Wheaton Precious Metals Q3 2023 Earnings Call Transcript

Quartr
Provided by Quartr
November 10, 2023

There are 10 speakers on the call.

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2023 Third Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer as a webinar.

Operator

Thank you. I would like to remind everyone that this call is being recorded on Friday, November 10, 2023 at 11 am Eastern Standard Time. I will now turn the call over to Emma McKay, Vice President of Investor Relations. Please go ahead.

Speaker 1

Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Wheaton Precious Metals' President and Chief Executive Officer Gary Brown, Senior Vice President and Chief Financial Officer Hapen Podollet, Senior Vice President, Corporate Development and Wes Carson, Vice President, Mining Operations. Some of the commentary in today's call may contain forward looking statements and I would direct everyone to Slide 2 of the presentation, which contains important cautionary notes regarding such statements. It should be noted that all figures referred to on today's call in U.

Speaker 1

S. Dollars unless otherwise noted. With that, I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Speaker 2

Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's Q3 results of 2023. I'm pleased to announce that our portfolio of long life, low cost assets delivered another solid quarter, generating strong metal production and robust cash flows With a number of our assets hitting record quarterly production levels. The importance of having a diversified portfolio of high quality low cost assets was evidenced by Wheaton's ability to deliver solid operating results despite operations at Penasquito being suspended for the entire Q3. Strong out performances from Salobo and Constancia resulted in quarter over quarter production growth, further highlighting the resilience of our diversified asset and delivering on our commitment of continuous growth over the next 5 years.

Speaker 2

Our strong quarterly performance was underscored by significant progress at the expansion of our largest asset, Salobo, which is now expected to reach a throughput capacity of 32,000,000 tonnes per annum in the Q4 of 2023. Our growth pipeline of development projects was further derisked In the quarter, as Artemis received their Fisheries Act authorization for the Blackwater project, which continues In addition, ARRIS Mining announced that they have received approval of their environmental management plan, which now permits The development of the Marmato Lower Mine. These projects are among a few of the assets that are forecast to contribute to organic growth profile of over 40% production growth in the next 5 years. During this quarter, we are also proud to have been recognized by ESG Investing's Corporate ESG Awards as the best company for ESG and Sustainability in the Metals and Mining Sector. Looking to the remainder of 20 23 and given that Penasquito has resumed operations, we are very pleased to confirm our previously forecasted annual guidance of 660 Between 600,000 to 660,000 gold equivalent ounces, albeit with a slightly higher weighting towards gold.

Speaker 2

In this high interest rate environment, streaming continues to be one of the most attractive sources of capital, and our corporate development team remains exceptionally busy Evaluating opportunities. Subsequent to the quarter end, we announced the acquisition of a Silverstream on Waterton Copper's Mineral Park Mine, for which Haitham will provide an overview on shortly. This latest acquisition is an example of our commitment to enhancing our portfolio With growth that is accretive and sustainable benefiting all stakeholders. With that, I'd like to turn the call over to Wes Carson, our Vice President of Operations, who will provide more details on our operating results. Wes?

Speaker 3

Thanks, Randy. Good morning. Overall, it was a strong quarter with production coming in higher than expected, which as Randy highlighted was driven by strong out performances at both Salobo and Constancia, partially offset by the temporary suspension at Penasquito. In the Q3 of 2023, Silbo produced 69,000 ounces of attributable gold, an increase of approximately 56% relative to the Q3 of 2022, driven by higher throughput with production from the 3rd concentrator line commencing at the end of 2022 And higher gold recoveries. In the Q3 of 2023, Salobo reached its highest production level since the Q4 of 2019 As the ramp up of the Salobo III expansion continues to advance and overall improvements at both Salobo I and II continue.

Speaker 3

The overall Salobo site with the inclusion of the Salobo III expansion is expected to reach a throughput capacity of 32,000,000 tons in the Q4 of 2023 and full throughput capacity by the end of 2024. In the Q3 of 2023 Constancia produced 700,000 ounces of attributable silver and 19,000 ounces of attributable gold, An increase of approximately 24% and 164% respectively relative to the Q3 of 2022. Record quarterly gold production combined with strong silver production are a result of significantly higher grades from the mining of High grade zones of the Pampacancha deposit, higher recoveries and higher throughput. As stated by Hudbay, production is Expected to continue to benefit from higher grades in Q4 of 2023. Also in the Q3 of 2023, Penasquito had no production resulting from the suspension of operations at the mine, which began on June 7, 2023 due to a labor dispute.

Speaker 3

On October 13, sorry, 2023, Newmont reached a definitive agreement to end the strike and has since begun the safe ramp up of operations. Newmont expects to reach full operating capacity by the end of the Q4. Due to the delay between production and sales, the impact of Penasquito Suspended operations will be reflected in our sales results in the Q4 of 2023 resulting in a significant quarter over quarter decrease to our reported Penasquito sales volumes. Wheaton's estimated attributable production for 2023 is forecast to be approximately 600,000 to 660,000 gold equivalent unchanged from our previous guidance. For the 5 year period ending in 2027, the company estimates the average annual production will amount to 8 10,000 gold equivalent ounces and for the 10 year period ending in 2,032, the company estimates the average annual production will amount to 850,000 gold equivalent ounces.

Speaker 3

This includes sector leading organic growth of over 40% with total production from our current portfolio increasing to over 900,000 gold equivalent ounces By the end of 2027. That concludes the operations overview. And with that, I will turn the call over to Gary.

Speaker 4

Thank you, Wes. As described by Wes, production in the 3rd quarter amounted to 155,000 GEOs, a 6% increase relative to the Q2 of 2023 and consistent with the comparable period of the prior year. Worth noting is that in addition to the quarterly record achieved for gold production at Constancia, Zincgruven achieved a new record for silver production, which is a stream that has been part of our portfolio Relative to Q3 2022, gold production increased 46%, Primarily due to out performances at Salobo and Constancia, partially offset by a 42% decrease in silver production, Due primarily to the now resolved labor dispute at Penasquito and the divestment of the Yaliyahu Pimpa, which occurred during 2022. Sales volumes amounted to 119,000 GEOs, a 14% decrease relative to the Q2 of 2023 and a 12% decrease relative to the comparable period of the prior year, with the year over year being primarily due to relative changes in ounces produced but not yet delivered or PBND, which reduced sales volumes by 18,000 GEOs, which is simply driven by the timing of shipments. Strong commodity prices coupled with our solid production base resulted in revenue of $223,000,000 And a gross margin of $127,000,000 and a total cash margin of 100 $73,000,000 Of this revenue, 65% was attributable to gold, 32% to silver, 2% to palladium and 1% to cobalt.

Speaker 4

As at September 30, 2023, approximately 125,000 GEOs were in PBND and cobalt inventory representing approximately 2.4 months of payable production, which is a level that is slightly higher than the preceding 4 quarters, but within our expected range of 2 to 3 months. G and A expenses amounted to $9,000,000 for the Q3 and the company anticipates that G and A will total $40,000,000 to $42,000,000 For the year, the company generated $10,000,000 of interest income on its cash balances, $8,000,000 higher than the comparable quarter of the prior year. Adjusted net earnings amounted to $121,000,000 with the $28,000,000 increase The prior year due primarily to the higher gross margins and higher interest income. Despite the persistent inflationary environment, Wheaton continued to deliver robust cash operating margins in the 2nd quarter resulting in cash flow from operations of over $171,000,000 And a quarterly dividend of $0.15 per share consistent with Q3 of 2022. During the quarter, Wheaton made total upfront cash payments of approximately $90,000,000 towards Artemis' Blackwater project, along with dividend payments totaling $67,000,000 Overall, net cash inflows amounted to $5,000,000 in Q3 2023, resulting Cash and cash equivalents as at September 30 of $834,000,000 This significant cash balance combined with the fully Undrawn $2,000,000,000 revolving credit facility and the strength of our forecasted operating cash flows positions the company exceptionally well to funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream That concludes the financial summary.

Speaker 4

And with that, I will turn the call over to Haitham.

Speaker 5

Thank you, Gary, and good morning, everyone. As Randy mentioned, the corporate development team remains exceptionally busy evaluating opportunities and we're excited to have recently announced a precious metal stream agreement on Waterton Copper's Mineral Park Located in Arizona. Mineral Park Mine is a polymetallic mine currently under construction with production expected to reach full capacity in 2026. Attributable production is forecast to average over 690,000 ounces of silver per year for the 1st 5 years of production and over 740,000 ounces of silver per year for the life of mine. In exchange, Wheaton will pay Waterton Copper $115,000,000 in 4 payments during construction.

Speaker 5

We're excited to welcome Mineral Park in our portfolio and to be partnering with Water and Copper who's investing over $600,000,000 at Mineral Park, which they expect to result in decades of operational excellence at the mine. With that, I'll pass it back to Randy.

Speaker 2

Thank you, Haitham. In summary, Wheaton's Q3 was distinguished by several key highlights. We achieved solid 3 month revenue, earnings and cash flow and declared a $0.15 quarterly dividend. We maintained our previously announced annual guidance of 600,000 to 660,000 gold equivalent ounces, bolstered by significant quarter over by Quarter over quarter production growth. Our pipeline of development projects was further derisked, supporting our impressive organic growth profile Of over 40% in the next 5 years and we continue to grow our asset base welcoming the Mineral Park mine into our portfolio.

Speaker 2

Our balance sheet remains one of the strongest in the industry, providing ample capacity to add accretive high quality streams into our portfolio. And lastly, we continue to demonstrate leadership and sustainability with sector leading ESG ratings and external recognition. So with that, I would like to open up the call for questions, operator.

Operator

Thank you. Ladies and gentlemen, we will now conduct a question and Our first question comes from the line of Cosmos Du of CIBC. Please go ahead. Hi. In the meantime, we'll go to our next question from the line of Richard Hatch of Berenberg.

Operator

Please go ahead.

Speaker 6

Thanks very much. Good morning, Randy and team and congrats on a very strong set of numbers as usual. Just a few questions. Gary, I appreciate the PVND is a difficult one to forecast, but can you help us just a little bit with whether you expect The Q4, some of that gold release into Q4 that's the first one?

Speaker 4

Yes. The buildup Primarily came from Salobo during the quarter as they're ramping up the 3rd line here. And so we would expect that that would come down In Q4. I would say though that the 2.4 months average Production that sits in PBND right now is not anomalous for us. It's really you look at what happened over the quarter, we had a 23,000 ounce gold equivalent ounce buildup in PB And over the quarter as compared to 5,000 ounce buildup in Q3 of 2022, so the difference there results in a reduction in sales year over year of About 18,000 ounces, which again is simply driven by the timing of shipments.

Speaker 6

Okay, understood. Thanks. Second one is just on Salobo. We've only cut their base metals guidance recently. There is a technical report out there on Salobo, which I guess a few of us have been kind of using as a rule of thumb for what that asset could be.

Speaker 6

Are you able just to sort of give us any kind of flavor as to what you're thinking into 2024 just on that one just because it's so important to the sort of the broader piece?

Speaker 2

Thanks. Well, Richard, it's Randy. I'll pipe in here and then let Wes add any finishing statements. They've had great success in terms of ramping up that Line 3 expansion. And as we said in the opening statements, They're going to reach their 32,000,000 ton per annum average this year and they're rolling through it.

Speaker 2

We're actually We just had Wes was down on-site and was very impressed with everything that we saw in terms of what's going on down there. And so we fully expect that They're going to continue that ramp up through the course of 2024 and expect that by the end of the year they'll be satisfying the second phase of the Expansion payment, which is 35,000,000 tonnes per annum. The design capacity of that current system right now Line 12, Line 12 and And now Line 3 is 36,000,000 tonnes per annum. So I would expect by the end of the next year, they're going to be at a run rate very close to that. I don't know, Wes, if you can add anything to that.

Speaker 3

Yes. I'd just say, I mean, we had a team and myself included down on-site 2 weeks ago and Looking at what was going on with the ramp up there and really getting confidence in how quickly things were ramping up. And I'll say that, I mean, we've seen Steady improvement there over the last 18 months. I mean, as you know, we had some challenges there last year with maintenance and just getting things kind of going. And it's been a significant improvement over Last 18 months and that's really continued kind of through this quarter for sure as well.

Speaker 3

And I think we'll see that continued through next year. And as Randy said and hitting that kind of 35,000,000 ton by the next year, I think is a very viable goal for them to get to. So it's been very impressive to see just the Focus the team has had down there and really on working this through and making the improvements they needed to both get Slobo 1 and 2 kind of back in line and also that Ramp up and really on Salobo III has been, I would say, I mean, world class and how quickly they've managed to get that going.

Speaker 6

Okay. Got you. Thanks. And then sorry, just last couple. First one on Algust Strel down in Portugal.

Speaker 6

I guess the guide there is We zero it until Q2 2025, right?

Speaker 3

Yes. That's what we're looking at right now. They've switched over fully To the copper ore mining there and but they are looking at getting back into the zinc in Q2 2025.

Speaker 6

Okay, cool. And then the last one, I mean, just I look at the growth profile, I mean, you spent last few years kind of just doggedly sort of adding nice streams that So pad out the midterm. I mean, on sort of as I look at it, it seems like you're going to be producing well over 900,000 ounces gold equivalent if these sort of All come online over the next few years. I mean is that in line with your thinking? I appreciate your guidance is sort of €850,000,000 on a 10 year average, but you've got a few years where it's Slabaugh has been underperforming a bit, but is that plus 900,000,000 still something you're comfortable with because it just sort of feels that there's a lot of growth in this stock that Isn't being appreciated by market?

Speaker 2

Yes. I mean, I hate to say it. Sometimes it's quite misleading in terms of doing the average The average of course counts this year down in the 600,000,000. And so for us to get to that kind of an average, we will be over 900,000 ounces gold equivalent production by 2027. And I tell you with the work that Haytham is doing and what the whole team is doing on the corporate development front, but Haytham's team is leading that.

Speaker 2

I'm confident that we'll even have a few more acquisitions that will be adding towards that over the next couple of years. And so I'm incredibly confident. I think one of the things that's important to highlight is the bulk of that growth is actually coming from assets that are already operating in our portfolio, Truly organic growth, not Greenfields development stuff. And so to have that amount of growth already coming from assets that are in production This gives us all a higher confidence level in terms of getting there. And so Richard, we're at the point of taking Wheaton to a level never seen by any streaming or royalty company In terms of Precious Metals production, and it's pretty exciting times.

Speaker 6

Good stuff. Thanks a lot, Randy. Cheers. Have a nice one.

Speaker 7

Yes. Thanks, Richard.

Operator

Our next question comes from the line of Cosmos Chiu of CIBC. Please go ahead.

Speaker 7

Let's try this again.

Operator

Okay. And we have just lost Cosmos Chiu again. Again, Cosmos, if you could press In the meantime, we'll go to our next question from the line of Tanya Jakusconek of Deutsche Scotiabank. Please go ahead.

Speaker 8

Am I on? Hello? Hello?

Speaker 4

Yes. Hi, it's on. Okay.

Speaker 8

It seems to be working. I don't want to be Cosmos being like tossed off 2 times. So thank you for taking my questions. I have A couple if I could. I'm going to start with just on the guidance for this year, so that I just want to make sure that our model is Correct.

Speaker 8

You are maintaining guidance and I'm just looking at the guidance and we're just slightly below the lower end of your 600,000 GEOs. So can I just get some guidance for where you think you will be on the gold side? You said more gold exposure. Should I be thinking you would be at the upper end of that $350,000,000 range?

Speaker 2

Well, we're definitely going to outperform on the gold side. As we've seen, we've seen Constancia doing very well with the Pampacancha zone setting record gold production out of that asset Like significantly record production. But I think what is important to sort of highlight is how well Salobo is doing. As we mentioned, we're very close to them satisfying the first phase of this expansion payment, which Means that they have to run at 32,000,000 tons per annum. And they have to do that for 90 days, which means, I mean, they're already running at those levels, Because to satisfy that average over a 90 day period, that would mean that they have to exceed it at a certain point for A good portion of that 90 day period.

Speaker 2

And so we just we're really impressed with what we've seen On the Vale based metals side in terms of taking Salobo and bringing it back up to where it spent most of its life. The first 7 years of our streaming agreements on Salobo, it was always an outperformer and we think it's well on its way to becoming an outperformer again. And So there's no doubt that the gold is going to be to the high end of that guidance at the cost of silver obviously from Penasquito And might even wind up pushing a bit over. We're very comfortable with where we see our guidance. And it sounds like we're a little bit more optimistic than you are, Tanya.

Speaker 8

I always take the conservative side. But thank you. Just on Penasquito, just To make sure, are you expecting any contribution in Q4? We have nothing in Q4. And that's again from a ramp up and then who knows what is shipped out.

Speaker 8

So we've assumed nothing, but have you assumed something for Q4?

Speaker 2

We don't on the sales side, Unlikely. We don't think there's going to be anything on the sales side. And so obviously production will be ramping up. We'll have to that, but our approach has been 0 on Penasquito on the sales side.

Speaker 8

Okay. Well, at least we're the same on that one, Randy. Okay. I appreciate the color on that. And then my second question, if I could, I have 3.

Speaker 8

So maybe I'll go to hate them if I could. Just on Mineral Park and looking at that transaction and when you were thinking about it, What internal rate of return and you can use whatever silver price you want, but what internal rate of return Did this asset generate for you that you thought was well good enough for you to do? It just has had a bit of a checkered

Speaker 5

Yes. So if you look at it based on the current mine life, the current reserve life of 12 years, which is currently permitted for, Keep in mind, we think it's actually going to be much, much more than that. Our analysis shows that it's low double digit returns on this.

Speaker 8

Okay. Silver price of?

Speaker 5

Spot price at the time of announcement. Yes.

Speaker 8

Okay. Okay. I appreciate it. I just want to benchmark And one of the

Speaker 2

things to keep in mind there, Tanya, is that, yes, as you mentioned, it's had a bit of a checkered history. But with the reinvestments that Waterton Copper has put in, in terms of the expanded capacity on the milling side. One of the challenges that deposit has had is over time as it got deeper, the rock was Just getting harder and harder and the existing billing setup just wasn't sufficient for it to operate. And the investment that we've seen Waterton put into it, we think is Truly setting it up for long term prosperity. It's a game changer on this asset in terms of that capacity on the front end of the mill.

Speaker 2

And as you know, we are already familiar with the ore body itself. But the challenges in the past, I think really related to Dated infrastructure, dated mill setup that just wasn't capable of dealing with the changes in the ore body. The new investments, I can tell you our team, our metallurgical team went down and had a look at we're very impressed with what we see coming out of that asset. So we're excited about it.

Speaker 5

Originally the mill was designed for 35,000 short tonnes a day, Tengi. They're trying to flip through 50,000 short tonnes per day of very, very hard material. So now with the reinvestment of up to $600,000,000 in total by the time all is said and done, this will easily get to 50,000 tonnes a day. And this is a company now that Has no debt and is planning on advancing this project very, very aggressively. So we're very excited about this one.

Operator

Our next question comes from the line of Cosmos Chiu of CIBC. Please go ahead. Hello.

Speaker 7

Can you hear me at this time?

Speaker 2

We can. All these risks are good

Speaker 7

to hear. Clearly, Randy doesn't like me or is it Gary that doesn't like me or someone doesn't like me.

Speaker 2

Hey, we just cut off Tanya too. So

Speaker 7

You should cut

Speaker 2

Apologies, everyone. The service is not working.

Speaker 7

But maybe if we can Start off on Salobo. You've talked a bit about the expansion already. But could you maybe talk about what that means to Wheaton Precious Metals and the production profile, we're going to continue to see the number to Wheaton Precious Metals Continue to increase. Is it going to be a straight line sort of increase into 2024 as they reach full capacity? But then again, Q3 was slightly less than Q2.

Speaker 7

So how should we model it from your perspective?

Speaker 2

I mean, as it's tough to expand beyond where we've already described. I mean, we see it climbing up to 35,000,000 tons Per annum average next year satisfying the Phase 2 of the expansion test, the capacity is 36,000,000 tons per annum for what's built there right now currently. And again, I go back to the everyone should keep in mind the history of snow, but it definitely has had a couple of tough years. We signed that initial contract back in 2013 and we had 7, 8 years of outperformance in terms Higher than design capacity. So with the team that's in there, the spirited Motivated team that we see on the site right now in terms of moving this forward.

Speaker 2

The management team at Vale Base Metals We've just seen a real change in the approach there and there's a huge there's a very, very strong desire to And so it wouldn't surprise me at all to ultimately 2 years out see them exceeding over 36,000,000 tonnes per annum. There's long been discussion about a Phase 4 expansion, the possibility of it. They're still exploring that concept. That's of course multi years out, but what we have is Vale based metals as it's getting more of an Individual presence in itself focusing on its flagship. And of course, its flagship is our flagship.

Speaker 2

So we're going to reap the benefits. We and our shareholders are going to reap the benefits of that focus. And so we're really excited about where Salobo stands right now.

Speaker 7

Yes. I just

Speaker 4

Sorry, Cosmos. Just want to respond to your point about it, Q3 being lower than Q2. I think you're talking about sales there. Production was significantly higher. And the reason Sales were down because there was over a 20,000 ounce buildup of PBND during Q3 2023?

Speaker 4

Yes. So if that hadn't happened, sales would have been significantly higher as well.

Speaker 7

Of course, yes. I was just trying to ask about the I guess you did 69,000 ounces, Gary, as you mentioned in Q3. Is that going to continue to increase? You did $43,000,000 in Q1, dollars 54,000 in Q2, dollars 69,000 ounces in Q3. Are we going to see that continue to increase at least to your accounts as the expansion continues?

Speaker 7

I was trying to Linked the $35,000,000 time per annum expansion back to what we could expect for WPM.

Speaker 2

Yes. It's

Speaker 7

tough.

Speaker 2

It just goes without saying as the throughput increases and they fine tune, Yes. Not only are we seeing the enhanced throughput, we're also seeing better recoveries than we've seen in a very long time. And so the combination of those 2 is just Aligning up to be, as I said, an exciting time.

Speaker 3

It does start to level off at some point here there, Cosmos. I mean, we're seeing that increase as We go through the quarters here and we are getting close to kind of that $32,000,000 that we're expecting. We'll see it continue to increase next year with the throughput. But at some point, it does. The growth that we've seen in the last three quarters does start to level off at

Speaker 7

Okay. That's what I want to get to. And then in terms of the payment, as we understand, Need to make a payment for the expansion. If I look at your MD and A, the other obligations and contingency section, Yes, dollars 370,000,000 year end mark for 2023, dollars 163,000,000 year end mark for 2024, 2025 for this payment. I don't think you've made that payment yet.

Speaker 7

And if that's the case, I know it's based on the matrix, it's based Maximum of $552,000,000 if they reach $35,000,000 by January 1, 2024. I guess what I'm trying to get to is When should we expect that payment to be made?

Speaker 2

Yes. We expect, I mean, They're not quite there yet, but they should be there within a very short period of time. We expect to be making the 1st phase payment in the Q4 of this year. So that's the 370,000,000

Speaker 8

Okay.

Speaker 2

With respect to the 2nd phase, we hope we'll be making it sometime next year. That's definitely the objective of Vale. I mean, they're and they're definitely on track. We don't see why that shouldn't happen. And so we would hope that that $35,000,000 or $35,000,000 ton per annum payment would be triggered next year.

Speaker 7

And then maybe on the Penasquito, you mentioned that Q4 sales is going to be less And going to decrease due to the strike that ended in October. Could you remind me again in terms of The timing like are we going to see is the impact of the strike that it continue again to Wheaton Precious Metals accounts Into Q1 2024 or should Q1 2024 be fairly normalized by that?

Speaker 2

So Production should definitely be up to full levels by the end of this year. Sales, there may still be a residual. As mentioned earlier, we don't We don't see any sales from Penasquito in Q4 if we get some at the end of the year. I mean, always interesting in Q4 because every one of our partners tends to try and squeeze a bit of extra out of the system. And as we say, squeeze the pipeline.

Speaker 2

And As has been clear in these Q3 results, our pipeline is a little bit full right now. We do have although it's not out of normal, but we do have a lot Produced but not yet delivered. And so we'd expect to see a bit of a bump on the sales side during Q4. And but I unlikely to see anything Out of Penasquito, there may still be a residual slowdown as because it is going to be a gradual ramp up. And then with the time it takes to get to the sales stage, the We may see a little bit of a residual effect on sales in Q1 of next year, but we'll definitely have better guidance for you at the end of the Q4 from that perspective.

Speaker 7

Great. And then maybe one last question. Broader scale, as you mentioned, very good growth, sector leading growth For the company, you mentioned 810,000 ounces GEOs for the 5 years ending 2027 on average, 850,000 ounces for the 10 years ending 2,032 for the 10 year average. But then you also mentioned that you're going to give us an update in Q1 2024 updated sort of longer term numbers. I guess you can't really tell us details at this point in time, but more broadly, given that you've made some additions to portfolio, Like should the direction of these longer term numbers trend up?

Speaker 7

Or am I mistaken?

Speaker 2

We definitely have added some assets. And so I mean, We determined a long time ago to just maintain our long term guidance come out at the start of the year and not adjust that as we add assets over the course of the year. I wouldn't say there's going to be significant growth. What I think we're doing is building good longer term structure. Some of the assets we've built that we've added, We're hopeful we'll come in and we're sort of waiting for further clarity in terms of timing as they come forward.

Speaker 2

And so We're definitely going in the right direction and but it'd be tough to sort of give you a firmer guidance for something that we sit down Every during the Q1, the 1st couple of months of the New Year and have a really good look at all of our production visits Stuff like that, to keep you in mind or just to remind you Cosmos, I mean, our production forecast, we do it based on our site And our read through in terms of how the operations are going. And so it is something that we take very seriously in terms of putting the time into. So I don't want to preempt that effort in terms of pushing forward. What I can assure you is that we will be up over 900,000 ounces a year of production By 2027. And we've got a path that keeps us well up into that range.

Speaker 2

And I think We're on a track towards 1,000,000 gold equivalent ounces of production shortly thereafter or even it may not even it may even be at that time. And so but Stay tuned. We will give you further clarity in the Q1 as we always do.

Speaker 7

Of course. That's great to hear. Thanks once again, Randy, Gary, Heath and Weston and Emma, congrats on a very strong quarter and have a good weekend.

Speaker 2

God most apologies again for the technical Issues here

Speaker 9

and

Speaker 2

hopefully we can get Tanya back on again. Don't take it personally. Hello, Tanya.

Operator

Thank you. Okay. Tanya, please go ahead. Your line is now open.

Speaker 8

Okay. Operator, I have 2 questions, so please don't cut me off. I have 2 questions. All right.

Speaker 2

Yes.

Speaker 8

Must be very specific here in case there's a pause and I get cut off. Appreciate you taking my questions yet again. So I just wanted to come back to just the Haitham on M and A and then I have One for Gary on the global minimum tax and Cayman. So just on the M and A, Haitham, if I could just ask, I've seen some Of the peers, increasing exposure to existing assets, albeit it has been in royalty form. But I'm just wondering if When you look at your own assets internally and your streams, are there anything that I should think about whether you could see increased exposure within your portfolio like Upping some of these streams in the portfolio, was that an option as well?

Speaker 5

We're always considering that Tanya, but I would say the majority of the stuff that we're looking at in terms of growth going forward are new opportunities. We've seen an influx of new opportunities Within the last few months obviously with the equity markets tightened, the debt markets overpriced, streaming tends to be one of the Lowest cost capital type of funding opportunity. So we're mostly focused on

Speaker 7

relatively small when I say

Speaker 5

small, it's anywhere between call it 100 to 3 Small when I say small, it's anywhere between call it 100 to 300. But there are still some chunky ones out there and we hope to get some of these things across The next little while. So focus remains on precious metals obviously.

Speaker 8

Yes. And is that when you say chunky, are those the one from $500,000,000 to $1,000,000,000 of Those types?

Speaker 5

Well, you know what, we I would say they're 400 plus.

Speaker 8

Okay. I appreciate that. And mostly on development of helping development of funding for development projects,

Speaker 7

Was that going

Speaker 8

to be the catalyst?

Speaker 5

Yes. That's right. The majority are development stage opportunities, but some of them are quite advanced.

Speaker 8

Okay. Thank you for that. And then if I could for Gary, just on the global minimum tax, we did see your competitor in Barbados. Barbados had made some comments on what they're doing with in terms of the global minimum tax. Just wondering if you have any update for us in terms of anything from Cayman And anything of your insights into the global minimum tax?

Speaker 4

Yes. Cayman has not Proposed adopting global minimum tax. So it's still Canada that is The jurisdiction that we're looking to govern how GMT will impact us. So there's really no change on that front. We're still assuming that the draft Legislation will be adopted and approved by the Canadian government here for effect January 1 next year and we're totally prepared internally Before that to happen.

Speaker 4

But there's a lot of work I think that still needs to be done from the government side to get that across The line, so if it does get pushed out that would just be a benefit I think.

Speaker 8

Okay. Now I'm just interested if Cayman had done anything. At the end of the day, Gary, we all know the taxes are going up. It's just who takes it. Is it a

Speaker 4

case number

Speaker 8

or cans, right? That's the bottom line. It doesn't really matter on your from your perspective, it's 15% On any of the assets that were with the contract placed in the Cayman. So it doesn't matter. It's just Wondering if Kamen had said anything and looks like they have.

Speaker 8

So, either way, except for getting 15%. Okay. So, I appreciate it.

Speaker 4

Thanks.

Speaker 8

Thank you. Thank you, operator.

Speaker 2

Thanks, Tanya.

Operator

Our last question comes from the line of John Gianakos Independence Research. Please go ahead.

Speaker 9

Good morning. Thank you. I have three follow-up questions on Mineral Park and congratulations, Arizona is A nicer place in Panama or Ecuador, some other places. First, is the capital budget 600 or 600 plus your 115?

Speaker 5

The total is 600, Chuck.

Speaker 9

600. Could you break Down a little bit to $600,000,000 budget. There had been a mine built and operating 13, 14 years ago, was there stripping that was let go at the end or Equipment that was sold off in the bankruptcy. I know there was lots of equipment that was installed that didn't work. The poor guy had like at least 5 mill motors that didn't work on the original installation.

Speaker 9

A lot of bad luck. I have a car battery getting fixed at 3 o'clock. It didn't work when they put it in as well. Then finally, Has Waterton Copper produced anything before? And maybe does that mean that if Cosmos or Tanya or I started a project, we could bring it to Wheaton for a stream too.

Speaker 5

So maybe I'll take your last question. And since I've answered the first question, I'll take the last question first. Last question, how they produced? They've actually got a pretty incredible technical team. Their objective in the past has been to pick up projects that have Been somewhat start for capital ramp them up and sell them.

Speaker 5

So they have produced It's on small scale project that they've tried to sell off. Specifically on Mineral Park, there actually is an actual SFCW operation that's actually producing there right now. So they have been producing for a few months, quite a few months at this point. In terms of your second question in terms of capital cost, John, They have put in, I think, close to about $160,000,000 Since they acquired it and so in total, I think what's remaining is about 200 and I would say Let's say $260,000,000 plus a contingency plus a management reserve is probably somewhere around $330,000,000 in total CapEx left to go. So all in total By the time since they acquired it, they will have spent close to $600,000,000 on it, of which roughly I would say half has been spent.

Speaker 9

I'm sorry, I believe the dollars are going out the door, but like is it stripping are they Ripping out old equipment and putting in new equipment or are they merely adding 15,000 tons a day of additional grinding and flotation capacity?

Speaker 5

Well, the big chunk of it is that just that the crushing and grinding is about $70,000,000 to $75,000,000 The flotation and control modernization, Etcetera is about another $75,000,000 Indirects excluding EPCM is about another $60 plus 1,000,000 So those are the big factors, big chunks there, John.

Speaker 9

Thank you.

Operator

Ladies and gentlemen, this concludes the Q and A portion of today's conference call.

Speaker 4

Yes. Randy had to run to a meeting. So I just like to thank everyone for participating. And as you can see, we are taking the company to a level not Seen before in the royalty and streaming space and believe it has never been a better time to own more Wheaton. We look forward to speaking with you all again soon And thank you.

Operator

This concludes this conference call for today. Thank you for participating. Participants, please disconnect your

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Earnings Conference Call
Wheaton Precious Metals Q3 2023
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