Q3 2024 Wheaton Precious Metals Corp Earnings Call
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Speaker Change: Good morning ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2024 third quarter results conference call.
Speaker Change: All lines have been placed on mute to prevent any background noise.
Speaker Change: After this 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.
Speaker Change: If you would like to withdraw your question, press star then the number 2.
Thank you.
Speaker Change: Thank you, Operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Leachan's 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.
Speaker Change: 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.
Speaker Change: 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.
Randy Smallwood: 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.
Thank you.
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.
Thank you for tuning in.
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.
Speaker Change: This award is reflective of our commitment as the founders and architects of sustainable streaming.
Speaker Change: 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 Constantia 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.
Wes Carson: On July 25, 2024, Valley reported that the Celobo 3 processing plant operations had resumed after being halted for 31 days due to a fire on a conveyor belt.
Wes Carson: Valley has confirmed the 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 planned stripping activity in the Papacancho 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.
Speaker Change: In the third quarter of 2024, Penasquito produced 1.8 million ounces of attributable silver compared to zero production in the third quarter of 2023, which was impacted by a labor 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.
Thank you.
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 care and maintenance, while Stillwater East and East Boulder operations will continue to operate.
Speaker Change: Subanya 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 Voices 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 to 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.
Gary Brown: 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.
Speaker Change: Strong commodity prices, coupled with our solid production base, resulted in revenue increasing by 38% to $308 million. Of this revenue, 61% was attributable to gold, 37% to silver, 1% to palladium, and 1% to cobalt.
Speaker Change: As of September 30, 2024, approximately 136,000 GEOs were in PB&D, representing approximately three months of payable production.
Speaker Change: a slight increase from the preceding four quarters due to relative differences in timing of sales and at the upper end of our guided range of two to three months.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: During the quarter, Wheaton made total upfront 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.
Speaker Change: 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.
Speaker Change: We believe this cash balance, combined with the strength of our forecasted operating cash flows and the fully undrawn $2 billion revolving credit facility,
Speaker Change: 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 Haytham 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.
Haytham Hodaly: 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.
Haytham Hodaly: 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: Whedon 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 Kone, 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, CONI 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.
Speaker Change: 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: 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 Coney project towards production. With that, I will hand the call back over to Randy.
Thank you, Haytham.
Randy Smallwood: In summary, Wheaton's third quarter was distinguished by several key highlights.
Speaker Change: 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.
Speaker Change: 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.
Speaker Change: Shortly following quarter's end, we announced two accretive precious metal streaming transactions.
and expansion to the existing stream on Rio 2's Phoenix.
project and the new stream on Montage's Kone project.
Speaker Change: further adding to our already impressive organic growth profile of over 40% in the next five years.
Speaker Change: 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: 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 4 by the 1 on your telephone keypad.
Speaker Change: If you would like to withdraw your 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 8 Capital. Please go ahead.
Rob Profitti: Thanks operator and good morning and thanks for taking my questions.
Speaker Change: Randy and Wes, you touched on this a little bit, and I just want to confirm that Copper World
Speaker Change: is really the only new asset that will be rolling into new guidance when you roll it forward and you think about that 2029 target, right? I'm just trying to separate, you know, 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: ten-year plan that will be moving forward into the five-year years.
Okay, that's helpful, yeah.
Speaker Change: Randy and maybe Haytham, we're seeing the secure debt as part of the Phoenix transaction. We're increasingly seeing, you know, debt structures coming into some of these streams. Just wondering...
Speaker Change: Within that bucket and 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 WICAN wants to provide? Can you talk to me a little bit about the advantages you're getting on securing that debt in and with those streams?
Speaker Change: Yeah, I'll start and then let Haytham 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,
Haytham Hodaly: 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.
Speaker Change: 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.
Haytham?
Haytham Hodaly: 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 secure debt, whether it's cost over on a facility, whatever 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. [inaudible]
Haytham Hodaly: 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.
Haytham Hodaly: 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. 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.
Well understood. Thanks for your answers.
Thanks, Ralph. Thanks.
Speaker Change: Thank you and your next question comes from the line of Tanya Jacobs-Connick from Scotiabank. Please go ahead.
Tanya Jacobs-Connick: Good morning, everybody. Thank you for taking my questions, and it's good that the operator gets my name right, so very excited. We try hard.
Tanya Jacobs-Connick: 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.
Tanya Jacobs-Connick: Can I follow up on Ralph's question and maybe that's for you Randy or Haytham to
It continued on.
Tanya Jacobs-Connick: 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.
Tanya Jacobs-Connick: in addition to the stream. Some have equity, some have prepaid, some have collars.
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 pretty good perspective in terms of how this industry has changed.
Speaker Change: And I think one of the aspects to keep in mind is the capacity. At Wheaton, we've now got such strong capacity to be able to actually consider 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: 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
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: 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.
Speaker Change: Each one of them has a different appetite in terms of mix. I mean, we've seen some very debt-heavy, expensive debt-heavy financing 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.
Speaker Change: And the structure works in terms of aligning between the two groups. So 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 in, 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: 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...
Haytham Hodaly: by seeing some private equity groups come into the space. I've talked way too long on this one. Haytham, 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 many industries, businesses have to evolve.
We can either...
Haytham 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
Haytham 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 with many of these different
diversified tools I would say.
Speaker Change: And maybe just in you 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 to that.
Speaker Change: No, no, no. 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, deja vu when I was looking at this and I'm like I have to wake up and see that model pair up again. So Haytham, 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 to $300 million now are $500 million.
Speaker Change: 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, you know, the funding for construction?
Speaker Change: 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
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 in one to 300. And the majority is, as I said, it's development funding.
Speaker Change: And can I just also confirm, some of 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?
Tanya Jacobs-Connick: Okay, thank you so much for taking my questions. I'm sorry to say that it's someone else asking 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.
Speaker Change: 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.
Speaker Change: 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 going to be a pretty material increase in what you're projected.
Speaker Change: 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: and starting to sort of, you know, push us up even farther. So yeah, you're right, that combined with Kone coming on stream and the larger Phoenix package, you know, 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: I'll let Gary take that one. Yeah, Lawson, look, the biggest component of that is the $163 million that would be due to Valet should they...
Gary Brown: 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's likely to move to 2025.
Gary Brown: And when it does, it drops down to about $144 million, I think. As it gets, you know, the later it gets satisfied, the lower the payment gets.
Speaker Change: Thanks for reminding us about that one. That's an important iteration, yeah.
Speaker Change: And then, okay, so one other one just on the assets, so Constantia.
Speaker Change: How should we think about the sales trailing production? Based on what Hudbay is guiding to, there's a really big step up in Q4.
Speaker Change: in precious metal production versus Q3, but then there's that delivery mismatch. What would you guide us to do to kind of account for that timing mismatch for Q4?
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's 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 outside, you know, HADBE will take that approach. It's something that we have traditionally seen.
Wes Carson: to capture back a lot of that produced but not yet delivered into Q4. So I don't know if Wes you have anything to add to that? Yeah, no, I think that covers it well. I mean, we've seen them starting to move back into Papakantia in the latter part of Q3 and we'll see that obviously as we said into Q4 there. So, and as Randy said, I wouldn't expect anything different than what they're saying.
Wes Carson: 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: Can I 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 royalty deals well into the $2,000 per ounce range.
Speaker Change: Meanwhile, maybe there's value in looking at 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 the assets, some of the core assets in there have some structural flaws and some weaknesses that in our eyes...
Speaker Change: just not as good as a good old Wheaton stream and and so so you know the valuation differential You know may be appropriate in terms of what they trade at versus what we trade at You know
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. Haytham, I don't know if you've got anything to add to that.
Haytham 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 at a slight discount to NAV.
Haytham Hodaly: So, you know, it always doesn't make sense to pay a 30-plus percent premium on assets that's trading at NAV.
Haytham Hodaly: to consolidate assets that we've 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 all.
Thank you. Thank you. Thank you.
Thank you.
Thank you.
Speaker Change: and your next question comes from the line of Will Dalby from Berenberg, please go ahead.
For the quarter, you say about three months worth.
Speaker Change: 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: Thanks Will. 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 Mantineo port, which is the main export.
Wes Carson: for Penesquito, so we did see a build-up there, and being our second-largest asset, that certainly adds things up. I mean, we do often see these build-ups kind of at various different times during the year, and as we said earlier, we generally see that drawdown in Q4, and that is what we're expecting to see again this year.
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: is of course, I mean, you know, 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 expiration potential delivered ahead of the actual original ore body, which is the Rosemont in the 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. 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 what the plan is going forward, how the impact changes because, 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: to actually move off the private lands 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 I'm 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.
Randy Smallwood: Okay, useful, useful. Thanks Randy. Just thinking out loud on that one, you know, as the development advances a bit further, it becomes more certain in those negotiations.
Randy Smallwood: Is there maybe scope for Wheaton to take a bigger piece there, to put in more upfront CapEx, maybe under renegotiated terms, is that something that is on the table, potentially?
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. So everything's on the table when it comes to these discussions. HUDBAE 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.
Thank you.
Okay, very clear. Thanks very much guys. Cheers. Thanks Rob.
Thank you.
Speaker Change: Thank you. And your next question comes from the line of Kerry McCrory from Connecticut Genuinity. Please go ahead.
Speaker Change: 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, yeah. 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.
Yeah, Gary, it's interesting.
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 then 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, but we should see a healthy wrap-up in 2025, I guess.
Yep, absolutely.
I appreciate it, thanks.
Speaker Change: Thank you, Gary, 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.
Speaker Change: 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.