Honing Q321 forecasts

Wheaton Precious Metals 8 October 2021 Update
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Wheaton Precious Metals

Honing Q321 forecasts

Q321 results preview

Metals & mining

8 October 2021

Price

C$47.00

Market cap

C$21,164m

C$1.2635/US$, US$1.3577/£

Net cash (US$m) end-June, excluding US$3.3m in lease liabilities

235.4

Shares in issue

450.3m

Free float

100%

Code

WPM

Primary exchange

TSX

Secondary exchange

LSE, NYSE

Share price performance

%

1m

3m

12m

Abs

(17.2)

(15.3)

(25.2)

Rel (local)

(15.6)

(15.8)

(39.8)

52-week high/low

C$66.95

C$45.11

Business description

Wheaton Precious Metals is the world’s pre-eminent ostensibly precious metals streaming company, with 32 high-quality precious metals streaming and early deposit agreements relating to assets in Mexico, Peru, Canada, Brazil, Chile, the United States, Argentina, Sweden, Greece, Portugal and Colombia.

Next events

Q321 results

4 November 2021

Q421/FY21 results

March 2022

Q122 results

May 2022

Q222 results

August 2022

Analyst

Charles Gibson

+44 (0)20 3077 5724

Wheaton Precious Metals is a research client of Edison Investment Research Limited

Wheaton is to release its Q321 results on Thursday 4 November, after the market close in Toronto. Ahead of the publication of its actual results, we have revised our earnings forecast for the quarter to reflect actual versus estimated precious metals prices (especially palladium, which has fallen from a high in the quarter of US$2,859/oz on 12 July to US$1,811/oz currently) and a slightly delayed ramp in production from lingering coronavirus-induced disruptions at Salobo in Brazil.

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/19

861.3

242.7

54

36

68.9

1.0

12/20

1,096.2

503.2

112

42

33.2

1.1

12/21e

1,266.6

612.8

136

56

27.4

1.5

12/22e

1,621.0

922.6

205

77

18.2

2.1

Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments.

Silver production makes up for gold

All told, the changes to our forecasts for the rest of FY21 have reduced our group production estimate by 10koz gold equivalent (or only 1.3%) for the full year (using WPM’s standardised metals’ prices) to 748koz AuE. Despite our forecast for gold production being slightly below the bottom of the guided range, this is counterbalanced by a silver production forecast that is above the top of the range, such that gold equivalent production is on track to meet almost exactly the middle of the company’s guided range of 720–780koz AuE for the full year (see Exhibit 4).

FY21 to mark start of a period of production growth

After FY21 (748koz AuE estimated), gold equivalent production is expected by Wheaton to increase by c 8.3% to 810koz per year AuE in the period FY22–25 and by 11.0% (from FY21) to 830koz per year AuE in the five-year period FY26–30.

Valuation: C$78.32/share

Changes to our precious metal pricing assumptions reduced our EPS forecast for FY21 by 5.0c (or 3.5%), while changes to our output assumptions reduced it by another 2.0c (or 1.4%). In normal circumstances and assuming no material purchases of additional streams in the foreseeable future (which we think unlikely), we forecast a value per share for WPM of US$61.99 or C$78.32 or £45.66 in FY23 (cf US$64.92 previously). In the meantime, WPM’s shares are trading on near-term financial ratios that are cheaper than those of its peers on at least 72% of common valuation measures regardless of whether Edison or consensus forecasts are used. Hence, if WPM’s shares were to trade at the same level as the average of its peers, then we calculate that its year 1 share price should be US$45.74 (C$57.79 or £33.69), based on our forecasts for FY21. Alternatively, if precious metals return to favour and WPM to a premium rating, we believe an US$84.06 (C$106.22 or £78.24) per share valuation is still achievable (see page 5).

Q321 forecast adjustments

Wheaton is to release its Q321 results on Thursday 4 November after the market close in Toronto. A conference call to discuss the results will then be held on Friday 5 November, starting at 11:00am ET (8:00am PT, 3:00pm GMT).

Ahead of the publication of the actual results, we have adjusted our forecasts for the quarter to reflect both updated commodity prices plus a number of operating considerations that we understand to have been the case at Wheaton’s partners’ mines. A summary of the commodity price changes (which have also affected our forecasts for Q421), is as follows:

Exhibit 1: Metal price changes vs prior forecasts

Metal

Prior Q321 forecast

Actual Q321 average price

Change
(%)

Current spot price

Change (spot vs Q321)
(%)

Gold (US$/oz)

1,792

1,790

-0.1

1,749

-2.3

Silver (US$/oz)

24.59

24.30

-1.2

22.23

-8.5

Palladium (US$/oz)

2,623

2,452

-6.5

1,811

-26.1

Cobalt (US$/lb)

23.15

23.54

+1.7

24.21

+2.8

Average

-1.5

-8.5

Source: Edison Investment Research, Bloomberg. Note: Priced on 6 October 2021.

A summary of the operating conditions we understand to have been the case at Wheaton’s partners’ mines is as follows:

After a review in Q121 that limited equipment availability, we had previously expected throughput at Salobo to increase as maintenance workshops ramped up quickly at end-Q2/early Q3. In the event, we believe that the persistence of the coronavirus in Brazil (including the newer delta variant and a spike in infections in September) may have delayed the ramp-up, with the mine reaching budgeted throughput rates only towards the end of the quarter. In addition (and partially as a consequence), we suspect that sales of metal at Salobo (which were higher than production in Q1 and Q2) may now have moved to normalise with respect to output.

Despite signing an agreement with the new Greek government in March that would open the way for restarting major mining investment at its Skouries, Olympias and Stratoni projects (which have been stalled for years over licensing and environmental concerns), we understand that Eldorado’s Stratoni mine in particular (which had contributed 1.1% to sales in H121) remained offline in Q321.

By contrast, we do not expect the recent incident at the Totten mine at Sudbury, in which 39 miners were trapped underground after a scoop bucket detached and blocked the main transport shaft, to have had any material or longstanding effect on either production or sales. In addition, we had already anticipated a modest tapering of performance at Antamina and Penasquito (to do with moving the primary crusher and pit sequencing, respectively) after each reported unexpectedly strong performances in H1.

We have also adjusted our general and administrative (G&A) charge for the quarter to reflect WPM’s shares finishing the quarter at a price of C$47.68 (or US$37.60) compared with US$44.04 at the end of the previous quarter – a decline of US$6.43 – which alters our estimate of stock-based G&A (see our note Solid Q221 results set up H221, published on 18 August 2021, for more details).

In the light of the above developments, our updated forecasts for WPM for FY21 are as shown in Exhibit 2. The forecasts assume operations will continue throughout the remainder of the year without major interruptions. Apart from precious metals prices, the principal remaining risk to our forecasts relates to the extent to which sales differ from production and therefore the extent to which inventory (in the form of ounces produced but not yet delivered to WPM) either increases or decreases throughout the remainder of the year.

Exhibit 2: WPM FY21 forecast, by quarter*

US$000s
(unless otherwise stated)

FY20

Q121

Q221

Q321e
(prior)

Q321e
(current)

Q421e
(prior)

Q421e
(current)

FY21e
(current)

FY21e
(prior)

Silver production (koz)

22,892

6,754

6,720

5,939

5,757

5,955

5,773

25,004

25,368

Gold production (oz)

367,419

77,733

90,290

88,175

85,735

95,225

95,225

348,983

351,423

Palladium production (koz)

22,187

5,769

5,301

5,561

5,561

5,561

5,561

22,192

22,192

Cobalt production (klb)

1,161

380

525

390

525

400

2,331

2,591

Silver sales (koz)

19,232

6,657

5,600

5,923

5,741

5,955

5,773

23,771

24,135

Gold sales (oz)

369,553

75,104

90,090

87,159

78,212

95,192

95,192

338,598

347,545

Palladium sales (oz)

20,051

5,131

3,869

5,539

5,539

5,539

5,539

20,078

20,078

Cobalt sales (klb)

132.3

395

525

400

525

400

1,317

1,577

Avg realised Ag price (US$/oz)

20.78

26.12

26.69

24.59

24.30

23.72

22.23

24.87

25.29

Avg realised Au price (US$/oz)

1,767

1,798

1,801

1,792

1,790

1,787

1,749

1,783

1,794

Avg realised Pd price (US$/oz)

2,183

2,392

2,797

2,623

2,452

2,519

1,811

2,326

2,569

Avg realised Co price (US$/lb)

20.90

19.82

23.15

17.65

23.58

18.16

18.91

22.38

Avg Ag cash cost (US$/oz)

5.28

6.33

6.11

6.23

6.15

6.21

6.09

6.18

6.23

Avg Au cash cost (US$/oz)

426

450

450

430

433

428

428

440

439

Avg Pd cash cost (US$/oz)

389

427

503

472

441

453

326

418

461

Avg Co cash cost (US$/lb)

4.98

4.41

4.17

4.24

4.24

4.36

4.40

4.32

Sales

1,096,224

324,119

330,393

328,533

299,971

337,705

312,129

1,266,612

1,320,750

Cost of sales

Cost of sales, excluding depletion

266,763

78,783

78,445

79,247

73,259

82,502

79,415

309,902

318,978

Depletion

243,889

70,173

70,308

68,995

63,599

77,390

75,422

279,502

286,866

Total cost of sales

510,652

148,956

148,753

148,242

136,858

159,892

154,837

589,404

605,843

Earnings from operations

585,572

175,164

181,640

180,291

163,113

177,813

157,292

677,207

714,906

Expenses and other income

– General and administrative**

65,698

11,971

18,465

16,169

12,765

16,101

15,891

59,092

62,705

– Foreign exchange (gain)/loss

0

0

– Net interest paid/(received)

16,715

1,573

1,357

1,240

1,240

1,137

1,147

5,316

5,307

– Other (income)/expense

(387)

420

136

556

556

Total expenses and other income

82,026

13,964

19,958

17,408

14,004

17,238

17,038

64,964

68,568

Earnings before income taxes

503,546

161,199

161,682

162,882

149,109

160,576

140,254

612,243

646,338

Income tax expense/(recovery)

211

67

56

250

250

250

250

623

623

Marginal tax rate (%)

0.0

0.0

0.0

0.2

0.2

0.2

0.2

0.1

0.1

Net earnings

503,335

161,132

161,626

162,632

148,859

160,326

140,004

611,620

645,715

Average no. shares in issue (000s)

448,964

449,509

450,088

450,271

450,271

450,271

450,271

450,035

450,035

Basic EPS (US$)

1.12

0.358

0.359

0.361

0.331

0.356

0.311

1.36

1.43

Diluted EPS (US$)

1.12

0.358

0.358

0.360

0.330

0.355

0.310

1.36

1.43

DPS (US$)

0.42

0.13

0.14

0.15

0.15

0.15

0.14

0.56

0.57

Source: WPM, Edison Investment Research. Note: *Excluding impairments and exceptional items. **Forecasts now include stock-based compensation costs. Totals may not add up owing to rounding.

Readers should note that, consistent with past practice, for the purposes of FY21 we are assuming production and sales are closely aligned and there is little or no change in the level of ounces produced but not yet delivered. Within this context, our basic EPS forecast of US$1.36/share for FY21 is towards the bottom of the range of analysts’ estimates of US$1.36–1.58/share (source: Refinitiv, 6 October 2021).

Exhibit 3: WPM FY21e consensus EPS forecasts (US$/share), by quarter

Q121

Q221

Q321e

Q421e

Sum Q1–Q421e

FY21e

Edison forecasts

0.358

0.359

0.331

0.311

1.359

1.36

Mean consensus

0.358

0.359

0.38

0.39

1.487

1.48

High consensus

0.358

0.359

0.42

0.46

1.597

1.58

Low consensus

0.358

0.359

0.33

0.32

1.367

1.36

Source: Refinitiv, Edison Investment Research. Note: As at 6 October 2021.

In the meantime, our basic EPS forecast of US$2.05/share for FY22 (cf US$2.14/share previously) compares with a consensus of US$1.56/share within a range of US$0.57–2.14/share (source: Refinitiv, 6 October 2021). In this case, our estimate is, once again, predicated on an average gold price during the year of US$1,892/oz and an average silver price of US$30.78/oz, which assumes, among other things, the silver price will revert to the long-term correlation that it has exhibited with gold since the latter was demonetised in 1971. If both metals remain at current levels (US$22.23/oz Ag and US$1,749/oz Au at the time of writing), our forecast for WPM’s EPS in FY22 then moderates to US$1.48 per share and our forecast for its DPS to US$0.64/share (from US$0.77 current FY22 DPS forecast).

FY21 and five- and 10-year guidance

At the time of its Q420/FY20 results, WPM provided production guidance of 720–780koz AuE for FY21 and five-year average (2021–25) production guidance of 810,000oz AuE per year and maiden 10-year average (2021–30) guidance of 830,000oz AuE per year. This compares with our updated forecasts, as follows:

Exhibit 4: WPM precious metals production – Edison forecasts vs guidance

FY21e

*FY22–25 average

FY26–30 average

Previous Edison forecast

Silver production (Moz)

25.4

Gold production (koz)

351.4

Cobalt production (klb)

2,591

Palladium production (koz)

22.2

Gold equivalent (koz)

758

824

804

Current Edison forecast

Silver production (Moz)

25.0

Gold production (koz)

349.0

Cobalt production (klb)

2,331

Palladium production (koz)

22.2

Gold equivalent (koz)

748

819

804

WPM guidance

Silver production (Moz)

22.5–24.0

Gold production (koz)

370–400

Cobalt & palladium production (koz AuE)

40–45

Palladium production (koz)

N/A

Gold equivalent (koz)

720–780

810

830

Source: WPM, Edison Investment Research forecasts. Note: *Edison forecasts include a contribution from Salobo III from FY23e and Rosemont from FY25e.

WPM’s updated five-year guidance and its 10-year guidance are based on standardised pricing assumptions of US$1,800/oz gold (Au), US$25.00/oz silver (Ag), US$2,300/oz palladium (Pd) and US$17.75/lb cobalt (Co). Of note in this context is an implied gold/silver ratio of 72.0x, which compares with its current ratio of 78.7x and a long-term average of 61.5x since gold was demonetised in August 1971.

Readers will note that our FY21 silver production forecast remains above the top end of WPM’s guidance range. After producing 13.5Moz Ag in H121, WPM’s mines will only be required to produce at a rate of 5.3Moz Ag per quarter for the remaining two quarters of the year to achieve the top end of WPM’s guidance range of 22.5–24.0Moz Ag for FY21. This compares with a long-term average quarterly production rate of 6.6Moz per quarter since Q112. Conversely, our gold production forecast remains slightly below the bottom end of WPM’s guidance range. After producing 168.0koz Au in H121, WPM’s mines would have to produce at a rate of 101.0koz Au per quarter for the remaining two quarters of the year to achieve the bottom end of WPM’s guidance range of 370–400koz Au for FY21. While this is certainly possible (WPM’s gold mines produced at an average rate of 102.4koz per quarter in the period Q318–Q419), we think it may prove demanding, given the strike action at Sudbury in Q3 (see our note, Solid Q221 results set up H221, published on 18 August 2021) and the delay in Salobo’s recovery from lingering coronavirus-induced disruptions, in particular. Self-evidently, however, at the standardised prices indicated, our gold equivalent production forecast of 748koz gold equivalent (AuE) is close to the middle of WPM’s guidance of 720–780koz AuE.

Otherwise, readers will note that our (updated) production forecasts are within 3.1% of WPM’s guidance for the period FY22–30.

Valuation

Excluding FY04 (part-year), WPM’s shares have historically traded on an average P/E multiple of 30.0x current year basic underlying EPS, excluding impairments (cf 27.4x Edison or 25.4x Refinitiv consensus FY21e, see Exhibit 6).

Exhibit 5: WPM’s historical current year P/E multiples, 2005–20

Source: Edison Investment Research

Applying this 30.0x multiple to our EPS forecast of US$2.06 in FY23 (previously US$2.16) would ordinarily imply a potential value per share for WPM of US$61.99 or C$78.32 in that year (cf US$64.92 or C$81.86 previously). However, the graph above suggests the current year multiple has been on a broadly upward trend between FY12 and FY19, on which basis we would argue that a multiple in excess of 40x (as evidenced by FY18 and FY19) could be supported in the event of a return to favour of precious metals and precious metals stocks (not least given the fact that these years were not subject to the extraordinary trials and tribulations experienced in FY20). In this case, applying a 40.7x earnings multiple (the average of FY18, FY19 and FY20) to our updated EPS forecast of US$2.06 in FY23 implies a potential value per share for WPM of US$84.06 or C$106.22 in that year (cf US$88.03 or C$111.24 previously). Note this analysis implicitly assumes metals prices in FY24 would be experiencing the same sort of increases relative to FY23 that they did in FY20 relative to FY19 and the average multiple would probably then contract again in FY24 as EPS ‘catch up’ with the share price. Even at such share price levels, however, a multiple of over 40.7x would put WPM’s shares on little more than peers such as Franco-Nevada (currently trading on 36.08x current year earnings, see Exhibit 6).

In the meantime, from a relative perspective, it is notable that WPM has a lower valuation than the average of its royalty/streaming ‘peers’ on eight out of nine valuation measures if our forecasts are used or seven out of nine valuation measures if consensus forecasts are used. On an individual basis, WPM is cheaper than its peers on 83% (30 out of 36) of the valuation measures used in Exhibit 6 if our estimates are adopted or 72% (26 out of 36) of the same valuation measures if consensus forecasts are adopted. Among other things, this could possibly indicate the market has more conservative precious metal pricing expectations than we do in FY22 and FY23, in particular.

Exhibit 6: WPM comparative valuation vs a sample of operating and royalty/streaming companies

P/E (x)

Yield (%)

P/CF (x)

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Year 1

Year 2

Year 3

Royalty companies

Franco-Nevada

36.1

34.9

33.8

0.9

0.9

0.9

24.9

23.9

23.0

Royal Gold

22.4

24.4

23.6

1.3

1.3

1.3

12.7

13.8

13.6

Sandstorm Gold

32.2

27.1

38.6

0.0

0.0

0.0

12.9

12.0

15.6

Osisko

30.1

27.3

23.5

1.5

1.4

1.5

16.7

14.6

11.9

Average

30.2

28.4

29.9

0.9

0.9

0.9

16.8

16.1

16.0

WPM (Edison forecasts)

27.4

18.2

18.0

1.5

2.1

2.2

18.4

13.6

13.4

WPM (consensus)

25.4

22.6

22.4

1.5

1.7

1.9

17.9

16.6

15.7

Implied WPM share price (US$)*

41.01

58.23

61.71

62.19

84.56

90.33

34.01

43.90

44.43

Source: Refinitiv, Edison Investment Research. Note: Peers priced on 6 October 2021. *Derived using Edison forecasts and average consensus multiples.

Exhibit 7: Financial summary

US$'000s

2016

2017

2018

2019

2020

2021e

2022e

2023e

Dec

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

891,557

843,215

794,012

861,332

1,096,224

1,266,612

1,621,004

1,648,167

Cost of Sales

(254,434)

(243,801)

(245,794)

(258,559)

(266,763)

(309,902)

(330,648)

(343,380)

Gross Profit

637,123

599,414

548,218

602,773

829,461

956,710

1,290,356

1,304,787

EBITDA

 

 

602,684

564,741

496,568

548,266

763,763

897,618

1,231,265

1,245,695

Operating Profit (before amort. and except.)

 

 

293,982

302,361

244,281

291,440

519,874

618,116

921,679

928,547

Exceptionals

(71,000)

(228,680)

245,715

(156,608)

4,469

5,368

0

0

Other

(4,982)

8,129

(5,826)

217

387

(556)

0

0

Operating Profit

218,000

81,810

484,170

135,049

524,730

622,928

921,679

928,547

Net Interest

(24,193)

(24,993)

(41,187)

(48,730)

(16,715)

(5,316)

965

2,258

Profit Before Tax (norm)

 

 

269,789

277,368

203,094

242,710

503,159

612,799

922,644

930,805

Profit Before Tax (FRS 3)

 

 

193,807

56,817

442,983

86,319

508,015

617,611

922,644

930,805

Tax

1,330

886

(15,868)

(181)

(211)

(623)

(1,000)

(1,000)

Profit After Tax (norm)

266,137

286,383

181,400

242,746

503,335

611,620

921,644

929,805

Profit After Tax (FRS 3)

195,137

57,703

427,115

86,138

507,804

616,988

921,644

929,805

Average Number of Shares Outstanding (m)

430.5

442.0

443.4

446.0

448.7

450.0

450.3

450.3

EPS - normalised (c)

 

 

62

63

48

54

112

136

205

206

EPS - normalised and fully diluted (c)

 

62

63

48

54

112

136

199

201

EPS - (IFRS) (c)

 

 

45

13

96

19

113

137

205

206

Dividend per share (c)

21

33

36

36

42

56

77

83

Gross Margin (%)

71.5

71.1

69.0

70.0

75.7

75.5

79.6

79.2

EBITDA Margin (%)

67.6

67.0

62.5

63.7

69.7

70.9

76.0

75.6

Operating Margin (before GW and except.) (%)

33.0

35.9

30.8

33.8

47.4

48.8

56.9

56.3

BALANCE SHEET

Fixed Assets

 

 

6,025,227

5,579,898

6,390,342

6,123,255

5,755,441

5,592,969

5,451,383

5,919,235

Intangible Assets

5,948,443

5,454,106

6,196,187

5,768,883

5,521,632

5,356,263

5,214,677

5,682,529

Tangible Assets

12,163

30,060

29,402

44,615

33,931

34,451

34,451

34,451

Investments

64,621

95,732

164,753

309,757

199,878

202,255

202,255

202,255

Current Assets

 

 

128,092

103,415

79,704

154,752

201,831

545,740

1,265,485

1,355,499

Stocks

1,481

1,700

1,541

43,628

3,265

2,274

2,910

2,959

Debtors

2,316

3,194

2,396

7,138

5,883

3,470

4,441

4,516

Cash

124,295

98,521

75,767

103,986

192,683

539,996

1,258,134

1,348,025

Other

0

0

0

0

0

0

0

0

Current Liabilities

 

 

(19,057)

(12,143)

(28,841)

(64,700)

(31,169)

(48,712)

(50,758)

(52,014)

Creditors

(19,057)

(12,143)

(28,841)

(63,976)

(30,396)

(47,939)

(49,985)

(51,241)

Short term borrowings

0

0

0

(724)

(773)

(773)

(773)

(773)

Long Term Liabilities

 

 

(1,194,274)

(771,506)

(1,269,289)

(887,387)

(211,532)

(16,532)

(16,532)

(16,532)

Long term borrowings

(1,193,000)

(770,000)

(1,264,000)

(878,028)

(197,864)

(2,864)

(2,864)

(2,864)

Other long term liabilities

(1,274)

(1,506)

(5,289)

(9,359)

(13,668)

(13,668)

(13,668)

(13,668)

Net Assets

 

 

4,939,988

4,899,664

5,171,916

5,325,920

5,714,571

6,073,465

6,649,578

7,206,189

CASH FLOW

Operating Cash Flow

 

 

608,503

564,187

518,680

548,301

784,843

918,008

1,231,704

1,246,827

Net Interest

(24,193)

(24,993)

(41,187)

(41,242)

(16,715)

(5,316)

965

2,258

Tax

28

(326)

0

(5,380)

(2,686)

(623)

(1,000)

(1,000)

Capex

(805,472)

(19,633)

(861,406)

10,571

149,648

(117,030)

(168,000)

(785,000)

Acquisitions/disposals

0

0

0

0

0

0

0

0

Financing

595,140

1,236

1,279

37,198

22,396

0

0

(0)

Dividends

(78,708)

(121,934)

(132,915)

(129,986)

(167,212)

(252,727)

(345,531)

(373,194)

Net Cash Flow

295,298

398,537

(515,549)

419,462

770,274

542,313

718,138

89,891

Opening net debt/(cash)

 

 

1,362,703

1,068,705

671,479

1,188,233

774,766

5,954

(536,359)

(1,254,497)

Other

(1,300)

(1,311)

(1,205)

(5,995)

(1,462)

0

0

0

Closing net debt/(cash)

 

 

1,068,705

671,479

1,188,233

774,766

5,954

(536,359)

(1,254,497)

(1,344,388)

Source: Company sources, Edison Investment Research


General disclaimer and copyright

This report has been commissioned by Wheaton Precious Metals and prepared and issued by Edison, in consideration of a fee payable by Wheaton Precious Metals. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

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United States of America

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Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

General disclaimer and copyright

This report has been commissioned by Wheaton Precious Metals and prepared and issued by Edison, in consideration of a fee payable by Wheaton Precious Metals. Edison Investment Research standard fees are £49,500 pa for the production and broad dissemination of a detailed note (Outlook) following by regular (typically quarterly) update notes. Fees are paid upfront in cash without recourse. Edison may seek additional fees for the provision of roadshows and related IR services for the client but does not get remunerated for any investment banking services. We never take payment in stock, options or warrants for any of our services.

Accuracy of content: All information used in the publication of this report has been compiled from publicly available sources that are believed to be reliable, however we do not guarantee the accuracy or completeness of this report and have not sought for this information to be independently verified. Opinions contained in this report represent those of the research department of Edison at the time of publication. Forward-looking information or statements in this report contain information that is based on assumptions, forecasts of future results, estimates of amounts not yet determinable, and therefore involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of their subject matter to be materially different from current expectations.

Exclusion of Liability: To the fullest extent allowed by law, Edison shall not be liable for any direct, indirect or consequential losses, loss of profits, damages, costs or expenses incurred or suffered by you arising out or in connection with the access to, use of or reliance on any information contained on this note.

No personalised advice: The information that we provide should not be construed in any manner whatsoever as, personalised advice. Also, the information provided by us should not be construed by any subscriber or prospective subscriber as Edison’s solicitation to effect, or attempt to effect, any transaction in a security. The securities described in the report may not be eligible for sale in all jurisdictions or to certain categories of investors.

Investment in securities mentioned: Edison has a restrictive policy relating to personal dealing and conflicts of interest. Edison Group does not conduct any investment business and, accordingly, does not itself hold any positions in the securities mentioned in this report. However, the respective directors, officers, employees and contractors of Edison may have a position in any or related securities mentioned in this report, subject to Edison's policies on personal dealing and conflicts of interest.

Copyright: Copyright 2021 Edison Investment Research Limited (Edison).

Australia

Edison Investment Research Pty Ltd (Edison AU) is the Australian subsidiary of Edison. Edison AU is a Corporate Authorised Representative (1252501) of Crown Wealth Group Pty Ltd who holds an Australian Financial Services Licence (Number: 494274). This research is issued in Australia by Edison AU and any access to it, is intended only for "wholesale clients" within the meaning of the Corporations Act 2001 of Australia. Any advice given by Edison AU is general advice only and does not take into account your personal circumstances, needs or objectives. You should, before acting on this advice, consider the appropriateness of the advice, having regard to your objectives, financial situation and needs. If our advice relates to the acquisition, or possible acquisition, of a particular financial product you should read any relevant Product Disclosure Statement or like instrument.

New Zealand

The research in this document is intended for New Zealand resident professional financial advisers or brokers (for use in their roles as financial advisers or brokers) and habitual investors who are “wholesale clients” for the purpose of the Financial Advisers Act 2008 (FAA) (as described in sections 5(c) (1)(a), (b) and (c) of the FAA). This is not a solicitation or inducement to buy, sell, subscribe, or underwrite any securities mentioned or in the topic of this document. For the purpose of the FAA, the content of this report is of a general nature, is intended as a source of general information only and is not intended to constitute a recommendation or opinion in relation to acquiring or disposing (including refraining from acquiring or disposing) of securities. The distribution of this document is not a “personalised service” and, to the extent that it contains any financial advice, is intended only as a “class service” provided by Edison within the meaning of the FAA (i.e. without taking into account the particular financial situation or goals of any person). As such, it should not be relied upon in making an investment decision.

United Kingdom

This document is prepared and provided by Edison for information purposes only and should not be construed as an offer or solicitation for investment in any securities mentioned or in the topic of this document. A marketing communication under FCA Rules, this document has not been prepared in accordance with the legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This Communication is being distributed in the United Kingdom and is directed only at (i) persons having professional experience in matters relating to investments, i.e. investment professionals within the meaning of Article 19(5) of the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005, as amended (the "FPO") (ii) high net-worth companies, unincorporated associations or other bodies within the meaning of Article 49 of the FPO and (iii) persons to whom it is otherwise lawful to distribute it. The investment or investment activity to which this document relates is available only to such persons. It is not intended that this document be distributed or passed on, directly or indirectly, to any other class of persons and in any event and under no circumstances should persons of any other description rely on or act upon the contents of this document.

This Communication is being supplied to you solely for your information and may not be reproduced by, further distributed to or published in whole or in part by, any other person.

United States

Edison relies upon the "publishers' exclusion" from the definition of investment adviser under Section 202(a)(11) of the Investment Advisers Act of 1940 and corresponding state securities laws. This report is a bona fide publication of general and regular circulation offering impersonal investment-related advice, not tailored to a specific investment portfolio or the needs of current and/or prospective subscribers. As such, Edison does not offer or provide personal advice and the research provided is for informational purposes only. No mention of a particular security in this report constitutes a recommendation to buy, sell or hold that or any security, or that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person.

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Frankfurt +49 (0)69 78 8076 960

Schumannstrasse 34b

60325 Frankfurt

Germany

London +44 (0)20 3077 5700

280 High Holborn

London, WC1V 7EE

United Kingdom

New York +1 646 653 7026

1185 Avenue of the Americas

3rd Floor, New York, NY 10036

United States of America

Sydney +61 (0)2 8249 8342

Level 4, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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