Never knowingly undersold

Wheaton Precious Metals 10 November 2017 Update
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Wheaton Precious Metals

Never knowingly undersold

Third quarter results

Metals & mining

10 November 2017

Price

C$26.72

Market cap

C$11,813m

C$1.2693/US$

Net debt* (US$m) at 30 September 2017
*ex-dividend

784.1

Shares in issue

442.0m

Free float

100%

Code

WPM

Primary exchange

TSX

Secondary exchange

NYSE

Share price performance

%

1m

3m

12m

Abs

7.1

6.0

(17.1)

Rel (local)

4.7

0.3

(23.9)

52-week high/low

C$30.0

C$22.8

Business description

Wheaton Precious Metals is the world’s pre-eminent pure 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, the US and Guyana.

Next events

FY17/Q417 results

March 2018

Analyst

Charles Gibson

+44 (0)20 3077 5724

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

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).

Year end

Revenue (US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/15

648.7

223.6

53

20

39.7

1.0

12/16

891.6

269.8

62

21

34.0

1.0

12/17e

828.2

275.7

62

33

33.9

1.6

12/18e

951.8

394.5

89

42

23.6

2.0

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

Production guidance maintained

Overall, WPM has maintained its production guidance for FY17 at 28Moz Ag and 340koz Au, cf Edison’s forecast of 28.5Moz Ag and 343koz Au. We perceive that there is risk to our estimates from San Dimas, but regard this as being offset by opportunity at Penasquito. Otherwise, we have also increased our Q417 silver price forecast from US$16.71/oz to US$16.91 and our gold price forecast from US$1,247/oz to US$1,272/oz. In the aftermath of these revisions, our updated basic EPS estimate for FY17 is barely changed, at 62c, which compares to an average consensus estimate of 60.2c, within a range of 57-64c.

Au/Ag normalisation offers material upside

Edison’s FY18 EPS forecast assumes precious metals prices of US$21.54/oz Ag and US$1,220/oz Au. This moderates to 67c (cf a consensus of 65.3c, within the range 42-81c, excluding Edison) in the event that prices in fact equal the current spot prices of US$17.12/oz Ag and US$1,287/oz Au. While Edison’s headline forecast for this year may thus look optimistic, it nevertheless demonstrates the material operational gearing offered by WPM to a normalisation of the gold/silver ratio.

Valuation: 81.7-95.7% upside depending on Salobo

Assuming no material purchases of additional streams (which is unlikely), we forecast a per share value for WPM of US$38.24, or C$48.54 in FY20 (at average precious metals prices of US$23.98/oz Ag and US$1,362/oz Au), implying a 26.6% pa total internal rate of return for investors in US dollar terms over the next three years. These valuations would rise to US$41.20, C$52.30 and 28.7% in the event that Vale decides to increase Salobo’s processing capacity by 50% to 36Mpa. In the meantime, WPM’s shares are trading on near-term financial ratios that are lower than those of its royalty/streaming ‘peers’ on 96% of financial measures considered in Exhibit 5, and the miners themselves in at least 41% of the same measures, despite being associated with materially less operating and cost risk. Additional potential upside still then exists in the form of the optionality provided by the development of major assets such as Pascua-Lama and Rosemont.

Q317

WPM’s Q317 results were characterised by improvements in production relative to the previous quarter, but a 24.2% under-sale of silver relative to production (which was attributed to Penasquito, Zinkgruvan, Yauliyacu and Antamina) and a 13.9% under-sale of gold (which was attributed to Sudbury and Salobo). As a result, revenues were US$16.9m below our expectations for the quarter, although this was largely offset by a US$12.1m positive variance in the cost of sales. Note that, during the course of a year, WPM almost invariably experiences a period of inventory build, which is then, typically, ‘flushed through’ in the final quarter of the year. Otherwise, production was below our expectations at San Dimas, Constancia and Sudbury, but was more than offset by being above our expectations at Penasquito, Antamina, Salobo and Other Gold. Once again, gold sales exceeded silver sales, in this case in the ratio 52:48 (cf 46:54 in Q217).

Exhibit 1: Wheaton Precious Metals’ Q317 vs Q317e and Q217*

US$000s
(unless otherwise stated)

Q116

Q216

Q316

Q416

Q117

Q217

Q317e

Q317a

Chg**
(%)

Diff***
(%)

Q417e

FY17e

Silver production (koz)

7,570

7,581

7,651

7,589

6,513

7,192

6,916

7,595

5.6

9.8

7,156

28,456

Gold production (oz)

64,942

70,249

109,193

107,332

84,863

78,127

83,765

95,897

22.7

14.5

83,765

342,652

AgE production (koz)

12,733

12,852

15,084

15,218

12,454

12,898

13,289

14,874

15.3

11.9

13,457

53,701

Silver sales (koz)

7,552

7,142

6,122

7,506

5,225

6,369

6,916

5,758

-9.6

-16.7

7,156

24,508

Gold sales (oz)

65,258

70,757

85,063

108,931

88,397

71,965

83,765

82,548

14.7

-1.5

83,765

326,675

AgE sales (koz)

12,759

12,451

11,913

15,249

11,412

11,625

13,289

12,024

3.4

-9.5

13,457

48,527

Avg realised Ag price (US$/oz)

14.68

17.18

19.53

16.95

17.45

17.09

16.55

16.87

-1.3

1.9

16.91

17.06

Avg realised Au price (US$/oz)

1,175

1,267

1,336

1,205

1,208

1,263

1,259

1,283

1.6

1.9

1,272

1,248

Avg realised AgE price (US$/oz)

14.70

17.06

19.57

16.95

17.35

17.18

16.55

16.89

-1.7

2.1

16.91

17.07

Avg Ag cash cost (US$/oz)

4.14

4.46

4.51

4.59

4.54

4.51

4.52

4.43

-1.8

-2.0

4.52

4.50

Avg Au cash cost (US$/oz)

389

401

390

389

391

393

395

396

0.8

0.3

368

359

Avg AgE cash cost (US$/oz)

4.44

4.84

5.10

5.04

5.11

4.90

4.84

4.84

-1.2

0.0

4.86

4.92

 

 

Sales

187,511

212,351

233,204

258,491

197,951

199,684

219,927

203,034

1.7

-7.7

227,565

828,233

Cost of sales

 

 

Cost of sales, excl. depletion

56,636

60,208

60,776

77,617

58,291

56,981

64,346

58,234

2.2

-9.5

65,422

238,928

Depletion

71,344

75,074

73,919

88,365

63,943

59,772

67,902

61,852

3.5

-8.9

68,924

254,491

Total cost of sales

127,980

135,282

134,695

165,983

122,234

116,753

132,249

120,086

2.9

-9.2

134,346

493,419

Earnings from operations

59,531

77,069

98,509

92,509

75,717

82,931

87,679

82,948

0.0

-5.4

93,219

334,814

Expenses and other income

 

 

– General and administrative****

10,844

9,959

9,513

4,123

7,898

9,069

8,500

8,793

-3.0

3.4

8,500

34,260

– Foreign exchange (gain)/loss

0

0

0

0

41

163

297.6

N/A

204

– Net interest paid/(received)

6,932

4,590

6,007

6,664

6,373

6,482

6,023

6,360

-1.9

5.6

5,686

24,901

– Other (income)/expense

1,160

1,599

1,380

843

94

283

0

1,317

365.4

N/A

0

1,694

Total expenses and other income

18,936

16,148

16,900

11,630

14,365

15,875

14,523

16,633

4.8

14.5

14,186

61,059

Earnings before income taxes

40,595

60,921

81,609

80,879

61,352

67,056

73,156

66,315

-1.1

-9.4

79,033

273,755

Income tax expense/(recovery)

(384)

615

(1,377)

(184)

128

(556)

0

(263)

-52.7

N/A

-691

Marginal tax rate (%)

(0.9)

1.0

(1.7)

(0.2)

0.2

(0.8)

0.0

(0.4)

-50.0

N/A

0.0

-0.3

Net earnings

40,979

60,306

82,986

81,063

61,224

67,612

73,156

66,578

-1.5

-9.0

79,033

274,446

Avg no. shares in issue (000s)

402,952

436,726

440,635

440,635

441,484

441,784

441,484

442,094

0.1

0.1

442,094

441,864

Basic EPS (US$)

0.10

0.14

0.19

0.18

0.14

0.15

0.17

0.15

0.0

-11.8

0.18

0.62

Diluted EPS (US$)

0.10

0.14

0.19

0.18

0.14

0.15

0.17

0.15

0.0

-11.8

0.18

0.62

Source: Wheaton Precious Metals, Edison Investment Research. Note: *Excluding impairments; **Q317 vs Q217; ***Q317 actual vs Q317 estimate; ****Forecast excluded stock-based compensation costs.

Salobo was reported to have operated above nameplate capacity during the quarter, while Penasquito and Antamina both benefited from higher grades, combined with higher recoveries at Penasquito and higher throughput at Antamina. According to Goldcorp (the operator), throughput at Penasquito is expected to increase once again in Q417, as a result of improved mill efficiencies, while the Chile Colorado pit will now contribute to mill feed ahead of schedule in CY18. In the longer term, the Pyrite Leach Project at Penasquito (which will add c 1Moz gold and 44Moz silver over the current life of the mine, by recovering 40% Au and 48% Ag currently reporting to the tailings) is reported to be 40% complete and is expected to commence commissioning three months ahead of schedule, in Q418.

In the same period, Constancia was affected by the continued processing of lower-grade ore (albeit as anticipated by Hudbay), while Sudbury experienced the inevitable effects of its transition to a single furnace flow sheet in Q417. Notwithstanding the fact that production was slightly lower than our expectations, Vale (the operator) reports that the transition has proceeded smoothly, with the newly designed furnace already exceeding its nameplate capacity, with the result that it achieved record quarterly copper concentrate production. In the meantime, San Dimas continued to be adversely affected by persistent issues relating to underground equipment reliability, which has restricted development rates and underground stoping activities. Despite its tribulations however (see our note, entitled Still shining, published on 30 August 2017), WPM pronounced itself encouraged by Primero’s ability to reduce general and administrative costs and to sell non-core assets. Also, it noted that Primero has “received a number of proposals from interested parties regarding a potential acquisition of the San Dimas operation.”

Finally, WPM agreed a renegotiation of the terms of its Minto gold stream with Capstone, such that the production payment per ounce of gold delivered to WPM will increase over the current fixed price in periods in which the market price of copper is below US$2.50/lb (note that the market price of three-month copper is currently US$3.08/lb, or US$6,808/t). In return for this accommodation, WPM has received C$8m in Capstone shares. It has also advanced a subordinated secured convertible debt loan up to C$20m at an interest rate of 10% per annum over a seven-year term to Desert Star in order to assist it in developing Kutcho (over which it has concluded an “early deposit” agreement).

Overall, WPM has maintained its production guidance for FY17 at 28Moz Ag and 340koz Au, compared with Edison’s forecast of 28.5Moz Ag and 343koz Au. We perceive that there is risk to our estimates from San Dimas, but regard this as being offset by upside risk at Penasquito. Otherwise, we have also increased our Q417 silver price forecast from US$16.71/oz to US$16.91/oz and our gold price forecast from US$1,247/oz to US$1,272/oz. In the aftermath of these revisions, our updated basic EPS estimate for FY17 is 62c, which compares to an average consensus estimate (source: Bloomberg, 9 November 2017) of 60.2c, within a range of 57-64c (cf an average of 59.5c within a range of 51-67c in August).

Ounces produced but not yet delivered – ‘inventory’

Sales of silver and gold recorded 24.2% and 13.9% under-sales relative to production in Q317, compared to long-term average under-sale rates of 11.0% and 9.5%, respectively.

Exhibit 2: Over-/(under-) sale of silver and gold as a percentage of production, Q112-Q317

Source: Edison Investment Research, Wheaton Precious Metals

As at 30 September, payable ounces attributable to Wheaton Precious produced but not yet delivered amounted to 5.3Moz silver and 57,200oz gold (cf 4.2Moz silver and 52,900oz gold in June, 3.9Moz silver and 51,500oz gold in March, 3.2Moz silver and 61,700oz gold in December and 3.8Moz silver and 63,300oz gold in September 2016). This ‘inventory’ equates to 2.23 months and 2.00 months of forecast FY17 silver and gold production, respectively (cf 1.81 months and 1.92 months in Q217, 1.73 months and 1.85 months in Q117, 1.25 months and 2.1 months of forecast FY16 production as at end-December, and 1.5 months and 2.3 months as at end-September), or 2.15 months on a silver equivalent basis (cf 1.88 months as at end-June and 1.8 months as at end-March, 1.6 months as at end-December and 1.9 months as at end-September) – slightly above WPM’s target level of two months.

Exhibit 3: WPM oz produced but not yet delivered, Q316-Q317 (months of production)

Source: Edison Investment Research, Wheaton Precious Metals

Note that, for these purposes, the use of the term ‘inventory’ reflects ounces produced by WPM’s operating counterparties at the mines over which it has streaming agreements, but which have not yet been delivered to WPM. It in no way reflects the other, more usual use of the term in the mining industry itself, where it is typically used to refer to metal in circuit (among other things), and may therefore (under certain circumstances) be considered to be a consequence of an operation’s metallurgical recoveries.

Valuation

Excluding FY04 (part year), WPM’s shares have historically traded on an average P/E multiple of 27.1x current year basic underlying EPS – ie excluding impairments (cf 33.9x Edison or 35.3x consensus FY17e, currently – see Exhibit 5).

Exhibit 4: WPM’s historic current year P/E multiples

Source: Edison Investment Research.

Applying this multiple to our long-term EPS forecast of US$1.41 in FY20 (at Edison’s average long-term precious metals prices of US$23.98/oz Ag and US$1,362/oz Au in FY20) implies a potential share value for WPM shares of US$38.25, or C$48.54 in that year.

In the meantime, from a relative perspective, it is notable that WPM is cheaper than its royalty/streaming ‘peers’ in 96% (ie 23 out of 24) of the valuation measures used in Exhibit 5 and on multiples that are cheaper than the miners themselves in at least 41% of the same valuation measures, despite being associated with materially less operational and cost risk, in particular.

Exhibit 5: Wheaton Precious Metals’ valuation cf a sample of major operating and royalty/streaming companies

P/E (x)

Yield (%)

P/CF (x)

Year 1

Year 2

Year 1

Year 2

Year 1

Year 2

Royalty companies

Franco-Nevada

79.1

74.0

1.1

1.1

31.7

30.5

Royal Gold

48.6

40.2

1.1

1.1

19.3

17.7

Sandstorm Gold

76.5

64.3

0.0

0.0

16.6

17.7

Osisko Gold Royalties

51.8

44.5

1.1

1.2

30.1

24.0

Average

64.0

55.7

0.8

0.8

24.4

22.5

Wheaton Precious (Edison forecasts)

33.9

23.6

1.6

2.0

17.4

14.3

WPM (consensus)

35.3

32.5

1.6

1.6

17.4

16.4

Gold producers

Barrick

18.3

17.3

0.9

0.8

6.3

6.3

Newmont

25.3

27.4

0.7

1.0

8.7

8.6

Goldcorp

31.0

27.1

0.6

0.6

9.6

8.2

Newcrest

31.9

19.7

1.0

1.5

10.7

9.2

Kinross

36.3

36.6

0.0

0.0

5.8

5.2

Agnico-Eagle

46.9

51.7

0.9

0.9

13.3

13.3

Eldorado

53.1

18.0

1.5

0.5

11.3

5.7

Yamana

58.4

21.7

0.7

0.7

5.5

3.8

Randgold Resources

28.6

23.8

2.0

3.1

17.2

14.4

Average

36.6

27.0

0.9

1.0

9.8

8.3

Silver producers

Hecla

85.4

23.5

0.2

0.2

11.2

7.7

Pan American

30.3

19.2

0.6

0.7

11.4

8.6

Coeur Mining

688.2

23.0

0.0

0.0

9.2

5.4

First Majestic

335.7

35.4

0.0

0.0

14.3

9.4

Hocschild

39.0

25.1

1.4

1.6

6.6

5.3

Fresnillo

27.0

22.8

1.8

1.9

15.9

12.7

Average

200.9

24.8

0.7

0.7

11.4

8.2

Source: Bloomberg, Edison Investment Research. Note: Edison WPM FY18 forecasts assume precious metals prices of US$21.54/oz Ag and US$1,220/oz Au. Priced on 9 November 2017.

Sensitivities

Currently, we make no provision for either future expansion at Salobo or related expansion payments in our long-term forecasts. However, in the event that Salobo were to be expanded from 24Mtpa to 36Mtpa by the addition of a further 12Mtpa processing lines by 1 January 2023 – thereby attracting an estimated c US$603m incremental payment from WPM to Vale – we estimate that it would increase our estimate of WPM’s earnings by a material US$0.11/share. This, in turn, would increase our forecast value per share for the company to US$41.20, or C$52.30 at prevailing FX rates, implying an internal rate of return to investors buying WPM shares currently at C$26.72, equivalent to 28.7% pa in US dollar terms.

Financials

As at 30 September, WPM had US$69.9m in cash (ex-dividend) and US$854.0m of debt outstanding under its US$2bn revolving credit facility (which attracts an interest rate of Libor plus 120-220bp and matures in February 2022), such that it had net debt of US$784.1m overall, after US$129.1m (US$0.29/share) of cash inflows from operating activities during the quarter. Relative to the company’s equity, this level of net debt equates to a financial gearing (net debt/equity) ratio of 15.5% and a leverage (net debt/[net debt+equity]) ratio of 13.4%. It also compares with a net debt position of US$876.4m as at 30 June, US$980.2m as at 31 March, US$1,068.7m as at the end of December 2016, US$1,219.5m as at the end of September 2016 and US$1,362.7m as at the end of December 2015 and is consistent with WPM continuing to generate c US$100-150m per quarter from operating activities before financing and investing activities. Otherwise, assuming the operational performance set out in Exhibit 1, we estimate that WPM’s net debt position will decline organically, to US$759.1m by the end of FY17 (equating to gearing of 15.0% and leverage of 13.0%), and that WPM will be net debt free approximately midway through FY19, all other things being equal and contingent on its making no further major acquisitions (which is unlikely). Self-evidently, such a level of debt is well within the tolerances required by its banking covenants that:

net debt should be no more than 0.75x tangible net worth (which was US$5,067.3m as at end-September 2017 and which we forecast to be US$5,068.6m as at end-December 2017); and

interest should be no less than 3x covered by EBITDA (we estimate that net interest will be 22.3x covered in FY17).

Note that the C$191.7m letter of guarantee that WPM has posted re 50% of the disputed taxes relating to its dispute with the Canadian Revenue Agency (CRA) (see below) has been determined under a separate agreement and is therefore specifically excluded from calculations regarding WPM’s banking covenants.

CRA

There have been no further substantive developments regarding WPM’s dispute with the CRA since our update note of 15 February 2016.

WPM notes that the CRA’s position is that the transfer pricing provisions of the Income Tax Act (Canada) in relation to income earned by WPM’s foreign subsidiaries should apply “such that the income of Silver Wheaton [sic] subject to tax in Canada should be increased by an amount equal to substantially all of the income earned outside of Canada by the company’s foreign subsidiaries for the 2005-2010 taxation years”. Should this interpretation be upheld, we would expect it to have potentially profound consequences for Canada’s status as a supplier of finance and capital to overseas destinations in general (ie not just for the mining industry).

Earlier this year, WPM’s CEO, Randy Smallwood, was quoted as saying that the company is willing to settle its tax dispute with the CRA via a payment of C$5-10m “with gritted teeth”, but still believes no payment should be required. As such, the C$5-10m quoted should not be interpreted as an admission of guilt, but rather an appreciation of the costs involved in going to a full trial and also of the effect that the issue is having on WPM’s share price rating relative to its peers (see Exhibit 5).

In the meantime, Wheaton Precious is approximately halfway through the case ‘discovery process’ with the CRA, designed to provide both sides with the opportunity to arrive at an out-of-court settlement before formal proceedings commence. At the moment, this discovery process appears likely to last until the end of the year and any potential out-of-court settlement would therefore be likely to occur shortly after this date. Otherwise, however, the company has stated that it is willing to go to trial if a ‘principled’ settlement is not possible (which would be likely to be towards the middle of 2018).

Exhibit 6: Financial summary

US$000s

2012

2013

2014

2015

2016

2017e

2018e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

849,560

706,472

620,176

648,687

891,557

828,233

951,821

Cost of Sales

(117,489)

(139,352)

(151,097)

(190,214)

(254,434)

(238,928)

(249,386)

Gross Profit

732,071

567,120

469,079

458,473

637,123

589,305

702,435

EBITDA

 

 

701,232

531,812

431,219

426,236

602,684

555,045

668,175

Operating Profit (before amort. and except.)

600,003

387,659

271,039

227,655

293,982

300,554

412,203

Intangible Amortisation

0

0

0

0

0

0

0

Exceptionals

0

0

(68,151)

(384,922)

(71,000)

0

0

Other

788

(11,202)

(1,830)

(4,076)

(4,982)

(1,898)

0

Operating Profit

600,791

376,457

201,058

(161,343)

218,000

298,656

412,203

Net Interest

0

(6,083)

(2,277)

(4,090)

(24,193)

(24,901)

(17,688)

Profit Before Tax (norm)

 

 

600,003

381,576

268,762

223,565

269,789

275,653

394,515

Profit Before Tax (FRS 3)

 

 

600,791

370,374

198,781

(165,433)

193,807

273,755

394,515

Tax

(14,755)

5,121

1,045

3,391

1,330

691

0

Profit After Tax (norm)

586,036

375,495

267,977

222,880

266,137

274,446

394,515

Profit After Tax (FRS 3)

586,036

375,495

199,826

(162,042)

195,137

274,446

394,515

Average Number of Shares Outstanding (m)

353.9

355.6

359.4

395.8

430.5

441.9

442.1

EPS - normalised (c)

 

 

166

106

75

53

62

62

89

EPS - normalised and fully diluted (c)

 

165

105

74

53

62

62

89

EPS - (IFRS) (c)

 

 

166

106

56

(41)

45

62

89

Dividend per share (c)

35

45

26

20

21

33

42

Gross Margin (%)

86.2

80.3

75.6

70.7

71.5

71.2

73.8

EBITDA Margin (%)

82.5

75.3

69.5

65.7

67.6

67.0

70.2

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

70.6

54.9

43.7

35.1

33.0

36.3

43.3

BALANCE SHEET

Fixed Assets

 

 

2,403,958

4,288,557

4,309,270

5,526,335

6,025,227

5,849,736

5,665,764

Intangible Assets

2,281,234

4,242,086

4,270,971

5,494,244

5,948,443

5,772,952

5,588,980

Tangible Assets

1,347

5,670

5,427

12,315

12,163

12,163

12,163

Investments

121,377

40,801

32,872

19,776

64,621

64,621

64,621

Current Assets

 

 

785,379

101,287

338,493

105,876

128,092

437,630

830,603

Stocks

966

845

26,263

1,455

1,481

1,487

1,709

Debtors

6,197

4,619

4,132

1,124

2,316

2,269

2,608

Cash

778,216

95,823

308,098

103,297

124,295

433,874

826,286

Other

0

0

0

0

0

0

0

Current Liabilities

 

 

(49,458)

(21,134)

(16,171)

(12,568)

(19,057)

(23,794)

(24,825)

Creditors

(20,898)

(21,134)

(16,171)

(12,568)

(19,057)

(23,794)

(24,825)

Short term borrowings

(28,560)

0

0

0

0

0

0

Long Term Liabilities

 

 

(32,805)

(1,002,164)

(1,002,856)

(1,468,908)

(1,194,274)

(1,194,965)

(1,194,965)

Long term borrowings

(21,500)

(998,136)

(998,518)

(1,466,000)

(1,193,000)

(1,193,000)

(1,193,000)

Other long term liabilities

(11,305)

(4,028)

(4,338)

(2,908)

(1,274)

(1,965)

(1,965)

Net Assets

 

 

3,107,074

3,366,546

3,628,736

4,150,735

4,939,988

5,068,608

5,276,576

CASH FLOW

Operating Cash Flow

 

 

720,209

540,597

434,582

435,783

608,503

557,924

668,646

Net Interest

0

(6,083)

(2,277)

(4,090)

(24,193)

(24,901)

(17,688)

Tax

(725)

(154)

(204)

(208)

28

1,382

0

Capex

(641,976)

(2,050,681)

(146,249)

(1,791,275)

(805,472)

(79,000)

(72,000)

Acquisitions/disposals

0

0

0

0

0

0

0

Financing

12,919

58,004

6,819

761,824

595,140

0

0

Dividends

(123,852)

(160,013)

(79,775)

(68,593)

(78,708)

(145,827)

(186,546)

Net Cash Flow

(33,425)

(1,618,330)

212,896

(666,559)

295,298

309,579

392,412

Opening net debt/(cash)

 

 

(761,581)

(728,156)

902,313

690,420

1,362,703

1,068,705

759,126

HP finance leases initiated

0

0

0

0

0

0

0

Other

0

(12,139)

(1,003)

(5,724)

(1,300)

0

0

Closing net debt/(cash)

 

 

(728,156)

902,313

690,420

1,362,703

1,068,705

759,126

366,714

Source: Wheaton Precious Metals sources, Edison Investment Research

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Wheaton Precious Metals and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

Edison is an investment research and advisory company, with offices in North America, Europe, the Middle East and AsiaPac. The heart of Edison is our world-renowned equity research platform and deep multi-sector expertise. At Edison Investment Research, our research is widely read by international investors, advisers and stakeholders. Edison Advisors leverages our core research platform to provide differentiated services including investor relations and strategic consulting. Edison is authorised and regulated by the Financial Conduct Authority. Edison Investment Research (NZ) Limited (Edison NZ) is the New Zealand subsidiary of Edison. Edison NZ is registered on the New Zealand Financial Service Providers Register (FSP number 247505) and is registered to provide wholesale and/or generic financial adviser services only. Edison Investment Research Inc (Edison US) is the US subsidiary of Edison and is regulated by the Securities and Exchange Commission. Edison Investment Research Limited (Edison Aus) [46085869] is the Australian subsidiary of Edison and is not regulated by the Australian Securities and Investment Commission. Edison Germany is a branch entity of Edison Investment Research Limited [4794244]. www.edisongroup.com

DISCLAIMER
Copyright 2017 Edison Investment Research Limited. All rights reserved. This report has been commissioned by Wheaton Precious Metals and prepared and issued by Edison for publication globally. 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. Opinions contained in this report represent those of the research department of Edison at the time of publication. The securities described in the Investment Research may not be eligible for sale in all jurisdictions or to certain categories of investors. This research is issued in Australia by Edison Aus and any access to it, is intended only for "wholesale clients" within the meaning of the Australian Corporations Act. The Investment Research is distributed in the United States by Edison US to major US institutional investors only. Edison US is registered as an investment adviser with the Securities and Exchange Commission. Edison US 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. As such, Edison does not offer or provide personalised advice. We publish information about companies in which we believe our readers may be interested and this information reflects our sincere opinions. The information that we provide or that is derived from our website is not intended to be, and should not be construed in any manner whatsoever as, personalised advice. Also, our website and 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 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. This document is provided 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.
Edison has a restrictive policy relating to personal dealing. 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. Edison or its affiliates may perform services or solicit business from any of the companies mentioned in this report. The value of securities mentioned in this report can fall as well as rise and are subject to large and sudden swings. In addition it may be difficult or not possible to buy, sell or obtain accurate information about the value of securities mentioned in this report. Past performance is not necessarily a guide to future performance. 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. 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 (ie 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. To the maximum extent permitted by law, Edison, its affiliates and contractors, and their respective directors, officers and employees will not be liable for any loss or damage arising as a result of reliance being placed on any of the information contained in this report and do not guarantee the returns on investments in the products discussed in this publication. FTSE International Limited (“FTSE”) © FTSE 2017. “FTSE®” is a trade mark of the London Stock Exchange Group companies and is used by FTSE International Limited under license. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent.

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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, 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

295 Madison Avenue, 18th Floor

10017, New York

US

Sydney +61 (0)2 8249 8342

Level 12, Office 1205

95 Pitt Street, Sydney

NSW 2000, Australia

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