Q1 2024 Wheaton Precious Metals Corp Earnings Call
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Operator: Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals' 2024 First Quarter Results Conference Call.
Good morning, ladies and.
Gentlemen, thank.
Thank you for standing by.
Kim to lead in precious metals 2024 first quarter results conference call.
Operator: All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad. Or type your answer in the Q&A box of the webinar. If you would like to withdraw your question, please press star 2. Thank you. I would like to remind everyone that this conference call is being recorded on Friday, May 10, 2024, at 11 a.m. Eastern Time. I will now turn the call over to Emma Murray, Vice President of Investor Relations. Please go ahead.
All lines have been placed on mute to prevent any background noise. After speakers remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press to open the number one on your telephone keypad.
Our country to answer in the Q&A box with the webinar. If you would like to withdraw your question. Please star four to thank you all.
I'd like to remind everyone that this conference call is being recorded on Friday may gentlemen.
24.
11, a M. Eastern time, I will now turn the conference over to Amit.
Amit: Evidence of Investor Relations. Please go ahead.
Emma Murray: Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today's call.
Amit: 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 and West Carson Vice President mining operations. Please note for those not currently on the webcast and slide presentation.
Emma Murray: 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, and Wes Carson, Vice President, Mining Operations. Please note, for those not currently on the webcast, a 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, and I would direct everyone to review slide two of the presentation, which contains important cautionary notes. It should be noted that all figures referred to on today's call are in U.S. dollars unless otherwise noted. With that said, I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.
Amit: Asian accompanying this conference call is available in PDF format on the presentation page of the Wheaton precious metals website. Some of the commentary in today's call may contain forward looking statements and I would direct everyone to review slide two of the presentation, which contains important cautionary tale. 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.
Amit: To turn the call over to Randy Smallwood, our President and Chief Executive Officer.
Randy V. J. Smallwood: Thank you Emma and good morning, everyone. Thank you for joining us today to discuss <unk> first quarter results of 2024.
Randy V. J. Smallwood: Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's first quarter results for 2024. I am pleased to announce that our portfolio of long-life, low-cost assets delivered a robust quarter to start the year, generating approximately $220 million of operating cash flow and over $160 million in net earnings, underscoring the effectiveness of our business model in leveraging rising commodity prices while maintaining strong cash operating margins. And we were very excited to have closed the previously announced agreement with Orion Resource Partners for the Platte Reef and Kootstakaia Streams, completing an upfront payment of $450 million in February of this year.
Randy V. J. Smallwood: I am pleased to announce that our portfolio of long life low cost assets delivered a robust quarter to start the year generating approximately $220 million of operating cash flow and over $160 million in net earnings underscoring the effectiveness of our business model and leveraging rising.
Randy V. J. Smallwood: Commodity prices, while maintaining strong cash operating margins.
Randy V. J. Smallwood: And we were very excited to have closed the previously announced agreement with Orion resource partners for the Platt reef acoustic highest dreams, completing an upfront payment of $450 million in February of this year.
Randy V. J. Smallwood: After advancing this payment, Wheaton remains very liquid with $306 million in cash, a $2 billion undrawn revolving credit facility, and ongoing strong operating cash flows, allowing the company to fund all outstanding commitments as well as provide the flexibility to acquire additional accretive mineral stream interest.
Randy V. J. Smallwood: After advancing this payment we remained very liquid with $306 million in cash at $2 billion Undrawn revolving credit facility and ongoing strong operating cash flows, allowing the company to fund all outstanding commitments as well as provide the flexibility to acquire additional <unk>.
Randy V. J. Smallwood: Creative mineral stream interests.
Randy V. J. Smallwood: Building on the momentum from a record eight acquisitions in 2023, our corporate development team remains actively engaged in evaluating new opportunities, and we continue to see a healthy appetite for streaming as a source of capital for the mining industry. In addition, during the quarter, we were proud... to have been recognized among Corporate Night's 100 Most Sustainable Corporations in the World in 2024. As the architects of sustainable streaming, this accomplishment is reflective of our commitment to operating responsibly in all facets of our business. And with that, I would like to now turn the call over to Wes Carson, our Vice President of Operations, who will provide more details on our operating results.
Randy V. J. Smallwood: Building on the momentum from a record eight acquisitions in 2023, our corporate development team remains actively engaged in evaluating new opportunities and we continue to see healthy appetite for streaming as a source of capital for the mining industry.
Randy V. J. Smallwood: Okay.
Randy V. J. Smallwood: In addition, during the quarter we were proud.
Randy V. J. Smallwood: To have been recognized among corporate Knights 100, most sustainable corporations in the world in 2024.
Randy V. J. Smallwood: As the architect some sustainable streaming this accomplishment is reflective of our commitment to operating responsibly in all facets of our business.
Randy V. J. Smallwood: And with that I would like to now turn the call over to West Carson Vice President of operations, who will provide more details on our operating results Wes.
Wes Carson: Thanks, Randy. Good morning.
Wes Carson: Thanks, Randy good morning.
Wes Carson: Overall production in the first quarter came in higher than expected, driven by strong outperformance at Salobo, Constancia, and Penasquito. In the first quarter of 2024, Slobo produced 61,600 ounces of attributable gold, an increase of approximately 41 percent relative to the first quarter of 2023, driven primarily by higher throughput. Slobo's strong production in Q1 is attributed primarily to the continued ramp-up of Slobo 3 expansion and sustained overall improvements at both Slobo 1 and 2.
Wes Carson: Overall production in the first quarter came in higher than expected driven by strong performances at Salobo Constancia and <unk>.
In the first quarter of 2024 global produce 61600 ounces of attributable gold an increase of approximately 41% relative to the first quarter of 2023, driven primarily by higher throughput.
Wes Carson: <unk> strong performer production in Q1.
Wes Carson: Is attributable primarily to the continued ramp up of slow or three expansion and sustained overall improvements at both global one and two.
Wes Carson: In the first quarter of 2024, Constantia produced 640,000 ounces of attributable silver and 13,900 ounces of attributable gold, an increase of approximately 16% and 101%, respectively, relative to the first quarter of 2023. Strong quarterly silver and gold production continued in Q1 as a result of the significantly higher gold grades from the mining of the Papacancho deposit and associated higher recovery. In the first quarter of 2024, Penosquito produced 2.6 million ounces of attributable silver, an increase of approximately 27% relative to the first quarter of 2023, primarily due to higher grades.
Wes Carson: In the first quarter of 2020 for Constancia produced 640000 ounces of attributable silver and 13900 ounces of attributable gold an increase of approximately 16% and 101% respectively.
Relative to the first quarter of 2023.
Strong quarterly silver and gold production continued in Q1 as a result of the significantly higher gold grades from the mining of the public conscious deposit and associated higher recoveries.
Wes Carson: In the first quarter of 2024 kind of Sito produced $2 6 million ounces of attributable silver an increase of approximately 27% relative to the first quarter of 2023, primarily due to higher grades and production in the first quarter focused on mining in the Chile, Colorado pit, which contains higher silver lead and zinc metal grades than the main <unk> pit.
Wes Carson: Production in the first quarter focused on mining in the Chile-Colorado Pit, which contains higher silver, lead, and zinc metal grades than the main Pinasco Pit. On April 30th, 2024, Ivanhoe reported that construction activities for the Platte Reef Phase 1 concentrator were on schedule at almost 90% complete and on track for cold commissioning in the third quarter of 2024. An updated independent feasibility study on an optimized development plan for the acceleration of Phase 2 is planned to be completed and published in the fourth quarter of 2024.
Wes Carson: On April 30 of 2024, Ivanhoe reported that construction activities for the <unk> phase one concentrated are on schedule at almost 90% complete and on track for cold commissioning in the third quarter of 2024.
Wes Carson: And updated independent feasibility study on an optimized development plan for the acceleration of phase II is planned to be completed and published in the fourth quarter of 2024 as a result of the planned acceleration of phase two Ivanhoe reports that the first Cid and ramp up of production for phase one will be deferred until the mid 2025.
Wes Carson: As a result of the planned acceleration of Phase 2, Ivanhoe reports that the first feed and ramp-up of production for Phase 1 will be deferred until mid-2025. In addition, a preliminary economic assessment on a Phase III expansion is expected to be completed at the same time, increasing flat reefs' processing capacity up to approximately 10 million tonnes per annum, the result of which is expected to rank Platte Reef as one of the world's largest PGM, nickel, copper, and gold producers.
Wes Carson: In addition, our preliminary economic assessment on our phase III expansion is expected to be completed at the same time, increasing flat <unk> processing capacity up to approximately 10 million tonnes per annum.
Wes Carson: The result of which is expected to rank <unk> as one of the world's largest PGM nickel copper and gold producers.
Wes Carson: In 2024, GEO production is forecast to be consistent with levels achieved in 2023. As expected, stronger attributable production from Penesquito and Boise's Bay is forecast to be offset by lower production from Solobo, the suspension of operations at Minto, and the temporary halting of production at Algeciras. Attributable production is forecast to increase at Penasquito as a result of uninterrupted operations and at Boise's Bay due to the ongoing transition from the Ovoid Pit to the underground mine.
Wes Carson: In 2020 for Geo production is forecast to be consistent with levels achieved in 2023.
Wes Carson: As expected stronger attributable production from <unk> and Boise's Bay is forecast to be offset by lower production from Salobo. The suspension of operations at Minto and the temporary halting of production at <unk>.
Wes Carson: Attributable production is forecast to increase in <unk> as a result of uninterrupted operations.
Wes Carson: <unk> Bay due to the ongoing transition from the <unk> pit to the underground mines.
Wes Carson: Attributable production is forecast to decrease slightly at Slowbow due to lower grades as per the mine plan, which is expected to be partially offset by increasing throughput as the Slowbow III expansion continues toward completion. Wheaton's estimated tributal production in 2024 continues to be forecast at 325,000 to 370,000 ounces of gold, 18.5 to 20.5 million ounces of silver, and 12,000 to 15,000 GEOs of other metals, resulting in production of approximately 550,000 to 620,000 GEOs, unchanged from previous guidance.
Wes Carson: Attributable production is forecast to decrease slightly its global due to lower grades as per the mine plan, which are expected to be partially offset by increasing throughput at the <unk> III expansion continues towards completion.
Wes Carson: <unk> estimated attributable production in 2024 continues to be forecast at 325000 to 370000 ounces of gold 18, 5% to $20 5 million ounces of silver and 12000 to 15000 geos of other metals.
Wes Carson: The resulting in production of approximately 550000 to 620000 geos unchanged from previous guidance.
Wes Carson: Production is forecast to increase at an industry-leading rate of approximately 40% to over 800,000 GEOs by 2028, primarily due to the growth from operating assets including Salobo Antimina, Penasquito Voices Bay, and Maramato, and developing projects which are in construction or or permitted, including Blackwater, and Platte Reef. Goose, Merrill Park, Phoenix, Curry Pomba, and Santa Domingo, and pre-development projects including Marathon and Copper World, for which production is anticipated towards the latter end of the five-year forecast period.
Wes Carson: <unk> is forecast to increase at an industry leading rate of approximately 40% to over 800000 Geos by 2028, primarily due to the growth from operating assets, including Salobo and demeanour, Venice Keto voices Bay and mirror model.
Wes Carson: Development projects, which are in construction and our permitted including Blackwater Platt reef.
<unk> Merrill Park, Phoenix, <unk> added Domingo and pre development projects, including marathon in copper world for which production is anticipated towards the latter end of the five year forecast period.
Wes Carson: From 2029 to 2033, attributable production is forecast to average over 850,000 oz. per year for the five-year period, also unchanged from previous guidance. That concludes the operations overview, and with that, I'll turn the call over to Gary. Thank you.
Wes Carson: For 2023, and 2029 to 2033 attributable production is forecast to average over 850000 ounces in the five year period also unchanged from previous guidance.
Wes Carson: That concludes the operations overview and with that I'll turn the call over to Gary.
Gary D. Brown: Thank you, Wes. As described by Wes, production in the first quarter amounted to 160,000 GEOs, a 19% increase relative to the comparable period of the prior year. Most notably, gold production increased 28% primarily due to Salobo and Constancia. Sales volumes amounted to 143,000 GEOs, a 31% increase relative to the comparable period of the prior year, primarily due to higher production levels coupled with relative changes in ounces produced but not yet delivered, or PBND.
Gary D. Brown: Thank you Wes.
Gary D. Brown: As described by less production in the first quarter amounted to 160000, Geos, a 19% increase relative to the comparable period of the prior year.
Most notably gold production increased 28%, primarily due to salobo and Constancia sale.
Gary D. Brown: Sales volumes amounted to 143000, Geos at 31% increase relative to the comparable period of the prior year, primarily due to higher production levels, coupled with relative changes in ounces produced but not yet delivered or pbms.
Gary D. Brown: This increased sales volume, coupled with a 6% increase in commodity prices, resulted in revenue rising by 38% to $297 million. Of this revenue, 64% was attributable to gold, 32% to silver, and 2% to each of palladium and cobalt. As of March 31st, 2024, approximately 120,000 GEOs were in PB&D, representing approximately 2.3 months of payable production, which is consistent with our expected range of two to three months.
Gary D. Brown: This increased sales volume coupled with a 6% increase in commodity prices resulted in revenue rising by 38% to $297 million.
Gary D. Brown: This revenue, 64% was attributable to gold, 32% to silver and 2% to Egypt Palladium and cobalt.
Gary D. Brown: As at March 31, 2020 for approximately 120000, Geos, where in <unk> representing.
Gary D. Brown: Adding approximately two three months of payable production, which is consistent with our expected range of two to three months.
Gary D. Brown: G&A expenses amounted to $10.5 million for the first quarter, and the company continues to anticipate that G&A will total $41 to $45 million for the year, with these figures excluding share-based compensation, as well as donations and community investment. Adjusted net earnings amounted to $164 million, with a $59 million increase from the prior year due primarily to a higher gross margin coupled with lower stock-based compensation. Despite the persistent inflationary environment and thanks to our low and predictable cost structure, Wheaton continued to deliver robust cash operating margins in the first quarter, resulting in cash flow from operations of over $219 million, an increase of 62 percent from the prior year, driven primarily by higher sales volumes.
Gary D. Brown: G&A expenses amounted to $10 5 million for the first quarter and the company continues to anticipate that G&A will total 41% to $45 million for the year with these figures excluding share based compensation as well as donations and community investments.
Gary D. Brown: Adjusted net earnings amounted to $164 million with a $59 million increase from the prior year due primarily to the higher gross margin coupled with lower stock based compensation. Despite.
Gary D. Brown: Despite the persistent inflationary environment and thanks to our low and predictable cost structure. We can continue to deliver robust cash operating margins in the first quarter, resulting in cash flow from operations of over $219 million, an increase of 62% from the prior year driven prime.
Gary D. Brown: Merrily by higher sales volumes.
Gary D. Brown: We have declared a quarterly dividend of $0.155 per share, a 3% increase from the prior year. During the quarter, Wheaton made total upfront cash payments of $462 million, $450 million of which was related to the Platte Reef and Kutsakaya Streams, with the balance relating to the Delamar and Mount Todd royalties. When coupled with cash generated from operating activities, our overall net cash outflows amounted to $240 million in the first quarter of 2024, resulting in cash and cash equivalents as at March 31st of $306 million.
Gary D. Brown: We have declared a quarterly dividend of <unk> 15, five cents per share a 3% increase from the prior year.
Gary D. Brown: During the quarter, we made total upfront cash payments.
Gary D. Brown: $462 million.
Gary D. Brown: $450 million of which was relative to the REIT and <unk> streams with the balance relating to the del Mar and Mt. Todd royalties.
Gary D. Brown: When coupled with cash generated from operating activities. Our overall net cash outflows amounted to $240 million in the first quarter of 2024, resulting in cash and cash equivalents as at March 31 of $306 million. Additionally.
Gary D. Brown: Additionally, subsequent to the quarter, the company disposed of its investments in Hekla Mining for gross proceeds of $177 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 entry.
Gary D. Brown: Additionally, subsequent to the quarter the company disposed of its investment in Hecla mining for gross proceeds of $177 million.
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.
Gary D. Brown: Lastly, I would like to provide an update on Global Minimum Tax. As previously disclosed, the company does expect its income generated outside of Canada to be subject to a 15% Global Minimum Tax, or GMT. While we continue to anticipate that the tax will be retroactive to January 1, 2024, Canada has not yet enacted the legislation, and as such, the company has recorded no current tax expense associated with GMT in the quarter.
Gary D. Brown: Lastly, I did want to provide an update on global minimum tax as previously disclosed the company does expect its income generated outside of Canada to be subject to a 15% global minimum tax or GMT, while we continue to anticipate that the tax will be retroactive to.
Gary D. Brown: January one 2020 for Canada has not yet enacted legislation and as such the company has recorded no current tax expense associated with GMT in the quarter.
Gary D. Brown: For reference, in the first quarter, the wholly owned foreign subsidiaries, which reside in jurisdictions where the GMT is expected to apply, had net earnings of $165 million, with 15% of such amount amounting to $25 million. We will recognize the tax expense associated with the GMT in our Consolidated Financial Statements in the appropriate period relative to when the legislation is enacted. As such, assuming that the legislation is enacted in its current proposed form, we will record multiple quarters' worth of GMT in the quarter that such enactment occurs. That concludes the financial summary, and with that, I will turn the call back over to Randy.
Gary D. Brown: For reference in the first quarter, the wholly owned foreign subsidiaries, which reside in jurisdictions, where the GMT is expected to apply had net earnings of $165 million.
Gary D. Brown: With 15% of such amount amounting to $25 million.
Gary D. Brown: We will recognize the tax expense associated with the GMT in our consolidated financial statements and the appropriate period relative to when the legislation is enacted as such assuming that the legislation is enacted in its current proposed form we will record multiple quarters worth of <unk>.
Gary D. Brown: <unk> in the quarter that such enactment occurs.
Gary D. Brown: That concludes the financial summary, and with that I will turn the call back over to Randy.
Randy V. J. Smallwood: Thank you Gary.
Randy V. J. Smallwood: In summary, Q1 was a very strong start to the year for Wheaton, distinguished by several key highlights. We achieved robust three-month revenue, earnings, and cash flow and declared a 15.5 cent quarterly dividend, aligned with our new progressive dividend policy. 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% by 2028. We continue to maintain low and predictable costs which, when coupled with our leverage to increasing commodity prices, result in some of the highest margins in the entire precious metals space.
Randy V. J. Smallwood: In summary, Q1 was a very strong start to the year for Wheaton distinguished by several key highlights.
Randy V. J. Smallwood: We achieved robust three month revenue earnings and cash flow and declared a <unk> 15, five cent quarterly dividend aligned with our new progressive dividend policy.
Randy V. J. Smallwood: Our pipeline of development projects was further de risked by construction advancements in the receipt of various key permits by our partners supporting our impressive organic growth profile of over 40% by 2028.
Randy V. J. Smallwood: We continue to maintain low and predictable costs, which when coupled with our leverage to increase in commodity prices result in some of the highest margins in the entire precious metal space.
Randy V. J. Smallwood: Our balance sheet also remains strong, providing ample capacity to add accretive, high-quality streams to our portfolio. And lastly, we take pride in being a leader amongst precious metal streamers in sustainability and by supporting our partners and the communities in which we live and operate. So with that, I would like to open up the call to questions. Operator? Thank you.
Randy V. J. Smallwood: Our balance sheet also remains strong providing ample capacity to add accretive high quality streams into our portfolio.
Randy V. J. Smallwood: And lastly, we take pride in being a leader amongst precious metal streamers in sustainability and by supporting our partners and the communities in which we live and operate.
Speaker Change: So with that I would like to open up the call for questions operator.
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 the star and the number 1 on your telephone keypad. If you would like to withdraw your question, please press star 2. There will be a brief pause while we compile the Q&A log. Your first question is from Ralph Profiti from 8 Capital. Please ask your question.
Speaker Change: Thank you.
Speaker Change: Ladies and gentlemen, we will now conduct the question and answer session.
Speaker Change: We would like to ask a question. Please press the star and the number one and your telephone keypad.
Speaker Change: We would like to withdraw your question. Please press Star Jones.
Speaker Change: There will be a brief pause while we compile the Q&A roster.
Speaker Change: Yes.
Speaker Change: Your first question is from Ralph <unk>.
Ralph: <unk> capital. Please ask your question.
Ralph M. Profiti: Thanks, Operator. Good morning.
Ralph: Thanks, operator, good morning.
Randy V. J. Smallwood: Randy, you know, getting back to Wheaton's roots and silver prices have been very strong year to date. Just wondering what the transaction pipeline looks like for more of those silver heavily levered deals. I would imagine they are still pretty rare to come by, and there seems to be a lot of gold with silver and vice versa in some of the transactions that you're making. But where does the transaction market start if we wanted to look at bringing more silver into the deal structure?
Ralph: Randy.
Ralph: Getting back to.
Ralph: Silver prices with a very strong year to date.
Speaker Change: Wondering what the what the transaction pipeline looks for it looks like for more of those silver heavily levered deals.
Speaker Change: I would imagine those are still pretty rare to combined which seems to be a lot of gold with silver and vice versa, and some of the transaction with Germany, but once the transaction Mark will start with we wanted to look at more silver into the deal structure.
Randy V. J. Smallwood: Yeah, Ralph, you're bang on. It's tough to find good silver projects. One of the things that's a bit unique about silver is that most of it is produced from lead-zinc operations, whereas a lot of by-product gold comes from copper operations. And we just don't hear about a lot of lead-zinc developments out there. Those aren't very sexy metals in today's world, so yeah, we're not seeing a lot on the silver side. I'll let Haytham add some color to that. But definitely, much more in tune in terms of the opportunities that are out there.
Speaker Change: Yes, Ralph.
Ralph: You're bang on it's tough to find good silver projects one of the things that is a bit unique about silver is that most of it is produced from lead zinc operations, whereas.
Ralph: You know a lot of byproduct gold comes from copper operations and we just don't hear a lot of lead zinc developments out there it's not those aren't very sexy metals in today's world. So.
Speaker Change: So yes, we're not seeing a lot on the silver side I'll, let haytham.
Haytham: Add some color to that he's definitely much more in tune in terms of the opportunity set out there sure. Thanks, Randy and good morning, Ralph Thank you for the question.
Haytham Henry Hodaly: Sure. Thanks, Randy. And good morning, Ralph.
Haytham Henry Hodaly: Thank you for the question. I would say, like, if I look at the top 10 opportunities I have, probably at least a third of those have a fairly significant silver exposure. So there definitely is silver out there. But, as Randy said, there's not a lot of new silver. It's mostly for, you know, if you're looking at balance sheet strengthening or balance sheet repair, that type of thing.
Haytham: We'll say like if I look at the top 10 opportunities I have probably at least a third of those have a fairly significant silver exposure there.
Haytham: There definitely is silver out there.
Speaker Change: It is as Randy said Theres not a lot of new silver, it's mostly for if youre looking at balance sheet strengthening our balance sheet repair that type of thing.
Wes Carson: Gotcha. Okay. And, you know, maybe I can just stay on the silver theme and, you know, maybe go to Wes and ask him about sort of the near-term mine plan for silver coming out of Penosquito. Sort of looking over the course of 2024 Q1, a very good quarter on the silver side, and we're coming off a strike-impacted second half last year, you know, puts us in a position where, and you talked about the chilly Colorado pit where we're currently tracking ahead of guidance, just wondering what that cadence looks like on silver for the rest of the year.
Speaker Change: Gotcha Okay.
Speaker Change: Maybe I could just stay on the silver theme and maybe go to western and asked him about sort of the near term mine plan for silver coming out of China.
So then looking over the course of 2020 for Q1 very good quarter on the silver side, and we're coming off of a strike impacted second half last year puts us in a position where you talked about the Chile, Colorado pit, where we're currently tracking ahead of guidance just wondering what that cadence looks like on silver for the rest of the year.
Wes Carson: Thanks, Ralph. They are starting to transfer back over to the Pinasco pit later in the year here, so we will see kind of a slight weakening of that as the year goes on, but it is fairly consistent through the year here in terms of silver production. There is still production from Chile and Colorado through the year, so it will be fairly consistent through the year, but as they move back to Pinasco, that is where they do get the higher gold grades and slightly lower silver.
Speaker Change: Thanks, Ralph they are starting to transfer back over to the <unk> pit. The later in the year here. So we will see kind of a slight weakening of that is as the year goes on but it is fairly consistent through the year here. The silver production there is still production.
Speaker Change: Excuse me from Chile, Colorado through the year so.
Speaker Change: It will be fairly consistent through the year, but as they move back to <unk> that is where they do get the higher gold grades and slightly lower silver grades.
Ralph M. Profiti: Gotcha. Helpful. Thanks everyone.
Ralph M. Profiti: Helpful. Thanks, everybody.
Speaker Change: Got you helpful. Thanks, everyone.
Thanks Ralph.
Operator: Thank you. Your next question is from Cosmos Chiu from CIBC. Please ask your question.
Speaker Change: Thank you. Your next question is from Cosmos <unk> from CIBC. Please ask your question.
Cosmos Chiu: Great. Thanks, Randy, and Gary.
Cosmos: Great, Thanks, Randy Gary and team.
Cosmos Chiu: Maybe my first question is on your production year. Randy, as you mentioned, very strong Q1, 160,000 ounces, but you've maintained your four-year guidance at 550 to 620. If I were to straight line it, but you know life isn't that simple, but if I were to multiply your Q1 by four, I would get a number that's higher than the top end of your annual guidance. Could you remind us, to the extent possible, Randy? Do you know what we should look for? I think Wes kind of mentioned it, penosquito, it could come down a little bit, but what else can we look for in terms of quarter over quarter, sort of, production.
Cosmos: Maybe my first question is on <unk>.
Cosmos: Your production.
Cosmos: Randy as you mentioned very strong Q1 hundred 60000 ounces, but you've maintained your full year guidance of $5 15 to 620 <unk>.
Cosmos: If I were to straight line it.
Life isn't that simple, but if I were to multiply your Q1 by four.
Get to a number that's higher than the top end of your annual guidance could you remind us to the extent possible Randy.
Cosmos: And what we should look for I think it was kind of mentioned it and mosquito it could come down a little bit.
Cosmos: But what else can we look for in terms of quarter over quarter and shortly.
Cosmos: Production.
Randy V. J. Smallwood: I mean, I'll let Wes add a little bit of color at the end of it, but, you know, what we do see is relatively consistent production over the course of the year. You know, I think the last quarter at year-end there, we were giving guidance to be a little bit more heavily weighted towards the back end of the year, but we have had some outperformance here, obviously, in the first quarter. You know, we're not confident enough to adjust guidance in the sense of having that outperformance continue through the course of the year, but even if we stay on track, you're right, we're going to be, you know, we're in a very, very good position to at least meet guidance, if not exceed it, and so we just want to see a bit more strength behind that, so I don't know, Wes, if you've got some color to add to that. Yeah.
Speaker Change: I mean, I'll, let Wes add a little bit of color at the end of it but.
Speaker Change: What we do see is relatively consistent production over the course of the year I think.
Wes Carson: The last quarter at year end, there, we were giving guidance to be a little bit more heavily weighted towards the back end of the year, but we haven't had some outperformance year, obviously in the first quarter.
Wes Carson: We're not we're not confident enough to adjust guidance in the sense of having that the outperformance continue through the course of the year, but even if we stay on track you're right. We're going to be we're in a very very good position to at least meet guidance if not exceed exceed it and so we just want to see a bit more strength behind that so I don't know Wes if you get some color to add to that yes, I would agree.
Wes Carson: Yeah, I would agree. I think it's just that after the first quarter, it's a little premature for us to get too excited about it, I think, yet, but I'm certainly very happy with the quarter. I mean, Constanze would be the other one that, I mean, there is that volatility as Popconcha kind of comes in and out of the production there. So that would be the other one that we'll watch through the year as we go through it, and there is some change to that production from Constanze through the year, but fairly consistent through the rest of the year is what we're expecting.
Wes Carson: I think it's just that after the first quarter I think it's a little premature for us to get too excited about it I think yet, but certainly very happy with the quarter I mean <unk>.
Wes Carson: Constancia would be the other one that I mean, there is that volatility of ads pop contract kind of comes in and out of the production. There. So that would be another one that we'll walk through the year as we go through and there is some change to that to the production from constancia them through the year, but fairly consistent through the rest of the year is what we're expecting.
Cosmos Chiu: Sounds good. Maybe a quick question on global minimum taxes? As you mentioned, Gary, $165 million is the net income from your subsidiary. I'm just trying to figure out how you calculated that. Is it as simple as, say, the spot price for gold minus $430 an ounce, which is what it was in Q1, multiplied by all the stream houses going through your subsidiary? Or is there another sort of deduction that you can take as well?
Speaker Change: It sounds good.
Speaker Change: Maybe a quick question on global minimum taxes.
Speaker Change: As you mentioned, Gary under $65 million to net income from your subsidiary.
Speaker Change: Im just trying to figure out how you calculated is it as simple as say the spot price for gold minus $130 announced cost which is what it was in Q1 multiply by all the stream ounces going through your subsidiary.
Speaker Change: Or is there other sort of deductions that you can take as well.
Gary D. Brown: No, it's pretty much the former of those. We really estimate the tax based upon the accounting income generated outside of Canada.
Speaker Change: No it's pretty much.
Speaker Change: The former of those.
Speaker Change: It's really we estimate.
Speaker Change: The tax based upon the accounting income generated outside of Canada.
Gary D. Brown: So, is there potential, you know, when it gets enacted, that there are other deductions you can take before applying the 15%, or at this point in time, you don't have the issue? I mean, until the legislation is fully enacted, you know, I think there is potential. We're not, we're not, um, projecting that that's going to take place. And as a follow-up, Gary, how is it going to work?
Speaker Change: So is there a potential when it gets enacted.
Theres other deductions it can take 5% to 15%.
Speaker Change: Percent.
Speaker Change: At this point.
Speaker Change: Until the legislation is.
Speaker Change: Fully enacted.
Speaker Change: I think there is potential we're not.
Speaker Change: We're not.
Speaker Change: But projecting that that's going to take place.
Cosmos Chiu: I know that, as you said, when it gets enacted, you'll put through an expense in your income statement, but this is also retroactive to January 1st. So is there a potential that you have to make a lump sum payment at that point in time, including the $25 million from Q1.
Speaker Change: Okay.
Speaker Change: As a follow up Gary how is it going to work I know that you said when it gets enacted.
Gary D. Brown: Put through an expense in your income statement, but this is also a retroactive to January 1st so.
Gary D. Brown: Is there a potential that you have to make a lump sum payment.
Gary D. Brown: At that point in time, including $25 million.
Gary D. Brown: Q1.
Gary D. Brown: Uh, is that how it works...
Gary D. Brown: Is that how it works.
Gary D. Brown: Well, we would have a lump sum expense, but the tax doesn't get paid for 2024 until 2026. But assuming that the legislation gets fully enacted by June 30, we would have 2 quarters of global minimum tax flowing through our Q2 results. If it doesn't get enacted by June 30, and it gets enacted.
Speaker Change: Well, we would have a lump sum.
Speaker Change: Specs, but the tax doesn't get paid until 'twenty for 2024 until 2026.
Speaker Change: But.
Speaker Change: We.
Speaker Change: Like assuming that the.
Speaker Change: The legislation gets fully enacted by June 30, we would have two quarters of.
Speaker Change: Global minimum tax flowing through our Q2 results if it doesn't get.
Speaker Change: Enacted by June 30.
And it gets enacted by September 30th than we would have three quarters of GMT going through our third quarter results.
Gary D. Brown: But the key, you know, one of the keys there...
Speaker Change: One of the keys there Cosmos is that is that we.
Speaker Change: We don't actually make the payments until 2026.
Speaker Change: That's the way it looks like it's going to be structured as is that it's.
Speaker Change: It's going to be several years behind the actual tax year before the payment is actually made.
Cosmos Chiu: Got it. Thanks, Randy, Gary, and team. That's all the questions I have.
Speaker Change: Got it.
Thanks: Thanks, Randy Gary and team Thats, all the questions I have and have a good weekend.
Cosmos Chiu: Thanks, Cosmos. Thanks, Cosmos.
Speaker Change: Thanks, Scott Thanks Cosmos.
Speaker Change: What.
Operator: Thank you.
Speaker Change: Thank you.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: Yes.
Brian MacArthur: Thank you. Your next question is from Brian MacArthur from Raymond James. Please ask your question.
Speaker Change: Thank you. Your next question is from Brian Macarthur from Raymond James Please ask your question.
Brian MacArthur: Good morning, and thank you for taking my question. Again, it goes back to what you were just answering, Gary, about Cosmos.
Brian MacArthur: Good morning, and thank you for taking my question and again it goes back to what you were just answering Gary with Cosmos, So Jeff So I'm really clear on this.
Gary D. Brown: So, just so I'm really clear on this. Everything we're talking about is accounting. So from a cash basis, if that's what we're focused on, really all we need to think about is assuming this tax gets enacted this year, i.e., 2024; you'll just pay 15% cash taxes on your 2024 income in 2026. Is that the way I should think about it?
Brian MacArthur: Everything we're talking about is accounting so from a cash basis. If that's what we're focused on really all we need to think about is assuming this tax gets enacted this year I E 2024, Youll just pay 15% cash taxes of 2020 for income in 2026 is that the way I should think about it.
Brian MacArthur: On on the income generated outside of Canada.
Gary D. Brown: Right. Okay, so from a pure cash basis, I get it. We want to make sure everybody understands this is accounting, not cash, but there's really no cash effect this year. That's correct. Perfect, thank you. And maybe just the other question following up was asked earlier about, obviously, Slobo did very well, and you've got this, you know, ramp-up of volume through the middle, but you've got grades coming off. And I know you probably don't want to revise anything yet this year, but do we expect Q1's production at Slovo to continue throughout the year?
Brian MacArthur: It's just the majority of it okay. So from a pure cash basis I get it we want to make sure everybody understands this is accounting not cash, but there's really no cash effect this year.
Speaker Change: That's correct.
Perfect. Thank you and maybe just the other question following up what was asked earlier about <unk>.
Speaker Change: Obviously, salobo did very well and you've got this ramp up of volume.
Speaker Change: So the mill, but you've got grades coming off.
Speaker Change: And I know you probably don't want to get revised anything yet this year, but do we expect Q1 production at this level to continue throughout the year.
Wes Carson: I'll let Wes answer that one.
Speaker Change: I'll, let <unk> answer that one.
Wes Carson: Sure, I mean, I think we saw slightly better grades than expected at Celobo in Q1. Really, I mean, the grades do drop off kind of in the plan as we go through the year, and it's just a function of where they are in that pit. But I mean, they have certainly shown that the production that's going through, particularly Slobo 3, has been very positive. So, as we said at the start, I don't think we're confident enough to up the forecast at this point, but it is looking positive for the rest of the year. So would that be positive or negative?
Speaker Change: Sure I mean, I think we saw slightly better grades than expected that at Salobo in in Q1 and.
Speaker Change: Really I mean, the grades do drop off kind of in the plan is as we go through the year and it's just a function of where they are in that pit. So but they have certainly shown that the production that is going through particularly salobo III has been very positive. So as we set up the start I don't think were confident enough to.
Speaker Change: The forecast at this point, but it is looking positive from for the rest of the year.
Brian MacArthur: So would that be positive reconciliation, or is it just that they happen to be in a different part of the order body that you got better than expected, Q1, or can you comment? Positive reconciliation. Perfect. Thanks very much for answering my question.
Speaker Change: So would that be positive reconciliation or is it just they happen to be in a different part of the ore body that you got better than expected Q1 or can you comment.
Speaker Change: Positive reconciliation.
Perfect. Thanks, very much for answering my questions.
Speaker Change: Thanks, Brian.
Operator: Thank you once again. Please press R1 should you wish to ask a question. Your next question is from Tanya Jakusconek from Scotiabank. Please ask your question.
Speaker Change: Thank you once again, please press star one should you wish to ask a question.
Speaker Change: Your next question is from Todd.
Todd: From Scotiabank. Please ask your question.
Tanya M. Jakusconek: Good morning, everyone. I recognized myself today. That was good. Thank you for taking my questions.
Todd: Good morning, everyone I recognize myself today, so that was good.
Tanya M. Jakusconek: I just wanted to circle back, Wes, on the operational side. I think we touched on Salobo. We touched on Penasquito, and I think Newmont also confirmed on their call that production was going to be for silver evenly distributed for the year. The one I wanted to touch base on was Wazi Bay. We had talked last quarter about quarter over quarter improvements. Is that how I should still be thinking about that asset?
Todd: Alright. Thank you my question.
Todd: Just wanted to circle back on the operational side I think we touched on Salobo Lee touched on panic data and I think Newmont also confirmed on their call that production was going to be for silver evenly distributed.
Todd: For the year.
Todd: The one I wanted to touch base on was on one the day, we had talked last quarter about quarter over quarter improvement is that how I should.
Todd: There'll be thinking about that asset.
Wes Carson: Absolutely. As those undergrounds come more online, we will see quarter over quarter improvement there, and that is what's forecast for the rest of this year. And certainly, we saw very good performance from them in Q1, really ahead of what we've been expecting, and I think we can continue to see that growth through the year.
Speaker Change: Absolutely as those Undergrounds come more online, we will see quarter over quarter improvement there and that is what is forecast for the rest of this year and certainly we saw very good performance from them in Q1 really ahead of what we had been expecting so and I think we can continue to see that growth through the year.
Wes Carson: Okay, and then I think what Randy had mentioned, the 48-52 first half, second half looks like to be more of a normal distribution or thereabouts for the next three quarters. Would that be a safe assumption?
And then I think what Randy had mentioned the 48 52 first half second half looks like to be more of a normal distribution or thereabout for the next three quarters would that be a safe assumption.
Wes Carson: Yeah, you know, based on what we see right now, I think it's probably more like a 50-50. If we continue, you know, if we do see some outperformance in the latter half, I mean, obviously, we'll consider it at the end of the second quarter and determine whether we want to change our guidance. But we're definitely, you know, we're definitely well positioned to be on track. And as Ralph mentioned earlier on, I think it was Ralph or Cosmos mentioned earlier on, you know, four times this production is beating it. But, you know, we're definitely in a really good position to have a strong year.
Speaker Change: Yes.
Speaker Change: Based on what we see right now I think it's probably more like a 50 50. If we continue if we do see some outperformance in the latter half I mean, obviously, we'll consider it at the end of the second quarter and determine whether we want to change our guidance, but we're definitely we're definitely well positioned to be on.
On track.
Speaker Change: As <unk>.
Speaker Change: I mentioned earlier on I think it was Ralph Cosmos I mentioned early on you know four times. This production is beating it.
Speaker Change: So we're definitely.
Speaker Change: A really good position to have a strong year.
Tanya M. Jakusconek: Okay. Maybe just moving on to some of the financials, if I could. You have quite a number of investments, I think, still. I think you've sold out all of your HECLA. Where does the rest of the investment portfolio stand, and how should we be thinking of that in terms of harnessing some cash?
Okay maybe.
Speaker Change: Maybe just moving on to some of the financials if I could.
Speaker Change: You have quite a number of investments I think bill I think you sold out all of your Hecla.
Speaker Change: Or does the rest of the investment portfolio span and how we should we be thinking of that in terms of harnessing some cash.
Haytham Henry Hodaly: Hi Tanya, Haytham, thank you for the question. I will say that the Hekla was a bit of an opportunistic sale, and we're happy with that transaction. Looking at the rest of our portfolio, the majority of our portfolio is with our streaming partners. Our equities held because we entered into the transactions when we did the streams. Our philosophy at this point in time is we will hold those shares until our partners get up and running in advance, and if there's an opportunity to sell down the road, that's when we'll do it. We have no interest in selling those shares right now.
Bill: Hi, Thank you Tait and thank you for the question I will say that the hecla was a bit of an opportunistic.
Speaker Change: Sale and.
Bill: We're happy with that transaction looking at the rest of our portfolio. The majority of our portfolio is with our streaming partners. Our equities held because they we entered into transactions. When we did the streams. Our philosophy at this point in time is we will hold those shares until our partners get up and running.
Bill: Advance and if theres an opportunity to sell down the road. That's when we'll do it we have no interest in selling those shares right now.
Haytham Henry Hodaly: The primary focus of those types of investments is to be supportive of those partners, be a good, strong, supportive shareholder. And so, you know, there's no sense in putting pressure on them when they're going through the development phase of their projects. So, you know, it is a longer-term commitment, as is the streaming agreement itself.
Bill: The primary focus on those type of investments is to be supportive of those partners would be a good strong supportive shareholder and.
Bill: And so there's no sense in putting pressure on them when they're when they're going through the development phase on their projects. So.
Bill: It is a longer term commitment is as is the streaming agreement itself.
Bill: Okay.
Tanya M. Jakusconek: Okay, that's good on the investments. And then maybe if I could still follow through, Haytham, on just on the transaction opportunities. Sabanyi put out a comment that they're looking at up to 500 million in streaming opportunities. I want to circle back to number one.
Bill: Okay on the <unk>.
Speaker Change: And maybe if I can still follow through.
Speaker Change: On that just on the transaction opportunity.
Speaker Change: Want to circle back to that and you put out a comment that theyre looking at up to $500 million of streaming opportunity.
Speaker Change: To circle back to number one.
Haytham Henry Hodaly: Any thoughts of additional platinum palladium opportunities? I personally don't think still water can take on another rosy and or stream, but maybe some of the other things in South Africa and or their gold assets. I don't think you're interested in lithium. Maybe a comment on how that would fit your portfolio.
Speaker Change: Any thoughts of additional platinum palladium opportunities at firstly I don't think so water can take on another royalty and stream that maybe some of the other items in South Africa and or their gold assets. I don't think you are interested in lithium.
Speaker Change: Can you comment on how that would fit your portfolio.
Haytham Henry Hodaly: Sure, I mean I'll keep it simple. We're always looking to add precious metals, with gold and silver as the primary two precious metals. If we can add gold or silver and, alongside it, add platinum or palladium to top it off at the price that they need, that's something we could consider. You're right; I don't think we would increase Stillwater's stream there, but there are other opportunities throughout their portfolio that they are considering.
Speaker Change: Sure I'll keep it simple, we're we're always looking at precious metals being gold and silver as a primary two questions. If we can add gold or silver and alongside AD platinum or palladium to top it off to the price that they need thats something we could consider youre right I don't think we would increase Stillwater.
Speaker Change: Stream there, but there are other opportunities throughout their portfolio that they are considering.
Haytham Henry Hodaly: Sabani is a good, strong partner of ours. We've had a great, great, great relationship with Neil and the team there, and we're so hopeful that we can grow that relationship as we always hope with all of our partnerships. You know, they've got quite a broad selection of assets there, and we're sure we can help them unlock some value there
Speaker Change: <unk> is a good strong partner of ours, we've had.
Speaker Change: Great great relationship with Neil and the team there and so.
Speaker Change: Hopeful that we can grow that relationship.
Speaker Change: As we're always hopeful with all of our partnerships.
Speaker Change: Yes.
Speaker Change: Got quite a broad selection of assets there and were sure we can help them unlock some value there somewhere.
Speaker Change: And the balance sheet repair.
Speaker Change: Yes, yes. Thank you for that and then maybe just.
Tanya M. Jakusconek: you know, just circling back again on the opportunities. I know I ask all the time, all of these big opportunities for balance sheet repair keep coming up for some of the bigger non-gold companies and assets, sales for the Newcrest, Newmont portfolio, et cetera, et cetera.
Speaker Change: Circling back again.
Speaker Change: The opportunities I know.
Speaker Change: All of these big opportunities for balance sheet repair keeps coming up.
Speaker Change: So some of the bigger non gold companies and asset sales for the new cross newmont portfolio et cetera et cetera.
Haytham Henry Hodaly: Haytham, I think you mentioned you were looking at 10 or 20, I forget how many you mentioned you were looking at of your deals. And yeah, I mean, we always have at least a dozen on the go. Tanya, we're probably up closer to 15 right now. Of those, I would say there are probably a handful that are fairly sizable, but in this environment, you know, there's no guarantee that a stream will actually get done, but it is, I guess, enlightening to see that streaming is measured alongside debt, equity, and other forms of capital as well. So there are definitely people kicking the tires, and we're there trying to get involved.
Speaker Change: Hey, Tom I think you mentioned you were looking at 10 or 20 I forget how many you mentioned youre looking at.
Tom: Yes sure.
Tom: Yeah, I mean, we always have.
Tom: At least it doesn't on the gold Canyon, we're probably up closer to 15 right now.
Tom: Those I would say there is probably a handful that are fairly sizable but in this environment. There is no guarantee the stream will actually get done but it is.
Tom: It is I guess enlightening to see that streaming is measured alongside debt equity and other forms of capital as well. So there's definitely people kicking the tires and where they're trying to get involved.
Haytham Henry Hodaly: We are happy to see the equity market waking up a little bit, and we're starting to see some support on that side because, you know, we've been strong believers that streaming can't be the only source of capital. It should be standing alongside a nice balanced spread on that capital. And so, happy to see a little bit there because that's going to open up some opportunities, just in that sense, standing alongside some equity raises to fund these developments.
Tom: We're happy to see the equity market waking up a little bit and we're starting to see some support on that side, because we've been strong believers that streaming can't be the only source of capital.
Tom: It should be standing alongside.
Tom: It's balanced.
Tom: Spread spread on that capital and so happy to see a little bit there because thats going to open up some opportunities just in that.
Tom: In that sense standing alongside some equity raises to fund on these developments.
Tanya M. Jakusconek: And these bigger deals you said you had a handful of, I think Haytham those would be the plus 500 million deals. Can I assume those are pure streaming, or should I be thinking that there's equity components plus debt components to total plus 500, or should it be a simple streaming structure?
Tom: And these bigger deals that you have.
Tom: Handful up I think Keith and those would be the 500 million deal Ken.
Tom: Ken I assume those are curious streaming or should I be thinking that there's equity component that component to total plus 500.
Tom: Or.
Speaker Change: Simple screaming stop sure sure.
Haytham Henry Hodaly: Sure, I mean the majority of those are looking at streaming structures. You know, when you're looking at opportunities that are sizable, typically, the counterparty does not want to dilute, and they have access to debt on their own. For the smaller opportunities, I can tell you there's a, I guess you would look at a portfolio, not a portfolio; you'd look at a number of financing mechanisms alongside streaming.
Ken: Sure I mean, the majority of those started looking at streaming structures.
Ken: When youre looking at opportunities that sizable typically.
Ken: Counterparty does not want to dilute and they have access to that on their own for the smaller opportunities that I can tell you there is.
Ken: I guess, you would look at our portfolio and not a portfolio. When you look at a number of financing mechanisms alongside Australia.
Tanya M. Jakusconek: Okay, and so the main financing mechanisms for the smaller ones are, you know, royalties stream, and plus debt equity would be the structure on the market side. That's correct, Tanya.
Speaker Change: Okay, and so the main main financing mechanisms for the smaller ones are royalty stream and close that equity would be the structure.
Speaker Change: Yes.
Haytham Henry Hodaly: We don't see a lot in the royalty space. The royalties tend to, I mean, streaming has proven to be much more attractive as a source of capital than royalties, so we don't just don't see new royalties; we see existing royalties being traded around, but not too many people are creating new royalties, especially on advanced projects. If they're doing royalties, it's at an early, very early stage, trying to create royalties so that one day they can put them in a portfolio and try to sell them to companies like us.
Speaker Change: That's correct.
Speaker Change: Don't see a lot in the royalty space the royalties.
Speaker Change: Streaming has proven to be much more attractive as a source of capital than royalties. So we don't just don't see new royalties, we see existing royalties being traded around but not too. Many people are creating new royalties, especially on advanced projects.
Speaker Change: Royalties.
Speaker Change: <unk>.
Speaker Change: At this stage early very early stage.
Speaker Change: Kind of.
Ticket basically royalties so that one day, they can put them in our portfolio and try to sell them.
Tanya M. Jakusconek: Okay, well, we'll wait for those. I appreciate you taking all my questions and having a great quarter. Thanks, Gary. Always a pleasure, Tanya.
Speaker Change: Like us.
Speaker Change: Okay, well wait for that I. Appreciate you, taking all my questions and great quarter. Thank you. Thanks, Craig always a pleasure Tanya.
Operator: Thank you. Your next question is from Richard Hatch from Berenberg. Please ask your question.
Speaker Change: Thank you.
Speaker Change: Our next question is from Richard Hatch from Bahrenburg. Please ask your question.
Richard James Hatch: Yeah, thanks. Morning, Randy and team. Thanks for the call. I just got a couple of questions.
Richard James Hatch: Yes, thanks, good morning lending Jami, thanks for the tool.
Richard James Hatch: Just firstly, on the HEC Club, my numbers say you made about 50% on that trade. So it's a good deal. But is there any tax that you've got to pay on the sale of those shares or anything we need to be working on there or not? Thanks.
Richard James Hatch: Just a couple of questions and just lastly on the Hecla My numbers you made 50% on that trade.
Richard James Hatch: Good deal.
Richard James Hatch: Is there any tax eager to pay on the <unk>.
Speaker Change: And as I said, we need to be working well.
Thanks.
Gary D. Brown: Uh, the... We will have tax liability associated with that. It will be included at 50% and subject to a 27% tax.
Speaker Change: The tax law, we will.
Speaker Change: Tax liability associated with the with that.
Speaker Change: It will be included.
Speaker Change: 50%.
Speaker Change: And subject to a 27%.
Gary D. Brown: So for standard capital gains, 50% of the gain is taxed at a 27% rate, so the net effect is about 13.5%.
Speaker Change: Income tax standard capital gains.
Speaker Change: 50% of the gain is taxed at a 27% rate. So net effect is about 13, 5% on the total.
Richard James Hatch: Okay, very helpful, thanks. The second one is just on Solobo; it's nice to see that asset kind of coming back to performing better again. Any commentary around the expansion case from Vale or anything you might be able to add on that, please? Ah, cool.
Speaker Change: Yes.
Speaker Change: Okay very helpful. Thanks, and second one is just on <unk>.
Speaker Change: It's nice to see that yet.
Randy V. J. Smallwood: Oh, I see. Okay.
Speaker Change: Tony back to performing better again.
Speaker Change: Just any commentary around the expansion case.
Speaker Change: Some some vale you anything he might be able to add on that please.
Speaker Change: Expansion case, I mean, the high grading.
Speaker Change: Yeah, Great and cases.
Randy V. J. Smallwood: Yeah, I mean, you know, the focus, and I'll definitely let Wes add some color to this, but, you know, the current focus is, of course, trying to get to the next phase of the expansion payment. And so they're working their way toward that. You know, whether they achieve it this year or next year remains to be seen. They're definitely continuing to improve Line 3, but, you know, as it's been sort of laid out before, the whole site has to perform in order to satisfy that.
Speaker Change: Oh I see okay.
Speaker Change: Yes, I mean the focus.
Speaker Change: It definitely let west to add some color to this but the current focus is of course trying to get to the next phase of the expansion payment and so theyre working their way towards that whether they achieve it this year or next year remains to be seen there. They are definitely continuing to improve online III, but.
Speaker Change: It's been sort of laid out before the whole site has to perform in order to satisfy that and so a line one and line <unk> still got some work to do on that front.
Randy V. J. Smallwood: And so Line 1 and Line 2, they've still got some work to do on that front. But, you know, as we've seen this quarter, they actually outperformed even their own expectations, right? And so given that, you know, we think it's shaping up well for them to hopefully satisfy that. Once that next phase gets satisfied, then we'd be looking at the high-grade, you know, bonus kicker. It starts in the year subsequent to whenever they satisfy Phase 2 of the expansion payment.
Speaker Change: Bill as we've seen this quarter, they actually outperformed even our own expectations right and so so given that we think it's shaping up well for them to hopefully satisfy that.
Speaker Change: Yes.
Speaker Change: Once that next phase gets satisfied then we'd be looking at.
The high grade.
Speaker Change: Bonus kicker.
Speaker Change: Actually it starts in the years subsequent to whenever they satisfy phase III expansion payment and it's it's basically on an annual basis, if they meet certain objectives, we will make an additional payment towards.
Randy V. J. Smallwood: And it's, you know, it's basically on an annual basis. If they meet certain objectives, we'll make an additional payment towards VALE for satisfying those things. And so that won't start until, you know, next year at the earliest, again, depending on when they finish Phase 2 of the main expansion payment.
Speaker Change: Vale.
Speaker Change: For for satisfying those things and so so that wont start until next year at the earliest again, depending on when they finished the phase two of the of the main expansion payment.
Wes Carson: Yeah, I think just to add on to what Randy said there, I mean really, the focus right now is on getting Slobo 3 up to its full capacity and really having Slobo 1 and 2 built up there as well. The high grade is really an expansion of the open pit and getting some more equipment going in there. And that's really, once they get those plants up and running, then the focus will move over to the mine and getting that going, I think.
Speaker Change: Yes, I think just to add on to what Randy said, there I mean really the focus right now is on getting <unk> III up to its full capacity and really having a little bit wanting to built up there as well that the high grade is really an expansion on the open pit and getting some more equipment going in there and thats really once they get those plants up and running then the trend the focus will move over to the mine and then.
Speaker Change: Getting that going.
Randy V. J. Smallwood: They have talked in the past, just to add, about the possibility of exploring a phase 4 expansion, and there's been some discussion about whether that would be at an additional 6 million tonnes per annum or 12, whether it's a full line. So there is still some discussion and studies going on internally on that front too. So there's no doubt there's still a healthy focus on Celobo. Absolutely. Well, that's epicentric. And that's it. And that's just pure upside for you, right? There are no extra commitments you've got to pay for that, correct?
Okay Tom.
Speaker Change: In the past they have just to add to have talked in the past about the possibility of exploring our phase four expansion and theres been some discussion about whether that would be.
An additional 6 million tons per annum or 12, whether it's a full lineup. So there is still some discussion and studies going on internally on that front too. So theres no doubt theres still a healthy focus on salobo absolutely.
Yes.
Speaker Change: Sure.
Speaker Change: And Thats just clear upside for <unk>.
Speaker Change: There is no extra commitments, you've got to pay for that correct.
Randy V. J. Smallwood: And just on that grade up side, are you able to give us any kind of feel for what kind of higher grade potential we could be seeing next year if they go down that road?
Speaker Change: Yes.
Speaker Change: And then so just on that great upside are you able to give us any kind of a feel for what kind of ex higher kind of great potential we could be seeing from next year, if the gate on that right.
Randy V. J. Smallwood: The challenge is, it depends on how much they grow their mobile fleet. It depends on how much they push towards the low-grade stockpile side. And so, you know, there's a number of different factors that they have to balance. Stockpile capacity, you know, if they shift more of the low-grade toward that, then they could easily push grades substantially higher. You know, it really does come down to what kind of fleet expansion they go through in the pit. And that's what will sort of dictate what kind of grades they can deliver to the mills.
Speaker Change: The challenge.
Speaker Change: Yeah, sorry, let's I'll step in.
Speaker Change: The challenge is it depends on how much they grow their mobile fleet it depends on how much they pushed towards the low grade stockpiling site and so.
There's a number of different factors that they have to balance stockpile capacity.
Speaker Change: If they if they if they shift more of the low grade towards that then the naked easily pushed grades substantially higher.
Speaker Change: And so it really does come down to what kind of a fleet expansion. They go through in the pit.
Speaker Change: I will sort of dictate what kind of grades that can deliver to the mill.
Speaker Change: Okay got you and then last one is just on mineral park and if I look at the MD&A equaled $150 million.
Speaker Change: You could deploy into that one this year any kind of stable and tani on that please.
Speaker Change: Yes.
I mean, it looks like it's on track.
Speaker Change: I mean.
Speaker Change: Moving forward and so.
Speaker Change: It's an asset that we know well we're pretty excited about it it's always deliver.
Speaker Change: <unk> delivered more silver than expected in times past and so we're expecting to see similar results out of it then.
Speaker Change: What's really exciting about it is the.
Speaker Change: The current ownership group is has identified and really is in the process of resolving the challenges that the debt.
Speaker Change: Project had in the past and so we think it's going to be a nice Pleasant addition to the.
Re addition to the portfolio at this time round.
Speaker Change: So we're pretty happy with that group they've they've done a good job of identifying what the challenges are and they are putting the money right where it needs to be spent in terms of getting it there. So fully expect it to be coming onstream here within within the couple of years.
Speaker Change: And that $150 I think it will be will be provided in stage payments right. It's not all one lumpy that will be provided.
Speaker Change: Over over I would say three or four different payments 25 million each of the last one was $40 million.
Speaker Change: Gotcha, Okay sorry.
Speaker Change: Is that something that could be a key to that level or is it too early to say that yet.
Speaker Change: Yes, it could be Q2.
Speaker Change: Okay helpful. Thanks for your time I appreciate it.
Richard James Hatch: Okay, gotcha. And then the last one is just on Mineral Park. I think if I look at the MD&A, you've got $150 million that you could deploy into that one this year. Any kind of guidance on timing on that, please?
Thanks, Richard and thanks, everyone for your time today, we are pleased to report a good strong start to our 20th anniversary year here at Wheaton.
Randy V. J. Smallwood: It looks like it's on track. The work is moving forward.
Randy V. J. Smallwood: It's an asset that we know well, and we're pretty excited about it. It's always delivered more silver than expected in times past, and so we're expecting to see similar results out of it. What's really exciting about it is the current ownership group has identified and is really in the process of resolving the challenges that that project had in the past, and so we think it's going to be a nice, pleasant addition to the portfolio. And so we're pretty happy with that group. They've done a good job of identifying what the challenges are, and they're putting the money right into the right place.
Speaker Change: We didn't high quality portfolio of assets sector, leading growth profile and commitment to sustainability provides our shareholders with a solid outlook for the future and one of the best vehicles for investing into gold and precious metals space.
Randy V. J. Smallwood: And that $150 million will be...
Randy V. J. Smallwood: Yeah, gotcha. Okay, fine. Sorry. Is that something that could be a Q2 outflow, or is it too early to say that yet? Yeah, it could be Q2.
Richard James Hatch: Helpful. Thanks for your time. Much appreciated. Thanks, Richard.
Speaker Change: As we celebrate our 20th anniversary throughout 2024, I am sincerely thankful to all of our stakeholders for being a part of wheat and success and I truly look forward to a golden future together.
Randy V. J. Smallwood: Thanks Richard and thanks everyone for your time today. We are pleased to report a good, strong start to our 20th anniversary year here at Wheaton. Wheaton's high-quality portfolio of assets, sector-leading growth profile, and commitment to sustainability provide our shareholders with a solid outlook for the future and one of the best vehicles for investing in the gold and precious metals space. As we celebrate our 20th anniversary throughout 2024, I am sincerely thankful to all of our stakeholders for being a part of Wheaton's success, and I truly look forward to a golden future together. We look forward to speaking with you again soon. Thank you.
We look forward to speaking with you again soon thank you.
Operator: Thank you. This concludes this conference call for today. Thank you for participating. Please disconnect your line.
Speaker Change: Thank you.
Speaker Change: This concludes today's conference call for today. Thank you for participating please disconnect your lines.