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Wheaton Precious Metals

CRAziness averted

Update | Mining | 19 Dec 2018

On 13 December, Wheaton Precious Metals (WPM) announced it had reached a ‘principled settlement' for its tax dispute with the Canada Revenue Agency (CRA). Whereas the CRA had been seeking at least US$265m from WPM in taxes, penalties and interest in relation to its reassessment for the 2005o10 tax years with subsequent years left open to similar re-assessment, under the terms of the settlement WPM will actually pay the CRA cash taxes of US$5m for the 2011o17 tax years, US$15m in deferred tax and US$3o4m in interest. More importantly, the settlement creates a framework for both WPM and the CRA to assess tax in future years whereby foreign income on earnings generated by WPM's international subsidiaries will not be subject to tax in Canada.

Wheaton Precious Metals

Good operations offset by prices & finance costs

Update | Mining | 26 Nov 2018

Production of gold, silver and palladium attributable to WPM from its streaming assets were all better than our expectations in Q3, as a result of which the company expects to exceed its previous guidance for FY18. Gold once again surpassed silver as WPM’s biggest sales contributor. However, the company’s financial performance was restrained by a 122.1% increase in financing costs, as net debt increased by 46.0% after WPM’s investment of US$500m in the Stillwater stream earlier this year.

Wheaton Precious Metals

Q218 results in line with expectations

Update | Mining | 21 Aug 2018

Wheaton Precious Metals’ (WPM) Q218 results were closely in line with our forecasts in terms of production, sales, prices and financial results, with better than expected performances at Salobo, in particular, but also San Dimas (gold) and Antamina offsetting weakness at Sudbury, in particular, and also Minto and 777. Somewhat unusually for a second quarter, sales correlated closely with production.

Wheaton Precious Metals

Palladium ex machina

Update | Mining | 24 Jul 2018

On 16 July, Wheaton Precious Metals (WPM) announced it had entered into an agreement with Sibanye to acquire 100% of the gold production plus a percentage of the palladium production from the Stillwater and East Boulder mines for an upfront cash consideration of US$500m. On an underlying basis, we expect the transaction to add 4.0c (or c 5.0%) to WPM’s basic EPS per year over the 10 years from FY21 to FY30.

Wheaton Precious Metals

Kobold ex machina

Update | Mining | 21 Jun 2018

On 11 June, Wheaton Precious Metals (WPM) announced that it had entered into an agreement with Vale to acquire 42.4% of cobalt production from Voisey’s Bay from FY21 for an upfront cash consideration of US$390m. We estimate that this acquisition will increase WPM’s silver-equivalent production by 3.1Moz and 4.7Moz and its basic EPS by 4.7c and 9.3c in FY21 and FY24, respectively.

Wheaton Precious Metals

Serene start

Update | Mining | 18 May 2018

Wheaton Precious Metals’ (WPM) silver streams outperformed our expectations in Q118, while its gold streams performed closely in line. However, after demonstrating the traditional ‘flush through’ effect in Q417, sales of silver and gold in Q118 reverted to close to their long-term trends, with an (albeit temporary) 14.6% under-sale of silver and a 12.2% under-sale of gold relative to production. Nevertheless, adjusted net earnings of US$69.9m and EPS of 16 cents were within 10% of our previous expectations of US$77.0m and our forecasts for FY18 remain, to all intents and purposes, unchanged (see page 7).

Wheaton Precious Metals

A fine finish

Update | Mining | 27 Mar 2018

FY17 results were characterised by a record level of gold sales and of dividend payouts to shareholders. Overall, production attributable to Wheaton Precious Metals (WPM) in FY17 was 28.6Moz Ag and 355koz Au cf guidance of 28Moz Ag and 340koz Au and our prior forecast of 28.5Moz Ag and 343koz Au. Results for Q4 were notable for the close correlation of production and sales, demonstrating the traditional ‘flush through’ effect in the final quarter of the year. Financial results were similarly better than our forecasts (see Exhibit 1, overleaf), partly on account of an increase in gold production compared to Q317, but also on account of a material increase in other income. Nevertheless, excluding this item, Q4 net earnings still exceeded our forecasts by 3.6%.

Wheaton Precious Metals


Update | Mining | 15 Feb 2018

On 12 January, First Majestic (FR, C$8.65) announced that it is to buy Primero Mining (the operator of the San Dimas mine, over which WPM holds a silver stream). As a result, the existing silver purchase agreement covering 100% (effectively) of the silver produced by the mine will be replaced by one covering 25% of gold production plus an additional amount of gold equal to 25% of silver production converted into gold at a fixed gold:silver ratio of 70:1. This has caused us to revise our FY18 EPS forecast from 67c to 63c on a like-for-like basis (vs a consensus of 64.5c, within a range 49-80c). In lieu of this, First Majestic will also issue to WPM 20.9m FR common shares with an aggregate value at the time of writing of US$145m (equivalent to US$0.33 per WPM share).

Wheaton Precious Metals

Never knowingly undersold

Update | Mining | 10 Nov 2017

Wheaton Precious Metals’ (WPM) Q317 results were characterised by improvements in production relative to the previous quarter, but a 24.2% under-sale of silver relative to production and a 13.9% under-sale of gold. As a result, financial results were very close to those in the preceding quarter. However, at least one quarter of inventory build is normal in a typical WPM year and allows for a bounce when it is then ‘flushed through’ in Q4. Once again, gold sales exceeded silver sales, in this case, in the ratio 52:48 (cf 46:54 in Q217).

Wheaton Precious Metals

Still shining

Outlook | Mining | 30 Aug 2017

Despite a second quarter in which ounces produced but not yet delivered to Wheaton Precious Metals (WPM) increased, earnings from operations were just US$2.8m (or 3.2%) below our earlier published estimate of US$85.7m. In addition, management formally changed its dividend policy, from 20% of average cash generated by operating activities to 30%, which thus allowed it to declare a relatively generous third quarter dividend of 10c/share compared with our prior expectation of 6c. Silver sales exceeded gold sales for the first time since Q316 (in the ratio 54:46). Finally, WPM also announced that it had entered into an “early deposit” agreement whereby it will advance US$65m to Desert Star in return for the right to purchase 100% of the silver and gold production from Kutcho in British Columbia at 20% of the spot price of the metals over the life of the mine.