speaker 4: But depending on stockpiling, it would be pretty close to 30 or 40% increase in metal production. Again, depending on their stockpiling approach.
Speaker 4: And of course stockpiling all that does is bring forward ounces that would have eventually been mined. And so in terms of total metal production, it really doesn't change a lot. It's a matter of the timing of when that metal gets delivered. There's so many variables there that it's really tough to give you sort of a clear answer, but hopefully you understand there's a lot of different...
Speaker 4: of total materials moved at the site itself.
Speaker 10: No, that helps. 30-40% gives me an idea. That's sort of what I was looking for.
Speaker 10: Similar question with Pampa Cancha. I know that the deposit has higher grade and production will increase for Constantia.
Speaker 10: But, how much higher grade is Pampa Cancha and what is really the expected impact that you see in terms of, you know, this higher grade coming through in 2023.
Speaker 4: 2024. Yeah, the Papakancha gold grades are ten times higher than what are contained in the Constantia pit and of course our stream is focused on getting 50% of that gold so both Hutt Bay and ourselves profit mightily by having Papakancha ore pushed through the slime.
Speaker 4: pushed through the mill. Now unfortunately some of the challenges that they've had with respect to fuel supply have, you know, it's complicated things. It is a farther haulage distance to bring Papakancha into the milling complex at the Constantia Pit or right beside the Constantia Pit.
But they continue to work forward on that and again, both companies are very incented to try and move as much popocantia through as they can. The key number there is copper grades are also slightly higher, but gold grades are substantially higher. So it's quite a rich ore body for both parties here.
It's important to note that that's just delayed that metal coming in as well. So, I mean, it's not that it's got anywhere. It'll come in and it's over about a five-year period that we'll see Papa ShGY determined oh
But, okay, you have a level of production today. What is the expected impact in 2023, 2024 of this much higher grade coming in? Well, we could see upwards of, now, they're not going to entirely feed the mill from Papakancha Zone. They just can't mine and haul it that fast in that far.
can see a pleasant surprise on that side, you know, if that strengthens and we're, you know, lessening those restrictions. You know, I think the key thing to keep in mind is that it's ten times higher grade, but they can't shift fully to it because they don't have the mobile fleet to be able to go 100% from Papakancha just because of its greater haulage distance to the mill. And so there'll be batch treatment through there and it's...
I'm going to say that we should healthily see a good increase in terms of gold production from the overall constancy of...
I'm going to say three to four times what we've seen in times past. But again, it's going to come down to the capacity to get that material over to the mill and get it processed.
Okay, that's quite helpful. That gives me an idea.
In Voices Bay, your production was down 66% and you're talking about the new Reed Brook all grades. How does that compare with your previous grade, the Oviatt Open Pit grade?
Well, the challenge at Voisey's Bay was that there was probably no other asset that was impacted more from the pandemic and the response. In support of the local communities around the mine site, the mine was shut down for a period of time. So the underground development is quite a bit behind schedule.
But the open pit is still supplying, albeit lower and lower and lower grade material, stuff that originally wasn't part of this. And so we should see, as the underground phases in, we should see cobalt production probably three to four times higher than where we are right now coming out of the open pit.
And so, you know, the whole concept is both, I think it's Reid Brook and Eastern Deeps coming on as they continue to displace this low-grade ore that's being pulled out of the remnants of the open pits, that we will see a dramatic uptick in cobalt production from that. That's probably over the next year and a half, two years.
Okay, but didn't they already start mining one of the deposits, Raidbrooke? Just various development ore. So there's some development ore, it's not to the full scale of production. You know, with an underground operation like that, you need multiple working phases and they've never...
significant ramp up over the next really closer to the end of this year that we'll really start seeing that come in. So it's open pit most of this year and then over the next couple of years you'll see that significant increase in the production. It'll be a phased startup from the underground because as more working phases become developed you'll be able to access and pull a bit more ore out of each one of those working phases.
And so it's going to be a phased ramp up over the next, as I said, year and a half, two years. We should, you know, hopefully a couple years from now we should be entirely on underground ore, a much higher grade underground ore.
But so this year is still going to be quite weak. Yes. Yeah. Yes. Yes. The majority of the ore this year will still be coming from the open pit and I will say they are scratching the surfaces to try and find it and so we are seeing lower and lower grades. It's going to be offset by some.
from John Tomassos of John Tomassos Independent Research. Please go ahead.
Thank you. Could you update us for the Americas where you do the overwhelming portion of your business?
What are the countries that
might be off limits from a political risk standpoint. I presume, for example, you would never go to Cuba or Venezuela. a
But there are other things that might change, I don't know.
For example, there's five copper projects in Argentina that look like they're very big in very perspective.
And at least three of them might be streamable from the standpoint of the operator wanting to have financing.
In addition to Argentina, could you comment on Ecuador and Bolivia?
which have something called plurinationalism, where the indigenous have a state with their own
courts and laws. Could you comment on Nicaragua and Bolivia?
but very consistently vote with Russia and the United Nations.
Anything else you could tell us about countries? Sure, well I'm glad we're just focused on the Americas. Thanks, John . So, you know, political risk is important to us. When we make an investment into an asset, it's typically a life of mine investment.
So we have to make sure that, you know, first off, the assets that we're investing into have healthy enough operating margins because things will change. You know, we've brought in outside political specialists and consultants to talk to us about political risk and how to, you know, how to, you know, how to, you know, how to
try and address that in terms of how we do valuations and probably one of the wisest comments is the fact that politics are like pendulums. They kind of swing to the left and they swing to the right and every country is going to go through that. So for us, the first criteria is making sure that we have assets that have good strong operating margins so that
so that not only is Wheaton doing well as a stakeholder in this asset, but so is the operating company, and so is the country, and so is the surrounding communities, and everyone should be. This industry needs to recognize that all stakeholders need to be benefiting from these investments and going forward. Anyone that's impacted.
should have a net positive effect in terms of whatever happens to these things, and if that's not the case, then I don't think that's a sustainable situation. And so, it's one of the reasons why we also kick-started such a strong commitment towards helping our partners be stronger with respect to social license.
The co-funding that we do with our sustainability initiatives on communities around the mine sites was a first for the streaming and royalty space. We were the first company to do it and I'm happy and proud of the fact that just about every new streaming and royalty agreement that there is out there does now capture a commitment from whoever the actual streaming and royalty...
Our assets have done well and I like to think that the fact that we really try and encourage and support, not just with words but with capital, support our partners in terms of maintaining good, strong social license. That helps us in these types of situations.
The other aspect that I'd say comes into play is political risk is something that's a bit unique, but it also can be offset a bit by the scale of the partner that you're working with, the company, the operating company. And in fact, you know, a lot of times in terms of how we structure these things, we can actually...
you know, protect ourselves in a little bit riskier jurisdictions by relying on a parent company guarantee that provides that support. There's a number of times I've had to remind potential partners that we are in the business of streaming precious metals. We don't stream political risk. We don't want to be involved in that. What we want to be is supportive, but we shouldn't have any role in that space. And so it's very tough.
There's a huge number of factors that all come into play in terms of making sure, and I think you can synthesize it down to just trying to do our best as an industry, not just Wheaton, but as an industry in terms of making sure that all stakeholders...
are rewarded, you know, that have benefits, have a net positive benefit or impact from these operations. And if there are stakeholders that aren't, then we've got to find a way to get there. And sometimes that takes a very long time and it requires incredible patience to get there.
But in the end, you have a good, strong, sustainable project. And so, you know, I can start off by going down and you mentioned Venezuela and Cuba, you're right, we're not even, I can't remember, you know, I will say 20 years ago, I looked at something in Venezuela. I've never looked at anything in Cuba. You know, there is a spectrum of risk all the way through the entire hemisphere.
and so, or you know, within the Americas both. And so, it's something that you always have to assess. I mean, the one caution that you have to have in this industry is because even if a country is politically stable, currently, it doesn't mean that it's not going to be there. So, I just again underscore the importance of how I started off my answer here.
You have to make sure that there's healthy enough margins because sometimes the government's going to come knocking on the door and wanting a bit more of that piece of the pie. And as we've just seen in Central America, without mentioning names, the asset better have enough capacity to sort of hand over a little bit more of that pie and hopefully come up with a good long term.
sustainable arrangement on a go-forward basis. Sometimes it's, well, in fact most times it's very challenging, but in the end it's the only way that we thrive as an industry. I hope that sort of answers you. I don't want to get down to details.
arrangement on a go-forward basis. Sometimes it's, well in fact most times it's very challenging, but in the end it's the only way that we thrive as an industry. Hope that sort of answers you. I don't want to get down to details. If I could ask a different one if you'll share with me.
Of the eight recent
Of the eight recent portfolio additions, or eight or nine,
Four of them are pre-production companies. Could you just review the number of employees Wheaton has augmented by the number of outside technical consultants?
For us to get an idea whether you solely do pre-transaction due diligence.
And for I'm just looking at Rio2, Artemis, Gen Mining, and Adventist that are new companies that might operate for the first time. How much assistance you might offer to them.
Sure, yeah, so let's not forget Sabina on there, although it's on its way to being taken over by B2Gold, but we pride ourselves on being owners of our own decisions and that really comes down to a lot of internal tactical strength.
We have a good strong technical team. I think we have a total of just over 40 employees right now. Just about a third of us have a technical background, including myself as a geological engineer. When you sit and look at that, that highlights what the focus is in terms of making sure that we have good technical skills.
technical strengths, bench strength within the company itself on a go-forward basis. It's something that I've always believed is really important because when it comes to measuring risk, having outside consultants to sign off on a report and then go off into the sunset, it just doesn't, to me, doesn't reflect what we owe to our shareholders. And so we do put a lot of pressure on that.
And you're right, when you look at our recent transactions, there's a heavy bias towards single asset development companies. These companies don't have access to operating cash flows, and so when it comes time to raise capital, a stream is by far the most competitive, the most attractive source of that capital in terms of helping these companies become operators.
And so we're very busy in that front. Hey, I'm sitting here beside me and he's got a long list of assets that he's working on. But we don't rely on outside consultants and that's not to say that we don't pull them in. You know, there's sometimes unique aspects of a project where there's a specialization and we're not going to pay to have that expertise.
Sorry John , Wes is going to add something here. Yeah, sorry John , I was just going to add in that one of the really important parts of maintaining relationships with our partners is providing that kind of technical help as well and it's a huge part of what we do when we do our annual site visits and as we maintain relationships and that certainly has become a bigger part of that as you bring on some of these.
smaller companies in there is we can really offer that assistance to them, but it goes across the entire portfolio. We have great relationships with all of our partners and then we continue to build those in as many different ways we can and that technical assistance is a huge part of it. Yeah, I think John one of the things that's worth highlighting on that front, and thank you Wes, it's a good point. When you look at that list of recent transactions, the majority of those come with either people or companies.
list of other people here requesting.
Thanks, John . Thanks for the call. Thank you. The next question comes from Lord Ashburn Edison. Please go ahead.
Thank you very much. Morning Randy, Chaps, and congratulations if I may on your results. Thank you. Can I ask, not at all, can I ask about your investments just in terms of Power, Shillings and Pents, how they're looking for this year. You touched upon Solobo there and potentially being a payment due this year.
be a minimum and a maximum and the range it might fall in.
Sure thing, Charlie. I'm going to, sorry, Lorde. I'm going to hand you over to Gary here. Yeah, so I mean we, I think, disclose all of that information in both the notes to our financial statements and the MD&A and the
in our contractual obligations and contingency note. So, you know, if you look at that note, in total we've got just over $2 billion of commitments outstanding relative to upfront payments for these development stage projects.
We're forecasting about $850 million of that being dispersed in 2023 and, you know, that's as I think I previously connoted, you know, a conservative estimate, conservative meaning that it's likely
showing more being paid earlier, but that's our best estimate now. Then we have another $765 million going out in 2024-25, and then the vast majority of the rest of it, or just over $400 million going out in 2024-25.
is coming in. We've seen a lot of improvements from Valet in terms of operations and continued improvement within the first two lines and such like that, but it would be a real big step to get that full payment in on Salobo this year. I'd be happy to have it. Everything else is all funding that construction that ultimately delivers.
Thank you. The next... The next...
This question comes from Charlie Rotang of Berenberg. Please go ahead. Hi. Thank you. Thank you very much indeed for taking my question and congratulations again on your results. I'd just like to ask you about – Okay.
about Phoenix, if I may, and just about, I appreciate you haven't impaired it, but do you expect?
if I may, I'm just about, I appreciate you haven't impaired it, but do you expect, does the clinic sit within your guidance?
No, it does not. We have to wait and see how Rio 2 does on a go-forward basis in terms of getting back to the point of getting a permit to operate on a go-forward basis. So we're patiently waiting for Rio 2 to continue advancing.
think that we are confident that they'll ultimately be successful. It's a matter of timing and that's one of the challenges is until we get more clarity on the timing it's not part.
Okay, thank you. My final question is just around what you're seeing in the market in terms of options. I appreciate you might not be able to give us loads of color, but anything you could give us we'd greatly appreciate it. Your previous strategy looks have been sort of around.
smaller, smaller developer companies with very good projects, given that the large companies are very strong.
balance sheets. Is that still the case or are you finding it easier to negotiate with larger companies at this point?
I'll let Haytham add a few words to this one. He's the one carrying that charge. Good morning, Charlie. Thank you for the question. You know, maybe I'll just highlight what happened in the fourth quarter. The fourth quarter we saw a significant rise in activity, but you know, some very small streams, some larger royalties changing hands.
at what seemed to be some rather expensive valuations by some of our competitors. You know, these expensive valuations have made every company look for royalties in their portfolio and they're hoping to sell them to try to get similar valuations. I can assure you we won't be overpaying for royalties or streams regardless of what precedent has been set.
We're continuing to see a number of smaller opportunities with the majority still falling into the sub $300 million range. Primarily, as you said, the development stage opportunities and the occasional small operator with a focus on streaming precious metals as a byproduct. My team is currently working through a number of due diligence processes and if all goes well, we hope to be able to do that.
operating cash flow and so it is definitely a bias towards that early stage development company and trying to help them get to the point of having that operating cash flow. The streaming business model is a very, very competitive source of capital, especially when you look at how the market is supporting.
but not new royalties. I mean, it doesn't make any sense. New royalties, just there's a lot more value created in a stream than there is in a royalty on a number of different fronts. But existing royalties, we'll always sniff at them and see if there's an opportunity there. But again, reinforcing what Hasom just said, only for pumping room decreases or decreases or not.
in terms of new transactions with companies, but if there's existing royalties around, we'll always have a look at them and see if there's an opportunity to create value for our shareholders. Yeah, especially producing royalties, Charlie, we take those very seriously because they have the ability to add to our new term cash flow.
Thank you Charlie. I think we've got one question. We've got one question from the webcast. Is there a notable trend towards fixed price contracts or fixed margin contracts and what does Wheaton prefer? I think it's a good question. I think it's a good question.
So when we created the business model, the streaming business model back 20 years ago, fixed price contracts were the standard. You know, we have, you know, the beauty of that is of course it does give us some leverage with respect to commodity prices that you don't see with royalties or with bullion holdings.
And the challenge with it though is that if we see differences at the site with respect to, and specifically what we saw was with higher commodity prices typically become higher taxation burdens, and we've come to the conclusion over the last five or six years that a more sustainable model, a stronger model...
is actually the fixed margin contract. And so, and I think we've seen this across the industry, it's pretty well the standard in the industry. And the real reason behind that is that it does help our partners be much more...
sustainable, especially in high commodity price environments because they do wind up getting a bit more of value from the metal that's being delivered into the streaming contract to help offset any additional costs that might be attached to that type of an environment. So definitely focus more on that. A very full list of questions. Thank you everyone, but really appreciate everyone dialing in today.
Secondly, with low and predictable costs which are resilient to inflationary pressures resulting in some of the highest margins in the entire precious metals space. Thirdly, by offering our shareholders exposure to our diversified portfolio of long life, low cost assets, good strong asset base, 93% from the bottom half of the respective cost curves. And fourthly, by returning value to shareholders through a unique and unique way of creating a better future. Thank you. Thank you.
cash flow linked dividend. So with that, I'd really like to thank everyone for joining us today. I believe that we are in great shape. I think it's a great time to own more Wheaton. So thanks for dialing in today and I look forward to talking to everyone again soon. Stay safe, stay healthy.
you