Wheaton Precious Metals is the world’s pre-eminent predominantly precious metals streaming company, with over 30 high-quality precious metals streams and early deposit agreements over mines in Mexico, Canada, Brazil, Chile, the US, Argentina, Peru, Sweden, Greece, Portugal and Colombia.

EDISON VIEW

As well as posting records for revenue, net earnings, adjusted earnings and operating cash flow, Wheaton Precious Metals’ (WPM’s) Q1 results were also slightly above our prior EPS as well as the mean consensus forecast. In general, the outperformance could be attributed to higher-than-expected gold and silver sales and a small drawdown in gold ounces produced but not yet delivered (PBND) only partially offset by a slightly larger-than-expected increase in silver sales PBND. Operationally, Constancia, San Dimas, Antamina, Neves-Corvo and Aljustrel all outperformed our expectations, while Salobo performed closely in line. There was also a maiden contribution from Fenix. As a result, adjusted EPS achieved record levels for the fifth quarter in succession and was 4.0% above our forecast for the quarter and 5.2% above the market’s. In tandem with a slight increase in precious metals prices, we have raised our FY26 EPS estimate by 2.0% (see Exhibit 1). Note that, at current metals prices, our FY27 EPS estimate almost doubles from that shown below to US$6.14 per share.

Find more on Wheaton in our last research note: Wheaton Precious Metals — A fifth successive quarter of records

Q&A

How does a precious metals streaming agreement actually work?

To answer by giving an example, Wheaton recently bought a stream over the Antamina mine in Peru from BHP. The stream is effective from 1 April 2026, from which time WPM will purchase BHP's 33.75% of the payable silver from the mine until a total of 100Moz has been delivered, at which point Wheaton will purchase 22.5% of the payable silver for the remainder of the life of mine. Wheaton will pay upfront consideration for the stream of US$4.3bn and will make ongoing payments for the silver ounces delivered equal ot 20% of the spot price of silver.

What is Wheaton's production outlook and the path to 1Moz AuE per year?

Wheaton's guidance for 2026 is for production of 860-940 thousand gold equivalent ounces (GEOs). From there, we expect it to produce 1,075k GEOs in FY27, 1,147k GEOs in FY28, 1,236k GEOs in FY29 and 1,274k GEOs in FY30.

Why does Wheaton trade at a premium to miners and how does it compare to other streaming/royalty peers?

Wheaton trades at a premium to mining companies because it offers almost all of the benefits of owing a traditional miner (eg geared exposure to precious metals' prices, a dividend and exposure to blue-sky exploration success) but without the principal risks (eg it is completely protected from capex and opex overruns). It commands a modest premium relative to its peers for its focused strategy, its disciplined deployment of capital and its ability to consistently achieve guidance.

What are the primary risks facing the business?

The primary risk to Wheaton is precious metals prices. If these go down then Wheaton's revenues and profits will inevitably go down as well. However, almost more important are the risks that Wheaton avoids. Unlike mining companies (which are also exposed to precious metals' price risks), Wheaton has no exposure to either capex or opex cost risks. However, like them, it does offer geared exposure to precious metals' prices to the upside, as well as a progressive dividend, predictable margins and, importantly, blue-sky exposure to exploration success (in the form of extended mine lives). In summary, an investor who owns Wheaton has almost all of the same benefits they would have if they owned a miner, but with fewer risks.

What is the company's dividend policy and yield?

Wheaton operates a progressive dividend policy that is designed to increase every year. At the time of writing it is paying a dividend of 19.5 US cents per quarter, which gives it a dividend yield of 0.5%.

How sensitive are Wheaton's earnings to changes in gold and silver prices?

Obviously this varies, depending on starting conditions. At the time of writing however a 10% increase in the silver price will increase earnings by 6.7% and a 10% increase in the gold price will increase earnings by about the same amount. Increasing both gold and silver prices together increases earnings by approximately 13.7%.

What role does the Salobo stream play in Wheaton's portfolio and what are the risks?

As an asset, Salobo is the single largest entity in Wheaton's portfolio of streams. It is an open-pit copper mine, but Wheaton streams the gold by-product. Apart from the usual operational risks that affect production, Wheaton is therefore exposed to conditions in the copper market. A severe downturn could cause the operator, Vale, to consider production at Salobo. However, this risk is mitigated to a large extent by Salobo's being in the lowest cost quartile of copper producers (NB Most of Wheaton's production is derived from mines at least in the bottom half of the global cost curve).

How does Wheaton fund and evaluate new stream acquisitions?

Wheaton has a small, but dedicated and very technically proficient team. While there is no specific answer to this question, they generally evaluate streaming opportunities against the operator's mine plan and, generally, they find that they can improve upon it. Traditionally, they have also sought to apply precious metals' prices that are below the market consensus. New acquisitions are typically financed either via cash on the balance sheet or access to a US$2bn revolving credit facility. In some situations, it has also used equity to fund (or part fund) acquisitions.

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Q&A

How does a precious metals streaming agreement actually work?

What is Wheaton's production outlook and the path to 1Moz AuE per year?

Why does Wheaton trade at a premium to miners and how does it compare to other streaming/royalty peers?

What are the primary risks facing the business?

What is the company's dividend policy and yield?

How sensitive are Wheaton's earnings to changes in gold and silver prices?

What role does the Salobo stream play in Wheaton's portfolio and what are the risks?

How does Wheaton fund and evaluate new stream acquisitions?

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