Q3 2024 Wheaton Precious Metals Corp Earnings Call
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Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2024 3rd Quarter Results Conference Call.
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 one on your telephone keypad.
If you would like to withdraw your question, press star then the number 2.
Speaker Change: I would like to remind everyone that this conference call is being recorded on Friday, November 8, 2024 at 11 o'clock AM Eastern Time. I will now turn the conference over to Ms. Emma Murray, Vice President of Investor Relations. Please go ahead.
and the other one.
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's President and Chief Executive Officer, Gary Brown, Senior Vice President and Chief Financial Officer, Hatham Hodaly, Senior Vice President Corporate Development, and Wes Carson, Vice President Mining Operations.
Emma Murray: 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 our website.
Emma Murray: 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. 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.
Randy Smallwood: Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's third quarter results of 2024.
Randy Smallwood: I am pleased to announce that our portfolio of long-life, low-cost assets delivered another robust quarter, generating record quarterly operating cash flows of $254 million.
Randy Smallwood: and underscoring the effectiveness of our business model in leveraging rising commodity prices while maintaining strong cash operating margins.
Randy Smallwood: The company has produced approximately 450,000 gold equivalent ounces year-to-date, and we are well on track to achieve our 2024 production guidance of 550 to 620,000 gold equivalent ounces.
Randy Smallwood: Shortly following the quarter, we announced two accretive precious metal streaming agreements. First, an expansion to the existing stream on RIO2's Phoenix project for an additional $100 million.
Randy Smallwood: And second, a new $625 million gold stream on Montage's Kone project, marking the largest streaming transaction done by a single streamer in nearly a decade.
Randy Smallwood: Together, these transactions further diversify our strategic partnerships and the geography of our portfolio, and once ramped up, the KONE project is forecast to contribute meaningful near-term production, supporting Wheaton's already prominent position as a leader in the sector's growth landscape.
Randy Smallwood: 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.
Randy Smallwood: The company's balance sheet also remains very strong, with approximately $700 million cash at quarters end and a $2 billion undrawn revolving credit facility, which, when coupled with the strength of our forecasted operating cash flows, provides strong flexibility.
Randy Smallwood: To fund all outstanding commitments as well as the capacity to acquire additional accretive streams
Randy Smallwood: During the quarter, we launched the inaugural Future of Mining Challenge, which will award $1 million to the winning venture.
Randy Smallwood: The award will be used towards advancing a technology aimed at minimizing environmental impacts while improving productivity and efficiencies in our industry.
Randy Smallwood: This exciting challenge will help ensure that key resources are responsibly available for future generations.
The End
Randy Smallwood: This award is reflective of our commitment as the founders and architects of sustainable streaming.
Randy Smallwood: to operate responsibly and help others in our industry to do the same.
Speaker Change: Our performance year-to-date supports our belief that the strength of our organic growth profile, combined with favorable commodity price trends, firmly positions Wheaton as the premier choice for high-quality, long-life precious metals exposure.
Speaker Change: And with that, I would like now to turn the call over to Wes Carson, Vice President of Operations, who will provide more detail on our operating results. Wes.
Thanks, Randy. Good morning.
Wes Carson: Overall production in the third quarter came in higher than expected, driven by strong performances at Constancia and Salobo relative to forecast.
Wes Carson: In the third quarter of 2024, Solobo produced 62,700 ounces of attributable gold, a decrease of approximately 9% relative to the third quarter of 2023, primarily due to lower grades partially offset by higher throughput.
Speaker Change: On July 25, 2024, Valley reported that the Celobo III processing plant operations had resumed after being halted for 31 days due to a fire on a conveyor belt. Valley has confirmed that 2024 copper production guidance of 320,000 to 355,000 kilotons has been maintained.
Speaker Change: In the third quarter of 2024, Constantia produced 600,000 ounces of attributable silver and 10,400 ounces of attributable gold, a decrease of approximately 7% and 45% respectively relative to the third quarter of 2023.
Speaker Change: The decrease in silver production was primarily due to lower grades and recoveries. The decrease in gold production was primarily due to the result of lower gold grades due to the plant stripping activity in the Papakancha Pit, which commenced in the second quarter and continued throughout the third quarter.
Speaker Change: On August 13, 2024, Hudbay reported that the stripping program for the next mining phase of Papakancha was underway and expected to lead to significantly higher copper and gold grades in the fourth quarter of 2024.
and the other one.
Speaker Change: In the third quarter of 2024, Pennesquito produced 1.8 million ounces of attributable silver compared to zero production in the third quarter of 2023, which was impacted by a labour strike that lasted from June 7th through October 13th of 2023.
Speaker Change: Production in the third quarter transitioned the focus from mining in the Chile-Colorado Pit to the main Pinasco Pit, which has higher gold but lower silver and base metal grades.
Speaker Change: In the third quarter of 2024, the Stillwater Mines produced 2,200 ounces of attributable gold and 4,000 ounces of attributable palladium.
Speaker Change: A decrease of approximately 8% on gold relative to the third quarter of 2023, primarily due to lower recoveries, while palladium production was virtually unchanged.
Speaker Change: On September 12th of 2024, Sibania announced that as a result of low platinum and palladium prices, Stillwater West operations are being placed into Karen Maintenance, while Stillwater East and East Boulder operations will continue to operate.
Speaker Change: Sabania reports that Stillwater West could return to production as price permits.
Speaker Change: Based on Sabania's Q3M DNA, the company's management estimates that while Stillwater West operations remain on care and maintenance, 2025 production relative to the Stillwater PMPA will be approximately 40-45% lower than historical levels.
Speaker Change: In the third quarter of 2024, the Boise's Bay Mine produced 397,000 pounds of attributable cobalt, an increase of approximately 118% relative to the third quarter of 2023, as the transitional period between the depletion of the Ovoid Open Pit and the ramp-up to full production of the Boise's Bay Underground Mine nears completion.
Speaker Change: Valley reports the physical completion of the Boise's Bay Underground Mine extension was 99% at the end of the third quarter with all surface construction completed and the commissioning of the Reed Brook power plant remaining.
Speaker Change: In the Eastern Deeps Mine, the bulk material handling system achieved mechanical completion in early October, and Valley indicated that the focus is now on commissioning, with handover operations within 2024.
Speaker Change: Year-to-date our portfolio of assets has delivered solid production levels and will remain well on track to achieve our annual production guidance range of for 2024 of 550,000 to 620,000 gold equivalent ounces.
Speaker Change: In the medium term, production is forecast to increase at an industry-leading rate of approximately 40% to over 800,000 ounces by 2028, primarily due to growth from our operating assets including Celobo, Antimena, Boise's Bay, and Maramato.
Speaker Change: development projects which are in construction and or permitting including Blackwater, Platte Reefs, Goose, Mineral Park, Phoenix, Craypomba and Santo 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.
from 2029 to 2033.
Speaker Change: Attributable production is forecast to average over 850,000 GEOs in the five-year period.
Speaker Change: The transactions announced in 2024, including the new stream associated with the Kony project and the amendments related to the Phoenix project, have not yet been incorporated into the long-term guidance.
Speaker Change: The company will provide updated, longer-term guidance in normal course in the first quarter of 2025, which will incorporate the impact of recent developments and these recently announced transactions.
Speaker Change: That concludes the operations review, and with that, I'll turn the call over to Gary.
Thanks Wes.
Gary Brown: As described by Wes, production in the third quarter amounted to 144,000 GEOs, consistent with the comparable period of the prior year, with lower production from Salobo and Constantia being offset by higher production from Penasquito.
Gary Brown: Sales volumes amounted to 123,000 GEOs, an increase of 10% relative to the comparable period of the prior year, primarily due to timing of sales resulting from the relative changes in ounces produced but not yet delivered, or PBND.
Gary Brown: Strong commodity prices, coupled with our solid production base, resulted in revenue increasing by 38% to $308 million.
Gary Brown: Of this revenue, 61% was attributable to gold, 37% to silver, 1% to palladium, and 1% to cobalt.
Gary Brown: As of September 30, 2024, approximately 136,000 GEOs were in PB&D, representing approximately three months of payable production, a slight increase from the preceding four quarters.
Gary Brown: due to relative differences in timing of sales and at the upper end of our guided range of two to three months.
Gary Brown: G&A expenses amounted to $9.5 million for the third quarter, and the company now anticipates that G&A will be at the lower end of the previous estimate of $41 to $45 million for the year, with these figures excluding share-based compensation, as well as donations and community investments.
Gary Brown: Net earnings amounted to $155 million, an increase of $38 million, with the increased gross margin being partially offset by a $28 million global minimum tax expense, with the related legislation being enacted earlier this year.
Gary Brown: As we previously messaged, GMT accrued to December 31st, 2024 will be payable on or before June 30th, 2026, or 18 months following year end.
Gary Brown: Despite the persistent inflationary environment, and thanks to our low and predictable cost structure, third quarter cash flows increased nearly 50%, or $83 million to $254 million, representing a new quarterly record for Wheaton.
Gary Brown: The company's board declared a quarterly dividend of 15.5 cents per share, consistent with the prior two quarters, and a 3% increase from the prior year.
Gary Brown: During the quarter, Wheaton made total up-front cash payments of approximately $30 million, $25 million of which was relative to the Mineral Park Stream, and $5 million of which was relative to the Delamar Royalty.
Additionally, the company distributed $70 million in dividend payments.
Gary Brown: When coupled with the $254 million of cash generated from operating activities, overall, the company generated net cash inflows of $154 million in the third quarter of 2024, resulting in cash and cash equivalents at September 30th of $694 million.
Gary Brown: We believe this cash balance, combined with the strength of our forecasted operating cash flows and the fully undrawn $2 billion revolving credit facility, positions the company exceptionally well to satisfy its funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream interests.
Speaker Change: That concludes the financial summary and with that I will turn the call over to Hatham to discuss our recent partnership with Montage in more detail.
Speaker Change: Thank you, Gary, and good morning, everyone. On October 23rd, Whedon announced that we had entered into a new stream relative to the Kony project for up-front cash consideration of $625 million in addition to a $75 million secured debt facility.
Speaker Change: We held a conference call the day after the announcement to discuss the details, the replay of which is available on our website.
I will highlight a few of those key points today.
Speaker Change: With essential permits in place, coupled with its impressive scale, we believe the Kony project stands out as one of the premier gold assets in Africa.
Speaker Change: Supported by strong shareholder backing from the Lundin Group and Zijin Mining, the Coney Project is expected to significantly boost Wheaton's near-term annual gold production and further strengthen our peer-leading growth trajectory.
Speaker Change: In fact, once fully ramped up, Montage is forecast to become our second-largest producing asset over its first five years of production and third-largest producing asset overall.
Speaker Change: WEDIN is focusing on high-quality mining projects that can support streaming transactions in the long term, maintain social license by operating in a responsible manner, and support the communities around their operations.
Speaker Change: During our site visit to Koine, we visited various community investment projects in and around the mine that are supporting community members, including providing potable water through newly constructed water wells.
Speaker Change: Based on the feasibility study published in 2024, Kony ranks as one of the highest quality gold projects in Africa, with a long 16-year mine life, low all-in sustaining costs of $998 per ounce over the life of the mine, and sizable total annual production of over 300,000 ounces of gold over the first eight years.
Speaker Change: Under the Kone Stream Agreement, Whedon will receive 19.5% of the payable gold until a total of 400,000 ounces of gold has been delivered.
Speaker Change: Subject to adjustments if there are delays in deliveries relative to an agreed upon schedule. At which point, Whedon will then purchase 10.8% of the payable gold until an additional 130,000 ounces of gold has been delivered. After which, Whedon will then purchase 5.4% of the payable gold for the life of the mine.
Speaker Change: In return, Whedon will make ongoing payments for the ounces delivered equal to 20% of the spot gold price.
Speaker Change: Attributable gold production is forecast to average over 60,000 ounces of gold per year for the first five years of production, over 47,000 ounces of gold per year for the first ten years of production, and over 34,000 ounces for the life of the mine, and Wheaton anticipates receiving ounces beginning in early 2027.
Speaker Change: As outlined in the Definitive Agreement, Montage will provide Whedon with corporate guarantees and certain other securities over their assets. In addition, Whedon has obtained a right of first refusal on any future precious metal streams, royalties, prepays, or similar transactions.
Speaker Change: In conclusion, we are very pleased to partner with Montage, who with long-standing relationships in West Africa has done an immense amount of work to de-risk the asset and are rapidly advancing the Kony project towards production. With that, I will hand the call back over to Randy.
Thank you, Hatham.
Randy Smallwood: In summary, Wheaton's third quarter was distinguished by several key highlights.
Randy Smallwood: We achieved record quarterly cash flows of $254 million and declared a 15.5 cent quarterly dividend. And we are well positioned to achieve our annual guidance range of 550,000 to 620,000 gold equivalent ounces.
Randy Smallwood: Construction activities advanced at a number of our development projects, including Blackwater, Goose, Platte Reef, and Mineral Park, all of which are expected to be producing within the next 12 months.
Randy Smallwood: Shortly following quarter's end, we announced two accretive precious metal streaming transactions.
an expansion to the existing stream on RIO2's Phoenix.
project and a new stream on Montage's Kone project.
Randy Smallwood: further adding to our already impressive organic growth profile of over 40% in the next five years.
Randy Smallwood: Our balance sheet remains one of the strongest in the industry, providing ample capacity to add accretive, high-quality streams into our portfolio. And lastly, we continue to demonstrate leadership in sustainability.
with the launch of our inaugural Future of Mining Challenge.
Speaker Change: So with that operator, I'd like to open up this call for questions, please.
Speaker Change: Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the 1 on your telephone keypad.
Speaker Change: If you would like to return a question, please press star then the number 2. If you are using a speakerphone, please lift the handset before pressing any keys. There will be a brief pause while we compile the Q&A roster.
Speaker Change: Thank you. And your first question comes from the line of Rob Profitti from Aid Capital. Please go ahead.
Rob Profitti: Thanks operator and good morning and thanks for taking my questions.
Speaker Change: Randy and Wes, Wes, you touched on this a little bit, and I just want to confirm that Copper World
Speaker Change: existing from new streams that are going to come into the guidance. Obviously, notwithstanding that, you know, we're still quite a ways off from providing more details on that guidance that we'll get in the first quarter of 2025.
Speaker Change: Sorry Ralph, you're just talking about ones that are going to come in that aren't in the five-year guidance right now that are rolling in, is that? Exactly.
Speaker Change: Yeah, yeah, so that is. You're right, Copper World would be the one that's...
Speaker Change: that is coming in that 2029 period. So, I mean, obviously there's quite a number of other assets that are within that five-year period, including the new transactions that we've done. So, but as far as ones that are in the current
Speaker Change: 10-year plan that will be moving forward into the five-year years.
Okay, that's helpful, yeah.
Speaker Change: Randy and maybe Hatham, we're seeing this secure debt as part of the Phoenix transaction. We're increasingly seeing debt structures coming into some of these streams. Just wondering...
Speaker Change: Within that bucket in that portfolio, is there an ultimate limit on how much debt you want to carry in some of these partnerships? How far away are we from a limit on how much we can want to provide? And can you talk to me a little bit about the sort of the advantages you're getting on securing that debt in with those streams?
Speaker Change: Yeah, I'll start and then let Tatham add some additional color. There's definitely an appetite in the space for a one-stop shop. You know, we've seen more and more companies look at that. And I have to tell you, when it comes to negotiating security amongst a different number of, you know,
Speaker Change: You know, the debt combined with the stream and stuff like that. If you're negotiating with yourself, it's pretty easy. It's a lot more comfortable than having to negotiate with other institutes that are coming in. And so, you know, it allows us to structure the agreement so that it works favorably for Wheaton on the security side. You know, so it's quite attractive.
Speaker Change: That being said, I mean, we are a streaming company, and so we won't chase down a situation where there'd be more value tied up in the debt side of a one-stop shop financing.
Speaker Change: We will always be, you know, stream dominant in terms of that value. And so, you know, there is an increased appetite for it, and probably, you know, wouldn't be surprised to see even more of these things coming out over the next while.
Aidan?
Aidan: Thanks. I mean, that's well put, Randy. I think from our perspective, when we're looking at these opportunities, obviously, we're always looking to do a stream. If it makes sense for us to come in and do a small piece of debt, whether it's secured debt, whether it's cost overrun facility, whatever it happens to be, then we'll definitely consider it. But our primary focus, Ralph, is always just to put as big a stream on there as possible, without detrimentally affecting the economics of the project, long term.
Aidan: It really goes back to our belief that the best thing that we can do for our shareholders is just deliver good exposure to high quality precious metals production. It's the optionality of that commodity price along with associated expiration upside and such like that.
Aidan: But, you know, I think the montage deal was a really good example of how we can actually do that and actually provide our shareholders even more.
Aidan: Gold production, access to, you know, exposure to more, even more gold production.
Speaker Change: Ralph, I'll just add one thing, that doesn't mean every deal we look at will have a full financing package, just to be clear. There are some areas where it makes sense to diversify the risk among other participants as well.
Speaker Change: So just keep that in mind. For opportunities where we see very low risk, strong production, long mine life, quick payback, that's the opportunities that we would probably consider.
Gotcha. OK.
Well understood. Thanks for your answers.
Thanks Ralph.
Speaker Change: Thank you and your next question comes from the line of Tanya Jackus-Konek from Scotiabank. Please go ahead.
Speaker Change: I don't know who I was yesterday, but they kept saying your line is open. I said, I think that might be me. Anywho.
Speaker Change: Can I follow up on Ralph's question and maybe that's for you Randy or Hatham to
to continue on.
Speaker Change: As you look at the environment today, and I know it's quite competitive, what I've noticed is that we have a lot of maybe nuanced changes to these agreements, and Rob touched on the depth.
Speaker Change: in addition to the stream. Some have equity, some have prepaid, some have callers.
Speaker Change: Maybe someone can just review with me, what are you seeing out there in terms of, yes, you're a one-stop shop, but what are some of the things that are being asked that have changed over the, let's say, the last three months, six months because of the competitive environment?
Speaker Change: Yeah, I mean, you know, having been in the business now for 20 years, we just celebrated our 20th anniversary. We've got a, you know, a pretty good perspective in terms of how this industry has changed.
Speaker Change: I think one of the aspects to keep in mind is the capacity at Whedon.
Speaker Change: You know, we've now got such strong capacity to be able to actually consider, you know, expanding some of the...
Speaker Change: without losing our core focus of streaming as being the best way to deliver precious metals exposure to our shareholders.
Speaker Change: We have the capacity to step up and fill in some of the ancillary benefits and stuff like that.
Speaker Change: You know, I'm going to actually point back to probably about seven, eight years ago when we started seeing private equity heavily invest into the space. And private equity, of course, is a little bit agnostic in terms of what the split of financing is.
Speaker Change: You know, I think that's probably helped shape the industry, in terms of opportunities, because
Speaker Change: There's no doubt that we're competing against that as a source of capital. I mean, there's all sorts of different sources, alternative sources of capital in terms of moving forward.
Speaker Change: So, you know, I think it's a matter of staying agile and listening to what works for the operators, for the actual mind-builders, the developers, in terms of what they need as a source of capital, what works for them. Each one of them has a different appetite in terms of mix. I mean, we've seen some...
Speaker Change: Some very debt-heavy, expensive debt-heavy financing is done on other development projects around here with minor streams.
Speaker Change: You know, I think the Kone project, the stream we did there, was very, you know, from a montage perspective, a very attractive source of capital, you know, in terms of cost of capital and what they brought in. And the structure worked in terms of aligning between the two groups.
Speaker Change: So, you know, I think really what it comes down to is having flexibility and creativity in terms of...
keeping in mind our core focus, which is to deliver
Speaker Change: precious metals production to our shareholders. But to do that and, you know, if it means like a couple of ancillary, you know, cost overrun facilities or a small amount of debt that's wrapped around that or equity investments. You know, we've been we've actually been as equity investors.
Speaker Change: You know, I think the first equity investment we did was well over 15 years ago, or 14 years ago. So equity has always been a part of it. If we believe in these projects, I mean, you know, we always...
Speaker Change: As a streamer, we compete against equity as a source of financing, so if we believe in the project, the equity is probably a pretty good deal from our perspective.
Speaker Change: And so, you know, we've long been on the equity side. The debt is something that's a little bit more new, but I think that was probably brought in, as I said, by...
Speaker Change: by seeing some private equity groups come into the space. I've talked way too long on this one. Hatham, do you have anything to add to that? I've probably covered it all there, but... You have. Tanya, I would just say, you know, what we've seen in this industry is, and in many industries, businesses have to evolve.
We can either...
Hatham Hodaly: be evolved or be left behind and whether we're lagging or leading, I think we would rather be leading than lagging and setting the precedent for the next transaction and how we'd like to see that one structured.
You know, as Randy said...
Hatham Hodaly: streamed at equity cost overrun facilities. You know, our primary business would always be streaming, but the bigger and more diversified the funding package, the better the return to Wheaton. Now, that being said, as I mentioned in my response to Ralph, not every opportunity we'd be prepared to take on a full funding package, but there are some that we feel very comfortable in supporting on with many of these different
diversified tools I would say.
Speaker Change: and maybe just continue and I just want to confirm you know I've been in the business while as well and I remember
one of your, you know, peers actually taking a
a joint venture interest in an asset.
Speaker Change: I think that might be the way to go. I'm just worried we're going to get stuck.
Speaker Change: Don't worry, Tanya, that's never going to happen. I can tell you right now, the reason the streaming model works is because we have that fixed cost structure with that significant capital cost exposure and operating cost exposure. We're not going to take that away. That's going to continue forever.
Speaker Change: As I said, the déjà vu when I was looking at this and I'm like I
Speaker Change: not to wake up and see that model pair up again. So, Hatham, maybe now that you've confirmed that's not your model, just...
Speaker Change: coming back to the environment again today. What are you seeing out there? One of your peers mentioned deals that used to be $100 million to $300 million now are $500 million.
Hatham Hodaly: or closer to, no, they're more 300 million with a few over 500. Can you just tell me what you're seeing out there, deal size and whether anything has changed from what we had previously talked about, which was the funding for construction.
Hatham Hodaly: acquisitions of assets and or other. How has that changed our last call?
Speaker Change: I'm happy to answer that question. What we're seeing right now, Tanya, is still a focus on the single asset development stage opportunities. The range, I would say, is probably somewhere between 100 and 350. There is one or two out there that are
Thank you for watching. See you next time.
but they don't necessarily fit Wheaton's
Speaker Change: I'd say parameters for investment. So our focus right now, and we've told you over the last couple of years that we're going to do a couple over $500, and you saw that we did do a couple over $500. I think the best ones are gone. I think the focus right now will be on those ones that are $100 to $300. And the majority is, as I said, it's development funding.
Speaker Change: And can I just also confirm some of, you know, your peers also mentioned a lot of opportunities in the Americas and Australia. Is that what you're seeing or are you seeing other areas of the world?
Speaker Change: We're seeing everywhere. I mean, listen, there's opportunities. There is stuff in the Americas, there's stuff in Europe, there's stuff in Australia and surrounding countries there. You know, I would say the majority of the stuff we're seeing is in first world jurisdictions.
Speaker Change: Okay, thank you so much for taking my questions. I'm sorry to just let someone else ask questions. My pleasure, Tanya. Thank you, Tanya.
Speaker Change: Thank you. Once again, should you have a question, please press star, followed by the one on your telephone keypad. Your next question comes from the line of Lawson Winder from Bank of America. Please go ahead.
Lawson Winder: Thanks very much, operator. Good morning, guys. Hello, Randy and team. Thanks for the update today. Just maybe where I'd start is on the long-term guidance and picking up where Ralph had started.
Lawson Winder: When you think about the lower PGMs from Stillwater, but then the really big offset from KONE and some of the other moving parts as you roll forward into 2029, I mean, it seems to me that there's gonna be a pretty material increase in what you're projected.
Lawson Winder: GEO production would be for that year. Is that fair or are there some moving parts there that we might not be considering?
Thank you.
Speaker Change: Yeah, Lawson, thanks for the call. You know, one of the other projects in the portfolio that really starts ramping up is Platte Reef in 2029, so that will wind up coming back into, as Ross' original question, that'll be coming back into the five-year guidance.
Speaker Change: coming on stream, and the larger Phoenix package. Keep in mind that we've substantially grown the size of that stream as part of the...
Speaker Change: as part of the expansion of that relationship with RIO2. All will provide good growth on the tail end of that five-year guidance.
Speaker Change: I'd also say, Austin, that really the Stillwater ramp-down that they've got right now is hopefully temporary here as well. I mean, we still believe in this asset, I mean, it's a very strong asset, and we'll still see good production out of both East Boulder and Stillwater East over the next number of years. I mean, the impact of that is...
Speaker Change: kind of more in this 10,000 to 15,000 ounce range, really, overall. It's not that significant compared to the additions that we're seeing from all of these other projects coming online in the next few years. So we do see significant growth there, and really the slowdown at Stillwater doesn't impact that growth in a material way.
Okay, that's very helpful. Thank you both for that color.
I wanted to also ask about the projected payments.
Speaker Change: There's $238 million projected for Q4. How much of that $238 million has already been committed now, quarter to date, and is there some piece of that that might slip into 2025?
Speaker Change: satisfy the completion test on the third line there by year-end which is I think very unlikely at this point so you know that that that's likely to move to 2025.
Speaker Change: and when it does it drops down to about a hundred and forty four million I think yeah as it gets you know the later it gets satisfied the the lower the payment gets
Speaker Change: Hi, thanks for reminding us about that one. That's an important consideration. Yeah. And then, and then okay, so one other one, just on the on the asset. So Constancia.
Speaker Change: How should we think about the sales trailing production? I mean, based on what Hudbay is guiding to, I mean, there's a really big step up in Q4.
Speaker Change: in precious metal production versus Q3, but then there's that delivery mismatch.
Speaker Change: I mean, what would you guide us to do to kind of account for that timing mismatch for Q4?
Speaker Change: Thank you for watching. Please like, comment, and subscribe. See you next time.
Speaker Change: I'll just have an overall comment. We always see this in Q4. That difference between production and sales gets squeezed in Q4 because everyone is trying to get the most sales into their year-end results.
Speaker Change: And so, you know, there's always going to be a lag, especially for something like constancy where you're producing a con and having to ship it off, it means that it takes a bit longer to go through the process, we always guide two to three months typically for something like that. But I would say that in Q4...
Speaker Change: It probably turns into a one-and-a-half to two-and-a-half month versus two to three months, if you know what I mean. Everything gets squeezed a little bit tighter in Q4, so we're hopeful that on that side...
Speaker Change: You know, Hadbay will take that approach, you know, it's something that we have traditionally seen, we expect to...
Speaker Change: than what we've seen traditionally at Constancia with that two to three months, other than they will certainly be pushing in Q4, as all of our other assets will be to try to clear out that PB&D.
Speaker Change: Could also get your thoughts on consolidation in the sector and Wheaton's view on that.
So as you deploy capital, I mean, it seems like...
Speaker Change: deals are getting done at the streaming and and royalty deals well into the $2,000 per ounce range. Meanwhile I mean maybe there's value in in looking at it just acquiring smaller players to get access to the various streams and royalties. Is that a fair statement? Is that something that's on the radar for Wheaton right now and just any additional thoughts?
has continued to deliver, I think, a good performance.
Speaker Change: Good result for our shareholders. The challenge with consolidation is that even the smaller of the streaming companies...
Speaker Change: I'm going to say a lot of them have had to sort of, you know, be a little bit more relaxed on structure and security in order to get their foot in the door. And so, you know, some of their, some of the assets, some of the core assets in there have some structural flaws and some weaknesses that in our eyes
Speaker Change: It's just not as good as a good old Wheaton stream, and so the valuation differential may be appropriate in terms of what they trade at versus what we trade at.
Speaker Change: When you look at it from a consolidation perspective, by the time you put in any type of a takeover premium, it actually gets very expensive. To date, we have been very successful investing into good operating companies for
Speaker Change: for acquisition prices that are close to NAV but definitely lower than what even these smaller companies are.
Speaker Change: It's not to say that we don't watch the market and keep an eye and see if there are opportunities in this space. We always will. It would be foolish not to.
Speaker Change: But I think it's rather unlikely, especially given the opportunity set that we see out there. Hatham, I don't know if you've got anything to add to that.
Hatham Hodaly: Yeah, the only other thing Lawson and I would add is if you look at the actual valuations and where these things are trading relative to NAV, they're all trading pretty close to NAV and we're actually out there buying assets at NAV or a slight discount to NAV.
Hatham Hodaly: So, you know, it always doesn't make sense to pay a 30-plus percent premium on assets that's trading at NAV.
Hatham Hodaly: to consolidate assets that we passed on in the past when we looked at them. So, yeah, I don't see us doing any consolidation. Now, that doesn't mean we wouldn't be opportunistic. If one of these companies suddenly had a hiccup and the stock was down 50% and we felt it was recoverable, that's something we would look at. But, you know, that's not in the pipeline right now.
Okay, that's really helpful. Thank you, guys.
Thank You
Thank you for watching. Bye.
Thank you.
Speaker Change: And your next question comes from the line of Will Dalby from Berenberg. Please go ahead.
Speaker Change: Hi Randy and team, thanks for the call, and congrats on the solid quarter. Just a couple from me, the first on produced but not delivered, I know you've touched on it already, but got 136,000 geos for the quarter, you say about three months worth.
Speaker Change: But I'm just looking at kind of steady additions for the last...
Speaker Change: year or so. I wonder if you could maybe give a bit more detail on what's driven that build and are you, you know, you said you're expecting that to release but, you know, what kind of certainty do you have around that releasing over the next quarter or so? That's the first question, thanks.
Yeah, well, I'm going to let Wes answer that one.
Wes Carson: The single largest thing that we've seen there is really the build-up at Penosquito, and that's really pretty much entirely due to the hurricane that affected the Manzanillo port, which is the main export for Penosquito, so we did see a build-up there, and being our second largest asset, that certainly adds things up. We do often see these build-ups at various different times during the year, and as we said earlier, we're
Wes Carson: generally see that drawdown in Q4 and that is what we're expecting to see again this year.
Thank you.
Speaker Change: Thanks Wes, that was helpful. And then just a second one on Copperworld. I saw a part of their development strategy and financing, they mentioned they're looking to renegotiate the terms of the stream there. I just wonder if you could give some clarity on how you're expecting those terms to be renegotiated. Thank you.
Speaker Change: Well, I think it comes from the fact that the original plan, the original stream was based on an asset that would deliver
Speaker Change: To our credit, somewhere around 60,000 gold equivalent ounces per year. And the current plan at Copper World...
Speaker Change: It's interesting how these things change. The original stream was signed back in 2010, 14 years ago. And at that point, when we signed that, we had a whole bunch of exploration potential to the north. And that exploration potential has actually turned into copper world.
Speaker Change: And so this is a situation where we're going to see the exploration potential delivered ahead of the actual original ore body, which is Rosemont, into play.
Speaker Change: So, you know, net-net, we've got a lot more ounces in a much bigger ore body than we had back in 2010.
Speaker Change: But the start-up for the Copper World area ultimately will deliver us, the current plan has it delivering to us somewhere close to 40,000 gold equivalent ounces per year versus the 60,000.
Speaker Change: And so, I think we've just got to sit down with HUD-BAE. HUD-BAE is a long-term partner of ours on many different assets and hopeful that we can continue to grow the relationship. So we've just got to sit down and understand. We're still waiting for some firm decisions from HUD-BAE before we have those discussions.
Speaker Change: and get a sense of how, you know, what the plan is going forward, how the impact changes, because the, you know, as I said, the original...
Speaker Change: The original deal was structured around something that was about 50% higher than what the current plan is.
Speaker Change: That being said, the reserve and resource base, especially if you believe that with, you know, responsibly, you hope that common sense prevails and that they're allowed to actually move off the private lands and into the, and take advantage of the ultimate resource there.
Speaker Change: You know, we're definitely in a much more positive position, so we'll have those discussions. You know, as I said, we've got a very strong relationship with Peter and the team at HUD Bay, and so looking forward to it. We're just waiting for a little bit of further clarity on their side before we actually go through that discussion.
Thank you. Thank you.
Speaker Change: You know, I'm not going to sort of bin it by anything. I will say that we do get 100% of the silver and gold, so it's really tough to grow the precious metals stream there.
Speaker Change: And so, you know, not something that we're going to commit to. I wouldn't want to, you know, lay anything out here right now that would confine us in the future in terms of those discussions.
Speaker Change: Everything is on the table when it comes to these discussions. HUD Bay is a good long-term partner of ours and so I look forward to them advancing the project and us being a good part of that.
Okay, very clear. Thanks very much guys. Cheers. Thanks Rob.
Speaker Change: Thank you. And your next question comes from the line of Carey McRury from Caneco Genuity. Please go ahead.
Carey McRury: Hey, good morning guys. Just a question on Cobalt with Boise's Bay looking like it's finally nearing the finish line. How do you see the Cobalt production ramping up for you guys and when do you expect to hit the steady state run mark?
I'll let Wes take that one.
Thanks, Gary.
Wes Carson: So really, as I mentioned there, we're starting to see that ramp up and really we're looking at about a 60% increase in grade from what we saw last year right now and a significant increase in recovery as well, so we're well on our way with that.
Wes Carson: That being said, the full ramp-up of those undergrounds is really going to take about 18 months here, so it'll be well into 2025, early 2026, before we see full production out of those undergrounds. So I would expect to see a continual increase over the next couple of years from that cobalt production we're seeing from Boise's Bay.
And what's the steady state run rate again?
on an annualized basis.
Speaker Change: It comes in somewhere around two million pounds to our to our account
Speaker Change: How does that compare to production last year? Last year production was 600,000 so we're at about 1.2 this year so there's still a ways to go.
Speaker Change: There's still quite a bit of growth there yet. Yeah and then in terms of a related question, you know the production has been ramping up in your numbers but your sales are still quite a bit lower. Is that by design or is there something else going on there?
Speaker Change: So that one's an interesting one. I mean, there's been some...
Speaker Change: Challenges in delivery as you go through it is a very long Delivery time lane lane there it goes all the way over to the Netherlands to be to be sold there so and it's coming down from Labrador down to Newfoundland and that's a it's a it's a long timeline. It's
Speaker Change: probably close to our longest as you go through so there is a lag there and yeah we'll continue to see that as things start to stabilize at the undergrounds and as there is more consistent production we should see that stabilize more but this year it has been a bit more challenged on that.
Speaker Change: Gary, it's interesting. It is, out of all of our portfolio, it's probably the one that has the biggest gap of
Speaker Change: You know how long it takes for production to actually result in sales
Speaker Change: And then we have sales contracts that move that out, but the sales contracts are longer term.
Speaker Change: It definitely trades differently than a precious metal, and because of that, you know, it does have sometimes some bigger lags and sometimes some tighter lags, but just by virtue of the location of the asset and where the ultimate purchases are and where the transaction, where sales actually gets recorded, it's always going to be the longest lag. It's probably going to be closer to four months, four or five months in terms of production, you know, getting through to sales.
Speaker Change: Okay, we should see a healthy wrap-up in 2025, I guess.
Yep, absolutely.
I appreciate it, thanks.
Speaker Change: Thank you, Kerry, and thank you everyone for dialing in. We, of course, are very pleased to have reported yet another strong quarter.
Speaker Change: Wheaton's high-quality portfolio of assets, sector-leading growth profile, and commitment to sustainability provides our shareholders, and all of our stakeholders actually, with a solid outlook for the future in what we believe is one of the best, if not the best, vehicles for investing into the gold and precious metal space.
Speaker Change: We of course have just celebrated our 20th anniversary last month, and as I reflect on the past two decades, I myself am incredibly proud of what our team has been able to accomplish.
Speaker Change: And I just want to sincerely thank all of our stakeholders for their own support and contributions and for being a part of Wheaton's success.
Speaker Change: We do look forward to speaking with you all again very soon. Thank you.
Speaker Change: Thank you. This concludes today's call. Thank you for participating. You may all disconnect.