Q4 2023 Wheaton Precious Metals Corp Earnings Call
[music].
Good morning, ladies and gentlemen, thank you for standing by welcome to the Vista in it.
Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Wheaton Precious Metals 2023 fourth quarter and full year results conference call. All lines have been placed on mute to prevent any background noise.
Precious metals 2023.
And full year results conference call.
Lines have been placed on mute to prevent any background noise.
Operator: After the speaker's remarks, there will be a question and answer session. If you'd like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press the star. Thank you. I would like to remind everyone that this conference call is being recorded on Friday, March 15, 2024, at 11 a.m. Eastern Time. I would now like to turn the call over to Emma Murray, Vice President of Investor Relations. Please go ahead.
After the Speakers' remarks, there will be a question and answer session. If you'd like to ask a question. During this time simply press Star then the number one on your telephone keypad, if you'd like to withdraw your question. Please press star two thank you I would like to remind everyone that this conference call is being recorded on Friday March 15th 2020.
Four at 11 am eastern time.
I will now like to turn the conference over to Anne Marie <unk>, Vice President of Investor Relations. Please go ahead.
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 Metals', President and Chief Executive Officer, Gary Brown, Senior Vice President and Chief Financial Officer, Haytham, <unk> Senior Vice President Corporate development, Curt Bernardi, Senior Vice President legal and West Carson Vice President Michael.
Emma Murray: 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 Metals President and Chief Executive Officer, Gary Brown, Senior Vice President and Chief Financial Officer, Haytham Hodaly, Senior Vice President, Corporate Development, Kurt Bernardi, Senior Vice President, Legal, and Wes Carson, Vice President, Mining. Please note that for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the presentations page Some of the commentary in 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. It should be noted that all figures referred to on today's call are in U.S. dollars unless otherwise noted. With that, I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer. Thank you, Emma, and good morning everyone.
Sure.
Please note that for those not currently on the webcast slide presentation accompanying this conference call is available in PDF format on the presentations page of the Wheaton precious metals website.
Some of the commentary in today's call may contain forward looking statements that would direct everyone to review slide two of the presentation, which contains important cautionary note regarding forward looking statements. It should be noted that all figures referred to on today's call are in U S dollars unless otherwise noted with that I would like to turn the call over to Randy Smallwood, Our president and Chief Executive Officer.
Thank you Emma and good morning, everyone. Thank you for joining us today to discuss <unk> fourth quarter and full year results of 2023.
Randy V. J. Smallwood: Thank you for joining us today to discuss Wheaton's fourth quarter and full year results for 2023. I am pleased to announce that our portfolio of long-life, low-cost assets delivered another solid quarter, allowing us to meet our annual production guidance of 620,000 gold-equivalent ounces in 2023. Our strong quarterly performance was underpinned by Salobo, which reached its highest production level in the last four years.
I am pleased to announce that our portfolio of long life low cost assets delivered another solid quarter, allowing us to meet our annual production guidance, achieving 620000 gold equivalent ounces in 2023.
Our strong quarterly performance was underscored by Salobo, which reached its highest production level in the last four years.
Randy V. J. Smallwood: We were very excited to see Valet Base Metals successfully complete the throughput test for the first phase of the Slobo III expansion project in November, marking a significant milestone that demonstrates increased reliability and continued operational excellence. We look forward to further advances as that expansion project continues to ramp up through 2024. In 2023, we also achieved a milestone in our growth strategy with the announcement of a record eight acquisitions totaling just over $1 billion in commitment. Haytham will discuss in further detail these recent acquisitions, which include a silver stream on Waterton's Mineral Park project, gold, palladium, and platinum streams on Ivanhoe's Plat Reef project, which is our first foray into Africa. Gold and Silver Streams at BMC's Kutztakaya project.
We were very excited to see Vale base metals successfully complete the throughput test for the first phase of this global III expansion project in November.
Marking a significant milestone that demonstrates increased reliability and continued operational excellence.
We look forward to further advances as that expansion project continues to ramp up through 2024.
In 2023, we also achieved a milestone in our growth strategy with the announcement of our record eight acquisitions totaling just over $1 billion in commitments.
<unk> will discuss in further detail. These recent acquisitions, which include a silver stream on water <unk>.
Mineral Park project gold Palladium, and platinum streams, and Ivan host Platt Reef project, which is our first foray into Africa.
Gold and silver streams on Bmc's crudes, the kayak project.
Randy V. J. Smallwood: A Gold Stream on Dow Radian's Kernel Project and lastly, a royalty on Vista's Mount Todd project, marking our first foray into Australia. We are excited to welcome our new mining partners and look forward to supporting them as they advance these projects, the largest being Ivanhoe's rapidly advancing Platte Reef Project. We are very pleased to have Ivanhoe as partners who have had long-standing relationships in South Africa and have done an immense amount of work to de-risk one of the highest grade undeveloped precious metals assets in the world. Each of these acquisitions further diversifies our portfolio in terms of geographic presence and strategic partnerships and, once ramped up, are forecast to contribute meaningful production and further strengthen Wheaton's already prominent position as the leader in the sector's growth landscape.
Our gold stream on DAU radians current oil project.
And lastly, a royalty on vista's Mt Todd project.
Making marking our first foray into Australia.
We are excited to welcome our new mining partners and look forward to supporting them as they advance these projects the largest being ivanhoe is rapidly advancing plat reef project.
We are very pleased to have Ivanhoe as partners, who have had long standing relationships in South Africa and have done an immense amount of work to de risk one of the highest grade undeveloped precious metals assets in the world.
Each of these acquisitions further diversifies our portfolio in terms of geographic presence and strategic partnerships and once ramped up our forecast to contribute meaningful production and further strengthen weakened already prominent position.
As the leader in the sector's growth landscape.
Our growth pipeline of development projects was also further de risked in the quarter as Adventist mining received multiple key permits for the <unk> project.
Randy V. J. Smallwood: Our growth pipeline of development projects was also further de-risked in the quarter as Adventus Mining received multiple key permits for the Curipamba project and conveyed that a construction decision is expected within the year. In addition, Rio, too, announced that it had received approval of its environmental impact assessment, allowing it to advance the Phoenix project through permitting, financing, and into construction activities in 2024.
And convey that a construction decision is expected within the year.
In addition, Rio two announced that they have received approval of their environmental impact assessment, allowing them to advance the fenix project through permitting financing and into construction activities in 2024.
Sure.
During this quarter. We are also proud to have been recognized as one of the world's 100, most sustainable corporations by corporate Knights and achievement reflective of our commitment to operate to operating responsibly.
Randy V. J. Smallwood: During this quarter, we are also proud to have been recognized as one of the world's 100 most sustainable corporations by Corporate Knights, an achievement reflective of our commitment to operating responsibly in all areas of our business and representative of the quality of the mining partners that we work with to deliver society its much-needed commodity. To reinforce our confidence in the sustainability and the growth potential of Wheaton, we are pleased to announce the transition to a new progressive dividend policy. This new approach is marked by an increase in our 2024 annual dividend. Under our new policy, Wheaton's payout ratio is expected to remain the highest within the entire precious metal space. And with that, I would like to turn the call over to Wes Carson, our Vice President of Operations, who will provide more details on our operating results. Well, Thanks, Randy. Good morning.
All areas of our business and representing the quality of the mining partners that we work with to deliver society, it's much needed commodities.
To reinforce our confidence in the sustainability and the growth potential of Wheaton. We are pleased to announce the transition to a new progressive dividend policy. This new approach is marked by an increase to our 2024 annual dividend.
Under our new policy weakness payout ratio is expected to remain the highest within the entire precious metal space.
And with that I would like to turn the call over to West Carson, Our Vice President of operations, who will provide more details on our operating results.
Yes.
Thanks, Randy good morning.
Wes Carson: Overall production in the fourth quarter came in higher than expected, driven by strong outperformance at both Salobo and Constancia and a steady ramp-up at Penasquito, highlighting the strength of our diversified portfolio of long-life, low-cost assets. In the fourth quarter of 2023, Slobo produced 71,800 ounces of attributable gold, an increase of approximately 89% relative to the fourth quarter of 2022, driven Celobo reached its highest quarterly production level since 2019 as the ramp-up of Celobo III continued to advance, and overall improvements were realized at both Celobo I and II. As mentioned by Randy, in November, Valley Base Metals reported the successful completion of the 3-foot test for the first phase of the Slobo 3 project, with the Slobo complex exceeding an average of 32 million tonnes per annum over a 90-day period. Under the terms of the agreement, the company paid Slobo $370 million for the completion of the first phase of the Slobo 3 expansion on December 1st, 2023. SILOBO III is expected to achieve a sustained throughput capacity of 36 million tonnes per annum by the fourth quarter of 2024.
Overall production in the fourth quarter came in higher than expected driven by strong outperformance at both Salobo and Constancia and a steady ramp up at <unk>, highlighting the strength of our diversified portfolio of long life low cost assets.
In the fourth quarter of 2023, Salobo produced 71800 ounces of attributable gold an increase of approximately 89% relative to the fourth quarter of 2022.
Driven by higher throughput and higher gold recoveries.
Global reached its highest quarterly production level since 2019 as the ramp up of global expansion continues to advance and overall improvements were realized in both the level one and two.
As mentioned by Randy in November Valley base metals reported the successful completion of the throughput test for the first phase of this level III project with the slower complex exceeding an average of 32 million tonnes per annum over a 90 day period.
Under the terms of the agreement the company paid flow with $370 million for the completion of the first phase of slow with three expansion on December one 2023.
Salobo III is expected to achieve a sustained throughput capacity of 36 million tons per annum by the fourth quarter of 2024.
Wes Carson: The remaining balance of the expansion payment is dependent on the timing of completion and will be triggered once Value-Based Metals expands actual throughput above 35 million tonnes per annum for a period of 90 days. In the fourth quarter of 2023, Constancia produced 840,000 ounces of attributable silver and 22,300 ounces of attributable gold, an increase of approximately 28% and 112% relative to the fourth quarter of 2022. Record quarterly gold production combined with strong silver production is a result of significantly higher grades for mining of high-grade zones in the Papacancho deposit and associated higher recoveries. In the fourth quarter of 2023, Penosquito produced 1 million ounces of attributable silver, a decrease of approximately 41% relative to the fourth quarter of 2022, primarily due to lower throughput resulting from the labor strike which began on June 7th, 2023 and ended Newmont reports that operations have since safely wrapped up after the October 13th resolution was reached.
The remaining balance of the expansion payment is dependent on the timing of completion and will be triggered once value based models expand actual throughput above 35 million tonnes per annum for a period of 90 days.
In the fourth quarter of 2023, Constancia produced 840000 ounces of attributable silver and 22300 ounces of attributable gold an increase of approximately 28% and 112% relative to the fourth quarter of 2022.
Record quarterly gold production combined with strong silver production are a result of significantly higher grades for mining of higher grade zones in the public ACH deposit and associated higher recoveries.
In the fourth quarter of 2023 patents keto produced 1 million ounces of attributable silver a decrease of approximately 41% relative to the fourth quarter of 2022, primarily due to lower throughput, resulting from the labor strike, which began on June seven 2023 and ended on October 13th.
Newmont reports that operations have since safely ramped up after the October 13th resolution was reached.
Wes Carson: Newmont has indicated that Pensketo is expected to deliver higher co-product production in 2024 due to higher silver, lead, and zinc content in the Chile-Colorado. In the fourth quarter of 2023, Antimena produced 1 million ounces of attributable silver, a decrease of approximately 3% relative to the fourth quarter of 2022, resulting from lower grades due to the mine sequence. On February 15, 2024, Peru's National Environmental Certification Service for Sustainable Investments approved, after a detailed evaluation process, the modification of the Environmental Impact Study which allows the extension of Antimida's reserve mine life from 2028 to 2036.
Newmont has indicated that <unk> is expected to deliver higher co product production in 2024, due to higher silver lead and zinc content and the Chile, Colorado pit.
In the fourth quarter of 2023 centimeter produced 1 million ounces of attributable silver a decrease of approximately 3% relative to the fourth quarter of 2022, resulting resulting from lower grades due to mine sequencing.
On February 15th of 2024 proves national Environmental certification service for sustainable investments approved after a detailed evaluation process. The modification of the environmental impact study, which allows the extension of that to me is reserve mine life from 2028 to 2036.
Wins overall attributable reserves and resources saw solid growth across all mineral categories with the most noteworthy being 10% growth in our proven and probable reserves. This was driven by a 12% increase in gold reserves, primarily due to new acquisitions in 2023 combined with the results of a pre feasibility study at copper world, which now.
Wes Carson: Wheaton's overall attributable reserves and resources saw solid growth across all mineral categories, with the most noteworthy being 10% growth in our proven and probable reserves. This was driven by a 12% increase in gold reserves, primarily due to new acquisitions in 2023 combined with the results of a pre-feasibility study at Copper World, which now incorporates gold for the first time. Attributable measured and indicated mineral resources also saw good growth at 15% on a GEO basis, and overall attributable inferred resources grew by 3%.
Corporate goal for the first time.
Attributable measured and indicated mineral resources also saw good growth of 15% on a <unk> basis, and overall attributable inferred resources grew by 3%.
Wes Carson: In 2024, Golden Globe-announced production is forecast to be consistent with the levels achieved in 2023. As expected, stronger production from Penasquito and Boise's Bay is forecast to be offset by anticipated lower production from Celobo, as well as the suspension of operations at Minto and the halting of production at Algestrel.
In 2024 gold equivalent ounce production is forecast to be consistent with the levels achieved in 2023 as expected stronger production from <unk> and voices Bay is forecast to be offset by anticipated lower production from Salobo suspend.
The suspension of operations at Minto and the halting of production at <unk>.
Wes Carson: Wheaton's estimated attributable annual production is forecast to be 325,000 to 370,000 ounces of gold, 18.5 to 20.5 million ounces of silver, and 12,000 to 15,000 gold equivalent ounces of other metals, resulting in production of approximately 550,000 to 620,000 gold equivalent ounces using our updated 2024 Camargo Crescent Sun. Production is forecast to increase at Pensacito as a result of uninterrupted operations and at Boise's Bay due to the ongoing transition from the Ovoid Pit to the underground mine. Production is forecast to decrease slightly at Celobo due to lower grades, as per the mine plan, which is expected to be partially offset by increasing throughput as the Celobo III expansion project continues toward completion.
Wins estimated distributable annual production is forecast to be 325000 to 370000 ounces of gold.
18, 5% to $20 5 million ounces of silver and 12000 to 15000 gold equivalent ounces of other metals.
Resulting in production of approximately 550000 to 620000 gold equivalent ounces using our updated 2024 commodity price assumptions.
Production is forecast to increase in <unk> as a result of uninterrupted operations in it Boise's Bay do you see the ongoing transition from the worldwide pit to the underground mines.
Production is forecast to decrease slightly at Salobo due to lower grades as per the mine plan, which are expected to be partially offset by increasing throughput as the salobo III expansion project continues toward completion.
Historically weakness provided five and 10 year averages for its long term guidance. However in 2024. The company has elected to introduce a five year target. In addition to an annual average for years six through 10 with a goal of providing increased granularity and further transparency of our expected growth trajectory.
Gary D. Brown: Historically, Wheaton has provided 5- and 10-year averages for its long-term guidance. However, in 2024, the company elected to introduce a 5-year target in addition to an annual average for years 6 through 10, with the goal of providing increased granularity and further transparency of our expected growth trajectory. As such, we are forecasting growth of approximately 40% over the next five years to over 800,000 gold equivalent ounces by 2028 and averaging over 850,000 gold equivalent ounces per year from 2029 to 2033. We believe this industry-leading 5-year growth profile to be significantly de-risked with over 70% of the growth coming from assets that are either operating, in construction, and are permitted. We expect growth from operating assets to come from Salobo, Antimena, Penasquito, Voices Bay, and Maramato, with expected growth from development projects including Blackwater, Platte Reefs, Goose, Mineral Park, Phoenix, Creepomba, and Santa Monica. That concludes the operations review, and with that, I will turn the call over to Gary. Thank you, Wes.
As such we are forecasting growth of approximately 40% over the next five years to over 800000 gold equivalent ounces by 2028, and averaging over 850000 gold equivalent ounces per year from 2029% to 2033.
We believe this industry, leading five year growth profile to be significantly derisked with over 70% of the growth coming from assets that are either operating and construction and are permitted.
We expect growth from operating assets to come from Salobo Antena pennants keto voices be unmarried motto.
With expected growth from development projects, including Blackwater flat roofs Goose mineral Park, Phoenix creep Honda and Thats the main zone.
That concludes the operations review and with that I will turn the call over to Gary.
Thank you Wes.
As just described production in the fourth quarter amounted to 174000, Geos, a 13% increase relative to the prior quarter and a 22% increase from the fourth quarter of the prior year, primarily due to the throughput expansion at Salobo, which achieved the highest quarterly production level since 2019.
<unk>.
Relative to the fourth quarter of 2022 gold production increased 64%, primarily due to outperformance at Salobo and Constancia, partially offset by a 21% decrease in silver production due primarily to the now resolved labor dispute patents Quito, the divestment of the <unk>.
Gary D. Brown: As just described, production in the fourth quarter amounted to 174,000 GEOs, a 13% increase relative to the prior quarter and a 22% increase from the fourth quarter of the prior year, primarily due to the throughput expansion at Salobo, which achieved the highest quarterly production level since 2019. Relative to the fourth quarter of 2022, gold production increased 64%, primarily due to outperformance at Salobo and Constancia, partially offset by a 21% decrease in silver production due primarily to the now-resolved labor dispute at Penosquito, the divestment of Yaliyak Pimpa, the closure of the Minto Mine, and the temporary suspension of attributable production from Algestral. Sales volumes amounted to 162,000 GEOs, a 36% increase relative to the third quarter of 2023 and an 18% increase relative to the comparable period of the prior year, with the year-over-year variance being primarily due to higher production levels being partially offset by relative changes in ounces produced but not yet delivered, or PB&D. Strong commodity prices, coupled with our solid production base, resulted in revenue of $313 million and gross margin of $177 million, an increase over the comparable period of the prior year of 33% and 46%, respectively. Of this revenue, 74% was attributable to gold, 24% to silver, 1% to palladium, and 1% to cobalt.
Pampa and the closure the closure of the Minto mine and the temporary suspension of attributable production from al just drill.
Sales volumes amounted to 162000, Geos, a 36% increase relative to the third quarter of 2023, and an 18% increase relative to comparable period of the prior year with the year over year variance being primarily due to higher production levels being partially offset by relative change.
In ounces produced but not yet delivered or PBS.
Strong commodity prices, coupled with our solid production base resulted in revenue of $313 million.
And gross margin of $177 million.
An increase over the comparable period of the prior year of 33% and 46% respectively.
Of this revenue, 74% was attributable to gold, 24% to silver, 1% palladium and 1% to cobalt.
As at December 31, 2023, approximately 134000, Geo's, where in <unk> and cobalt inventory, representing approximately two five months of payable production slightly lower than the preceding quarter and within our expected range of two to three months.
G&A expenses amounted to $9 2 million for the fourth quarter of 2023, and total G&A for the year amounted to 38 million slight.
Gary D. Brown: As of December 31st, 2023, approximately 134,000 GEOs were in PB&D and Cobalt inventory, representing approximately two and a half months of payable production, slightly lower than the preceding quarter and within our expected range of two to three months. G&A expenses amounted to $9.2 million for the fourth quarter of 2023, and total G&A for the year amounted to $38 million, slightly below the low end of our original forecast, due primarily to lower compensation costs. For 2024, the company expects G&A expenses to amount to $41 to $45 million, with the anticipated increase from 2023 being attributable primarily to higher marketing and due diligence costs. Adjusted net earnings in the quarter amounted to $165 million, with the $61 million increase from the prior year due primarily to the higher growth margin. Adjusted earnings per share amounted to $0.36 per share, an increase of 59% over the comparable period of the prior year.
Slightly below the low end of our original forecast due primarily to lower compensation costs.
For 2024, the company expects the G&A expenses will amount to 41% to $45 million.
With the anticipated increased from 2023 being attributable primarily to higher marketing and due diligence costs.
Adjusted net earnings in the quarter amounted to $165 million with the $61 million increase from the prior year due primarily to the higher gross margin.
Adjusted earnings per share amounted to 36 per share an increase of 59% over the comparable period of the prior year.
Revenue for 2023 amounted to $1 billion, representing a 5% decrease relative to 2022, due primarily to lower gold equivalent sales, partially offset by a 6% increase in the average realized gold equivalent price of this revenue 99.
Gary D. Brown: Revenue for 2023 amounted to $1 billion, representing a 5% decrease relative to 2022, due primarily to lower gold equivalent sales, partially offset by a 6% increase in the average realized gold equivalent price. Of this revenue, 99% was derived from precious metals, with 65% attributable to gold, 32% to silver, 2% to palladium, and 1% to cobalt. Gross margin for 2023 increased 1% from the prior year to $573 million, with adjusted net earnings increasing by 6% to $533 million. Despite the persistent inflationary environment, Wheaton continued to deliver robust cash operating margins in the fourth quarter, resulting in cash flow from operations of over $242 million, an increase of over 40% relative to the fourth quarter of 2022. During the quarter, Wheaton made total upfront cash payments of approximately $452 million relative to mineral stream interests, including $45 million relative to Blackwater and $370 million relative to the Slobo III expansion, along with dividend payments totaling $67 million. Overall, net cash outflows amounted to $287 million in Q4 2023, resulting in cash and cash equivalents at December 31 of $547 million.
<unk> was derived from precious metals with 65% attributable to gold, 32% of silver, 2% to palladium and 1% to cobalt.
Gross margin for 2023 increased 1% from the prior year to $573 million.
With adjusted net earnings increasing by 6% to $533 million.
Despite the persistent inflationary environment, we can continue to deliver robust cash operating margins in the fourth quarter, resulting in cash flow from operations of over $242 million.
An increase of over 40% relative to the fourth quarter of 2022.
During the quarter, we made total upfront cash payments of approximately $452 million relative to mineral stream interests, including $45 million relative to Blackwater and $370 million relative to the Salobo III expansion.
Along with dividend payments totaling $67 million.
Overall net cash outflows amounted to $287 million in Q4, 2023, resulting in cash and cash equivalents at December 31 up $547 million.
This cash balance combined with the fully undrawn $2 billion revolving credit facility and the strength of our forecasted operating cash flows positions the company exceptionally well to satisfy its funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream interests.
It is worth noting that subsequent to the quarter on February 27.
Gary D. Brown: This cash balance, combined with the fully undrawn $2 billion revolving credit facility and the strength of our forecasted operating cash flows, positions the company exceptionally well to satisfy its funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream interests. It is worth noting that subsequent to the quarter on February 27th... 2024, an additional $450 million was paid to Orion relative to the closing of the acquisition of Platte Reef and Kuzukaja Stream. As mentioned by Randy, we have transitioned to a new progressive dividend policy marked by an increase in our first quarterly dividend in 2024. The board has declared a dividend of 15.5 cents a share payable to shareholders of record on April 3, 2024.
2020 for an additional $450 million was paid to Orion relative to the closing of the acquisition of the Platt reef and <unk> streams.
As mentioned by Randy we have transitioned to a new progressive dividend policy marked by an increase in our first quarterly dividend of 2024. The board has declared a dividend of 15 five cents a share payable to shareholders of record on April 3rd 2024.
To date. The company has now returned more than $2 billion to investors through dividends, which notably represents more than 50% of the amount of equity ever raised by the company.
That concludes the financial summary, and with that I turn the call back over to hate them.
Thank you Gary.
Development team was exceptionally busy in 2023 announcing a record eight precious metals transactions on a number of assets and over $1 billion in commitments, resulting in the addition of multiple top tier assets, adding strong accretive growth to our development project pipeline.
Haytham Henry Hodaly: To date, the company has now returned more than $2 billion to investors through dividends, which notably represents more than 50% of the amount of equity ever raised by the company. That concludes the financial summary, and with that, I turn the call back over to Haytham. Thank you, Gary.
I'll take this opportunity to focus on streams relating to three new assets that were acquired in November when we entered into an agreement with entities advised by Orion resource partners to purchase existing streams on the <unk> project along with the new stream that was created on the current project for total cash consideration of $525 million the Kern.
Haytham Henry Hodaly: The corporate development team was exceptionally busy in 2023, announcing a record eight Precious Metals transactions on a number of assets and over $1 billion in commitments, resulting in the addition of multiple top-tier assets, adding strong, accretive growth to our development project pipeline. I'll take this opportunity to focus on streams relating to three new assets that were acquired in November when we entered into an agreement with entities advised by Orion Resource Partners to purchase existing streams on the Plot Reef and Kutsukaya projects along with a new stream that was created on the Kernel project for a total cash consideration of $525 million. The Kernel Stream closed in December 2023, with the Flower Reef and Kutsukai Streams closing on February 27, 2024.
<unk> stream closed in December 2023, with a flattery if a good to kind of extremes closing on February 27 2024.
<unk> project is the world's largest undeveloped precious metals project and is currently projected to become one of the lowest cost producers of palladium platinum rhodium nickel copper and gold globally for.
For the existing flaring extreme agreements, we will receive 62, 5% of the payable gold and five 5% of the payable palladium and platinum until certain delivery thresholds have been met at which point the percentage of payable metal will be reduced as set forth in the pre existing agreements.
Attributable annual production is forecast to average over 21000 gold equivalent ounces for the first 10 years, almost doubling to over 37000 gold equivalent ounces for years, 10% through 'twenty. We can expect to begin receiving ounces in early 2025.
On slide eight in addition to <unk>. The company also acquired a stream on BMC minerals <unk> project, a poly metallic feasibility study stage development project projected to be one of Canada's top producers of zinc and silver and a top 10 copper producer Wheaton is expected to receive payable gold and silver deliveries ranging from 5% to seven.
Haytham Henry Hodaly: Ivanhoe's Plattery Project is the world's largest undeveloped precious metals project and is currently projected to become one of the lowest cost producers of palladium, platinum, rhodium, nickel, copper, and gold globally. For the existing Platinum Extreme Agreements, Wheaton will receive 62.5% of the payable gold and 5.25% of the payable palladium and platinum until certain delivery thresholds have been met, at which point the percentage of payable metal will be reduced as set forth in the pre-existing agreements. Attributable annual production is forecast to average over 21,000 gold-equivalent ounces for the first 10 years, almost doubling to over 37,000 gold-equivalent ounces for years 10 through 20. Wheaton expects to begin receiving ounces in early 2025.
375% of produced metal for the life of mine with the stage percentages, depending on the timing of deliveries.
The life of mine attributable production is expected to average 3900 ounces of gold and over 530000 ounces of silver per year.
Moving over to slide nine.
The third stream acquired is newly created gold stream with Dell Radiant on its current oil project in Northern Ireland, we will receive gold production of three 5% dropping to one 5% for the life of mine. After 125000 ounces of gold has been delivered.
Attributable production will equal 4400 ounces of gold per year for the first 10 years of production.
Haytham Henry Hodaly: On slide 8, in addition to Platte Reef, the company also acquired a stream on BMC Minerals' Kudzukaya project, a polymetallic feasibility study stage development project projected to be one of Canada's top producers of zinc and silver and a top 10 copper producer. Wheaton is expected to receive payable gold and silver deliveries ranging from 5% to 7.375% of the produced metal for the life of the mine, with the staged percentages depending on the timing of delivery. The life of mine attributable production is expected to average 3,900 ounces of gold and over 530,000 ounces of silver per year. Moving over to slide nine.
We're excited to be partnering with radian and supporting the build of the state of the art modern underground mine.
In addition to the streams acquired from Ryan in the fourth quarter, we acquired a silver stream on the mineral Park mine for $115 million, which was presented on our last conference call. In addition to 1% royalty on Vista Gold's Mt. Todd Gold project with $20 million.
While 2023 was a record year for corporate development activity of Wheaton, we continue to see strong appetite for streaming capital to the mining space and see opportunities to continue adding accretive acquisitions to our portfolio in 2024.
With that I'll hand, the call back over to Randy.
Thank you hate them.
In summary, 2023 was a very strong year for Wheaton distinguished by several key highlights with.
Haytham Henry Hodaly: The third stream acquired is a newly created gold stream with Delradian on its kernel project in Northern Ireland. Wheaton will receive gold production of 3.05%, dropping to 1.5% for the life of the mine, after 125,000 ounces of gold have been delivered. Attributable production will equal 4,400 ounces of gold per year for the first 10 years of production.
With production of 620000 gold equivalent ounces, we achieved our annual guidance generating robust cash flows of over $750 million in distributing record dividends of over $270 million.
Our pipeline of development projects was further derisked by construction advancements in the receipt of various key permits by our partners supporting our impressive organic growth profile of over 40% in the next five years.
We continued to grow our asset base welcoming seven new assets into our portfolio, adding further diversification by commodity operator region and development stage.
Randy V. J. Smallwood: We are excited to be partnering with Dow Radian in supporting the build of this state-of-the-art, modern underground mine. In addition to the streams acquired from Orion in the fourth quarter, Wheaton acquired a silver stream on the Mineral Park mine for $115 million, which was presented on our last conference call, in addition to a 1% royalty on Vista Gold's Mt. Todd Gold Project for $20 million. While 2023 was a record year for corporate development activity at Wheaton, we continue to see strong appetite for streaming capital in the mining space and see opportunities to continue adding accretive acquisitions to our portfolio in 2024. With that, I will hand the call back over to Randy. Thank you, Haytham.
Our balance sheet remains one of the strongest in the industry, providing ample capacity to add accretive high quality streams into our portfolio.
We announced a new progressive dividend policy.
And lastly, we continue to demonstrate leadership and sustainability with sector, leading ESG ratings and external recognition.
So 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'd like to ask a question. Please press the star followed by the number one on your telephone keypad.
Operator: In summary, 2023 was a very strong year for Wheaton, distinguished by several key highlights. With production of 620,000 gold equivalent ounces, we achieved our annual guidance, generating robust cash flows of over $750 million and distributing record dividends of over $270 million. Our pipeline of development projects was further de-risked by construction advancements and the receipt of various key permits by our partners, supporting our impressive organic growth profile of over 40% over the next five years. We continue to grow our asset base, welcoming seven new assets into our portfolio, adding further diversification by commodity, operator, region, and development stage. Our balance sheet remains one of the strongest in the industry, providing ample capacity to add accretive, high-quality streams to our portfolio. We announced a new progressive dividend policy. And lastly, we continue to demonstrate leadership and sustainability with sector-leading ESG ratings and external recognition. So with that, I would like to open up the call for questions. Operator?
To withdraw your question. Please press star two one moment, please while we compile the Q&A roster.
Your first question comes from Richard Hatch.
Bahrenburg. Please go ahead.
Thanks, very much good morning, Randy and team thanks for the presentation and congrats on that.
<unk>.
Thank you.
Three questions.
The first one.
Just on <unk>.
Thanks.
The market struggled a bit to get clarity on.
<unk>.
And I, just wonder whether you can perhaps give us a little bit more color and come to either the estimates that the market should be easing.
More reading into the comfort you'd go IV rank guidance, given the slight base such as a core asset.
Operator: Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you'd like to ask a question, please press the star followed by the number 1 on your telephone keypad.
The second one is just on <unk>.
Neiman, obviously, they've come out and said that they want to sell some assets and I was just wondering if you might be able to talk a little bit about weather.
You're seeing a bit of interesting business development opportunities there.
Operator: If you'd like to withdraw your question, please press star 2. One moment, please, while we compile the Q&A, Ralph. Your first question comes from Richard Hatch from Berenberg. Please go ahead. Thanks very much.
You can be part of our funding structure. Some companies that are looking to try and do some deals with some non core assets.
Some strange listen some interesting assets in some jurisdictions and then the last one is just funnily enough what I'll add from an investor today I'm just talking about.
Richard James Hatch: Yeah, good morning, Randy and team. Thank you. I've got three questions. The first one is just about Salobo.
Richard James Hatch: And the second one is just on Neymont. Obviously, they've come out and said that they want to sell some assets. And I just wonder if you might be able to talk a little bit about whether, you know, you're seeing a bit of interesting business development opportunities there, you know, whether, you know, you can be part of a funding structure on some companies that are looking to try and do some deals for some non-core assets and get some streams on some interesting assets, www.wheatonpreciousmetals.com, So if you were to look at a stream that you would have done at the point of actually doing it and then, you know, fast forward, you know, five, ten years or whatever it may be, can you just talk about the additional value you've created, you know, in that IRR as the years have gone by, you know, for example, through exploration upside or whatever that may be? A question, I'm just curious to get your views. Sure, Richard, and hopefully I'll remember all three questions, or we will remember all three questions. I'll start off with Solobo.
About the.
Evolution.
So like if you.
Luca stream that you would have done at the point of actually doing it and then.
Fast forward.
10 years, whatever it might be and can you just talk about the additional value.
In that IRR as the years gone by you May for example through <unk>.
Exploration upside.
Whatever that might be.
A question I'm, just curious to get your diesel thanks.
Sure Richard.
Hopefully I'll remember all three questions are we will remember all three questions I'll start off with Salobo.
<unk> is just finishing off last year they are phase four of the.
Of that pit design and kicking into phase five and.
Expected I mean.
These these pits always designed around the higher grade corn, so theyre always chasing down and whenever you're starting a new phase you chase up to the perimeter, which is little bit lower grades in <unk>.
And so that's what we're looking at is through the course of this year, we're going to see the bulk of it is just going to be the startup of mining in phase five as they work their way down the phase five is expected to last probably about four or five years.
Randy V. J. Smallwood: So, you know, Solobo is just finishing off last year their phase four of that pit design and kicking into phase five. And as is expected, I mean, you know, these pits are always designed around the higher grade core, and so they're always chasing down, and whenever you're starting a new phase, you chase out to the perimeter, which is a little bit lower grade. And so, you know, that's what we're looking at, is through the course of this year, the bulk of it is just going to be the start of mining in phase five, as they work their way down. The phase five is expected to last probably about four or five years, and so what we're going to see is gradually increasing grades, again, as they work towards the core of the deposit in phase five. But, you know, I'll make a prediction.
<unk>.
And so what we're going to see us gradually increasing grades again as they work towards the core of the deposit in phase five.
But I'll make a prediction five years out from now in the shipyard with phase six we will probably see a bit of a takeover and great again now.
The the reason that the third phase of the expansion was.
It was sort of timed to come on this third phase of global was the sort of coincide with this hidden lower grade and so we will see an offset it's not as hard as it would have been because we are ramping up this third phase.
So we do expect.
That there'll be running the operation at its full capacity by the end of this year. The objective is to satisfy the <unk>.
The next phase of the expansion test before the end of this year I'm, hoping it happens earlier than expected. They showed really good progress last year.
Randy V. J. Smallwood: Five years out from now, when they shift over to phase six, we'll probably see a bit of a kickover in grade again. Now, you know, the reason that the third phase of the expansion was, you know, sort of timed to come on, this third phase of Solobo, was to sort of coincide with this hit in lower grades, and so we will see an offset.
I do think that valley has taken a little bit of a conservative approach in terms of scheduling that towards the end of this year, but fingers crossed that they can actually get there a little bit earlier, but we will see improved grades over the next.
Four or five years as phase five works its way back down into the core of the ore of the ore body and but this is going to be something that's a natural cycle with respect to the open pit I don't know Wes you got anything to add to that yes, probably the only other thing I would add is just that they do have it and then optimize stockpiling strategy there where they are building up lower grade stockpiles as they mine ore out of the.
Randy V. J. Smallwood: It's not as hard as it would have been because we are ramping up this third phase, and so, you know, we do expect that they'll be running the operation at its full capacity by the end of this year. Their objective is to satisfy the next phase of the expansion test before the end of this year. I'm hoping it happens earlier than expected. They showed really good progress last year. I do think that Vale has taken a little bit of a conservative approach in terms of scheduling that towards the end of this year, but fingers crossed that they can actually get there a little bit earlier.
And we will see that variability over the next several years in grade, but as Randy said as you get deeper down into the pit in phase five and phase six you will see that grade start to come back up and really we're really excited to see that higher throughput coming through and we're really just seeing the beginning of it as that ramps up over the next year here, we will see the actual.
Randy V. J. Smallwood: But we will see improved grades over the next, you know, four or five years as phase five works its way back down into the core of the ore body, but, you know, this is going to be something that's a natural cycle with respect to the open pit. I don't know. Wes, do you have anything to add to that? Yeah, probably the only other thing I would add is just that they do have an optimized stockpiling strategy there, where they are building up lower-grade stockpiles as they mine ore out of the pit, and we will see that variability over the next several years in grade, but as Randy said, as you get deeper down into the pit in phase five and phase six, you will see that grade start to As that wraps up over the next year here, we'll see the actual overall production come up with that throughput. I think your second question, Richard, was about Newmont.
<unk> production come up with that throughput.
I think your second question Richard was.
New months I don't know Haytham youre, raising tablet happy to happy to take that question Richard and Thank you for the question. Yes, Newmont, obviously has indicated that almost half of their portfolio is considered non.
Non world class or non tier one and they have indicated that they would look to sell probably seven of those assets. We have been in discussions now with newmont, but with other parties to see if there is interest out there to that.
The way that streaming could actually help fund some of the status now keep in mind, there's only one or two of those assets that we would consider.
Interesting from a wheat perspective, given the long mine lives and the resources and reserves that are in place. Many of the others are very very short mine lives and wouldn't really be amenable to a good stream.
And the other aspect is operating costs and margins, we do focus on first and second quartile assets and so a lot of times when we see.
Haytham Henry Hodaly: I don't know, Haytham, do you have anything to add to that? Yeah, happy to take that question, Richard, and thank you for the question. Yeah, Newmont obviously has indicated that almost half of their portfolio is considered non-world-class or non-Tier 1, and they've indicated that they would look to sell probably seven of those assets. We have been in discussions, not with Newmont, but with other parties, to see if there's interest out there in a way that streaming could actually help fund some of those assets. Now, keep in mind, there's only one or two of those assets that we would consider interesting from a Wheaton perspective, given the long mine lives and the resources and reserves that are in place. Many of the others are very, very short mine lives and wouldn't really be amenable to a good...
Opportunities like this these assets one of the reasons. They are for sale is because they're not very high margin assets that costs have climbed up and so.
Is something that.
You know that we're not willing to stretch as far forward in terms of doing that but definitely going to be some activity on that front.
Richard I think the third question was related to IRR.
And what kind of an IRR or we look at it one of the huge benefits of this.
This business model is the fact that we have commodity price pure commodity price exposure our costs are defined in the contract and so.
A lot of it comes down to what happens to commodity prices over that.
That period, I think you suggested about four or five year period.
Haytham Henry Hodaly: The other aspect is operating costs and margins. We do focus on first and second quartile assets, and so a lot of times when we see opportunities like this, these assets, one of the reasons they are for sale is because they're not very high-margin assets. Their costs have climbed, and so it is something that we're not willing to stretch as far for in terms of doing that, but there's definitely going to be some activity on that front. Richard, I think the third question was related to IRR and what kind of an IRR we look at. One of the huge benefits of this business model is the fact that we have pure commodity price exposure. Our costs are defined in the contracts, and so a lot of it comes down to what happens to commodity prices over that period.
We deliver the bulk of that right back to our shareholders in terms of cash.
Cash flows and profits.
And so that's a real key difference in the streaming model versus the traditional mining model.
We're higher prices quite often mean lower grades get processed and costs go up because of that we don't we don't suffer from that our costs actually are defined by our contracts and our and we still delivered very very strong margins all the way back up when we see those higher prices and so I don't know Gary you've got some that and we've got a pretty good too.
Record on the IR side, Yes, we do Richard like we just still.
Haytham Henry Hodaly: I think you suggested about a four- or five-year period. We deliver the bulk of that right back to our shareholders in terms of cash flows and profits. It's a real key difference in the streaming model versus the traditional mining model, where higher prices quite often mean lower grades get processed, and costs go up because of that. We don't suffer from that.
The.
Wired returns associated with the opportunities that we're looking at.
Based upon the risks inherent in that opportunity relative to the risks inherent in our existing portfolio and so we look at how well defined the resource is what.
What the counterparty credit risk looks like what the political risk looks like whether we are dealing with the first quartile, etc. Second quartile and we're really only focused on.
Randy V. J. Smallwood: Our costs are actually defined by our contracts, and we still deliver very, very strong margins all the way back up when we see those higher prices. I don't know, Gary; you've got something to add. We've got a pretty good track record on the IRR side. Yeah, we do, Richard. We distill the required returns associated with the opportunities that we're looking at based upon the risks inherent in that opportunity relative to the risks inherent in our existing portfolio. We look at how well-defined the resource is, what the counterparty credit risk looks like, what the political risk looks like, whether we're dealing with a first quartile asset or a second quartile asset, and we're really only focused on assets that operate in the lowest half of their Then we look at whether we're taking development stage risk or whether it's a currently operating asset, and then we look at the ESG track record or what we expect to be the commitment of the counterparty to ESG, a high level of ESG practices, and we come up with an appropriate discount rate associated with that.
Assets that operate in the lowest half of their respective cost curves and then we look at.
Whether we're taking development stage risk score whether it's currently operating asset and then we look at the.
The ESG track record.
Or what we expect to be the commitment of the counterparty to ESG.
The high level of ESG practices, and we come up with.
An appropriate discount rate.
Associated with that.
When we also do what we call a post mortem every year, where we look at every deal that we've ever done and then we compare how it performed to how we expected it to perform and when you when you look at that.
Put just over $10 billion into streams.
We've already recovered all of that money.
We have.
Average mine life of rough Rune and probable reserve life of roughly.
Gary D. Brown: We also do what we call a post-mortem every year, where we look at every deal that we've ever done, and we compare how it performed to how we expected it to perform. When you look at that, we put just over $10 billion into streams. We've already recovered all of that money. We have an average mine life of roughly 25 years.
25 years when you include resources.
Which our assets have shown a high propensity to deliver on that mine life more than doubles.
So.
Gary D. Brown: When you include resources, which our assets have shown a high propensity to deliver on, that mine life more than doubles. When you look at the returns that we've generated on the over $10 billion, we estimate that at being just over 17%. That's over a 20-year history.
When you when you look at the returns that we've generated.
On the over $10 billion.
We estimate that it being just over 17% so.
That's over.
At 20 year history, we're celebrating our 20 <unk> anniversary so.
Gary D. Brown: We're celebrating our 20th anniversary, so I think we feel we've been pretty good stewards of capital. That's incredibly helpful, Gary, and team. Thanks. And I just, just for reference. Normally, when you would do a deal, if we would see one tomorrow, the IRR that the market probably would calculate would be high single digits, low double digits IRR, so really, there's a good 50% upside on return potentially, whether it's commodity price upside or life and mine upside. Is that a good way to think about it? Yeah, I mean, it comes down to every project being unique, right, because each project has varying risks. If you're going into small countries, where you're the only asset running, you assign a higher risk to it, and you take that risk when you're going into it, and so you make sure you structure it to protect yourself, so you don't have those kinds of problems.
Thank you.
We feel we've been pretty good stewards of capital.
Thank you.
Try to be helpful, Gary and thanks, and I just.
Just for reference normally when you would do a deal if we would say see what tomorrow. The IRR the market probably would calculate would be high single digits low double digit sorry, Ross I really dies.
While 50%.
Slide 10 potentially treat.
Commodity price upside to life of mine upside is that a good way to think about it.
Yes.
It comes out every project is unique right because each project has varying risks if youre going into small countries there were.
The only asset running you assign a higher risk to it and you take that risk when you're going into it and viewing.
You make sure you're structured to protect yourself. So you don't have those kind of problems.
Randy V. J. Smallwood: If you, you know, the expiration risk, the metallurgical risk, all of those factors come in, the ESG risk, all of those factors come in to what kind of return that we need to satisfy us investing in the project, you know, and as Gary highlighted there, we've got a pretty good track record of making sure that we deliver on those returns. Very helpful. I'll get out of the way.
If you.
Exploration risks the metallurgical risk all of those factors come into ESG risk all of those factors come into what kind of return that we need to satisfy.
US investing into the project.
And as Gary highlighted there.
We've got a pretty good track record of making sure that we deliver on those on those returns.
Very helpful I'll get out of the way thanks for your time Thanks Richard.
Richard James Hatch: Thanks for your time. Ladies and gentlemen, as a reminder, should you have a question, please press star 1. Thank you. Thank you. Thank you. Tanya Jakusconek from Scotiabank, please go ahead. Good morning, everyone.
Ladies and gentlemen, as a reminder, should you have a question. Please press star one.
Next question comes from Tanya Jackie.
From Scotiabank. Please go ahead.
Good morning, everyone. Thank you for taking my questions. Then thank you operator for getting my name right.
Operator: Bye. Thank you, Operator, for getting my name right. Um, yeah, I just called Annie, and it's not... That was a good one.
Yes, thanks, Rob.
Two other call. So this is a good luck.
Yes.
Tanya M. Jakusconek: I actually have four questions, if I could, go through them one by one. So the first one may be just on the global minimum tax, just your interpretation. My understanding is that if implemented, or when implemented, and the Canadian government implements it, it would be retroactive. So I just want to ask.
I have actually four questions if I could so I'm just going to go through them one by one.
First one maybe just on that global minimum cash.
So your interpretation because my understanding is that it.
Implemented well implemented in that Canadian government implement it would be retroactive back to January one 2024.
I just wanted to understand your view.
Gary D. Brown: Your view would, are you seeing it as retroactive going back or not? you know, the Canadian government. We expect it to be retroactive. Okay, so we should think of it that maybe you don't pay it in Q1, but if it's, you know, implemented in Q2, then you would have it, obviously, you know, take through the income statement and going forward in Q2 onwards, retroactive back to Gen First. Would that be a fair way of thinking about it? Yeah, I don't think there's much of a chance of the GMT being enacted by the time that we release our Q1 results. So you know, we'll be very transparent as to what that accrued liability would be expected to be by disclosing it in our MD&A, but we likely will take two quarters of GMT and reflect two quarters of it in our second quarter results. So you know, just keep that in mind. Assuming that the Canadian government enacts them. Yeah, no, no, no. Okay, that's helpful. Thank you very much for that. My second question... with a dividend. So, you know, I'm just, and maybe this is for Randy.
Are you seeing it is retroactive going back or are you seeing it does being implemented.
The Canadian government implement that.
We expect it to be retroactive Tanya.
Okay.
So we should think of it that maybe you don't pay it in Q1.
They implemented in Q2 that you would have it.
Obviously take through the income statement going forward. Thank you Q2 onwards retroactive.
Would that be a fair way of thinking about it yes.
Yes.
There is much of a chance of the GMT being enacted by the time that we release, our Q1 results. So we'll be very transparent as to what that.
Accrued liability would be expected to be.
By disclosing it in our MD&A, but we likely will take two quarters of GMT.
Reflect two quarters of it in our second quarter results.
Just keep that in mind.
Assuming that the Canadian government inaccurate.
Yes, no no no.
Okay. That's helpful. Thank you very much for that.
My second question has to do with a dividend so I'm.
Im just and maybe this is for Randy.
Randy V. J. Smallwood: Randy, just on the dividend policy, you know, you've gone to a progressive dividend. Can you just, you know, talk me through, you know, why the, is it made because your peers have progressive dividends? Transcripts provided by Transcription Outsourcing, LLC. Have a like increase and just remind me of your minimum cash balance on your balance to run your business so that I can think about what else, how I. Sure, well, as a refresher, the previous dividend was, it had as a reference, a minimum of 30% of our cash flows, the average over the previous four quarters. The challenge that we've had with that is that it's one that has a climbing basement, and so we've been actually holding it relatively constant, and to be honest, we're paying it currently somewhere around, I think it's 37% of our cash flows.
Andy just on the dividend policy, you've gone to electro aggressive dividend can you just.
True.
Why.
Is it maybe because your peers have progressive dividend.
Is it made.
It's being reviewed once a year and like your peers every year, we sort of haven't.
Slight increase and just remind me of a minimum cash balance on your balance sheet that you need to run your business. So that I can think about what else how I model the dividend going forward.
Sure well so as a refresher the previous dividend was it had as a reference a minimum of 30% of our of our cash flows.
<unk> averaged over the previous.
Four quarters.
The challenge that we.
We've had with that is that it's one that had a climbing basement and so we've been actually holding it relatively constant and to be honest, we're paying currently somewhere around that 37% of our cash flows and so when we looked at our growth profile coming forward, we realized that with that.
Randy V. J. Smallwood: And so, you know, when we looked at our growth profile coming forward, we realized that, with the current framework, we actually wouldn't be raising the dividend, even though we're going to see some growth, and of course, current commodity prices would accelerate that, but we wouldn't have seen that growth for a couple of years, and we just felt that, having been flat for a couple of years, it was time to add some growth. We've had substantive growth in our dividend, you know, peer group leading growth in our dividend over the last five, six years, but it has actually been held flat for a couple of years, and we just felt it was time to give it a bump, and so the commitment towards the progressive, the scale, I mean, what we're committing to
With the current framework, we actually wouldn't be raising the dividend, even though we're going to see some growth.
Of course current commodity prices would accelerate that but I wouldn't assume that growth for a couple of years and we just felt that having having been flat for a couple of years. It was time to add some some growth we've had substantive growth in our dividend.
Peer peer group, leading growth in our dividend over the last five six years, but it has actually been held flat for a couple of years and we just felt it was time to give it give.
Give it a bump.
So the commitment towards the progressive the scale I mean, what we're committing to is that there will be an increase on an annual basis on a go forward. The scale of that increase is going to be up to up to us and up to our board and it's going to be subjective to what kind of a cash balance or we're looking at right now.
In terms of a minimum cash balance. This is a this is a very G&A light company, we don't have.
Much much needs as a total of 40 employees and the whole company and so our G&A and as Gerry detailed in his.
Numbers, our G&A numbers are very very small and so and.
And we've got healthy access to very very attractively priced debt if required.
That's all going to only be touched if we with the strong cash flows and with the with the production growth. We've got over the next few years.
That's only going to be.
We're only going to be using that revolver, if we're seeing access to larger scale world class.
Dreaming opportunities, which we're always hopeful for but currently what we've been looking at is stuff, that's $500 million or less which which.
It's something that's easily handle that we can handle that with our current expected cash flows and so so I don't see any any risks on that side at all the commitment has been flat for close to two years now since we've seen a bump up on that and were and because of that 30% number.
Being well below what we're actually paying in the 37% range we just.
Looking forward, we didn't see that actually impacting our dividend on a go forward basis and so we just felt it was time to deliver brings some of that growth forward and start giving it even even adding more back to what we already delivered to our shareholders were already by far the biggest in the entire precious metal space in terms of the percentage of revenue back to back to shareholders.
And so we want to make sure that we continue showing that growth that we have shown for the last.
Four five years.
And the minimum cash that you think about on the balance sheet.
I don't.
We don't really.
Look at their being a minimum cash balance required on our balance sheet. We've got this five year $2 billion.
Revolving credit facility, which is fully drawn should we we need to access that.
Fund.
Some of the opportunity sets that.
Get them, we will hopefully be bringing in.
<unk>.
When we look at the.
Current commitments that we have outstanding we don't even see ourselves even with this new dividend policy, we don't see ourselves even accessing the $2 billion revolving credit facility to fund those.
Over the next three years.
Ill.
We've shown a strong track record of just adding to that dividend.
And so when you keep on talking about the reference to minimum balance I mean, we're not going to drop the dividend. So.
We've got a strong enough balance sheet with all the tools that we have at hand, and all the growth we have.
That's not something that's that.
Turn to us.
Yeah.
I'll continue with Gary Dan on My next question just.
I wanted to review Gary with you just the payments just want make sure I have all of the payments.
That you are going to be paying this year you did mention obviously the $450 million that went out that that 27 I think it was showing you and Jim can you just remind me all of the other ones that are coming so I have them all captured.
Yep.
I would.
I would point you to our.
The table that we have of our commitments on.
Page 39 of our MD&A.
So you've got the Salobo payment.
But we.
Is contingent upon.
Valet, achieving the 35 million tonne per annum throughput test.
Which we think.
<unk>.
Should satisfy this year, so thats a $163 million.
We expect to.
Start making payments relative to kind of gray hosts.
So we've got about $19 million relative to them.
<unk>.
Got about $15 million that we.
We hope to be making to generation mining relative to the marathon.
Project.
My motto is expected to move forward with.
<unk>.
Development of the.
The deeper zone and so we've got $80 million there, we've got the $115 million for the mineral Park stream.
We paid the $450 million relative to <unk> and <unk>.
Because the chaos.
Phoenix Gold.
Would hope they move forward with the construction decision later this year, so that's $25 million, they've got $17 million that we.
<unk>.
We'll pay relative to the Mt Todd.
Royalty.
And that's pretty much everything that we expect this year. There is that there is a possibility that.
That correct pombo might move forward a bit we've got that scheduled and that in next year, but with the success they've had on permitting.
And they are considering going into a construction decision we might see that move forward Thats, a great new story and that would be a 162 mill.
Unlikely, we pay all of that but we might be paying a bit of that here in this year.
If they May go ahead, and make a construction decision, which they are seriously looking at.
And open for that I guess, what I.
Sure.
The big ones that definitely in the model and then I just wanted to ask just on that guidance. Some depreciation we're getting with Q2 that may be G&A that you usually provide for US and then also an understanding of the quarterly guidance should I be thinking 48, 52 first half second.
Yeah.
Yes, I guess I mean from a G&A perspective, what we've got is 41.
$45 million over the course of the.
Course of the year.
Spread out evenly across that.
In terms of production.
There is no doubt that <unk> is a key influence and they expect to be running that it's a 90 day completion test to take to get that second phase and thats going to be their current schedule has that being satisfied during the fourth quarter, but but theyre going to have to start that in the third quarter to go forward and that'll be running at a minimum of 35 million tonnes per annum.
Keep in mind, the asset has a capacity of 36 million tons per annum. So I would probably lean it a little bit towards youre, probably not too far off the $48 50, 248% first half 52% second half.
It might even be a $47 53, there is definitely going to be a little bit of a bias towards the tail end of the.
The year, mainly because we global is ramping up through the course of the year.
And the other the other area, we're going to see gains over the course of the year as voice. These bay on the cobalt side.
Every quarter, there is going to be a higher percentage of underground feed satisfying.
That stuff is much higher grade than what were currently currently using from the open pit.
Yes, no I appreciate that and then my final question, maybe for Haytham is again coming back to the transaction activity or the M&A activity out there I'm just kind of curious whether now.
Switching back to focusing on production over development.
Are you happy to take your Max I'm just wondering.
Again size wise.
The development of our production how do you see that in your portfolio.
Sure.
I think youre right for the last few years. It has been focused on development on what we've seen is a little bit of focus on balance sheet strengthening by some of the potential diversified and other producers out there. So I think it's probably a 50 50 mix I'd say right now 50% is probably still looking at development stage opportunities and the other 50%.
Looking at.
Balance sheet strength, and I don't want to say balance sheet repair, but people are trying to shore up their balance sheets to be able to to add into increase acquire et cetera. In this environment. That's an area that they are coming to us and looking for guidance on.
I would say that the majority of the opportunities. We're looking at are still sub 300, but as always there is a couple that are greater than 500 that takes some time to foster and hopefully we can get those across the line also add Daniel one thing you've got 17 years as an analyst I don't think anybody ever got my name right on a conference call CRD upon on me there.
Got it.
Brian.
Thank you.
Okay.
I'll give it to somebody else.
Could go on for a long time here or otherwise.
Yes.
Always happy to talk to you Daniel.
Your next question comes from Brian Macarthur from Raymond James. Please go ahead.
Good morning, and thank you for taking my question can.
Can I go back to the GMT.
You talked about how youre going to pocket first quarter low second quarter higher but can you go through on a cash basis, when youll actually make payments because you also talk about theres some credits about G&A financing et cetera.
Can you just walk through how you think that will evolve over the next few years. When do you think you'll actually have to start making cash payments related to the GMT.
Yes.
For the amounts accrued in 2024, we won't actually disperse those until 2026.
And.
I think what we've been guiding people to us.
Take our non Canadian income and you apply a 15%.
Tax rate to that so we don't.
There won't be much like additional deductions.
We will incur.
Income so it does reflect the.
The depletion of the upfront payment.
So as I roll forward, then if I'm paying my 2024 on a cash basis in 'twenty.
Going that way that Youre 25 will be paid in.
So we're always like on a 18 months lag or does it get true up and eventually you start paying on a run rate I'm trying to figure out whether it's accurately.
Third to payment on a lag basis or are you actually.
Credit shelter some of that cash upfront.
Yes at this point I think we are operating on the basis that it will be.
<unk>.
<unk>.
On the on that kind of two year deferral based.
Basis, or a year and a half deferral basis.
Brian given that it is.
What I would call a sweep tax I think.
<unk> operate like that in a sense too.
Allow any other taxes that have been.
<unk> to be deducted off of what that works out and just looking at the mechanics of it.
But until then until we see legislation, it's really tough to be firm on that but but that sounds like it makes sense in terms of them having to wait for the subsequent year. So you get the 18 month lag before you actually calculate it because because it's going to look at whatever.
As I said, it's like a sweet tax.
Oh great.
That's very helpful to think about it that way and the other thing is in the MD&A you talk about how it works in Luxembourg.
Yes.
Barbados was there anything that changes going forward.
Hardware cadence Latin America.
Okay.
No I think we've.
Aligned all of the.
Potentially applicable jurisdictions.
Sure.
Great. Thanks, very much sorry to goes from tax, but just trying to get clear on a cash basis was very helpful.
Yep.
Thanks, Brian.
That's the only question Brian contacts.
Thanks.
We wanted to be more taxes.
No.
Thanks.
Thanks, Brian.
Your next question comes from John Tumazos from John Tumazos Independent. Please go ahead.
Congratulations on the page 39 table.
Playing out the next $2 billion to invest in such good projects.
And the good projects you invested in.
2023.
Thanks, Shai could shine the shoes of your corporate development guys, maybe they deserve.
Bonus.
Well I will tell you that its an entire team effort here, it's not haytham doesn't get all the credit, but I do like how do you think John.
So Randy while I was sitting in the new discoveries seminar.
Last Wednesday.
Okay.
And a year ago.
Maybe half of the discoveries I thought werent discoveries or not documented yet.
And.
Maybe one big discovery as Anglogold.
Silica northwest of Vegas, which already has an origin have the royalty on.
The skull Cisco has the royalty on it.
In the context of.
Sort of not a great stream of new discoveries.
Your accomplishments in locking up all these deals is even more superhuman.
If you can sustain this pace of deal generation.
You're getting bigger in generating so much cash.
Do you think you'd simply let cash.
Accumulate on the balance sheet or increase the dividend or buyback shares.
By royalties or other royalty companies.
Yes.
Or will you do if you can't sustain that.
Deal generation pace, I don't think youre going to lower your quality standards.
And Thats John.
Excellent point in it.
And I strongly agree with you one of the challenges this isn't a number that's out there, but what we have run into over the last few years as we're putting out a lot less rovs indications of value and so for an asset to actually make it to the <unk> level.
For us and we do it.
It has to show clear standards in terms of operating margins and responsible.
Neil suitable risks all the way across the board in terms of getting to that stage and I can tell you have for the last 40 years, it's less and less and less we're not seeing as many good quality projects out there.
I'm careful for the industry in the sense that there's just not a lot of risk capital. This is not a lot of exploration and that means there's just not a lot of good new discoveries that we see coming down the pipe, it's getting to be a tighter and tighter market I think in that space.
The.
The the number of the.
The success that we had last year, we more acquisitions than ever before.
Sure.
Just really do hand that to the team in terms of the work that we did.
Pushing that forward.
A lot of those transactions were with people or companies that we've worked with in the past.
And that really does come down to.
Working on being a partner of choice, it's something that we really strive to be a hero.
So.
I don't know Haytham, you want to add any more on the opportunity set and then ill come back in and talk about where the cash is going sure. Thanks, Randy I think good questions. John I think I will say what you are seeing now John in terms of a lack of quality is something we actually saw a few years ago. So about half a dozen years ago, we had a definite focus to try and find the best develop.
Mid stage opportunities that we could actually get involved in and as you saw over the last five years. We've we've got 14 or 15 development stage opportunities right now that we're actually involved in and there is three or four of them coming into production here in the next 12 to 24 months. So we did have a timeline, where we looked at said okay. Let's.
Work on our near term growth is working our medium term growth, let's have some optionality in our longer term growth and we've accomplished that so we do think that theres still opportunities out there. They are far and few between you are right, but randy's comment is exactly right building the relationships and getting that repeat business and.
That's going to be the key going forward is to be a partner for us.
And with respect to the cash on hand.
It's been a pretty consistent message, if we can't put it back into the ground effectively.
It goes back to shareholders.
I don't see us ever.
If we ever bump up over $1 billion cash on hand that to me is a pretty lazy balance sheet.
And Thats the point that if you ever see a cash balance kicking up at those kind of levels will start ramping up that dividend and sarpedon, even more of that back to our shareholders. We already we already lead the entire precious metals space on that front in terms of how much what percentage, we give back to our shareholders, but we can add that up further.
My hope is and what we're always trying to do is manage our existing portfolio and grow it and continue to add quality assets and that's what we'll keep doing but we're going to do it for.
Accretive prices.
We're not going to previously.
I mean for us.
It is important that we are strong stewards of our shareholders' capital and so if we can't put it to work effectively it will go back to shareholders. Our first choice is always going to be to grow the dividend I think it's the best way its a commitment on a longer term basis to go out and so so I just think that thats always going to be our first.
Our preferred choice.
Thank you and congratulations once again.
Thanks, John.
And thank you everybody Oh go ahead.
It's going to turn back the call over to yourself, ladies and gentlemen. This concludes the Q&A portion of today's conference call I will now turn the call back over to Mr. Randy Smallwood for closing remarks.
Thank you everyone for your time today.
As we.
To celebrate our 20 <unk> anniversary here in 2024.
I'm incredibly grateful for the partnerships that we have forged over the years and the strong support of our shareholders.
Together, we have provided the industry with an innovative solution to project finance that truly unlocked value for all stakeholders.
<unk> high quality portfolio of assets sector, leading growth profile and commitment to sustainability provides our shareholders with a solid outlook for the future and it's one of the best vehicles for investing into the gold and precious metals space.
So as we celebrate our 20th year.
Sincerely thankful for all of our stakeholders for their part in our success and wheat and success and I do look forward to a golden future ahead.
So we look forward to speaking to all of you again soon thank you.
This concludes your conference call for today. Thank you for participating you may now disconnect your lines. Thank you.
Okay.
Yes.