Wheaton Precious Metals Corp. Q3 FY2023 Earnings Call

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 session. Thank you. I would like to remind everyone that this call is being recorded on Friday, November 10, 2023 at 11:00 a.m. Eastern Standard Time. I will now turn the call over to Mr. Emma Murray, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today’s call. I am joined today by Randy Smallwood, Wheaton Precious Metals’ President and Chief Executive Officer; Gary Brown, Senior Vice President and Chief Financial Officer; Haytham Hodaly, Senior Vice President, Corporate Development; and Wes Carson, Vice President, Mining Operations. Please note that, for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the Presentations page of our 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 regarding such statements. 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.

Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton’s third quarter results of 2023. I am 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 many of our assets achieving record quarterly production levels. The value of having a diversified portfolio of high-quality, low-cost assets was demonstrated by Wheaton’s ability to deliver solid operating results, even though operations at Peñasquito were suspended for the entire third quarter. Strong performances from Salobo and Constancia led to quarter-over-quarter production growth, further emphasizing the resilience of our diversified asset base and fulfilling our commitment to continuous growth over the next five years. Our strong quarterly performance was supported by significant advancements at the expansion of our largest asset, Salobo, which is now anticipated to reach a throughput capacity of 32 million tons per annum in the fourth quarter of 2023. Our growth pipeline of development projects was further derisked this quarter as Artemis received their Fisheries Act Authorization for the Blackwater Project, which continues to progress on schedule with the first gold pour aimed for the second half of 2024. Additionally, Aris Mining announced that they have received approval for their environmental management plan, allowing the development of the Marmato Lower Mine. These projects are among several assets projected to contribute to our impressive organic growth profile of over 40% production growth in the next five years. During this quarter, we also take pride in being 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 rest of 2023 and considering that Peñasquito has resumed operations, we are pleased to confirm our previously forecasted annual guidance of 660,000, ranging from 600,000 to 660,000 gold equivalent ounces, although with a slightly higher weighting towards gold. In this high-interest rate environment, streaming continues to be one of the most appealing sources of capital, and our corporate development team is actively evaluating opportunities. After the quarter-end, we announced the acquisition of a silver stream on Waterton Copper’s Mineral Park Mine, which Haytham will discuss shortly. This latest acquisition exemplifies our commitment to enhancing our portfolio with growth that is both accretive and sustainable, benefiting all stakeholders. Now, 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.

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 outperformances at both Salobo and Constancia, partially offset by the temporary suspension at Peñasquito. In the third quarter of 2023, Salobo produced 69,000 ounces of attributable gold, an increase of approximately 56% relative to the third quarter of 2022, driven by higher throughput with production from the third concentrator line commencing at the end of 2022 and higher gold recoveries. In the third quarter of 2023, Salobo reached its highest production level since the fourth quarter of 2019, as the ramp-up of the Salobo III expansion continues to advance and overall improvements at both Salobo I and II continue. The overall Salobo site with the inclusion of the Salobo III expansion is expected to reach a capacity of 32 million tons per annum in the fourth quarter of 2023 and full throughput capacity by the end of 2024. In the third quarter 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 third quarter of 2022. Record quarterly gold production combined with strong silver production as a result of significantly higher grades from the mining of the 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 the fourth quarter of 2023. Also, in the third quarter of 2023, Peñasquito had no production resulting from the suspension of operations at the mine, which began on June 7, 2023, due to a labor dispute. On October 13, 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 fourth quarter. Due to the delay between production and sales, the impact of Peñasquito suspended operations will be reflected in our sales results in the fourth quarter of 2023, resulting in a significant quarter-over-quarter decrease in our reported Peñasquito sales volumes. Wheaton’s estimated attributable production for 2023 is forecast to be approximately 600,000 to 660,000 gold equivalent ounces, unchanged from our previous guidance. For the 5-year period ending in 2027, the Company estimates the average annual production will amount to 810,000 gold equivalent ounces, and for the 10-year period ending in 2032, the Company estimates the average annual production will amount to 850,000 gold equivalent ounces. 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.

Thank you, Wes. As described by Wes, production in the third quarter amounted to 155,000 GEOs, a 6% increase relative to the second quarter 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, Zinkgruvan achieved a new record for silver production, which is a stream that has been part of our portfolio since 2004. Relative to Q3 2022, gold production increased 46%, primarily due to outperformances at Salobo and Constancia, partially offset by a 42% decrease in silver production, due primarily to the now resolved labor dispute at Peñasquito and the divestment of the Yauliyacu PMPA, which occurred during 2022. Sales volumes amounted to 119,000 GEOs, a 14% decrease relative to the second quarter of 2023 and a 12% decrease relative to the comparable period of the prior year, with the year-over-year variance 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 million and a gross margin of $127 million and a total cash margin of $173 million. Of this revenue, 65% was attributable to gold, 32% to silver, 2% to palladium, and 1% to cobalt. As of 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 four quarters, but within our expected range of two to three months. G&A expenses amounted to $9 million for the third quarter, and the Company anticipates that G&A will total $40 million to $42 million for the year. The Company generated $10 million of interest income on its cash balances, $8 million higher than the comparable quarter of the prior year. Adjusted net earnings amounted to $121 million with a $28 million increase from 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 second quarter, resulting in cash flow from operations of over $171 million and a quarterly dividend of $0.15 per share, consistent with the third quarter of 2022. During the quarter, Wheaton made total upfront cash payments of approximately $90 million towards Artemis’s Blackwater Project, along with dividend payments totaling $67 million. Overall, net cash inflows amounted to $5 million in Q3 2023, resulting in cash and cash equivalents as of September 30th of $834 million. This significant cash balance combined with the fully undrawn $2 billion revolving credit facility and the strength of our forecast at 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 interests. That concludes the financial summary. And with that, I will turn the call over to Haytham.

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 the precious metals streaming agreement on Waterton Copper’s Mineral Park Mine, 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 first five years of production, and over 740,000 ounces of silver per year for the life of the mine. In exchange, Wheaton will pay Waterton Copper $115 million in four payments during construction. We are excited to welcome Mineral Park into our portfolio and to be partnering with Waterton Copper, who is investing over $600 million at Mineral Park, which they expect will result in decades of operational excellence at the mine. With that, I will pass it back to Randy.

Thank you, Haytham. In summary, Wheaton’s third quarter was distinguished by several key highlights. We achieved solid three-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-quarter production growth. Our pipeline of development projects was further derisked, supporting our impressive organic growth profile of over 40% in the next five years, and we continue to enhance our asset base, welcoming the Mineral Park Mine into our portfolio. 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.

Thank you. Our first question comes from the line of Cosmos Chiu of CIBC. Please go ahead. We have momentarily lost Cosmos. In the meantime, we will go to our next question from the line of Richard Hatch of Berenberg. Please go ahead.

Just a few questions. Gary, I understand that PBND is challenging to forecast. However, could you provide some insight into whether you expect to see a portion of that gold release in the fourth quarter? That’s the first question.

The buildup during the quarter was mainly from Salobo as they are increasing production on the third line. We anticipate that this will decrease in Q4. However, the current average production of 2.4 months in PBND is typical for us. Over the quarter, we experienced a build-up of 23,000 gold equivalent ounces in PBND, compared to a 5,000 ounce increase in Q3 of 2022. This difference has led to a year-over-year sales reduction of approximately 18,000 ounces, which is primarily affected by the timing of shipments.

Okay, understood. Thanks. Second one is just on Salobo. We’ve finally cut that 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. Are you able just to sort of give us any kind of flair or flavor as to what you are thinking into 2024, just on that one just because it’s so important to the sort of the broader piece? Thanks.

Richard, it’s Randy. I’ll jump in here and then let Wes provide any final comments. They’ve been very successful in ramping up the line III expansion. As we mentioned in our opening statements, they are on track to reach their average of 32 million tons per annum this year and they are progressing well. Wes visited the site and was quite impressed with what he observed there. We fully anticipate that the ramp-up will continue throughout 2024, and we expect that by the end of the year they will meet the requirements for the second phase of the expansion payment, which is 35 million tons per annum. The current design capacity of the system now that line III is operational, along with lines I and II, is 36 million tons per annum. Therefore, I expect that by the end of next year, they will be operating at a run rate very close to that. Wes, do you have anything to add?

Yes. I’d just say, I mean, we had a team, myself included, down on site two weeks ago and just 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 a steady improvement there over the last 18 months. I mean, as there were some challenges last year with maintenance and just getting things kind of going. And it’s been a significant improvement over the last 18 months, and that’s really continued kind of through this quarter for sure as well. And I think we’ll see that continued through next year. And as Randy said, hitting that kind of 35 million 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 Salobo I and II kind of back in line and also that ramp-up and really on Salobo III has been, I would say, world-class in how quickly they’ve managed to get that going.

Okay. Got you. Thanks. And then, sorry, just last couple. First one, I’ll just stroll down in Portugal, I guess the guide there is just zero until Q2 ‘25, right?

Yes. That’s what we’re looking at right now. Yes, they’ve switched over fully to the copper ore mining there, but they are looking at getting back into the zinc in Q2 ‘25.

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

Yes, I want to clarify that sometimes relying on averages can be misleading, especially given that this year's figures are around the 600s. To reach the average we're aiming for, we anticipate producing over 900,000 ounces of gold equivalent by 2027. I'm optimistic about our progress, particularly with the efforts Haytham and the entire corporate development team are making. I believe we will likely make additional acquisitions in the coming years that will contribute to this goal. Importantly, most of our expected growth is coming from assets that are already active in our portfolio, representing true organic growth rather than new developments. This organic growth from existing production assets boosts our confidence in achieving our targets. We are on track to elevate Wheaton to unprecedented levels in precious metals production among streaming and royalty companies, which is an exciting prospect.

Our next question comes from the line of Cosmos Chiu of CIBC. Please go ahead. We have just lost Cosmos Chiu again. In the meantime, we’ll go to our next question from the line of Tanya Jakusconek of Scotiabank. Please go ahead.

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. 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 range?

We are definitely going to exceed expectations on the gold side. Constancia is performing exceptionally well in the Pampacancha zone, achieving record gold production. However, it's important to emphasize how well Salobo is doing. As we mentioned, we are very close to them completing the first phase of their expansion payment, which requires running at 32 million tons per annum for 90 days. They are already operating at these levels, so they will need to exceed that average at times over this period. We are really impressed with the progress we've seen on the Vale base metal side, particularly with Salobo returning to its historical production levels. In the first seven years of our streaming agreements with Salobo, it consistently outperformed, and we believe it is on track to do so again. There is no doubt that gold production will be towards the high end of our guidance, at the expense of silver production from Peñasquito, and it may even exceed our expectations. We feel quite confident about our guidance, and it seems we may have a more optimistic outlook than you, Tanya.

I always take the conservative side, but thank you. Just on Peñasquito, 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. So, we’ve assumed nothing, but have you assumed something for Q4?

We don’t anticipate any contribution from sales. We believe there won't be anything on the sales side. Therefore, production will be increasing, and we will have something from that, but we are not expecting anything from Peñasquito in terms of sales.

Well, at least we’re in agreement on that one, Randy. I appreciate the insight on that. For my second question, if I could direct it to Haytham, I wanted to ask about Mineral Park. Considering that transaction, what internal rate of return did this asset generate for you that you deemed acceptable? You can base it on any silver price you wish, but I’m curious about the rate of return that influenced your decision, especially given its somewhat inconsistent history.

Sure. 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.

Okay. Silver price of?

Spot price at the time of announcement.

Okay. I appreciate it. I just want to benchmark, and…

One of the things to keep in mind there, Tanya, is that, as you mentioned, it’s had a bit of a checkered history. But with the reinvestment that Waterton Copper has put 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 existing milling 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. And as you know, we are already familiar with the orebody itself, but the challenges in the past, I think really related to a dated infrastructure, dated mill setup that just wasn’t capable of dealing with the changes in the orebody. 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 are excited about it.

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

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

Hello. Can you hear me at this time?

We can. Apologies…

Clearly, Randy doesn’t like me, or is it Gary that doesn’t like me? Or someone doesn’t like me?

Hey. We just cut off Tanya, too.

You should cut her off.

Apologies, everyone. The service is not working.

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? Are we 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. So, how should we model it from your perspective?

It’s challenging to provide more details than we've already shared. We anticipate reaching an average of 35 million tons per annum next year, which would satisfy the Phase 2 expansion test. The current capacity is 36 million tons per annum for what has been built. It's important to remember the history of Salobo, which has faced some difficult years. We signed our initial contract in 2013 and experienced seven or eight years of performance exceeding the design capacity. The team on site is enthusiastic and motivated to drive this forward, and there has been a noticeable change in management's approach at Vale Base Metals, accompanied by a strong desire to excel. Therefore, I wouldn't be surprised if, in two years, we see them surpassing 36 million tons per annum. There has been ongoing discussion about a potential Phase 4 expansion, which is still in exploration and is many years away. Vale Base Metals is establishing a stronger individual presence, concentrating on its flagship operations, which are also our flagship. We will benefit from this focus, and I am very optimistic about the current state of Salobo.

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 was because there was over a 20,000 ounce buildup of PBND during Q3 2023. So, if that hadn’t happened, sales would’ve been significantly higher as well.

Of course. Yes. I was wondering if you could provide an update on the production numbers. You mentioned producing 69,000 ounces in Q3. Will that number continue to rise? In Q1, you produced 43,000 ounces, followed by 54,000 in Q2, and then 69,000 in Q3. Can we expect this trend to continue as the expansion progresses? I'm trying to connect the 35 million ton per annum expansion to what we might anticipate for WPM.

Yes. It goes without saying. As the throughput increases and they fine-tune, 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 two is just aligning up to be, as I said, an exciting time.

It does start to level off at some point. We are experiencing an increase as we progress through the quarters, and we are approaching the 32 million that we expect. We will see it continue to increase next year with the throughput. However, at some point, the growth we have seen in the last three quarters will start to level off.

Okay. That’s what I wanted to get to. And then, in term of the payment, as we all understand, you need to make a payment for the expansion. If I look at your MD&A, the other obligations and contingency section, you got 370 million earmarked for 2023, and 163 million earmarked for 2024, 2025 for this payment. I don’t think you’ve made that payment yet. And if that’s the case, I know it’s based on the matrix, it’s based on a maximum of 552 million, if they reach 35 million by January 1, 2024. I guess what I’m trying to get to is, when should we expect that payment to be made?

Yes, we expect they are not quite there yet, but they should be in a very short period of time. We anticipate making the first phase payments in the fourth quarter of this year, which is the 370 million. Regarding the second phase, we hope to make that payment sometime next year, and that is Vale's definite objective. They are on track, and we see no reason why it shouldn’t happen. We hope that the 35 million ton per annum payment will be triggered next year.

Regarding Peñasquito, you mentioned that Q4 sales will decrease due to the strike that ended in October. Could you clarify the timing? Will the impact of the strike continue to affect Wheaton Precious Metals accounts into Q1 2024, or should Q1 2024 be fairly normalized by then?

Production should definitely reach full levels by the end of this year. There may still be some residual sales effects. As mentioned earlier, we do not anticipate any sales from Peñasquito in the fourth quarter. If there are any sales towards the end of the year, it will be interesting because our partners often try to maximize production during this time, and our pipeline is currently quite full. While it’s normal to have a lot produced but not yet delivered, we expect to see a slight increase in sales during the fourth quarter, but it is unlikely to involve Peñasquito. There may still be a gradual ramp-up effect leading to a slight slowdown in sales, potentially impacting the first quarter of next year. However, we will provide clearer guidance on this at the end of the fourth quarter.

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 five years ending 2027 on average, 850,000 ounces for the 10 years ending 2032 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 or am I mistaken?

We have definitely added some assets. We decided a long time ago to maintain our long-term guidance from the start of the year and not adjust it as we add assets throughout the year. I wouldn't say there will be significant growth. Instead, we are focused on building a solid longer-term structure with some of the assets we've added, and we're waiting for more clarity on timing as they come forward. We're definitely heading in the right direction. However, it's challenging to provide more specific guidance until we have our annual review during the first quarter when we assess all our production visits and related factors. It's important to note that our production forecasts are based on site visits and our observations regarding operations, which we take very seriously. I don't want to undermine that effort. What I can assure you is that we will exceed 900,000 ounces a year in production by 2027, and we have a plan that keeps us well within that range. We are also on a path toward producing a million gold equivalent ounces soon after that. It might even happen by that time. Stay tuned for further clarity in the first quarter, as we always provide.

Of course. That’s great to hear. Thanks once again, Randy, Gary, Haytham, and Wes and Emma. Congrats on a very strong quarter and have a good weekend.

Cosmos, apologies again for the technical issues here, and hopefully, we can get Tanya back on again. Don’t take it personally. Hello, Tanya?

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

Okay. Operator, I have two questions, so please don’t cut me off. Must be very specific here, in case there is a pause and I get cut off. But appreciate you taking some of my questions yet again. So, I just wanted to come back to just Haytham on M&A, and then I have one for Gary on the global minimum tax in Cayman. So just on that M&A, Haytham, 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 am just wondering when you look at your own assets internally in your stream, 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? Is that an option as well?

We are always considering that, Tanya. However, I would say that most of our focus on growth moving forward centers around new opportunities. Recently, we have witnessed a surge in these new opportunities, especially with the equity markets tightening and debt markets being overpriced. Streaming typically presents one of the most affordable capital funding options. Therefore, we are primarily concentrating on relatively smaller deals, which range from around 100 to 300. Nevertheless, there are still some larger opportunities available, and we are hopeful to finalize some of these soon. Our focus remains on precious metals, of course.

Yes. When you mention chunky, are you referring to those in the range of $500 million to $1 billion?

You know what? I would say they are in the $400 million-plus range.

Okay. I appreciate that. And lastly, regarding the funding for development projects, do you want me to calculate that?

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

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 are doing 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?

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

Okay. I'm curious if Cayman has taken any action. At the end of the day, we all know that taxes are increasing; the question is who will bear that burden, Cayman or Canada? That's the main point. From your perspective, it doesn't really matter, as it's 15% on any assets contracted in Cayman. I was just wondering if Cayman had provided any updates, but it seems they haven't. Either way, we're looking at 15%. Thank you.

Last question comes from the line of John Tumazos of John Tumazos Very Independent Research. Please go ahead.

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

The total is 600, John.

600. Could you break down a little bit the $600 million budget? There had been a mine build 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 five mill motors that didn’t work on original installation, a lot of bad luck. I have a car battery getting fixed at 3:00 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?

I’ll address your last question first. They have an impressive technical team whose goal has been to take on projects that have needed investment, enhance them, and then sell them. They have indeed produced on smaller-scale projects that they’ve attempted to divest. Specifically, at Mineral Park, there is currently an SSEW operation that has been in production for several months. Regarding your second question about capital costs, they have invested around $160 million since acquiring it. Overall, I estimate that about $330 million in total capital expenditures remains, including contingency and management reserves. In total, by the time they acquired it, they will have spent close to $600 million, of which approximately half has already been utilized.

I’m sorry, I believe that dollars are going out the door, but like is it stripping or 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?

Well, the big chunk of it is that just the crushing and grinding is about $70 million to $75 million; the flotation and the control, modernization, etc., is about another $75 million; indirects, excluding EPCM, is about another $60-plus million. So those are the big factors, big chunks there, John.

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

Randy had to run to a meeting. So, I’d 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 I 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.

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