Wheaton Precious Metals

CN: WPM

C$16171m market cap

C$36.16 last close

Wheaton Precious Metals is the pre-eminent ostensibly precious metals streaming company, with c 30 high-quality precious metals streaming and early deposit agreements relating to assets in Mexico, Peru, Canada, Brazil, Chile, Argentina, Sweden, Greece, Portugal and the US.

Investment summary

Wheaton Precious Metals was founded in 2004. The company’s vision is to be the world’s premier precious metals investment vehicle. The streaming model Wheaton employs offers shareholders many advantages relative to both mining companies and direct investment in bullion or gold ETFs. The company provides commodity price leverage, exploration upside and an attractive valuation, while having predictable capital and operating costs, a high quality asset base and a sustainable dividend policy. The portfolio contains a diverse list of high quality, low cost, long life assets. The balance sheet is strong and there is ample opportunity to reinvest in new projects, pay down debt and boost returns to shareholders.

In this interview, Randy Smallwood, president and CEO of Wheaton Precious Metals, discusses the concept of streaming, what differentiates Wheaton’s strategy from its peers, and the focus on ESG and sustainability. This is followed by an explanation of how a new stream is acquired, the priorities for uses of cash, where new growth is likely to come from and why he believes investors should invest in a streaming business.

Y/E Dec
Revenue (US$m)
EBITDA (US$m)
PBT (US$m)
EPS (fd) (c)
P/E (x)
P/CF (x)
2017A 843.2 564.7 277.4 63.0 43.4 21.4
2018A 794.0 496.6 203.1 48.0 57.0 23.4
2019E 869.4 555.4 246.3 57.0 48.0 21.7
2020E 1247.3 908.3 582.8 130.0 21.1 13.5
Industry outlook

Assuming no purchases of additional streams, we forecast a value for WPM of US$34.11/share (C$45.37/share) in FY20. Concerns that operations at Salobo could be affected by Vale’s iron ore tailings dams’ tribulations appear without foundation. In relative terms, WPM is trading on financial ratios that are cheaper than its royalty/streaming peers on 91% of common financial measures and the miners themselves on at least 41% of the same measures, despite being associated with materially less operating and cost risk. Third quarter results are scheduled for 14 November.

Last updated on 06/12/2019
Share price graph
Balance sheet
Forecast net debt (US$m) 832.3
Forecast gearing ratio (%) 16
Price performance
%
1m
3m
12m
Actual 1.4 (4.8) 66.8
Relative* (0.1) (7.4) 46.6
52-week high/low C$40.8/C$21.9
*% relative to local index
Key management
Randy V. J. Smallwood CEO
Gary D. Brown CFO
Emma Murray Director, Investor Relations
Patrick Drouin SVP, Investor Relations

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