Q4 2022 Wheaton Precious Metals Corp Earnings Call

Speaker 2: Good morning ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2022 for the fourth quarter conference call.

Speaker 2: All lines have been placed on mute to prevent any background noise.

Speaker 2: After the speaker's remarks, there will be a question and answer session.

Speaker 2: If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. Or type your question in the Q&A box of the webinar. If you would like to withdraw your question, press star two. Thank you.

Speaker 2: I would like to remind everyone that this conference is being recorded on Friday, March 10, 2023 at 11 a.m. Eastern Time. I will now turn the conference over to Mr. Patrick Druin, Senior Vice President of Investor Relations and Sustainability. Please go ahead. Patrick Druin, Senior Vice President of Investor Relations and Sustainability.

Speaker 3: Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Wheaton Precious Models President and Chief Executive Officer, Gary Brown, Senior Vice President and Chief Financial Officer, Haytham Hoadley, Senior Vice President of Corporate Development, and Wes Carson, Vice President of Mining Operations.

Speaker 3: Please note that for those not currently on the webcast the slide presentation accompanying this conference call is available in PDF format on the presentations page of the Wheat and Precious Metals website.

Speaker 3: I'd like to bring to your attention that similar commentary on today's call may contain forward-looking statements, and I would direct everyone to review slide 2 of the presentation, which contains important cautionary notes regarding forward-looking statements.

Speaker 3: It should be noted that all figures referred to on today's call are on US dollars unless otherwise noted. 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 4: 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.

Speaker 4: 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 4: 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 4: Wheaton, however, continued to deliver cash operating margins of 75% in the fourth quarter, reflecting the resilience of our business model.

Speaker 4: From a financial perspective, in the fourth quarter, Wheaton generated $236 million in revenue.

Speaker 4: $172 million in operating cash flow, and $166 million in net earnings, as Gary will discuss shortly.

Speaker 4: This solid performance contributed to our record annual dividend distribution of $237 million to shareholders.

Speaker 4: 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 4: Furthermore, we have demonstrated our continued willingness to identify strategic opportunities both externally and within our portfolio that create value for our shareholders.

Speaker 4: To that end, in the quarter, we completed the previously announced sale of the Ialiaku stream back to Glencore for $132 million.

Speaker 4: a continuation of our portfolio optimization efforts, which also saw us sell the Kino Hillstream for $141 million earlier in the year.

Speaker 4: The sale of Yaliaku and Kino Heelstreams contributed to the overall quality of our portfolio.

Speaker 4: where now 93% of Wheaton's production comes from assets that fall in the lowest half of the cost curve.

Speaker 4: In addition, the sale of these assets positions Wheaton with one of the strongest balance sheets in the industry.

Speaker 4: 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 4: as well as through additional accretive acquisitions.

Speaker 4: We can continue to demonstrate our leadership in sustainability with sector-leading scores, including a AA rating from MSCI and a genuine number one rating in precious metals from Sustainalytics.

Speaker 4: 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.

Speaker 3: Thank you, Randy, and good morning, ladies and gentlemen. The company's precious metal interest 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%.

Speaker 3: primarily due to lower production from Salobo, Penasquito, and Boise's Bay, coupled with the closure of the Stratoni and 777 mines and the termination of the Kino Hill and Yalayaku streams.

Speaker 5: 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 5: Of this revenue, 50% was attributable to Gold, 45% Silver, 3% Palladium and 2% Cobalt.

Speaker 5: 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 5: This balance is 24,000 GEOs lower than the average over the preceding four quarters.

Speaker 5: 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. G&A expenses and donations amounted to $11 million in the fourth quarter of 2022.

Speaker 5: for the Iliaca disposition together with other anomalous items.

Speaker 5: 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 5: 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.

Speaker 5: representing a 12% decrease on a per share basis. 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 5: 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 5: highlighting that these projects are advancing, fueling Wheaton's future organic growth.

Speaker 5: Overall, net cash inflows amounted to $201 million in Q4 2022, resulting in cash and cash equivalents at December 31 of $696 million.

Speaker 5: 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 5: 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 5: with a total of $42 million being virtually unchanged from 2021. However, this was $5 million below the lower end of our original guidance, primarily due to lower professional fees and employee compensation costs.

Speaker 5: 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 5: During 2022, the company terminated the Keno Hill stream in exchange for $141 million of Hekla common stock. 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 5: 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 5: This translated into operating cash flow per share of $1.65 compared to $1.88 in 2021. 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 the Yalayaka stream.

Speaker 5: provided by the undrawn $2 billion revolving credit facility and the strong forecast operating cash flows, 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 5: That concludes the financial summary. And with that, I turn the call over to Wes.

Speaker 5: Thanks, Gary. Good morning. 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 ounces of attributable gold, a decrease of 21% relative to the fourth quarter of 2021 due to lower throughput and grades.

Speaker 5: Valley reported that production was lower than expected due to reduced plant availability during the quarter caused by additional planned and corrective maintenance.

Speaker 5: 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. Subsequent to the quarter, Wheaton and Vale agreed to amend the Slowboat 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 Vale to maximize grade on an annual basis.

Speaker 5: During the quarter, Constanciop produced 700,000 ounces of attributable silver and 10,500 ounces of attributable gold, an increase of approximately 13% and 6% respectively.

Speaker 5: relative to the fourth quarter of 2021. The increase in both silver and gold production was due to higher grades resulting from additional ore production

Speaker 5: Gold production was lower than expected during the quarter as a result of short-term changes in the mine plan that prioritize lower grade stockpiles and shorter haul distances.

Speaker 5: 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 5: These changes did, however, allow HUD-BETA to continue to operate the process plan continuously through the quarter. During the fourth quarter, Antimita produced 1.1 million ounces of attribural silver, a decrease of 19% relative to the fourth quarter of 2021, primarily due to lower grades.

Speaker 5: As for the mine plan, Antimina did however continue to exceed expected production for 2022 driven primarily by increased productivity and better than expected mine grades.

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.

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.

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 increasing to over 900,000 GEOs by 2027.

key highlights, including...

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.

Accretive growth, emphasized by the addition of four new streams that will collectively provide over 65,000 gold equivalent ounces of annual production.

Continued portfolio optimization efforts, enhancing, improving the quality of our asset base, and contributing to one of the strongest balance sheets in the industry.

record annual dividend distribution of $237 million?

And lastly, continued leadership in sustainability with sector-leading ESG ratings.

With that, I would like to open up the call for questions. Operator? 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 one on your touch tone phone.

If you would like to withdraw your question, press the star followed by the 2.

There will be a brief pause while we compile the Q&A roster.

The first question comes from Brian McArthur of Raymond James. Please go ahead. Thank you.

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. It just

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?

I'll let Gary take that one. Hi Brian . Look, we're always trying to be conservative in the way that we frame the timing associated with the payment of those.

those upfront payments and so we're continuing to reflect that as potentially going out in 2023. And I think it's important. I mean, Vale is doing their best to try and satisfy that, right? They have told us they're going to do their best to try and move the entire site up to those production levels.

definitely got the desire. It's a matter of there's a lot of work you have to do so we'll see how it goes.

Great, thanks. Very clear. And then at some, there has been talk historically about a slow before. Is there anything changed if there's anything more to happen there as a result of this agreement? There's nothing different?

Nothing has changed. You can still see Slobo4 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. Great, thanks. And if I could just ask one other topic. The 777...

refundable deposit. I've got two questions. One, just you put some numbers in there, discounting rates and all the rest of it. Do you actually get payments over time through 2052? And the second thing is, can I just ask, are there any other...

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 you look at Sudbury.

which maybe has 10 years left, you know, depending on what happens, you may or may not get there. Does it, would it have a true up thing if I want to call it that, like, like the triple seven one does? Or maybe you can't comment on that for confidentiality.

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, Hutt Bay did not have as much exploration success.

777 as we anticipated and we did have to take a write down on that asset in years past because of that lack of success and so you know in most cases the deposit level is something that in fact I'm trying to think of another asset where you know we're not going to get to that number. It is one of the functions of the contracts.

I would just highlight the fact that HUD-Bay is a strong partner of ours. We do a lot of work with them, obviously Constanciia and other, you know, the Copper World, Rosemont. We've got a lot of other discussions coming up with them. So, you know, it is a partnership with HUD-Bay and that's the way it's structured through this contract, but it is something that...

2052 is a long ways away. So... And just to add to that, Brian , we won't be receiving any money in between. We don't get paid until the... until 2052.

assuming that we don't come to some other arrangement with HUD-B. Great, thank you very much. That's very clear. Appreciate it.

Yep, thanks Brian .

Thanks Brian . Thank you.

The next question comes from Lawson Winder of Bank of America Securities. Please go ahead. 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 III, achieving full capacity to Q4-24.

I was curious, based on your understanding, when they say full capacity, is that the 35 million tons per year by Q4-24 or is that the 35? And then what is baked into your long-term guidance in terms of when that 32 and then the 35 is hit?

So what they've got in there.

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 there.

Rosemont, Copperworld, you mentioned in the release that sort of in the latter part of the guidance is where that comes in, in terms of the five-year guidance actually, to be specific. But could you maybe just sort of clarify when more precisely you have Copperworld and Rosemont coming into that five-year guidance? Like is that end of 27 or is that early 27?

Let's just leave it at the latter portion of the five-year guidance. That probably gives you enough guidance. Near the end of it. As we have seen, permitting is a little bit more challenging than you would expect out of Arizona. There are so many variables that can adjust that.

What we do know is that BAE is committed to try and move that project forward as fast as they can. We've had to sort of try and reflect that. We do think that things are lining up quite nicely to have a bit of an impact, but a very small impact on 2027.

We are staying in really close contact with HUD-B 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 sort of a better idea as these things move through, and we'll just continue to work with HUD-B as we move forward.

Okay, yeah, fantastic. And then just one follow up then on Rosemont in terms of the discussions. I mean, both both sides you and had 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.

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 100% of all the silver and gold from the asset and so that's not going to change with respect to over and above that. 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.

So I think that's, you know, we've just got to sit down and hammer that out. But, you know, we are, you know, sort of waiting for a bit more clarity on terms of their path going forward. And, you know, as I said, it's a good strong relationship with Peter and the team over at Hutt Bay. And so, you know, as they get a little bit more firm as to their plans going forward, that's when we'll sit down.

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?

Yeah, ideally sometime this year they'd like the clarity so that they know what they need to do in terms of on a go-forward basis and so you know it should be happening within this year.

Okay, fantastic. Great start to the year. Take care, guys.

Thanks, Lawson.

Thank you.

Once again, ladies and gentlemen, if you do have a question, please press star 1 at this time. The next question comes from Martin Prater of Veritas. Please go ahead.

Hi, thank you for taking my question. The first question is, you mentioned that in Xalobo the throughput is expected to increase 50%. How and when areaki NG

But the grades are also coming down. So what is the expected increase in production or what is the difference in grades from the previous neighbours?

The grades are also coming down. 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, 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. And so, you know, there's a lot of variables moving there and it's very tough to sort of...

lay that out. I mean, it's one of the reasons why when we restructured the expansion payment, that there's a couple of triggers, both grade and total tonnage that come into play, in terms of determining whether they're satisfied 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, you know, it's really tough to push that out.

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. So a 50% increase in throughput capacity is not going to be a 50% increase in metal production. But depending on stockpiling, it should be pretty close to 30% or 40% increase in metal production.

Again, depending on their stockpiling approach. 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. And so 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...

No, that helps. 30-40% gives me an idea. That's sort of what I was looking for.

Similar question with Pampa Cantha. I know that the deposit has higher grade and production will increase for Constantia.

But, how much higher grade is Pampa Cancha and what is really the expected impact that you see in terms of this higher grade coming through in 2023?

2024. Yeah, the Papakancha gold grades are ten times higher than what are contained in the Constancia pit. And of course our stream is focused on getting 50% of that gold. So both both Hutt Bay and ourselves profit mightily by having Papakancha ore pushed through the...

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, you know, they continue to work forward on that and, you know, again, you know, both companies are very incented to try and move as much popocantia through as they can. But, you know, the key number there is copper grades are also slightly higher, but gold grades are substantially higher. And so it's quite a rich ore body for, you know, 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.

Yeah, we could see upwards of, now, you know, they're not going to entirely feed the mill from the Papakansha zone. They just can't mine and haul it that fast and that far. And so, it'll be batch treated. You know, the guidance that the HUD-B has come out with for 2023 has more Papakansha towards the end of this year versus the start. I do think that that might be a, you know, a result of...

some of the challenges they had at the end of last year with respect to fuel supply and stuff. And so if that does get resolved, we could see a pleasant surprise on that side, if that strengthens and we lessen those restrictions. I think the key thing to keep in mind is that it's 10 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.

There will be batch treatment through there. 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.

The whole concept is both Reid Brook and Eastern Deeps coming on as they continue to displace this low-grade ore that is 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 very, it's development ore. So there's some development ore, it's not to the full scale of production.

With an underground operation like that you need multiple working faces and they're down into that point. I don't know if you want to add more color? Sure, it's over this year that we'll start seeing those undergrounds come online, but as Randy said, it's been development that's come out so far. We actually haven't seen any production ore from those undergrounds. It is a 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 faces become developed you'll be able to access and pull a bit more ore out of each one of those working faces.

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 of 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 will be offset by some ore from the underground but the open pit material, the grades are actually dropping over the course of this year. Perfect, thank you. That's very helpful. Great. Thank you Martin.

Thank you. The next question comes 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.

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 and 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. And could you comment on Nicaragua and Bolivia?

that very consistently vote with Russia and the United Nations? And 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. And so...

So we have to make sure that, first off, the assets that we're investing into have healthy enough operating margins.

things will change. You know, we've brought in outside political specialists and consultants to talk to us about political risk and how to try and address that in terms of how we do evaluations 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.

one 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.

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 we've been able to do it.

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 company is to try and strengthen that up. And so, it is something that we factor into. And when I sit back and look at how our assets have done in the face of some pretty...

challenging times here, just even more recently within South America. 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 type 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, it can be offset a bit by the scale of the partner that you're working with, the company, the operating company.

In fact, a lot of times in terms of how we structure these things, we can actually protect ourselves in a little bit riskier jurisdictions by relying on a parent company guarantee that provides that support. There are 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. Well, we want to be as supportive, but we shouldn't have any role in that space. And so it's very tough for us to take on that type of risk in our own investments. And so we're always exploring for ways to try and make sure that the political risk is...

stays with the operator where it should. The operator itself is the face of the operation and they're the ones that maintain the government relations and such. And so 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...

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.

You know, there is a spectrum of risk all the way through the entire hemisphere.

and so are 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 the 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.

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 in an industry. Hope that sort of answers you. I don't want to get down to details.

So if I could ask a different one.

different one if you're with me.

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 and let's not forget Sabina on there, although it's on its way to being taken over by B2Gold, but you know, we pride ourselves on being owners of our own decisions and that really comes down to a lot of internal...

what the focus is in terms of making sure that we have good 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 that you know 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 is 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...

and we're not going to pay to have that expertise on site. So we don't hesitate to chase down that direction if we need to, but it's very few and far between. We truly believe that having an internal team here means that we own the responsibility for these assets on a go-forward basis.

It's also worth noting that it's a... 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 the 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.

and transactions, the majority of those come with either people or companies that we have done transactions with in the past. It really does come down to repeat customers and we really do put a lot of focus on trying to deliver value, not just with the upfront payment but with the material underneath.

John , we do have a long 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 Salobo there and that potentially being a payment due this year.

and a maximum and the range it might fall in.

Sure thing, 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 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 dollars 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

then the vast majority of the rest of it or you know just over four hundred million dollars going out after 2027. So it's important to note that you know those are all based on certain achievements on a go-forward basis and

For instance, Salobo, we'd be very happy if they got to that level, but it's a lot of work. It strikes us that the team that 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.

be but I greatly appreciate that. Thank you very much.

I greatly appreciate that. Thank you very much. Great, thanks for the call.

Thank you. The next question comes from Charlie Rotang of Berenberg. Please go ahead. 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...

about Phoenix if I may and just about um I appreciate you haven't impaired it but do you expect

I'm just about, I appreciate you haven't impaired it, but do you expect, does Fenix sit within your guide?

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.

We're patiently waiting for Rio2 to continue advancing those efforts. We were comfortable in our own due diligence in terms of the work that Rio2 did on that project, so we were a bit surprised at the result, but I would point to the fact that it was a challenging time in Chile.

And I do 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 me, give us loads of colour, but anything you could give us would be greatly appreciated. Your previous strategy looks to be in sort of around smaller.

sort of smaller developer companies with very good projects given that the large companies have 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. Maybe I'll just highlight what happened in the fourth quarter. The fourth quarter we saw a significant rise in activity, but some very small streams, some larger royalties changing hands at what seemed to be some rather expensive valuations by some of our competitors. So 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 narrow down one or two streams on high quality assets over the next 12 months.

So, you know, a heavy focus on the single asset development companies because as we've said in times past, anyone that's got operations in this environment is actually doing relatively well in terms of operating cash flow. And so it is definitely a bias towards, you know, that early stage development company in trying to help them get to the point of having that operating cash flow.

you sticking to this stream? We've always looked at royalties but not new royalties. I mean it doesn't make any sense. New royalties, 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 Haytham just said, only for accretive prices. So, to be honest, we actually have a couple of royalties already in the portfolio, but it's just stuff that was already in existence that came as part of a broader acquisition.

So our focus is doing streams 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 very much, Sipan. Thank you for taking my questions and congratulations again.

Yes, 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? So when we created 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 so, 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 come 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 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. Definitely focus more on that. A very full list of questions. Thank you everyone, but...

the next five years, more than 40% over the next five years.

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 cash flow linked dividend.

So with that, I 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, and we'll move forward. Thanks.

Ladies and gentlemen, this does conclude the conference call for today. Thank you for participating and please disconnect your lines.