PR Newswire
TSX | NYSE | LSE: WPM
Designated News Release
SECOND QUARTER 2021 FINANCIAL RESULTS
VANCOUVER, BC
,
Aug. 12, 2021
/PRNewswire/ – “Wheaton once again delivered strong results in the second quarter and remains well on track to achieve 2021 guidance of 720,000 to 780,000 gold equivalent ounces. With record sales volumes in the first half of 2021, Wheaton generated both record revenue and cash flow of
$655 million
and
$449 million
, respectively. This solid performance reflects the underlying strength of our diversified, high-quality portfolio, and has resulted in an increase to our dividend for the fourth quarter in a row, an increase of 50% over the prior year,” said
Randy Smallwood
, President and Chief Executive Officer of Wheaton Precious Metals Corp. “We continue to remain extremely active on the corporate development front, closing the previously announced precious metals stream on Capstone’s
Santo Domingo
project and subsequent to the quarter, entering into an agreement on a new precious metals stream on Rio2’s Fenix Gold project in
Chile
. In addition, we remain committed to sustainability and are proud to have published our annual sustainability report in the second quarter, highlighting our focus on delivering value to all of our stakeholders.”
Second Quarter 2021 Highlights:
-
$216 million
in operating cash flow during the second quarter. -
Record quarterly revenue of
$330 million
during the second quarter. -
Gold equivalent production
2
increased over 32% relative to Q2 2020. -
Declared quarterly dividend
1
of
$0.15
per common share representing the fourth quarterly dividend increase in a row and a 50% increase relative to Q2 2020. - Initial gold and silver production from the Pampacancha deposit at the Constancia mine.
- First gold and silver deliveries from the Marmato mine.
- Inaugural cobalt production from Voisey’s Bay underground extension.
Operational Overview
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Subsequent to the Quarter – Corporate Development
Fenix Gold Project:
On
July 20, 2021
, the Company signed a non-binding term sheet with Rio2 Limited (“Rio2”) to enter into a precious metals purchase agreement (“PMPA”) in connection with the Fenix Gold project located in
Chile
. Under the terms of the proposed Fenix PMPA, the Company will acquire 6% of the gold production until 90,000 ounces have been delivered and 4% of the gold production until 140,000 ounces have been delivered, after which the stream drops to 3.5% for the life of mine. In addition, under the proposed Fenix PMPA, the Company will pay a total upfront cash consideration of
$50 million
,
$25 million
of which is payable upon closing, subject to certain conditions, and
$25 million
payable subject to Rio2’s receipt of its Environmental Impact Assessment for the Fenix Gold project, and certain other conditions. In addition, the Company will make ongoing delivery payments equal to approximately 18% of the spot price until the value of gold delivered less the production payment is equal to the upfront consideration of
$50 million
, at which point the production payment will increase to 22% of the spot gold price. The entering into of the Fenix PMPA is subject to, among other matters, the negotiation and completion of definitive documentation.
Financial Review
Revenues
Revenue was
$330 million
in the second quarter of 2021 representing a 33% increase from the second quarter of 2020 due primarily to a 24% increase in the average realized gold equivalent² price; and coupled with a 7% increase in the number of gold equivalent² ounces sold.
Cash Costs and Margin
Average cash costs¹ in the second quarter of 2021 were
$444
per gold equivalent² ounce as compared to
$396
in Q2 2020. This resulted in a cash operating margin¹ of
$1,426
per gold equivalent² ounce sold, an increase of 29% as compared with the second quarter of 2020.
Balance Sheet
(at
June 30, 2021
)
-
Approximately
$235 million
of cash on hand. -
The Company’s
$2 billion
revolving term loan (the “Revolving Facility”) remains fully repaid. During the quarter, the term of the Revolving Facility was extended by an additional year, with the facility now maturing on
June 9, 2026
.
Second
Quarter Asset Highlights
Salobo:
In the second quarter of 2021, Salobo produced 55,600 ounces of attributable gold, a decrease of approximately 6% relative to the second quarter of 2020 due to lower grade, partially offset by higher throughput. According to Vale S.A.’s (“Vale”) Second Quarter 2021 Performance Report, production was mainly impacted as the mine maintenance workshops continued to ramp up in the quarter after a broader review in the first quarter of 2021, which limited mine movement and feed grade available for the quarter. Vale further reports that physical completion of the Salobo III mine expansion was 77% at the end of the second quarter and is on track for start-up in the second half of 2022.
Peñasquito:
In the second quarter of 2021, Peñasquito produced 2.0 million ounces of attributable silver, an increase of approximately 109% relative to the second quarter of 2020 as operations at the mine were temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic.
Antamina:
In the second quarter of 2021, Antamina produced 1.6 million ounces of attributable silver, an increase of approximately 155% relative to the second quarter of 2020 as operations at the mine were temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic.
San Dimas:
In the second quarter of 2021, San Dimas produced 11,500 ounces of attributable gold, an increase of approximately 89% relative to the second quarter of 2020, primarily due to operations being temporarily suspended during the second quarter of 2020 due to the COVID-19 pandemic coupled with the impact of changing the silver to gold conversion ratio from 70:1 to 90:1 from
April 1, 2020
to
October 15, 2020
, at which time it reverted to 70:1.
Constancia:
In the second quarter of 2021, Constancia produced 0.5 million ounces of attributable silver and 5,500 ounces of attributable gold, an increase of approximately 85% and 59%, respectively, relative to the second quarter of 2020, which was primarily due to operations being temporarily suspended during the second quarter of 2020 due to the COVID-19 pandemic, and, for gold, the improved grades and recoveries as a result of the commencement of first ore production from the Pampacancha satellite deposit. According to Hudbay Minerals Inc.’s (“Hudbay”) second quarter of 2021 MD&A, following the finalization of the remaining land user agreement and due to its short ramp-up period, Pampacancha achieved commercial production in
April 2021
. On
May 10, 2021
, Wheaton and Hudbay agreed to amend the Constancia streaming agreement so that Hudbay would no longer be required to deliver an additional 8,020 ounces of gold to Wheaton for not mining four million tonnes of ore from Pampacancha by
June 30, 2021
. As part of this amendment, Hudbay has agreed to increase the fixed gold recoveries that apply to Constancia ore production from 55% to 70% during the reserve life of Pampacancha
3
.
Sudbury
:
In the second quarter of 2021, Vale’s
Sudbury
mines produced 4,800 ounces of attributable gold, a decrease of approximately 48% relative to the second quarter of 2020, which was primarily due to lower grades and throughput, as operations at the mine were suspended due to a labour dispute, which lasted from
June 1, 2021
to
August 9, 2021
. Vale announced on
August 3, 2021
that a new five-year collective bargaining agreement had been ratified with mine workers. The Sudbury PMPA had an effective date of
February 28, 2013
with a term of 20 years. Under the provisions of the Sudbury PMPA, should the facilities at
Sudbury
be shut down for 60 or more cumulative days, exclusive of scheduled maintenance or shutdowns for periods of 20 days or less, the term of the Sudbury PMPA shall be extended for the same duration.
Stillwater
:
In the second quarter of 2021, the
Stillwater
mines produced 3,000 ounces of attributable gold and 5,300 ounces of attributable palladium, a decrease of approximately 8% for gold and 8% for palladium relative to the second quarter of 2020 due to lower grades.
Other Gold:
In the second quarter of 2021, total Other Gold attributable production was 10,000 ounces, an increase of approximately 30% relative to the second quarter of 2020, primarily due production from the newly acquired Marmato stream.
Other Silver:
In the second quarter of 2021, total Other Silver attributable production was 2.7 million ounces, an increase of approximately 47% relative to the second quarter of 2020, primarily due to higher production at Yauliyacu as prior year operations were temporarily suspended due to the COVID-19 pandemic coupled with the resumption of mining at Keno Hill and production from the newly acquired Cozamin and Marmato streams.
Voisey’s Bay:
In the second quarter of 2021, the Voisey’s Bay mine produced 380,000 pounds of attributable cobalt. As at the end of the second quarter 2021, approximately 134,000 pounds of cobalt were held in inventory by Wheaton and 777,000 pounds were produced but not delivered. As per Vale’s Second Quarter 2021 Performance Report, physical completion of the Voisey’s Bay underground mine extension, which includes developing two underground mines –
Reid Brook
and Eastern Deeps – was 66% at the end of the second quarter.
Reid Brook
produced its first ore in June of 2021, and Vale reports that Eastern Deeps is expected to start up in 2022.
Produced But Not Yet Delivered
4
As at
June 30, 2021
, payable ounces and pounds attributable to the Company produced but not yet delivered amounted to:
-
65,900 payable gold ounces, a decrease of 3,600 ounces during Q2 2021, primarily due to reductions during the period relative to the Salobo and
Sudbury
mines partially offset by an increase at the Constancia mine. - 4.0 million payable silver ounces, an increase of 0.2 million ounces during Q2 2021, primarily due to increases during the period relative to the Yauliyacu and Constancia mines.
- 6,800 payable palladium ounces, an increase of 1,400 ounces during Q2 2021.
- 777,300 payable cobalt pounds, a decrease of 40,300 pounds during Q2 2021.
Detailed mine-by-mine production and sales figures can be found in the Appendix to this press release and in Wheaton’s consolidated MD&A in the ‘Results of Operations and Operational Review’ section.
Corporate Development
-
On
April 15, 2021
, the previously announced PMPA relative to the Marmato mine was closed, with the initial upfront cash consideration of
$34 million
being paid to Aris Gold Corporation on that date. -
On
April 21, 2021
, the previously announced PMPA with Capstone Mining Corp. (“Capstone”) relative to the
Santo Domingo
project was closed with the initial upfront cash consideration of
$30 million
being paid to Capstone on that date. -
On
July 20, 2021
, the Company signed a non-binding term sheet with Rio2 to enter into a PMPA relative to the Fenix Gold project located in
Chile
.
Sustainability
COVID-19 Community Support and Response Fund:
In the second quarter of 2020, Wheaton announced the launch of a
$5 million
Community Support and Response Fund (the “CSR Fund”) to support global efforts to combat the COVID-19 pandemic and its impacts on our communities. The CSR Fund is designed to meet the immediate needs of the communities in which Wheaton and its mining partners operate. This fund is incremental to Wheaton’s already active Community Investment Program that currently provides support to over 50 programs in multiple communities around the world. As of
June 30, 2021
, the Company has made donations totalling approximately
$4 million
through the CSR Fund.
2020 Sustainability Report:
In the second quarter of 2021, Wheaton published its annual sustainability report, a comprehensive disclosure outlining Wheaton’s commitment to sustainability and environmental, social and governance (“ESG”) performance.
Partner CSR Program:
In the second quarter of 2021, Wheaton continued to support a wide range of programs with various mining partners. Wheaton committed to support the Enseña
Peru
educational program near the Antamina mine for another two years, bringing to a total of six years of Wheaton’s support; continued to work with the Vale Foundation in supporting ten different programs focused on health, education, entrepreneurial support and community engagement opportunities near the Salobo mine; and, committed to the second phase of an agricultural and livestock development program previously supported by Wheaton and a new waste management program with Hudbay near the Constancia mine.
Webcast and Conference Call Details
A conference call and webcast will be held on
Friday, August 13, 2021
starting at
11:00 am (Eastern Time)
to discuss these results. To participate in the live call please use one of the following methods:
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Participants should dial in five to ten minutes before the call.
The accompanying slideshow will also be available in PDF format on the ‘Presentations’ page of the Wheaton Precious Metals
website
before the conference call.
The conference call will be recorded and available until
August 20, 2021
at
11:59 pm ET
. The webcast will be available for one year. You can listen to an archive of the call by one of the following methods:
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This earnings release should be read in conjunction with Wheaton Precious Metals’ MD&A and Financial Statements, which are available on the Company’s website at www.wheatonpm.com and have been posted on SEDAR at
www.sedar.com
.
Mr.
Wes Carson
, P.Eng., Vice President, Mining Operations, is a “qualified person” as such term is defined under National Instrument 43-101 and has reviewed and approved the technical information disclosed in this news release.
Wheaton Precious Metals believes that there are no significant differences between its corporate governance practices and those required to be followed by
United States
domestic issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious Metals website at
http://www.wheatonpm.com/Company/corporate-governance/default.aspx
.
About Wheaton Precious Metals Corp. and Outlook
Wheaton is the world’s premier precious metals streaming company with the highest-quality portfolio of long-life, low-cost assets. Its business model offers investors commodity price leverage and exploration upside but with a much lower risk profile than a traditional mining company. Wheaton delivers amongst the highest cash operating margins in the mining industry, allowing it to pay a competitive dividend and continue to grow through accretive acquisitions. As a result, Wheaton has consistently outperformed gold and silver, as well as other mining investments. Wheaton is committed to strong ESG practices and giving back to the communities where Wheaton and its mining partners operate. Wheaton creates sustainable value through streaming for all of its stakeholders.
Wheaton’s estimated attributable production in 2021 is forecast to be 370,000 to 400,000 ounces of gold, 22.5 to 24.0 million ounces of silver, and 40,000 to 45,000 gold equivalent ounces
2
(“GEOs”) of other metals, resulting in production of approximately 720,000 to 780,000 GEOs
2
, unchanged from previous guidance. For the five-year period ending in 2025, the Company estimates that average production will amount to 810,000 GEOs
5
. For the ten-year period ending in 2030, the Company estimates that average annual production will amount to 830,000 GEOs
5
.
In accordance with Wheaton Precious Metals™ Corp.’s (“Wheaton Precious Metals”, “Wheaton” or the “Company”) MD&A and financial statements, reference to the Company and Wheaton includes the Company’s wholly owned subsidiaries.
End Notes
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Condensed Interim
Consolidated Statements of Earnings
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Condensed Interim
Consolidated Balance Sheets
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Condensed Interim
Consolidated Statements of Cash Flows
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Summary of Units Produced
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Summary of Units Sold
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Results of Operations
The operating results of the Company’s reportable operating segments are summarized in the tables and commentary below.
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On a gold equivalent and silver equivalent basis, results for the Company for the three months ended
June 30, 2021
were as follows:
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On a gold equivalent and silver equivalent basis, results for the Company for the three months ended
June 30, 2020
were as follows:
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Non-IFRS Measures
Wheaton has included, throughout this document, certain non-IFRS performance measures, including (i) adjusted net earnings and adjusted net earnings per share; (ii) operating cash flow per share (basic and diluted); (iii) average cash costs of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis, with the Company receiving its first deliveries of cobalt relative to its Voisey’s Bay PMPA during the first quarter of 2021; and (iv) cash operating margin. The Company has removed the non-IFRS measure relative to net debt as Wheaton fully repaid its debt during the first quarter of 2021.
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These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and other companies may calculate these measures differently. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For more detailed information, please refer to Wheaton’s MD&A available on the Company’s website at
www.wheatonpm.com
and posted on SEDAR at
www.sedar.com
.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
This press release contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation concerning the business, operations and financial performance of Wheaton and, in some instances, the business, mining operations and performance of Wheaton’s PMPA counterparties. Forward-looking statements, which are all statements other than statements of historical fact, include, but are not limited to, statements with respect to the successful negotiation and entering into of definitive documentation by Wheaton International with Rio2, payment by Wheaton International of
US$50 million
to Rio2 and the satisfaction of each party’s obligations in accordance with the Fenix PMPA, the receipt by Wheaton International of gold production in respect of the Fenix Gold project, statements with respect to the future price of commodities, the impact of epidemics (including the COVID-19 virus pandemic), including the potential heightening of other risks, the estimation of future production from Mining Operations (including in the estimation of production, mill throughput, grades, recoveries and exploration potential), the estimation of mineral reserves and mineral resources (including the estimation of reserve conversion rates) and the realization of such estimations, the commencement, timing and achievement of construction, expansion or improvement projects by Wheaton’s PMPA counterparties at mineral stream interests owned by Wheaton (the “Mining Operations”), the ability of Wheaton’s PMPA counterparties to comply with the terms of a PMPA (including as a result of the business, mining operations and performance of Wheaton’s PMPA counterparties) and the potential impacts of such on Wheaton, the costs of future production, the estimation of produced but not yet delivered ounces, the impact of the listing of the Company’s common shares, any statements as to future dividends, the ability to fund outstanding commitments and the ability to continue to acquire accretive PMPAs, future payments by the Company in accordance with PMPAs, including any acceleration of payments, projected increases to Wheaton’s production and cash flow profile, projected changes to Wheaton’s production mix, the ability of Wheaton’s PMPA counterparties to comply with the terms of any other obligations under agreements with the Company, the ability to sell precious metals and cobalt production, confidence in the Company’s business structure, the Company’s assessment of taxes payable and the impact of the CRA Settlement for years subsequent to 2010, possible audits for taxation years subsequent to 2015, the Company’s assessment of the impact of any tax reassessments, the Company’s intention to file future tax returns in a manner consistent with the CRA Settlement, and assessments of the impact and resolution of various legal and tax matters, including but not limited to outstanding class action and audits. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “projects”, “intends”, “anticipates” or “does not anticipate”, or “believes”, “potential”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to specific risks relating to the completion of documentation and diligence for the Fenix PMPA with Rio2, the satisfaction of each party’s obligations in accordance with the terms of the Fenix PMPA with Rio2, risks associated with fluctuations in the price of commodities (including Wheaton’s ability to sell its precious metals or cobalt production at acceptable prices or at all), risks of significant impacts on Wheaton or the Mining Operations as a result of an epidemic (including the COVID-19 virus pandemic), risks related to the Mining Operations (including fluctuations in the price of the primary or other commodities mined at such operations, regulatory, political and other risks of the jurisdictions in which the Mining Operations are located, actual results of mining, risks associated with the exploration, development, operating, expansion and improvement of the Mining Operations, environmental and economic risks of the Mining Operations, and changes in project parameters as plans continue to be refined), the absence of control over the Mining Operations and having to rely on the accuracy of the public disclosure and other information Wheaton receives from the Mining Operations, uncertainty in the estimation of production from Mining Operations, uncertainty in the accuracy of mineral reserve and mineral resource estimation, the ability of each party to satisfy their obligations in accordance with the terms of the PMPAs, the estimation of future production from Mining Operations, Wheaton’s interpretation of, compliance with or application of, tax laws and regulations or accounting policies and rules being found to be incorrect, any challenge or reassessment by the CRA of the Company’s tax filings being successful and the potential negative impact to the Company’s previous and future tax filings, assessing the impact of the CRA Settlement for years subsequent to 2010 (including whether there will be any material change in the Company’s facts or change in law or jurisprudence), the possible adoption of a global minimum tax, credit and liquidity, indebtedness and guarantees, mine operator concentration, hedging, competition, claims and legal proceedings against Wheaton or the Mining Operations, security over underlying assets, governmental regulations, international operations of Wheaton and the Mining Operations, exploration, development, operations, expansions and improvements at the Mining Operations, environmental regulations and climate change, Wheaton and the Mining Operations ability to obtain and maintain necessary licenses, permits, approvals and rulings, Wheaton and the Mining Operations ability to comply with applicable laws, regulations and permitting requirements, lack of suitable infrastructure and employees to support the Mining Operations, inability to replace and expand mineral reserves, including anticipated timing of the commencement of production by certain Mining Operations (including increases in production, estimated grades and recoveries), uncertainties of title and indigenous rights with respect to the Mining Operations, Wheaton and the Mining Operations ability to obtain adequate financing, the Mining Operations ability to complete permitting, construction, development and expansion, global financial conditions, and other risks discussed in the section entitled “Description of the Business – Risk Factors” in Wheaton’s Annual Information Form available on SEDAR at
www.sedar.com
, Wheaton’s Form 40-F for the year ended
December 31, 2020
and Form 6-Ks filed
March 11, 2021
and
August 12, 2021
, all on file with the U.S. Securities and Exchange Commission on EDGAR (the “Disclosure”). Forward-looking statements are based on assumptions management currently believes to be reasonable, including (without limitation): the completion of documentation and diligence in respect of the Fenix PMPA with Rio2, the payment of
US$50 million
to Rio2 and the satisfaction of each party’s obligations in accordance with the terms of the Fenix PMPA with Rio2, that there will be no material adverse change in the market price of commodities, that neither Wheaton nor the Mining Operations will suffer significant impacts as a result of an epidemic (including the COVID-19 virus pandemic), that the Mining Operations will continue to operate and the mining projects will be completed in accordance with public statements and achieve their stated production estimates, that the mineral reserves and mineral resource estimates from Mining Operations (including reserve conversion rates) are accurate, that each party will satisfy their obligations in accordance with the PMPAs, that Wheaton will continue to be able to fund or obtain funding for outstanding commitments, that Wheaton will be able to source and obtain accretive PMPAs, that any outbreak or threat of an outbreak of a virus or other contagions or epidemic disease will be adequately responded to locally, nationally, regionally and internationally, without such response requiring any prolonged closure of the Mining Operations or having other material adverse effects on the Company and counterparties to its PMPAs, that the trading of the Company’s common shares will not be adversely affected by the differences in liquidity, settlement and clearing systems as a result of multiple listings of the Common Shares on the LSE, the TSX and the NYSE, that the trading of the Company’s common shares will not be suspended, and that the net proceeds of sales of common shares, if any, will be used as anticipated, that expectations regarding the resolution of legal and tax matters will be achieved (including ongoing class action litigation and CRA audits involving the Company), that Wheaton has properly considered the interpretation and application of Canadian tax law to its structure and operations, that Wheaton has filed its tax returns and paid applicable taxes in compliance with Canadian tax law, that Wheaton’s application of the CRA Settlement for years subsequent to 2010 is accurate (including the Company’s assessment that there will be no material change in the Company’s facts or change in law or jurisprudence for years subsequent to 2010), and such other assumptions and factors as set out in the Disclosure. There can be no assurance that forward-looking statements will prove to be accurate and even if events or results described in the forward-looking statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Wheaton. Readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary. The forward-looking statements included herein are for the purpose of providing readers with information to assist them in understanding Wheaton’s expected financial and operational performance and may not be appropriate for other purposes. Any forward-looking statement speaks only as of the date on which it is made, reflects Wheaton’s management’s current beliefs based on current information and will not be updated except in accordance with applicable securities laws. Although Wheaton has attempted to identify important factors that could cause actual results, level of activity, performance or achievements to differ materially from those contained in forward looking statements, there may be other factors that cause results, level of activity, performance or achievements not to be as anticipated, estimated or intended.
View original content:
https://www.prnewswire.com/news-releases/wheaton-precious-metals-announces-record-revenue-cash-flow-and-sales-volume-for-the-first-half-of-2021-301354757.html
SOURCE Wheaton Precious Metals Corp.
