Wheaton Precious Metals Q1 2024 Earnings Call Transcript

Quartr
Provided by Quartr
May 10, 2024

There are 11 speakers on the call.

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 20 24 First 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 session.

Operator

Thank you. I would like to remind everyone that this conference call is being recorded on Friday, May 10, 2024 at 11 am Eastern Time. I will now turn the conference over to Emma Murray, 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 Haitham Hodalei, Senior Vice President, Corporate Development and Wes Carson, Vice President, Mining Operations. Please note for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the Presentations page of the Wheaton Precious Metals website. Some of the commentary on today's call may contain forward looking statements, and I would direct everyone to review slide 2 of the presentation, which contains important cautionary notes.

Speaker 1

It should be noted that all figures referred to on today's call are in U. 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 Q1 results of 2024. I am pleased to announce that our portfolio of long life low cost assets delivered a robust quarter to start the year, generating approximately $220,000,000 of operating cash flow and over $160,000,000 in net earnings, underscoring the effectiveness of our business model in leveraging rising commodity prices while maintaining strong cash operating margins. And we were very excited to have closed the previously announced agreement with Orion Resource Partners for the Platte Reef and Cucuta Cayes streams, completing an upfront payment of $450,000,000 in February of this year. After advancing this payment, Wheaton remains very liquid with 30 $6,000,000 in cash, a $2,000,000,000 undrawn revolving credit facility and ongoing strong operating cash flows, allowing the company to fund all outstanding commitments as well as provide the flexibility to acquire additional accretive mineral stream interests.

Speaker 2

Building on the momentum from a record 8 acquisitions in 2023, our corporate development team remains actively engaged in evaluating new opportunities, and we continue to see a healthy appetite for streaming as a source of capital for the mining industry. In addition, during the quarter, we were proud to have been recognized among Corporate Knight's 100 Sustainable Corporations in the world in 2024. As the architects of sustainable streaming, this accomplishment is reflective of our commitment to operating responsibly in all facets of our business. And with that, I would like to now 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 production in the Q1 came in higher than expected, driven by strong out performances at Salobo, Constancia and Penasquito. In the Q1 of 2024, Salobo produced 61,600 ounces of attributable gold, an increase of approximately 41% relative to the Q1 of 2023, driven primarily by higher throughput. Salobo's strong production in Q1 is attributable primarily to the continued ramp up of Salobo III expansion and sustained overall improvements at both Slobo I and II.

Speaker 3

In the Q1 of 2024 Constancia produced 640,000 ounces of attributable silver and 13,900 ounces of attributable gold, an increase of approximately 16% and 101% respectively, relative to the Q1 of 2023. Strong quarterly silver and gold production continued in Q1 as a result of the significantly higher gold grades from the mining of the Pampacancha deposit and associated higher recoveries. In the Q1 of 2024, Penasquito produced 2,600,000 ounces of attributable silver, an increase of approximately 27% relative to the Q1 of 2023, primarily due to higher grades. Production in the Q1 focused on mining in the Chile Colorado pit, which contains higher silver, lead and zinc metal grades than the main Penasco pit. On April 30, 2024, Ivanhoe reported the construction activities for the Platte Reef Phase 1 concentrator are on schedule at almost 90% complete and on track for cold commissioning in the Q3 of 20 24.

Speaker 3

An updated independent feasibility study on an optimized development plan for the acceleration of Phase 2 is planned to be completed and published in the Q4 of 2024. As a result of the planned acceleration of Phase 2, Ivanhoe reports that the first feed and ramp up of production for Phase 1 will be deferred until mid-twenty 25. In addition, a preliminary economic assessment on a Phase 3 expansion is expected to be completed at the same time, increasing Platte Reef's processing capacity up to approximately 10,000,000 tonnes per annum. The result of which is expected to rank Platte Reef as one of the world's largest PGM, nickel, copper and gold producers. In 2024, GEO production is forecast to be consistent with levels achieved in 2023.

Speaker 3

As expected, stronger attributable production from Penasquito and Boise Bay is forecast to be offset by lower production Boises Bay is forecast to be offset by lower production from Salobo, the suspension of operations at Minto and the temporary halting of production at Alustril. Attributable production is forecast to increase at Penasquito as a result of uninterrupted operations and at Boise Bay due to the ongoing transition from the Ovoid pit to the underground mines. Attributo production is forecast to decrease slightly at Slobo due to lower grades as per the mine plan, which are expected to be partially offset by increasing throughput as the Slobo III expansion continues towards completion. Wheaton's estimated attributable production in 2024 continues to be forecast at 325,000 to 370,000 ounces of gold, 18,500,000 to 20,500,000 ounces of silver and 12,000 to 15,000 GEOs of other metals, resulting in production of approximately 550,000 to 620,000 GEOs unchanged from previous guidance. Production is forecast to increase at an industry leading rate of approximately 40% to over 800,000 GEOs by 2028, primarily due to the growth from operating including Salobo, Antamina, Penasquito, Voisey's Bay and Marmato.

Speaker 3

Development projects which are in construction and or permitted including Blackwater, Platte Reef, Goose, Mineral Park, Phoenix, Curipamba and Santo Domingo and predevelopment projects including Marathon and Copper World for which production is anticipated towards the latter end of the 5 year forecast period. For 2023 and for 2029 to 2,033, attributable production is forecast to average over 850,000 ounces in the 5 year period also unchanged previous guidance. That concludes the operations overview. And with that, I'll turn the call over to Kerry.

Speaker 4

Thank you, Wes. As described by Wes, production in the Q1 amounted to 160,000 GEOs, a 19% increase relative the comparable period of the prior year. Most notably, gold production increased 28%, primarily due to Salobo and Constancia. Sales volumes amounted to 143,000 GEOs, a 31% increase relative to the comparable period of the prior year, primarily due to higher production levels coupled with relative changes in ounces produced but not yet delivered or PBND. This increased sales volume coupled with a 6% increase in commodity prices resulted in revenue rising by 38% to $297,000,000 Of this revenue, 64% was attributable to gold, 32% to silver and 2% to each of palladium and cobalt.

Speaker 4

As at March 31, 2024 approximately 120,000 GEOs were in PBND representing approximately 2.3 months of payable production which is consistent with our expected range of 2 to 3 months. G and A expenses amounted to $10,500,000 for the Q1 and the company continues to anticipate that G and A will total $41,000,000 to $45,000,000 for the year, with these figures excluding share based compensation as well as donations and community investments. Adjusted net earnings amounted to $164,000,000 with the $59,000,000 increase from the prior year due primarily to the higher gross margin coupled with lower stock based compensation. Despite the persistent inflationary environment and thanks to our low and predictable cost structure, Wheaton continued to deliver robust cash operating margins in the Q1, resulting in cash flow from operations of over $219,000,000 an increase of 62% from the prior year, driven primarily by higher sales volumes. We have declared a quarterly dividend of $0.155 per share, a 3% increase from the prior year.

Speaker 4

During the quarter, Wheaton made total upfront cash payments of $462,000,000 $450,000,000 of which was relative to the Platte Reef and Kootsukaya streams with the balance relating to the Delamar and Mt. Todd royalties. When coupled with cash generated from operating activities, our overall net cash outflows amounted to $240,000,000 in the Q1 of 2024 resulting in cash and cash equivalents as at March 31 of $306,000,000 Additionally, subsequent to the quarter, the company disposed of its investments in Hecla Mining for gross proceeds of $177,000,000 This 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 satisfy its funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream interest. Lastly, I did want to provide an update on global minimum tax. As previously disclosed, the company does expect its income generated outside of Canada to be subject to a 15% global minimum tax or GMT.

Speaker 4

While we continue to anticipate that the tax will be retroactive to January 1, 2024, Canada has not yet enacted the legislation. And as such, the company has recorded no current tax expense associated with GMT in the quarter. For reference, in the Q1, the wholly owned foreign subsidiaries, which reside in jurisdictions where the GMT is expected to apply, had net earnings of $165,000,000 with 15% of such amount amounting to $25,000,000 We will recognize the tax expense associated with the GMT in our consolidated financial statements in the appropriate period relative to when the legislation is enacted. As such, assuming that the legislation is enacted in its current proposed form, we will record multiple quarters worth of GMT in the quarter that such enactment occurs. That concludes the financial summary.

Speaker 4

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

Speaker 2

Thank you, Gary. In summary, Q1 was a very strong start to the year for Wheaton, distinguished by several key highlights. We achieved robust 3 month revenue, earnings and cash flow and declared a $0.155 quarterly dividend aligned with our new progressive dividend policy. Our pipeline of development projects was further derisked by construction advancements and the receipt of various key permits by our partners, supporting our impressive organic growth profile of over 40% by 2028. We continue to maintain low and predictable costs, which when coupled with our leverage to increasing commodity prices, result in some of the highest margins in the entire precious metals space.

Speaker 2

Our balance sheet also remains strong providing ample capacity to add accretive high quality streams into our portfolio. And lastly, we take pride in being a leader amongst precious metal streamers in sustainability and by supporting our partners and the communities in which we live and operate. 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 answer session. Your first question is from Rob Ricchiuti from East Capital. Please ask your question.

Speaker 5

Thanks, operator. Good morning. Randy, getting back to Wheaton's roots in silver, prices have been very strong year to date. Just wondering what the transaction pipeline looks like for more of those silver heavily levered deals. I would imagine those are still pretty rare to come by and there seems to be a lot of gold with silver and vice versa in some of the transactions that you're making.

Speaker 5

But where does the transaction market start if we wanted to look at bringing more silver into the deal structure?

Speaker 2

Yes. It's Ralph, you're bang on. It's tough to find good silver projects. One of the things that's a bit unique about silver is that most of it is produced from lead zinc operations, whereas a lot of byproduct gold comes from copper operations. And we just don't hear a lot of lead zinc developments out there.

Speaker 2

It's not a those aren't very sexy metals in today's world. So yes, we're not seeing a lot on the silver side. I'll let Haitham add some color to that. He's definitely much more in tune in terms of the opportunity set out there.

Speaker 6

Sure. Thanks, Randy. And good morning, Ralph. Thank you for the question. I will say like if I look at the top ten opportunities I have, probably at least a third of those have fairly significant silver exposure.

Speaker 6

So there definitely is silver out there. It is as Randy said, there's not a lot of new silver. It's mostly for if you're looking at balance sheet strengthening or balance sheet repair that type of thing.

Speaker 5

Got you. Okay. And maybe I can just stay on the silver theme and maybe go to Wes and ask him about sort of the near term mine plan for silver coming out of Penasquito, that looking over the course of 2024. Q1, very good quarter on the silver side and we're coming off a strike impacted second half last year. It puts us at a position where and you talked about the Chile, Colorado pit where we're currently tracking ahead of guidance.

Speaker 5

Just wondering what that cadence looks like on silver for the rest of the year?

Speaker 3

Thanks, Ralph. They are starting to transfer back over to the Penasco pit later in the year here. So we will see kind of a slight weakening of that as the year goes on. But it is fairly consistent through the year here, the silver production. There is still production from Chile, Colorado through the year.

Speaker 3

So it will be fairly consistent through the year, but as they move back to Penasco, that is where they do get the higher gold grades and slightly lower silver grades.

Speaker 5

Got you. Helpful. Thanks everyone.

Speaker 2

Thanks Ralph.

Operator

Thank you. Your next question is from Cosmos Chiu from CIBC. Please ask your question.

Speaker 7

Great. Thanks, Randy, Gary and team. Maybe my first question is on your production here. Randy, as you mentioned, very strong Q1, 160,000 ounces, but you've maintained your full year guidance at $550,000 to 620,000 If I were to straight line it, but life isn't that simple, but if I were to multiply your Q1 by 4, I would get to a number that's higher than the top end of your annual guidance. Could you remind us to the extent possible, Randy, what we should look for?

Speaker 7

I think Wes kind of mentioned it, Penasquito, it could come down a little bit. But what else can we look for in terms of quarter over quarter sort of production?

Speaker 2

Yes. I mean, I'll let Wes add a bit of color at the end of it. But what we do see is relatively consistent production over the course of the year. I think the last quarter at year end there, we were giving guidance to be a little bit more heavily weighted towards the back end of the year, but we have had some outperformance here, obviously, in the Q1. We're not confident enough to adjust guidance in the sense of having that outperformance continue through the course of the year.

Speaker 2

But even if we stay on track, you're right, we're going to be we're in a very, very good position to at least meet guidance, if not exceed it. And so we just want to see a bit more strength behind that. So I don't know, Wes, if you got some color to add to that.

Speaker 3

Yes, I would agree. I think it's just that after the Q1, I think it's a little premature for us to get too excited about it, I think, yet. But I mean, certainly very happy with the quarter. I mean Constancia would be the other one that I mean there is that volatility of as Pampacancha kind of comes in and out of the production there. So that would be the other one that we'll walk through the year as we go through and there is some change to that, the production from Constancia through the year, but fairly consistent through the rest of the year is what we're expecting.

Speaker 7

Sounds good. Maybe a quick question on global minimum taxes. As you mentioned, Gary, dollars 165,000,000 is the net income from your subsidiary. I'm just trying to figure out how you Is it as simple as, say, the spot price for gold minus $4.30 an ounce cost, which is what it was in Q1, multiplied by all the stream ounces going through your subsidiary? Or is there other sort of deductions that you can take as well?

Speaker 4

No, it's pretty much the former of those. It's really we estimate the tax based upon the accounting income generated outside of Canada.

Speaker 7

So is there a potential when it gets enacted that there's other deductions you can take before applying to 15% or at this point

Speaker 4

I mean until the legislation is fully enacted, I think there's potential. We're not projecting that that's going to take place.

Speaker 7

Okay. And then as a follow-up, Gary, how is it going to work? I know that as you said, when it gets enacted, you'll put through an expense in your income statement, but this is also retroactive to January 1. So is there a potential that you have to make a lump sum payment at that point in time, including the $25,000,000 from Q1? Is that how it works?

Speaker 4

Well, we would have a lump sum expense, but the tax doesn't get paid until 20 for 2024 until 2026. But if we like assuming that the legislation gets fully enacted by June 30, we would have 2 quarters of global minimum tax flowing through our Q2 results. If it doesn't get enacted by June 30 and it gets enacted by September 30, then we would have 3 quarters of GMT going through our 3rd quarter results.

Speaker 2

One of the keys there, Cosmos, is that we don't actually make the payments until 2026. That's the way it looks like it's going to be structured is that it's going to be several years behind the actual tax year before the payment is actually made.

Speaker 7

Got it. Thanks, Randy, Gary and team. That's all the questions I have and have a good weekend.

Speaker 2

Thanks, Cosmos. Thanks, Cosmos. Go Canucks.

Speaker 7

What?

Operator

Thank you. Your next question is from Brian MacArthur from Raymond James. Please ask your question.

Speaker 8

Good morning and thank you for taking my question. Again, it goes back to what you're just answering Gary with Cosmos. So just so I'm really clear on this, everything we're talking about is accounting. So from a cash basis, if that's what we're focused on, really all we need to think about is assuming this tax gets enacted this year, I. E.

Speaker 8

2024, you'll just pay 15% cash taxes of 2024 income in 2026. Is that the way I should think about it?

Speaker 4

On the income generated outside of Canada.

Speaker 8

Right. That's just the majority of it.

Speaker 9

Okay. So from a

Speaker 6

pure cash basis, I get it.

Speaker 8

We want to make sure everybody understands this is accounting, not cash, but there's really no cash effect this year.

Speaker 4

That's correct.

Speaker 8

Perfect. Thank you. And maybe just the other question following up was asked earlier about, obviously Salobo did very well and you've got this ramp up of volume through the mill, but you've got grades coming off. And I know you probably don't want to get revised anything yet year, but do we expect Q1's production at Slovo to continue throughout the year?

Speaker 2

I'll let Wes answer that one. Sure.

Speaker 3

I mean, I think we saw slightly better grades than expected at Salobo in Q1. And really, I mean, the grades do drop off in the plan as we go through the year and it's just a function of where they are in that pit. So but I mean, they have certainly shown that the production that's going through particularly Slobo 3 has been very positive. So as we said at the start, I don't think we're confident enough to up the forecast at this point, but it is looking positive from for the rest of the year.

Speaker 8

So would that be positive reconciliation? Or is it just they happen to be in a different part of the ore body that you got better than expected Q1 or can you comment?

Speaker 3

Positive reconciliation.

Speaker 8

Perfect. Thanks very much for answering my question.

Speaker 2

Thanks, Brian.

Operator

Thank you. Your next question is from Tanya Jakusconek from Scotiabank. Please ask your question.

Speaker 10

Good morning, everyone. I recognize myself today. So that was good. Thank you for taking my questions. Just wanted to circle back, Wes, on the operational side.

Speaker 10

I think we touched on Salobo, we touched on Penasquito and I think Newmont also confirmed on their call that production was going to be for silver evenly distributed for the year. The one I wanted to touch base on was on Wazee Bay. We had talked last quarter about quarter over quarter improvement. Is that how I should still be thinking about that asset?

Speaker 3

Absolutely. As those undergrounds come more online, we will see quarter over quarter improvement there and that is what's forecast for the rest of this year. And certainly, we saw very good performance from them in Q1 really ahead of what we've been expecting. So and I think we can continue to see that growth through the year.

Speaker 10

Okay. And then I think what Randy had mentioned the $48,00052,000 first half, second half looks like to be more of a normal distribution or thereabouts for the next three quarters. Would that be a safe assumption?

Speaker 2

Yes. Based on what we see right now, I think it's probably more like a fifty-fifty. If we continue if we do see some outperformance in the latter half, I mean, obviously, we'll consider it at the end of the second quarter and determine whether we want to change our guidance. But we're definitely well positioned to be on track. And as Ralph mentioned earlier on, I think it was Ralph or Cosmos mentioned

Speaker 4

earlier on, 4 times this production

Speaker 2

is beating it. But so we're definitely we're Okay.

Speaker 10

Okay. Maybe just moving on to some of the financials, if I could. You have quite a number of investments, I think, still. I think you sold out all of your Hecla. Where does the rest of the investment portfolio stand and how we be thinking of that in terms of harnessing some cash?

Speaker 6

Tanya, it's Tatum. Thank you for the question. I will say that the Hecla was a bit of an opportunistic sale and we're happy with that transaction. Looking at the rest of our portfolio, the majority of our portfolio is with our streaming partners. Our equity is held because they entered into the transactions when we did the streams.

Speaker 6

Our philosophy at this point in time is we will hold those shares until our partners get up and running in advance. And if there's an opportunity to sell down the road, that's when we'll do it. We have no interest in selling those shares right now.

Speaker 2

The primary focus on those type of investments is to be supportive of those partners, be a good strong supportive shareholder. And so there's no sense in putting pressure on them when they're going through the development phase on their projects. So it is a longer term commitment as is the streaming agreement itself.

Speaker 10

Okay. Okay, that's good on the investments. And maybe if I could still follow through, Haitham, on just on the transaction opportunities. Just want to circle back. Savan, you put out a comment that they're looking at up to $500,000,000 of streaming opportunities.

Speaker 10

So I want to circle back to number 1, any thoughts of and or their gold assets. I don't think you're interested in lithium. Maybe a comment on how that would fit your portfolio?

Speaker 6

Sure. I mean, I'll keep it simple. We're always looking at precious metals being gold and silver as primary to precious metals. If we can add gold or silver and alongside add platinum or palladium to top it off to the price that they need, that's something we could consider. You're right.

Speaker 6

I don't think we would increase Stillwater stream there, but there are other opportunities throughout their portfolio that they

Speaker 2

are considering. Sibanye is a good strong partner of ours. We've had great relationship with Neil and the team there. And so, hopeful that we can grow that relationship as we're always hopeful with all of our partnerships. It's they've got quite a broad selection of assets there and we're sure we can help them unlock some value there somewhere.

Speaker 10

And the balance sheet repair. So yes, thank you for that. And then maybe just circling back again on the opportunities. I know I ask all the time, all of these big opportunities for balance sheet repairs keeps coming up on for some of the bigger non gold companies and assets sales for the Newcrest, Newmont portfolio, etcetera, etcetera. Haitham, I think you mentioned you were looking at 10 or 20, I forget how many you mentioned you were looking at of your deals and yes.

Speaker 6

I mean, we always have at least a dozen on the go, Tanya. We're probably up closer to 15 right now. Of those, I would say there is probably a handful that are fairly sizable. But in this environment, there's no guarantee that a stream will actually get done. But it is, I guess, enlightening to see that streaming is measured alongside debt equity and other forms of capital as well.

Speaker 6

So there's definitely people kicking the tires and we're there trying to get involved.

Speaker 2

We are happy to see the equity market waking up a little bit and we're starting to see some support on that side because we've been strong believers that streaming can't be the only source of capital. It should be standing alongside a nice balanced spread on that capital. And so happy to see a little bit there because that's going to open up some opportunities just in that sense standing alongside some equity raises to fund these developments.

Speaker 10

And these bigger deals, like you said, you had a handful of, I think, Haitham, those would be the plus 500,000,000 deals. Can I assume those are pure streaming? Or should I be thinking that there's equity components, dollars dollars or should it be a simple streaming structure?

Speaker 6

Sure. I mean the majority of those are looking at streaming structures. When you're looking at opportunities that sizable, a is I guess you would look at a portfolio not a portfolio, you'd look at a number of financing mechanisms alongside streaming. Okay.

Speaker 10

And so the main financing mechanisms for the smaller ones are royalty stream and plus debt equity would be

Speaker 2

royalty space. The royalties tend to I mean, streaming has proven to be much more attractive as a source of capital than royalties. So we don't just don't see new royalties. We see existing royalties being traded around, but not too many people are creating new royalties, especially on advanced projects. If they're doing royalties, it's on

Speaker 4

early very early stage. Kind of

Speaker 6

create basically royalties so that one day they can put them in a portfolio and try to sell them to companies like us.

Speaker 10

Okay. Well, we'll wait for those. I appreciate you taking all my questions and great

Speaker 2

Gary. Always a pleasure, Tanya.

Operator

Thank you. Your next question is from Richard Hatch from Berenberg. Please ask your question.

Speaker 9

Yes, thanks. Good morning, Randy and team. Thanks for the call. Just got a couple of questions. Just firstly on the Hecla, my numbers you made about 50% on trade.

Speaker 9

So it's a good deal. But is there any tax that you've got to pay on the sale of those shares or anything we need to be working in there or not? Thanks.

Speaker 4

The tax we will have a tax liability associated with that. It will be included at 50% and subject to a 27%

Speaker 2

income tax. So standard capital gains of 50% of the gain is taxed at a 27% rate. So net effect is about 13.5% on the total.

Speaker 4

That's right.

Speaker 2

Yes.

Speaker 9

Okay. Very helpful. Thanks. And second one is just on Salobo. It's nice to see that asset kind of coming back to performing better again.

Speaker 9

Just any commentary around the expansion case from Vale or anything that you might be able to add on that, please? When I said the expansion case, I mean the high grading higher grading case.

Speaker 2

Oh, I see. Okay. Yes, I mean the focus I'll definitely let Wes add some color to this. But the current focus is, of course, trying to get to the next phase of the expansion payment. And so they're working their way towards that.

Speaker 2

Whether they achieve it this year or next year remains to be seen. They're definitely continuing to improve on Line 3. But as it's been sort of laid out before, the whole site has to satisfy that. And so Line 1 and Line 2, we still got some work to do on that front. But as we've seen this quarter, they actually outperformed even their own expectations, right?

Speaker 2

And so given that, we think it's shaping up well for them to hopefully satisfy that. Once that next phase gets satisfied, then we'd be looking at the high grade bonus kicker. And it actually it starts in the year subsequent to whenever they satisfy Phase 2 of the expansion payment. And it's basically on an annual basis, if they meet certain objectives, we'll make an additional payment towards Vale for satisfying those things. And so that won't start until next year at the earliest, again, depending on when they finish the Phase 2 of the main expansion payment.

Speaker 6

Yes.

Speaker 3

I think just to add on to what Randy said there, I mean, really the focus right now is on getting Slobo 3 up its full capacity and really having Slobo I and II built up there as well. The high grade is really an expansion on the open pit and getting some more equipment going in there. And that's really once they get those plants up and running then the focus will move over to the mine and then getting that going I think.

Speaker 9

Okay.

Speaker 2

They have talked in the past. They have just to add, they have talked in the past about the possibility of exploring a Phase 4 expansion. And there's been some discussion about whether that would be at an additional 6,000,000 tonnes per annum or 12,000,000,000, whether it's a full line. And so there is still some discussion and studies going on internally on that front too. So there's no doubt there's still

Speaker 5

a healthy focus on Salobo.

Speaker 4

Absolutely. Lots of upside.

Speaker 9

And that's just pure upside for you, right? There's no extra commitments. You've got to pay for that, correct?

Speaker 3

Yes, exactly.

Speaker 9

And then, sorry, just on that grade upside, are you able to give us any kind of a feel for what kind of higher kind of grade potential we could be seeing from next year if they go down that road?

Speaker 2

The challenge I'll step in. The challenge is it depends on how much they grow their mobile fleet. It depends on how much they push towards the low grade stockpiling side. And so there's a number of different factors that they have to balance, stockpile capacity. If they shift more of the low grade towards that, then they could easily push grades substantially higher.

Speaker 2

If they and so it really does come down to what kind of a fleet expansion they go through in the pit. And that's what will sort of dictate what kind of grades they can deliver to the mills.

Speaker 9

Yes. Okay. Got you. And then last one is just on Mineral Park. I think if I look at the MD and A, you've got $115,000,000 that you could deploy into that one this year.

Speaker 9

Any kind of steer on timing on that please?

Speaker 2

I mean, it looks like it's on track. We've I mean, the work's moving forward. And so it's an asset that we know well. We're pretty excited about it. It's always delivered more silver than expected in times past.

Speaker 2

And so we're expecting to see similar results out of it. And what's really exciting about it is the current ownership group has identified and really is in the process of resolving the challenges that that project had in the past. And so we think it's going to be a nice pleasant addition to the a re addition to the portfolio this time around. And so we're pretty happy with that group. They've done a good job of identifying what the challenges are and they're putting the money right where it needs to be spent in terms of getting it there.

Speaker 5

So fully expect it to

Speaker 2

be coming on stream here within a couple of years.

Speaker 6

And that $150,000,000 will be provided in stage payments, right? It's not all of 1 lump sum. It will be provided over I would say 3 or 4 different payments $25,000,000

Speaker 2

each and the last is $40,000,000

Speaker 9

Yes. Got you. Okay, fine. Sorry, while I've got you, so is that something that could be a Q2 outflow or is it too early to say that yet?

Speaker 6

Yes, it could be Q2.

Speaker 9

Okay. Helpful. Thanks for your time. Much appreciated.

Speaker 2

Thanks, Richard, and thanks everyone, for your time today. We are pleased to report a good strong start to our 20th anniversary year here at Wheaton. Wheaton's high quality portfolio of assets, sector leading growth profile and commitment to sustainability provides our shareholders with a solid outlook for the future and one of the best vehicles for investing into gold and precious metal space. As we celebrate our 20th anniversary throughout 2024, I am sincerely thankful to all of our stakeholders for being a part of Wheaton's success, and I truly look forward to a golden future together. We look forward to speaking with you again soon.

Speaker 2

Thank you.

Operator

Thank you. This concludes this conference call for today. Thank you for participating. Please disconnect your lines.

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Earnings Conference Call
Wheaton Precious Metals Q1 2024
00:00 / 00:00