Wheaton Precious Metals — Salobo tasting sweet

Wheaton Precious Metals (TSX: WPM)

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Research: Metals & Mining

Wheaton Precious Metals — Salobo tasting sweet

Ahead of Wheaton’s scheduled Q3 results after the bell on Thursday 7 November, we have adjusted our earnings forecasts for the quarter to take account of generally higher precious metals prices, lower production and sales at Penasquito, Constancia and San Dimas, but higher production and sales at Salobo. Specifically, Vale’s announcement that Salobo produced 46.6kt of copper in Q3 implies gold production attributable to Wheaton of 65,019oz ±3,480oz (cf 54,750oz previously forecast). As a result, we have upgraded our forecast EPS for Q3 fractionally. However, we have upgraded our forecast for FY24 by a more material 9.9c/share, largely on account of the effect of higher precious metals prices on Q4 earnings. Note that if current metals prices persist, our FY25 EPS forecast will be US$1.72/share (cf the US$1.24/share shown below).

Lord Ashbourne

Written by

Lord Ashbourne

Director of Content, Mining

Metals & Mining

Wheaton Precious Metals

Salobo tasting sweet

Q324/FY24 forecasts,
Koné & Fenix PMPAs and Salobo site visit

Metals and mining

30 October 2024

Price

C$91.91

Market cap

C$41,675m

C$1.3899/US$, US$1.2994/£

Cash at end June 2024 (excluding US$5.7m in lease liabilities)

US$540.2m

Shares in issue

453.4m

Free float

100.0%

Code

WPM

Primary exchange

TSX

Secondary exchanges

LSE, NYSE

Share price performance

%

1m

3m

12m

Abs

11.8

16.3

56.4

Rel (local)

9.1

7.8

19.3

52-week high/low

C$94.71

C$52.92

Business description

Wheaton Precious Metals is the world’s pre-eminent ostensibly precious metals streaming company, with 46 high-quality precious metals streaming and royalty agreements over mines in Mexico, Canada, Brazil, Chile, the US, Argentina, Peru, Sweden, Greece, Portugal and Colombia.

Next events

Q324 results

7 November 2024

Third quarterly dividend record date

Late November

Distribution date

Early December

Q424/FY24 results

March 2025

Analyst

Lord Ashbourne

+44 (0)20 3077 5700

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

Ahead of Wheaton’s scheduled Q3 results after the bell on Thursday 7 November, we have adjusted our earnings forecasts for the quarter to take account of generally higher precious metals prices, lower production and sales at Penasquito, Constancia and San Dimas, but higher production and sales at Salobo. Specifically, Vale’s announcement that Salobo produced 46.6kt of copper in Q3 implies gold production attributable to Wheaton of 65,019oz ±3,480oz (cf 54,750oz previously forecast). As a result, we have upgraded our forecast EPS for Q3 fractionally. However, we have upgraded our forecast for FY24 by a more material 9.9c/share, largely on account of the effect of higher precious metals prices on Q4 earnings. Note that if current metals prices persist, our FY25 EPS forecast will be US$1.72/share (cf the US$1.24/share shown below).

Year end

Revenue
(US$m)

PBT*
(US$m)

EPS*
(c)

DPS
(c)

P/E
(x)

Yield
(%)

12/22

1,065.1

505.4

112

60

59.0

0.9

12/23

1,016.0

533.4

118

60

56.0

0.9

12/24e

1,309.0

775.5

145

62

45.5

0.9

12/25e

1,322.4

654.5

124

65

53.4

1.0

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

FY24 marks the start of a multi-year growth profile

In recent days, Wheaton Precious Metals (WPM) has shown itself to be one of the major beneficiaries of the funding stasis for mining projects in western world financial markets by entering into a definitive precious metals purchase agreement (PMPA) with Montage Gold in respect of its Koné mine in Côte d'Ivoire and also an updated and expanded PMPA with Rio2 in respect of its Fenix project in Chile. Both are key components in packages that fully finance the projects and allow them to develop rapidly. As a result, we are forecasting that WPM’s attributable production will grow to 899.0k gold equivalent ounces (GEOs) in FY30 (cf 596.5k GEOs in FY24e).

Valuation: Steady on conservative assumptions

Using a capital asset pricing model-type method, whereby we discount cash flows at a nominal 9% per year, our ‘terminal’ valuation of WPM has held steady at US$57.01 (C$79.24) in FY27, assuming zero subsequent long-term growth in real cash flows (which we think unlikely). However, if we instead assume 7.4% pa long-term growth in cash flows (ie the average compound annual growth rate in the price of gold from 1967 to 2023), our current valuation of WPM in FY24 increases manyfold to US$136.28/share, or C$189.42/share. As such, at an implied rate of 5.7% per year, WPM’s share price currently appears to be discounting future compound annual average increases in cash flows per share from FY27 only very slightly in excess of the long-term average rate of US dollar inflation of 4.0% from 1967 until 2023. Alternatively, assuming no purchases of additional streams, we calculate a value per share for WPM of US$56.57 or C$78.62 or £43.54 in FY27, based on a historical multiple of 30.8x contemporary earnings (albeit at a gold price of only US$2,239/oz). In the meantime, WPM is maintaining its premium rating relative to its peers, albeit it appears good value within the context of future dividend expectations, especially in years two and three.

Q324 forecasts

WPM’s Q324 results are scheduled after the close of business in Canada on Thursday 7 November. Ahead of their release, we have adjusted our earnings forecasts for the quarter to take account of the following:

Generally higher precious metals prices (see Exhibit 1, below).

Lower sales at Penasquito (in line with Newmont’s Q3 results) to reflect port delays to shipments ex-Mexico as a result of Hurricanes Beryl, Debby, Francine and (in particular) Helene – albeit we expect this shortfall to be largely made up in Q4 notwithstanding Hurricane Milton early in the quarter.

Lower production at Constancia to reflect mine phasing and a temporary delay in moving to higher-grade areas of the mine.

Slightly lower production at San Dimas in Q3 relative to Q2 to reflect a 4% increase in gold production (quarter-on-quarter), but an 8% decrease in silver production, driven by lower silver grades and recoveries only partially offset by an increase in ore tonnes processed.

Higher production from Salobo to reflect Vale’s announcement of 46.6kt copper production in Q3, driven by a 30% (year-on-year) increase in ore processed, supported by a stronger mill performance and notwithstanding the after-effects of a conveyor belt fire at the Salobo III plant in June (see ‘Salobo site visit’ section, below, for more detail).

An increase in WPM’s general and administrative (G&A) charge, reflecting the strong performance of Wheaton’s share price during the quarter.

Of the six effects, the most significant is our estimate of higher gold production attributable to Wheaton from Salobo. The mine produced 46.0kt copper in Q2 and 46.6kt copper in Q3 and there is a very strong correlation (0.954 Pearson product moment correlation coefficient, quarterly, since Q316) between copper produced and gold produced attributable to WPM (as shown in Exhibit 1, below). In this case, 46.6kt Cu produced in Q3 implies gold production attributable of 65,019oz ±3,480oz and, for these purposes, we have therefore assumed that production attributable to Wheaton from Salobo in Q3 will be at the lower end of the range, at 61,539oz. Note however, that we continue to expect lower output of both copper and gold in Q4 owing to mine sequencing as it segues into lower-grade zones of the pit (as shown in Exhibit 2).

Exhibit 1: Salobo copper production versus gold production attributable to WPM, Q316–Q324e

Exhibit 2: Gold production attributable to WPM from Salobo, Q412–Q424e

Source: Wheaton Precious Metals, Edison Investment Research

Source: Wheaton Precious Metals, Vale, Edison Investment Research

Exhibit 1: Salobo copper production versus gold production attributable to WPM, Q316–Q324e

Source: Wheaton Precious Metals, Edison Investment Research

Exhibit 2: Gold production attributable to WPM from Salobo, Q412–Q424e

Source: Wheaton Precious Metals, Vale, Edison Investment Research

The consequence of these changes is that we have increased our revenue estimate by US$3.9m (or 1.3%), partially offset by a US$2.7m (16.7%) increase in the G&A charge to result in a US$2.7m (1.8%) increase in net earnings to US$153.9m, or US$0.339/share (as shown below):

Exhibit 3: WPM Q324 forecast change*

US$000s
(unless otherwise stated)

Implied re-stated Q124

Underlying Q224

Q324e
(prior)

Q324
(current)

**Change

(%)

***Change

(%)

**Change

(units)

***Change

(units)

Silver production (koz)

5,476

5,062

4,830

4,446

-7.9

-12.2

-384

-616

Gold production (oz)

93,370

84,993

81,873

84,137

2.8

-1.0

2,264

-856

Palladium production (oz)

4,463

4,338

4,209

4,209

0.0

-3.0

0

-129

Cobalt production (klb)

240

259

214

214

0.0

-17.4

0

-45

 

 

 

 

 

 

Silver sales (koz)

4,067

3,823

4,087

3,690

-9.7

-3.5

-397

-133

Gold sales (oz)

92,019

77,326

76,018

78,120

2.8

1.0

2,102

794

Palladium sales (oz)

4,774

4,301

3,786

3,786

0.0

-12.0

0

-515

Cobalt sales (klb)

309

88

214

214

0.0

143.2

0

126

 

 

 

 

 

 

Average realised Ag price (US$/oz)

23.77

29.11

27.95

29.45

5.4

1.2

1.50

0.34

Average realised Au price (US$/oz)

2,072

2,356

2,422

2,476

2.2

5.1

54

120

Average realised Pd price (US$/oz)

980

979

921

969

5.2

-1.0

48

-10

Average realised Co price (US$/lb)

15.49

16.02

12.48

12.48

0.0

-22.1

0.00

-3.54

 

 

 

 

 

 

Average Ag cash cost (US$/oz)

4.77

4.95

4.92

5.00

1.6

1.0

0.08

0.05

Average Au cash cost (US$/oz)

439

441

451

442

-2.1

0.1

-9

1

Average Pd cash cost (US$/oz)

182

175

166

174

5.1

-0.3

8

-1

Average Co cash cost (US$/lb)****

2.96

3.11

2.25

2.25

-0.2

-27.8

0.00

-0.86

 

 

 

 

 

 

Sales

296,806

299,064

304,506

308,425

1.3

3.1

3,919

9,361

Cost of sales

 

 

 

 

 

 

Cost of sales, excluding depletion

61,555

54,007

55,507

54,078

-2.6

0.1

-1,429

71

Depletion

63,676

58,865

59,400

58,507

-1.5

-0.6

-893

-358

Total cost of sales

125,231

112,872

114,907

112,585

-2.0

-0.3

-2,322

-287

Earnings from operations

171,575

186,192

189,599

195,840

3.3

5.2

6,241

9,648

Expenses and other income

 

 

 

 

 

 

– General and administrative*****

13,315

17,185

16,299

19,017

16.7

10.7

2,718

1,832

– Foreign exchange (gain)/loss

0

0

N/A

N/A

0

0

– Interest paid

1,442

1,299

1,378

1,378

0.0

6.0

-1

79

– Other (income)/expense

(6,840)

(4,752)

(7,828)

(7,828)

0.0

64.7

0

-3,076

Total expenses and other income

7,917

13,732

9,849

12,567

27.6

-8.5

2,718

-1,165

Earnings before income taxes

163,658

172,460

179,750

183,273

2.0

6.3

3,523

10,813

Income tax expense/(recovery)

24,824

22,895

28,614

29,412

2.8

28.5

798

6,517

Marginal tax rate (%)

15.2

13.3

15.9

16.0

0.9

20.7

0.1

2.7

Net earnings

138,834

149,565

151,136

153,861

1.8

2.9

2,725

4,296

Average no. shares in issue (000s)

453,094

453,430

453,430

453,430

0.0

0.0

0

0

Basic EPS (US$)

0.306

0.330

0.333

0.339

1.9

2.8

0.01

0.01

Diluted EPS (US$)

0.306

0.329

0.333

0.339

1.7

3.0

0.01

0.01

DPS (US$)

0.155

0.155

0.155

0.155

0.0

0.0

0.00

0.00

Source: Wheaton Precious Metals, Edison Investment Research. Note: *Excluding impairments, impairment reversals and exceptional items (unless otherwise indicated). **Change is Q324e (current) cf Q324e (prior). ***Change is Q324e cf Q224. ****Cobalt inventory is held on WPM’s balance sheet at the lower of cost and net realisable value; cash costs per pound of cobalt sold are therefore affected by changes in the valuation of inventory quarterly. *****Forecasts include stock-based compensation costs. Totals may not add up owing to rounding.

Note that, for the purposes of the above analysis, we have shown Q224 on an ‘underlying’ basis, with the global minimum tax (GMT) attributable in Q124, but reported in Q224, adjusted back out into Q124 (which is also the basis of our ‘Implied re-stated’ Q124 numbers).

As a result, our forecasts compare as follows with respect to the consensus for the quarter:

Exhibit 4: WPM Q324 EPS forecasts compared to Q124 and Q224 actuals (US$/share)

Q124

Q224

Q324e

Forecast change

(%)

Edison forecasts

0.306

0.330

0.339

+2.7

Mean consensus

0.306

0.330

0.339

+2.7

High consensus

0.306

0.330

0.400

+21.2

Low consensus

0.306

0.330

0.330

u/c

Source: LSEG Data & Analytics, Edison Investment Research. Note: As at 28 October 2024.

Ounces produced but not yet delivered

For the group as a whole, we expect the level of silver under-sales to remain relatively high in Q3, at 17.0% of production (cf a long-term average of 12.6% since Q112), while we expect the level of gold under-sales to remain relatively close to the long-term average, at 7.2% (cf a long-term average of 7.1%):

Exhibit 5: Over/(under) sale of silver and gold as a percentage of production, Q112–Q324e

Source: Edison Investment Research, Wheaton Precious Metals. Note: As reported.

As a result, we expect silver ounces produced but not yet delivered (PBND) to WPM to increase to c 3.6Moz and to now equate to 2.14 months of our forecast FY24 production level (cf 2.8Moz and 1.68 months at the end of Q224) – that is, broadly in line with WPM’s target level of two months for silver production. We expect gold ounces PBND to increase by 6,017oz (or 6.7%) to 95,684oz, or 3.26 months of estimated FY24 production (cf 89,667oz and 3.05 months at the end of Q124). This figure of 3.26 months of gold ounces PBND is slightly above WPM’s target levels of two to three months for gold and palladium production, but arguably sets up a rebound in Q4 when Wheaton’s counterparties traditionally flush through sales ahead of the end of the calendar (and usually financial) year-end.

Exhibit 6: WPM ounces produced but not yet delivered, Q316–Q324e (months of production)

Source: Edison Investment Research, Wheaton Precious Metals. Note: As reported.

General and administrative expenses

At the time of its Q423 results, WPM provided guidance for non-stock G&A expenses of US$41–45m, or US$10.25–11.25m per quarter, for FY24, which represents a decline relative to US$47–50m in FY23 and US$47–49m in FY22 and is on a par with guidance of US$42–44m for FY21 and US$40–43m for FY20.

Given WPM’s share price as at the date of our last note in August, we forecast that the total G&A charge for WPM in Q3 should be US$16.3m. WPM’s share price appreciated by 16.7% in US dollar terms over the quarter, with the result that we have increased our estimate of G&A expenses to US$19.0m, of which 57% will have been attributable to non-stock-based G&A expenses and 43% to stock-based expenses.

Exhibit 7: WPM G&A expenses, Q421–Q324e (US$000s)

Item

Q222

Q322

Q422

Q123

Q223

Q323

Q423

Q124

Q224

Q324e

G&A salaries excluding PSU and equity settled stock-based compensation

5,061

4,629

4,187

5,021

4,749

4,591

4,051

5,365

5,083

Other (including depreciation, donations and professional fees)

5,784

5,137

7,112

6,456

7,407

5,751

7,401

6,669

5,861

Non-stock-based G&A

10,845

9,766

11,299

11,477

12,156

10,342

11,452

12,034

10,944

10,750

Guidance

11,750–12,250

11,750–12,250

11,750–12,250

11,750–12,500

11,750–12,500

11,750–12,500

11,750–12,500

10,250–11,250

10,250–11,250

10,250–11,250

PSU accrual

110

(1,491)

7,035

5,855

2,625

2,604

5,222

(317)

4,586

Equity settled stock-based compensation

1,498

1,568

1,439

1,542

1,859

1,732

1,305

1,598

1,655

Stock-based G&A

1,608

77

8,474

7,397

4,484

4,336

6,527

1,281

6,241

8,267

Total general & administrative

12,453

9,843

19,773

18,874

16,640

14,678

17,979

13,315

17,185

19,017

Non-stock as pct of total G&A (%)

87.1

99.2

57.1

60.8

73.1

70.5

63.7

90.4

63.7

56.5

Source: Wheaton Precious Metals, Edison Investment Research. Note: PSU = performance share units. Totals may not add up owing to rounding.

Exhibit 8, below, shows the precise position of our stock-based G&A forecasts for Q3 relative to Wheaton’s share price movement in US dollars. Note that the error of estimation of the regression analysis is US$2.4m for any particular quarter.

Exhibit 8: Graph of historical share price change (US$/share) versus stock-based G&A expenses (US$000s), quarterly, Q419–Q324e

Source: Edison Investment Research (underlying data: Bloomberg and Wheaton Precious Metals)

New stream acquisitions

Koné

On 23 October, Wheaton announced that it had entered into a definitive PMPA with Montage Gold in respect of its Koné mine in Côte d'Ivoire, which also effectively represents a full financing package for the project.

Key terms of the stream are as follows:

An upfront cash consideration of US$625m in four equal instalment payments during construction, subject to certain customary conditions.

WPM will purchase 19.5% of the payable gold until a total of 400koz has been delivered, at which point it will purchase 10.8% of the payable gold until an additional 130koz has been delivered (the ‘Second Dropdown Threshold’), after which it will purchase 5.4% of payable gold for the remainder of the life of the mine.

Koné production is forecast to average over 60koz Au per year for the first five years of production, over 47koz of gold per year for the first 10 years of production, and over 34koz for the life of the mine. The project is forecast to have a 16-year life based on reserves, with first production anticipated in early 2027.

WPM will make ongoing payments for the gold ounces delivered equal to 20% of the spot price of gold. For the first five years after the PMPA is signed, there will be a price adjustment mechanism in place if the spot price of gold is less than US$2,100/oz or greater than US$2,700/oz (eg if the spot gold price is US$3,200/oz, Wheaton’s production payment would be US$675/oz, or 21%, of the spot price). However, this price adjustment mechanism will expire on the fifth anniversary of the PMPA, after which the production payment will be equal to 20% of the spot price.

Wheaton has also provided Montage with a secured debt facility of up to US$75m to be allocated to project costs, including cost overruns.

Other considerations:

The gold stream will apply to a ‘Core Area of Interest’, inclusive of the Koné and Gbongogo deposits, with exploration upside beyond the currently defined deposits. WPM will have the right of first refusal on any future precious metal streams, royalties, prepays or similar transactions.

Ore from within a 100km ‘Expanded Area of Interest’ will be subject to the stream if that ore is processed at the Koné mineral processing facility, until such time following the ‘Second Dropdown Threshold’ that ounces received under the stream from the Expanded Area of Interest is equal to the remaining ounces from the Core Area of Interest, at which point the stream percentage will be reduced to nil. If at any point after that the remaining ounces from the Core Area of Interest exceed the ounces received from the Expanded Area of Interest, the company will continue receiving 5.4% of payable gold from the Core Area of Interest, for the remaining life of the mine.

In the event of a change of control prior to the earlier of completion and 31 December 2026, Montage will have an option to buy back one third of the stream.

Montage will provide WPM with corporate guarantees and certain other security over its assets.

Montage is expected to comply in all material respects with the International Finance Corporation’s Performance Standards on Environmental and Social Sustainability, the Global Industry Standard on Tailings Management and WPM’s Partner/Supplier Code of Conduct, which outlines Wheaton’s expectations with regard to environmental, social & governance (ESG) matters.

Montage completed, and subsequently published, an updated feasibility study on the Koné project (with Lycopodium as its lead consultant) on 15 February 2024. For the purposes of our valuation of the stream relating to the mine, we have taken ‘Year 1’ of the study to be 2027, albeit we have adjusted output such that this year entails nine months of production (being six months of ramp up and six months of commercial production). On this basis (including the terms of the stream set out above), our estimate of pre-tax cash flows attributable to Wheaton from the project in the first nine years of production (note that, according to the feasibility study, there are a further nine years beyond the end of this schedule) is as follows:

Exhibit 9: Koné project forecast cash flows to WPM (US$000s)

2025e

2026e

2027e

2028e

2029e

2030e

2031e

2032e

2033e

2034e

2035e

Pre-tax cash flows to WPM

(156,250)

(468,750)

87,199

109,423

119,279

96,836

90,072

90,623

113,452

133,944

48,416

Source: Wheaton Precious Metals, Edison Investment Research

This schedule inevitably excludes any potential expansion or extension of the mine as a result of blue-sky exploration success. Nevertheless, we calculate that its pre-tax internal rate of return (IRR) to Wheaton will be 10.1% at Edison’s gold price forecast assumptions (which dip as low as US$2,023/oz in the event of real interest rates in the United States becoming positive to the tune of 4%, in line with experience in the early 1980s). At the current price of gold of US$2,692/oz – flat for the life of the mine – we calculate that the IRR of the stream to Wheaton will be 13.0%, with higher returns earlier and lower returns later.

Fenix

Two days before its Koné announcement, on 21 October, Rio2 announced an expanded relationship with Wheaton whereby WPM will now provide a full financing package for the construction, development, operation, commissioning and ramp-up of the Fenix Gold project in Chile. Under the updated terms, WPM will pay Rio2 an additional upfront cash consideration of US$100m (over and above the remaining US$25m outstanding under the original stream), in exchange for which Rio2 will deliver 95,000oz of gold from the project (subject to adjustment if there are delays in deliveries relative to an agreed schedule). In addition, Rio2 has agreed to adjust the production payment for all gold ounces delivered to 20% of the spot gold price. Rio2 has a one-time option to terminate the requirement to deliver the additional gold production from the end of 2027 until the end of 2029 by delivering 95,000oz less any of the previously delivered gold ounces. Wheaton will also provide a US$20m contingent cost overrun facility for the project in the form of a standby loan facility. Lastly, Wheaton has committed to participate in a private placement of Rio2 common shares for C$5m at a price per share equal to, and concurrent with, a public offering by Rio2. 

Rio2 completed, and subsequently published, a feasibility study on the Fenix project (with Mining Plus as its lead consultant) on 5 September 2023. At the time, the feasibility study posited a ‘construction timeline of approximately 14 months from receipt of relevant permits and contractor mobilization’. Assuming that contractor mobilisation is now imminent in the aftermath of the announcement of the expanded stream terms, our estimate of incremental pre-tax cash flows attributable to Wheaton from the project in the first eight years of production (note that, according to the feasibility study, there are a further 10 years beyond the end of this schedule) is as follows:

Exhibit 10: Fenix project forecast incremental cash flows to WPM (US$000s)

2025e

2026e

2027e

2028e

2029e

2030e

2031e

2032e

Pre-tax cash flows to WPM (US$000s)

(100,000)

13,265

24,797

24,912

24,026

27,014

27,680

24,953

Source: Wheaton Precious Metals, Edison Investment Research

As with Koné, this schedule inevitably excludes any potential expansion or extension of the mine as a result of blue-sky exploration success. Nevertheless, we calculate that its pre-tax IRR to Wheaton on its incremental payment of US$100m will be 13.5% at Edison’s gold price forecast assumptions. At the current gold price of US$2,692/oz – flat for the life of the mine – we calculate that the IRR on Wheaton’s incremental payment will be 19.9%, with higher returns earlier and lower returns later.

FY24 and future forecasts cf guidance

In addition to the short-term adjustments, we have also adjusted our medium- and longer-term production forecasts for Wheaton to account for:

Wheaton’s newly announced PMPAs with Montage Gold and Rio2 (discussed above).

An upwardly revised production profile from Salobo for the next five years (following our visit to site earlier this month – see below).

Fractionally lower gold production in FY25 attributable to Wheaton from the Blackwater project to reflect a ramp-up period in Q1 and Q225 after pouring first gold in Q424.

Production from the KZK project commencing in FY27, in line with the implied timeline from the economic review of its 2020 definitive feasibility study.

Production from Santo Domingo from FY29 to reflect the details provided in its NI 43-101 Technical Report and Feasibility Study Update, published on 31 July 2024, indicating higher overall gold production, but a later starting date.

Lower output from Stillwater after the parent company, Sibanye Stillwater, announced a restructuring of operations that will see the Stillwater West project being suspended and the East Boulder mine being closed, while simultaneously increasing output of higher-grade material from Stillwater East in a move that appears likely to result in platinum group metals production being reduced by approximately 200koz from 2025’s level of c 440–460koz.

A revised production profile for Platreef to reflect an operational ramp-up from mid-2025 (cf the start of 2025 previously).

On 20 February, WPM provided detailed production guidance for FY24 and beyond. This guidance is summarised below relative to our updated FY24 forecasts in light of the Q1 and Q2 results:

Exhibit 11: WPM precious metals production – Edison forecasts compared to guidance

FY24e

FY28e
(target)*

FY29–33
(average)*

Prior Edison forecast

Silver production (Moz)

20.3

Gold production (koz)

350.3

Cobalt production (klb)

927

Palladium production (koz)

17.2

Gold equivalent (koz)

598.7

816

849

Current Edison forecast

Silver production (Moz)

19.9

Gold production (koz)

352.5

Cobalt production (klb)

927

Palladium production (koz)

17.2

Gold equivalent (koz)

596.5

816

885

WPM guidance

Silver production (Moz)

18.5–20.5

Gold production (koz)

325–370

Cobalt & palladium production (koz AuE)

12–15

Gold equivalent (koz)

550–620

>800

>850

Source: Wheaton Precious Metals, Edison Investment Research forecasts. Note: *Edison forecasts include Antamina extension from FY28.

WPM’s guidance for FY24 and beyond is based on standardised pricing assumptions of US$2,000/oz gold, US$23.00/oz silver, US$1,000/oz palladium, US$1,000/oz platinum and US$13.00/lb cobalt. Of note is the implied gold/silver ratio of 87.0x, which compares with the current ratio of 84.8x, but a longer-term average of 60.1x since gold was demonetised in August 1971. At the updated standardised prices indicated, our production forecast of 596.5koz gold equivalent (AuE) for FY24 is towards the upper end of WPM’s guidance range of 550–620koz AuE, although our sales forecast of 540.2koz AuE is more conservative (see Exhibit 12).

Otherwise, readers will note that our longer-term production forecasts are within 5% of WPM’s guidance for the period FY29–33, albeit WPM’s guidance will have included neither a contribution from Koné nor any incremental contribution from Fenix as a result of the revision of the stream’s terms announced on 21 October.

FY24 forecasts

In the light of our short-term earnings revisions, we have upgraded our forecasts for FY24 to those shown in Exhibit 12, below. Relative to our earlier numbers, the main changes in our estimates reflect higher metals prices leading to higher revenues – especially in Q4 – falling straight through to the bottom line after the appropriate pro rata effective tax charge:

Exhibit 12: WPM FY24e forecast, by quarter*

US$000s
(unless otherwise stated)

Implied re-stated Q124

Underlying Q224

Q324e
(prior)

Q324
(current)

Q424e
(prior)

Q424e
(current)

FY24e
(current)

FY24e
(prior)

Silver production (koz)

5,476

5,062

4,830

4,446

4,958

4,958

19,943

20,327

Gold production (oz)

93,370

84,993

81,873

84,137

90,028

90,028

352,528

350,264

Palladium production (oz)

4,463

4,338

4,209

4,209

4,209

4,209

17,218

17,218

Cobalt production (klb)

240

259

214

214

214

214

927

927

 

 

 

Silver sales (koz)

4,067

3,823

4,087

3,690

4,843

4,843

16,423

16,820

Gold sales (oz)

92,019

77,326

76,018

78,120

90,007

90,007

337,472

335,370

Palladium sales (oz)

4,774

4,301

3,786

3,786

4,192

4,192

17,053

17,053

Cobalt sales (klb)

309

88

214

214

214

214

825

825

 

 

 

Avg realised Ag price (US$/oz)

23.77

29.11

27.95

29.45

26.92

31.71

28.63

26.91

Avg realised Au price (US$/oz)

2,072

2,356

2,422

2,476

2,394

2,714

2,402

2,303

Avg realised Pd price (US$/oz)

980

979

921

969

904

1,026

988

948

Avg realised Co price (US$/lb)

15.49

16.02

12.48

12.48

11.82

11.82

13.81

13.81

 

 

 

Avg Ag cash cost (US$/oz)

4.77

4.95

4.92

5.00

4.90

5.10

4.96

4.88

Avg Au cash cost (US$/oz)

439

441

451

442

448

451

443

445

Avg Pd cash cost (US$/oz)

182

175

166

174

163

185

179

172

Avg Co cash cost (US$/lb)

2.96

3.11

2.25

2.25

2.13

2.13

2.58

2.58

 

 

 

Sales

296,806

299,064

304,506

308,425

352,175

404,660

1,308,955

1,252,551

Cost of sales

 

 

 

Cost of sales, excluding depletion

61,555

54,007

55,507

54,078

65,211

66,468

236,109

236,281

Depletion

63,676

58,865

59,400

58,507

70,716

70,716

251,764

252,657

Total cost of sales

125,231

112,872

114,907

112,585

135,927

137,184

487,873

488,939

Earnings from operations

171,575

186,192

189,599

195,840

216,247

267,476

821,082

763,612

Expenses and other income

 

 

 

– General and administrative**

13,315

17,185

16,299

19,017

15,533

17,503

67,020

62,331

– Foreign exchange (gain)/loss

0

0

0

0

0

0

– Net interest paid/(received)

1,442

1,299

1,378

1,378

1,378

1,378

5,496

5,496

– Other (income)/expense

(6,840)

(4,752)

(7,828)

-7,828

(7,430)

-7,536

-26,955

(26,850)

Total expenses and other income

7,917

13,732

9,849

12,567

9,480

11,345

45,561

40,977

Earnings before income taxes

163,658

172,460

179,750

183,273

206,768

256,131

775,521

722,635

Income tax expense/(recovery)

24,824

22,895

28,614

29,412

32,437

39,760

116,891

108,770

Marginal tax rate (%)

15.2

13.3

15.9

16.0

15.7

15.5

15.1

15.1

Net earnings

138,834

149,565

151,136

153,861

174,331

216,371

658,630

613,865

Average no. shares in issue (000s)

453,094

453,430

453,430

453,430

453,430

453,430

453,346

453,346

Basic EPS (US$)

0.306

0.330

0.333

0.339

0.384

0.477

1.453

1.354

Diluted EPS (US$)

0.306

0.329

0.333

0.339

0.384

0.476

1.451

1.352

DPS (US$)

0.155

0.155

0.155

0.155

0.155

0.155

0.620

0.620

Source: Wheaton Precious Metals, Edison Investment Research. Note: *Excluding impairments, impairment reversals and exceptional items (except where indicated). **Forecasts include stock-based compensation costs. Totals may not add up owing to rounding.

Our updated adjusted basic EPS forecast of US$1.453 per share for the full year is nevertheless near to consensus, which has also been rising since the time of our last note in August, when it was US$1.354/share for FY24, within a range of US$1.22–1.52/share.

Exhibit 13: WPM FY24 consensus EPS forecasts (US$/share), by quarter

Q124

Q224

Q324e

Q424e

Sum Q1–Q424e

FY24e

FY25e

Edison forecasts

0.306

0.330

0.339

0.477

1.452

1.453

1.238

Mean consensus

0.306

0.330

0.339

0.416

1.391

1.437

1.797

High consensus

0.306

0.330

0.400

0.460

1.496

1.480

2.260

Low consensus

0.306

0.330

0.330

0.384

1.350

1.340

1.350

Source: LSEG Data & Analytics, Edison Investment Research. Note: As at 28 October 2024.

Readers should note that our low EPS forecast for FY25 arises largely from the use of relatively low precious metals forecasts of US$2,004/oz Au and US$23.72/oz Ag (see also Exhibit 20). These will be revisited early in the next financial year. In the event that metals prices remain at current levels, however, our FY25 EPS estimate instead rises to US$1.72/share.

Salobo site visit

Wheaton hosted a site visit to Salobo earlier this month, which was attended by Edison’s analyst. A brief summary of some of the pertinent observations and conclusions arising from the trip is as follows:

The ore body is heterogeneous and there is no visual distinction between high-grade and low-grade ore; as a result, a great deal of effort is put into grade control to the point of modelling the blast fall (inter alia).

Vale is currently in the process of mining – and preparing to mine – Phases IV to VIII of its mine plan; of these, Phase IV is notably higher grade; however, plant feed is significantly blended to negate the effect of ore grade variability, generally.

The stripping ratio of the mine is very low – in the order of 3:1 formally, but probably closer to 1:1 if low-grade material (destined for stockpile but which will probably ultimately be processed) is considered as ore not waste.

Resources are estimated to be capable of supporting production for at least 30 years with no meaningful constraints to expansion; hence a Salobo 3.5 and/or 4 expansion is still very much under consideration and being actively studied by management. Likely execution of such a project would be within the next three to eight years.

Mine phasing and mining are managed to retain maximum operational flexibility; to this end, management is in the process of standardising its mine fleet.

The tailings pond is downstream of the mine and plant; owing to the method of tailings deposition, the contents of the tailings pond is currently predominantly water and will only be substituted slowly for sediments (thereby exerting minimal pressure on the dam wall).

Exhibit 14: Salobo tailings pond

Exhibit 15: Salobo main pit

Source: Edison Investment Research

Source: Edison Investment Research

Exhibit 14: Salobo tailings pond

Source: Edison Investment Research

Exhibit 15: Salobo main pit

Source: Edison Investment Research

Senior management on site has been overhauled in recent months and new management empowered to make significant operational decisions without recourse to head office. As a result, the mine is now managed with much higher regard to asset integrity. An example of the benefits of this new approach were evidenced in the reaction to the June fire on a conveyor belt at Salobo III that had the potential to stop production at the entire complex if not addressed in a timely and decisive manner.

The level of management oversight is high and highly computerised, with oil, pipes and conveyor belts (among others) continuously monitored remotely for evidence of wear in order to pre-empt and manage plant downtime. As a result, management estimates that 1,720 hours of maintenance downtime have been saved so far in 2024, with hours of downtime on a single line reduced from 770 to 220.

Valuation

Absolute

WPM is a multi-asset company that has shown a willingness and desire to buy streams in the past to maintain production and maximise shareholder returns. As a result, rather than our customary method of discounting maximum potential dividends over the life of operations back to FY24, in the case of WPM, we discount forecast cash flows back over four years to the start of FY24 and then apply an ex-growth terminal multiple to forecast cash flows in that year (FY27) based on the appropriate discount rate.

In this case, our estimate of WPM’s ‘terminal’ cash flow in FY27 remains ostensibly unchanged at US$2.73/share (cf US$2.77/share previously).

Exhibit 16: WPM operational cash flow and related valuation (US$/share), FY24–27

Source: Edison Investment Research. Note: Valuation line assumes cash flow per share growth rate of 4% pa post-FY26 in nominal terms, which equals the average US rate of CPI inflation since 1972 (ie 0% pa growth in real terms).

Assuming 4% growth in nominal cash flows beyond FY27 (ie 0% growth in real cash flows) and applying a discount rate of 9% (being the expected long-term required nominal equity return), our ‘terminal’ valuation of the company at end-FY27 is US$57.01 per share, or C$79.24 per share. However, it should be noted that this valuation is inherently conservative in that it assumes a gold price of US$2,239/oz and zero growth in (real) cash flows beyond FY27. This is inconsistent with the gold price, which has risen at a compound average annual growth rate of 7.4% per year from 1967 to 2023, a simple average annual growth rate of 9.3% per year (cf a compound average inflation rate over the same period of 4.0%) and a compound average real annual growth rate of 3.0% per year.

Exhibit 17: Gold price annual performance, 1968–2023

Source: Edison Investment Research (underlying data: US Bureau of Labor Statistics, Bloomberg, South African Chamber of Mines)

It is also inconsistent with WPM’s longer-term historical performance, wherein operational cash flows have increased at a compound average annual growth rate of 19.6% pa for the 18 years between FY05 and FY23, while its operational cash flows per share have increased at a compound average annual growth rate of 13.2% pa.

If we instead assume that cash flows per share increase at a compound average annual growth rate of 7.4% (ie the average compound average annual growth rate in the gold price from 1967 to 2023, cf 4.0% above), then our ‘terminal’ valuation of WPM increases many times to US$187.57/share, or C$260.71/share, and our current valuation to US$136.28/share, or C$189.42/share.

Stated alternatively, WPM’s current share price of C$91.91 appears to be discounting future compound annual average increases in cash flow per share of just 5.7% pa from FY27, which is only slightly higher than the long-term average rate of US inflation of 4.0% pa from 1967 to 2023 (inclusive).

A summary of these valuations with respect to their cash flow growth rate assumptions is as follows:

Exhibit 18: WPM valuation with respect to long-term cash flow growth rate assumptions post-FY27

Long-term cash flow growth rate assumption (%)

Comment

WPM valuation
(US$/share)

WPM valuation
(C$/share)

4.0

Zero real growth rate, ie rate equals compound average US inflation rate, 1967–2023

43.79

60.87

5.7

Implied cash flow per share growth rate required to justify current share price

66.13

91.91

7.4

Gold price compound average annual growth rate, 1967–2023

136.28

189.42

Source: LSEG Data & Analytics, Edison Investment Research

Historical

Excluding FY04 (part-year), WPM’s shares have historically traded on an average P/E multiple of 30.8x current year basic underlying EPS, excluding impairments (cf 45.5x Edison and 46.1x LSEG Data & Analytics consensus FY24e currently – see Exhibit 20).

Exhibit 19: WPM’s average historical current year P/E multiples, 2005–23

Source: Average share price data Bloomberg, Edison Investment Research calculations

Applying this 30.8x multiple to our EPS forecast of US$1.83 in FY27 (cf US$1.77 previously) implies a potential value per share for WPM of US$56.57 or C$78.62 in that year.

Relative

In the meantime, WPM is maintaining its premium rating relative to its peers, albeit it also appears good value within the context of future dividend expectations, especially in years two and three:

Exhibit 20: WPM comparative valuation versus 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

40.7

33.4

30.8

1.1

1.1

1.2

30.1

24.7

24.1

Royal Gold

30.6

23.5

23.8

1.1

1.1

1.3

20.3

16.1

15.5

Sandstorm Gold

66.1

29.1

34.6

1.0

1.0

0.0

15.1

13.1

13.8

Osisko

43.8

34.6

33.5

0.8

0.8

0.7

26.4

22.6

22.5

Average

45.3

30.2

30.7

1.0

1.0

0.8

23.0

19.1

19.0

WPM (Edison forecasts)

45.5

53.4

43.9

0.9

1.0

1.0

29.3

31.1

29.0

WPM (consensus)

46.1

36.8

38.0

0.9

1.0

1.0

30.7

24.8

27.4

Source: LSEG Data & Analytics, Edison Investment Research. Note: Peers and WPM (consensus) priced on 28 October 2024.

Readers will note our relatively high year 2 P/E ratio, which arises from our relatively low precious metals forecasts of US$2,004/oz Au and US$23.72/oz Ag for FY25. These will be revisited early in the next financial year (see also Exhibit 13).

Financials: End-Q2 US$534.5m in net cash

As at 30 June, WPM had US$534.5m in cash on its balance sheet and no debt outstanding under its US$2bn revolving credit facility. Including a modest US$5.7m in lease liabilities, it therefore had US$534.5m in net cash after generating US$234.4m in operating cash flow and receiving a further US$131.7m from investing activities (cf a US$463.5m outflow in Q124, a US$464.2m outflow in Q423 but only a US$98.9m outflow in Q323), largely from the disposal of its Hecla shareholding and after relatively few PMPA investments during the quarter.

Exhibit 21: WPM cash, net cash and operating cash flow, by quarter, Q420–Q224

(US$m)

Q420

Q121

Q221

Q321

Q421

Q122

Q222

Q322

Q422

Q123

Q223

Q323

Q423

Q124

Q224

Cash/(debt)

192.7

191.2

235.4

372.5

226.0

376.2

448.6

494.6

696.1

799.7

828.8

833.9

546.5

306.1

540.2

Net cash/(debt)

6.0

187.7

232.1

369.4

223.2

373.5

446.2

492.5

694.1

797.9

822.3

827.7

540.3

300.2

534.5

Operating cash flow

208.0

232.2

216.3

201.3

195.3

210.5

206.4

154.5

172.0

135.1

202.4

171.1

242.2

219.4

234.4

Source: Wheaton Precious Metals, Edison Investment Research

In addition, WPM had long-term investments, in the form of equity share holdings and warrant holdings, in listed companies in the sum of US$88.1m as at end-June (cf US$246.7m as at end March), equivalent to US$0.19/share, after it disposed of its investment in Hecla for gross proceeds of US$177.1m.

For FY23, WPM generated US$750.8m from operating activities, before consuming US$646.6m in investing activities and paying out US$265.1m in dividends. In FY24, we estimate that it will generate US$1,024.3m from operating activities (cf US$973.3m previously), before consuming US$648.1m in net investing activities (cf US$824.2m previously) and paying out an increased US$281.1m in forecast dividends under the influence of its new, progressive dividend policy. However, readers should note that the timing of PMPA payments is uncertain and, inasmuch as investments are advanced or delayed, it is possible that WPM could register either a larger or smaller net cash position on its balance sheet by the year end than that forecast. All other things being equal however – and notwithstanding its recently announced PMPAs with Koné and Fenix – in the absence of any major new asset acquisitions, we do not expect WPM to need recourse to its debt facilities in the future.

Exhibit 22: Financial summary

$000s

 

2020

2021

2022

2023

2024e

2025e

2026e

Year end 31 December

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

IFRS

PROFIT & LOSS

Revenue

 

 

1,096,224

1,201,665

1,065,053

1,016,045

1,308,955

1,322,381

1,562,615

Cost of Sales

(266,763)

(287,947)

(267,621)

(228,171)

(236,109)

(294,227)

(339,719)

Gross Profit

829,461

913,718

797,432

787,874

1,072,846

1,028,154

1,222,896

EBITDA

 

 

763,763

852,733

735,245

719,704

1,005,826

961,134

1,155,876

Operating profit (before amort. and excepts.)

 

 

519,874

597,940

503,293

505,270

754,062

653,291

793,836

Intangible Amortisation

0

0

0

0

0

0

0

Exceptionals

4,469

162,806

164,214

4,593

(2,945)

0

0

Other

387

190

7,680

33,658

26,955

0

0

Operating Profit

524,730

760,936

675,187

543,521

778,072

653,291

793,836

Net Interest

(16,715)

(5,817)

(5,586)

(5,510)

(5,496)

1,164

1,086

Profit Before Tax (norm)

 

 

503,546

592,313

505,387

533,418

775,521

654,454

794,922

Profit Before Tax (FRS 3)

 

 

508,015

755,119

669,601

538,011

772,576

654,454

794,922

Tax

(211)

(234)

(475)

(367)

(116,891)

(92,998)

(111,333)

Profit After Tax (norm)

503,335

592,079

504,912

533,051

658,630

561,457

683,589

Profit After Tax (FRS 3)

507,804

754,885

669,126

537,644

655,685

561,457

683,589

Average Number of Shares Outstanding (m)

448.7

450.1

451.6

452.8

453.3

453.4

453.4

EPS - normalised (c)

 

 

112

132

112

118

145

124

151

EPS - normalised and fully diluted (c)

 

 

112

131

112

118

145

124

151

EPS - (IFRS) (c)

 

 

113

168

148

119

145

124

151

Dividend per share (c)

42

57

60

60

62

65

67

Gross Margin (%)

75.7

76.0

74.9

77.5

82.0

77.8

78.3

EBITDA Margin (%)

69.7

71.0

69.0

70.8

76.8

72.7

74.0

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

47.4

49.8

47.3

49.7

57.6

49.4

50.8

BALANCE SHEET

Fixed Assets

 

 

5,755,441

6,046,427

6,039,813

6,463,774

6,860,091

7,266,601

7,806,415

Intangible Assets

5,521,632

5,940,538

5,753,111

6,169,534

6,561,895

6,968,405

7,508,218

Tangible Assets

33,931

44,412

30,607

47,562

48,351

48,351

48,351

Investments

199,878

61,477

256,095

246,678

249,845

249,845

249,845

Current Assets

 

 

201,831

249,724

720,093

567,411

673,952

630,765

460,705

Stocks

3,265

12,102

13,817

10,806

14,544

14,693

17,362

Debtors

5,883

11,577

10,187

10,078

7,172

7,246

8,562

Cash

192,683

226,045

696,089

546,527

652,236

608,826

434,780

Other

0

0

0

0

0

0

0

Current Liabilities

 

 

(31,169)

(29,691)

(30,717)

(26,075)

(23,937)

(26,724)

(28,905)

Creditors

(30,396)

(28,878)

(29,899)

(25,471)

(23,333)

(26,120)

(28,301)

Short-term borrowings

(773)

(813)

(818)

(604)

(604)

(604)

(604)

Long-term liabilities

 

 

(211,532)

(16,343)

(11,514)

(19,594)

(135,895)

(228,893)

(217,550)

Long-term borrowings

(197,864)

(2,060)

(1,152)

(5,625)

(5,035)

(5,035)

(5,035)

Other long-term liabilities

(13,668)

(14,283)

(10,362)

(13,969)

(130,860)

(223,858)

(212,515)

Net Assets

 

 

5,714,571

6,250,117

6,717,675

6,985,516

7,374,210

7,641,749

8,020,665

CASH FLOW

Operating Cash Flow

 

 

779,156

845,832

737,821

725,548

1,030,992

963,697

1,154,072

Net Interest

(13,763)

(187)

6,227

33,770

(5,496)

1,164

1,086

Tax

49

(279)

(171)

(6,192)

0

0

(122,677)

Capex

149,648

(404,437)

(44,750)

(648,963)

(649,262)

(714,354)

(901,854)

Acquisitions/disposals

0

0

0

0

0

0

0

Financing

22,396

7,992

10,171

12,934

12,064

0

0

Dividends

(167,212)

(218,052)

(237,097)

(265,109)

(281,075)

(293,917)

(304,673)

Net Cash Flow

770,274

230,869

472,201

(148,012)

107,224

(43,410)

(174,045)

Opening net debt/(cash)

 

 

774,766

5,954

(223,172)

(694,119)

(540,298)

(646,597)

(603,187)

HP finance leases initiated

0

0

0

0

0

0

0

Other

(1,462)

(1,743)

(1,254)

(5,809)

(925)

0

0

Closing net debt/(cash)

 

 

5,954

(223,172)

(694,119)

(540,298)

(646,597)

(603,187)

(429,141)

Source: Company accounts, 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 £60,000 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 2024 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom


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 £60,000 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 2024 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.

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

London │ New York │ Frankfurt

20 Red Lion Street

London, WC1R 4PS

United Kingdom

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