“Wheaton had a strong start to 2020 with over $177 million generated in operating cash flow in the first quarter. Given our strong financial position and the immediate needs created by the COVID-19 pandemic, Wheaton launched a $5 million fund designed to support our local communities and those around the mines from which we receive precious metal, more than doubling our budget for community support. At this time, our top priority is the health and safety of our employees and the communities in which we and our partners operate.” said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “With one of the highest quality portfolios in the precious metals space, we remain confident in the strength and sustainability of our business model through this pandemic, and our ability to continue delivering shareholder value. We hope everyone stays safe and well."
First Quarter Highlights:
• Attributable gold equivalent2 production was over 180,000 ounces in the first quarter partially driven by record attributable silver production at Peñasquito.
• Over $177 million in operating cash flow generated in the quarter, an increase of over 50%.
• Net debt1 reduced by $182 million with Wheaton ending the first quarter in a net debt position of $589 million.
• Declared quarterly dividend1 of $0.10 per common share.
• At the Constancia mine, Hudbay announced the formal approval of the surface rights agreement for the higher-grade Pampacancha satellite deposit.
• Launched a $5 million Community Support and Response Fund combatting COVID-19.
Operational Overview
(all figures in US dollars unless otherwise noted) Q1 2020
Q1 2019 Change Ounces produced
Gold 94,707 94,918 (0.2)%
Silver 6,704 5,656 18.5 %
Palladium 5,312 4,729 12.3 %
Gold equivalent 2 182,241 169,098 7.8 %
Ounces sold
Gold 100,405 115,020 (12.7)%
Silver 4,928 4,294 14.8 %
Palladium 4,938 5,189 (4.8)%
Gold equivalent 2 166,121 173,464 (4.2)%
Revenue $ 254,789 $ 225,049 13.2 %
Net earnings $ 94,896 $ 57,349 65 %
Per share $ 0.212 $ 0.129 64.3 %
Adjusted net earnings 1 $ 96,160 $ 56,540 70.1 %
Per share 1 $ 0.215 $ 0.127 68.8 %
Operating cash flows $ 177,588 $ 118,194 50.3 %
Per share 1 $ 0.397 $ 0.266 49.2 %
Dividends declared 1 $ 44,815 $ 40,074 11.8 %
Per share $ 0.10 $ 0.09 11.1%
All amounts in thousands except gold, palladium and gold equivalent ounces produced and sold, per ounce amounts and per share amounts.12
Updates on COVID-19
Business Continuity and Employee Health and Safety
In accordance with local government restrictions and guidelines, Wheaton closed its physical offices in mid-March and successfully transitioned to telecommuting for all of its employees. As Wheaton has always maintained detailed business continuity plans, the transition was seamless with an uninterrupted flow of business.
Partner Mining Operations
Wheaton has completed a thorough review of operations with our counterparties to better understand their policies and procedures around COVID-19. We have been advised that each operation has a crisis management team in place and will make decisions according to their local situation and applicable laws, as well as considering the health and safety of their employees. As of May 5, 2020, six partner operations located in Mexico and Peru (Constancia, Yauliyacu, San Dimas, Los Filos, Peñasquito and Antamina) were temporarily suspended due to government restrictions focussed on reducing the impacts of COVID-19. The restrictions on non-essential activities in Mexico and Peru are currently scheduled to be lifted by the end of May. In 2018 and 2019, these mines accounted for 36% of the Company’s gold equivalent2 production. There can be no assurance that the restrictions noted above will be lifted as currently planned nor that our partners’ operations that are currently operational will continue to remain operational for the duration of the COVID-19 virus pandemic. In addition, even if operational, these operations may be subject to adverse impacts on production and other impacts due to the COVID-19 virus pandemic response measures, absenteeism and otherwise as a result of the pandemic.
Production Guidance
Due to the temporary suspensions noted above, Wheaton has withdrawn its production guidance for 2020. We are closely monitoring and regularly assessing the impact of the COVID-19 virus pandemic on partner mining operations; however, this pandemic is evolving rapidly and its effects are uncertain.
Community Support – Wheaton CSR Fund to Combat COVID-19
Subsequent to the quarter, Wheaton announced the launch of a $5 million Community Support and Response Fund (the “CSR Fund”) in order to support the global efforts to combat the COVID-19 virus pandemic and its impacts on our communities. The CSR Fund is designed to meet the immediate needs of the communities in which Wheaton operates and around the mines from which Wheaton receives precious metals. This fund is incremental to Wheaton's already active Community Investment Program that currently provides support to over 50 programs in multiple communities around the world.
Financial Review
Revenues
Revenue was $255 million in the first quarter of 2020 representing a 13% increase from the first quarter of 2019 due primarily to an 18% increase in the average realized gold equivalent² price; partially offset by a 4% decrease in the number of gold equivalent² ounces sold.
Costs and Expenses
Average cash costs¹ in the first quarter of 2020 were $403 per gold equivalent² ounce as compared to $399 in Q1 2019. This resulted in a cash operating margin¹ of $1,131 per gold equivalent² ounce sold, an increase of 26% as compared with Q1 2019.
Balance Sheet (at March 31, 2020)
• Approximately $127 million of cash on hand.
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• $716 million outstanding under the Company's $2 billion revolving term loan (the "Revolving Facility").
• During Q1 2020, the Company has repaid $159 million under the Revolving Facility.
• During Q1 2020, the net debt¹ was reduced by $182 million to $589 million.
• The average effective interest rate for the first quarter of 2020 was 3.03%.
First Quarter Asset Highlights
Salobo: In the first quarter of 2020, Salobo produced 62,600 ounces of attributable gold, virtually unchanged relative to the first quarter of 2019. According to Vale S.A.’s (“Vale”) First Quarter 2020 Performance Report, physical completion of the Salobo III mine expansion was 47% at the end of the first quarter. Since the end of March 2020, only critical work fronts have reportedly been continued as a preventive measure related to the COVID-19 pandemic, but Vale reports that the expansion remains on track to start up in the first half of 2022.
Peñasquito: In the first quarter of 2020, Peñasquito produced a record 2.7 million ounces of attributable silver, an increase of approximately 67% relative to the first quarter of 2019 primarily due to higher grades.
San Dimas: In the first quarter of 2020, San Dimas produced 11,300 ounces of attributable gold, an increase of approximately 10% relative to the first quarter of 2019 primarily due to higher throughput offset partially by slightly lower grades.
Antamina: In the first quarter of 2020, Antamina produced 1.3 million ounces of attributable silver, an increase of approximately 11% relative to the first quarter of 2019, primarily due to higher grades.
Constancia: In the first quarter of 2020, Constancia produced 0.5 million ounces of attributable silver and 3,700 ounces of attributable gold, a decrease of approximately 27% and 24%, respectively, relative to the first quarter of 2019 primarily due to lower grades as expected and the temporary suspension of the mine beginning on March 20, 2020. As per Wheaton’s precious metals purchase agreements (“PMPA”) with Hudbay Minerals Inc. (“Hudbay”), the failure to achieve a minimum level of throughput at the Pampacancha deposit during 2019 entitles Wheaton to an additional 8,020 ounces of gold in 2020 (received in quarterly installments), of which 2,005 ounces of gold was received during the first quarter of 2020 and included as production. As per Hudbay’s news release dated February 18, 2020, the surface rights agreement with Hudbay for the Pampacancha satellite deposit was formally approved by the community of Chilloroya in February. In accordance with Peru’s Consulta Previa law, additional consultation between the Peruvian government and the local community is required before Hudbay can begin development activities.
Sudbury: In the first quarter of 2020, Sudbury produced 7,500 ounces of attributable gold, a decrease of approximately 34% relative to the first quarter of 2019 primarily due to lower grades.
Other Gold: In the first quarter of 2020, total Other Gold attributable production was 6,700 ounces, an increase of approximately 50% relative to the first quarter of 2019, primarily due to the resumption of mining at the Minto mine.
Produced But Not Yet Delivered 3
As at March 31, 2020, payable ounces attributable to the Company produced but not yet delivered amounted to:
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• 88,400 payable gold ounces, a decrease of 10,100 ounces during Q1 2020, primarily the result of a draw down during the period relative to the Salobo mine.
• 5.3 million payable silver ounces, an increase of 0.8 million ounces during Q1 2020, primarily the result of an increase during the period relative to the Yauliyacu mine.
• 4,900 payable palladium ounces, virtually unchanged from the balance at Q4 2019.
Detailed mine-by-mine production and sales figures can be found in the Appendix to this press release and in Wheaton’s consolidated MD&A in the ‘Results of Operations and Operational Review’ section.
Webcast and Conference Call Details
A conference call and webcast will be held Thursday, May 7, 2020, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call, please use one of the following methods:
Dial toll free from Canada or the US: 888-231-8191
Dial from outside Canada or the US: 647-427-7450 Pass code: 6167928
Live audio webcast: link
Participants should dial in five to ten minutes before the call.
The conference call will be recorded and available until May 14, 2020 at 11:59 pm (Eastern Time). The webcast will be available for one year. You can listen to an archive of the call by one of the following methods:
Dial toll free from Canada or the US: 855-859-2056
Dial from outside Canada or the US: 416-849-0833 Pass code: 6167928
Archived audio webcast: link
This earnings release should be read in conjunction with Wheaton Precious Metals’ MD&A and Financial Statements, which are available on the Company’s website at www.wheatonpm.com and have been posted on SEDAR at www.sedar.com.
Mr. Wes Carson, P. Eng., Vice President, Mining Operations is a “qualified person” as such term is defined under National Instrument 43-101, and has reviewed and approved the technical information disclosed in this news release.
Wheaton Precious Metals believes that there are no significant differences between its corporate governance practices and those required to be followed by United States domestic issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious Metals website at http://www.wheatonpm.com/Company/corporate-governance/default.aspx
Wheaton Precious Metals Announces Second Quarterly Dividend of US$0.10 Per Share
May 6, 2020
TSX: WPM
NYSE: WPM
VANCOUVER, May 6, 2020 /CNW/ - Wheaton Precious Metals™ Corp. ("Wheaton" or the "Company") is pleased to announce that its Board of Directors has declared its second quarterly cash dividend payment for 2020 of US$0.10 per common share, an 11% increase relative to the prior period.
Second Quarterly Dividend
The second quarterly cash dividend for 2020 of US$0.10 will be paid to holders of record of Wheaton Precious Metals common shares as of the close of business on May 22, 2020, and will be distributed on or about June 4, 2020.
Under the Company's dividend policy, the quarterly dividend per common share is targeted to equal approximately 30% of the average cash generated by operating activities in the previous four quarters divided by the Company's then outstanding common shares, all rounded to the nearest cent. To minimize volatility in quarterly dividends, the Company has set a minimum quarterly dividend of $0.10 per common share for the duration of 2020 representing an 11% increase relative to 2019. Under this policy, the forecast annualized dividend for 2020 would represent an increase of more than 90% over a five-year period.
The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. This dividend qualifies as an 'eligible dividend' for Canadian income tax purposes.
Dividend Reinvestment Plan
The Company has previously implemented a Dividend Reinvestment Plan ("DRIP"). Participation in the DRIP is optional. For the purposes of this fourth quarterly dividend, the Company has elected to issue common shares under the DRIP through treasury at a 1% discount to the Average Market Price, as defined in the DRIP. However, the Company may, from time to time, in its discretion, change or eliminate the discount applicable to Treasury Acquisitions, as defined in the DRIP, or direct that such common shares be purchased in Market Acquisitions, as defined in the DRIP, at the prevailing market price, any of which would be publicly announced.
The DRIP and enrollment forms, including direct deposit, are available for download on the Company's website at www.wheatonpm.com, accessible by quick links directly from the home page, and can also be found in the 'investors' section, under the 'dividends' tab.
Registered shareholders may also enroll in the DRIP online through the plan agent's self-service web portal at: https://www.canstockta.com/en/InvestorServices/Investor_Information/Issuer_List/IssuerDetail.jsp?companyCode=1501.
Beneficial shareholders should contact their financial intermediary to arrange enrollment. All shareholders considering enrollment in the DRIP should carefully review the terms of the DRIP and consult with their advisors as to the implications of enrollment in the DRIP.
This press release is not an offer to sell or a solicitation of an offer of securities. A registration statement relating to the DRIP has been filed with the U.S. Securities and Exchange Commission and may be obtained under the Company's profile on the U.S. Securities and Exchange Commission's website at http://www.sec.gov. A written copy of the prospectus included in the registration statement may be obtained by contacting the Corporate Secretary of the Company at 1021 West Hastings Street, Suite 3500, Vancouver, British Columbia, Canada V6E 0C3.
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