Wheaton Precious Metals Corp 6-K, filed May 7, 2021
Wheaton Precious Metals Corp. (WPM)
About this 6-K
Wheaton Precious Metals Corp filed this 6-K on May 7, 2021.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 6-K
Report of Foreign Private Issuer Pursuant to Rule 13a-16 or15d-16 Under the
Securities Exchange Act of 1934
May 6, 2021
CommissionFile Number: 001-32482
WHEATON PRECIOUS METALS CORP.
(Exact name of registrant as specified in its charter)
Suite 3500, 1021 West Hastings Street
Vancouver, British Columbia
V6E 0C3
(604) 684-9648
(Address of principal executive offices)
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.
Form 20-F ☐ Form 40-F ☑
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(1): ☐
Indicate by check mark if the registrant is submitting the Form 6-K in paper as permitted by Regulation S-T Rule 101(b)(7): ☐
This report on Form 6-K shall be incorporated by reference into the registrant’s Registration Statement on Form S-8 (File No. 333-128128), on Form F-10 (File No. 333-255208) and on Form F-3D (File No. 333-194702) under the Securities Act of 1933, as amended.
DOCUMENTS FILED AS PART OF THIS FORM 6-K
See the Exhibit Index to this Form 6-K.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| WHEATON PRECIOUS METALS CORP. | |||
|---|---|---|---|
| May 6, 2021 | By: | /s/ Curt Bernardi | |
| Name: | Curt Bernardi | ||
| Title: | Senior Vice President, Legal | ||
| and Corporate Secretary |
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EXHIBIT INDEX
| 99.1 | News Release dated May 6, 2021 | |
|---|---|---|
| 99.2 | Management’s Discussion and Analysis and Unaudited Interim Consolidated Financial Statements for the period ended March 31, 2021 | |
| 99.3 | Certification of Chief Executive Officer pursuant to Form 52-109F2 | |
| 99.4 | Certification of Chief Financial Officer pursuant to Form 52-109F2 |
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EX-99.1
Exhibit 99.1
| May 6, 2021 | TSX | NYSE | LSE: WPM | |
|---|---|---|---|---|
| Vancouver, British Columbia | ||||
| Designated News Release | ||||
| FIRST QUARTER 2021 FINANCIAL RESULTS |
WHEATON PRECIOUS METALS ANNOUNCES
RECORD REVENUE FOR THE FIRST QUARTER OF 2021
“Wheaton’s first quarter results illustrate the strength and growth profile of our diversified, high-quality portfolio with record revenue achieved and over $230 million in operating cash flow generated. As a result of these strong results, we have increased our dividend for the third quarter in a row and now have net cash on the balance sheet, which we will look to deploy to further grow our sector-leading portfolio,” said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. “We are excited to report our first production of cobalt from the Voisey’s Bay mine in Canada and look forward to having many more years of what we believe is the most environmentally friendly, socially responsible cobalt production in the world. In addition, in the first quarter, we added a new precious metals stream on a top-tier copper development project, Santo Domingo, which should provide additional growth. Our corporate development team remains exceptionally busy evaluating a host of new opportunities, and as always, Wheaton is focused on ensuring our growth is both accretive and sustainable for all of our stakeholders.”
First Quarter 2021 Highlights:
| · | $232 million in operating cash flow during the first quarter. |
|---|---|
| · | Record quarterly revenue of $324 million during the first quarter. |
| --- | --- |
| · | Revolving facility fully repaid during the quarter, resulting in $191 million of cash on hand.<br> |
| --- | --- |
| · | Declared quarterly dividend^1^ of $0.14 per common share representing<br>the third quarterly dividend increase in a row and a 40% increase relative to Q1 2020. |
| --- | --- |
| · | First cobalt and silver deliveries from the Voisey’s Bay and Cozamin mines, respectively. |
| --- | --- |
| · | New precious metal purchase agreement in respect to the Santo Domingo project. |
| --- | --- |
Operational Overview
| (all figures in US dollars unless otherwise noted) | Q1 2021 | Q1 2020 | Change | ||||||
|---|---|---|---|---|---|---|---|---|---|
| Units produced | |||||||||
| Gold ounces | 77,733 | 94,999 | (18.2)% | ||||||
| Silver ounces | 6,754 | 6,704 | 0.7 % | ||||||
| Palladium ounces | 5,769 | 5,312 | 8.6 % | ||||||
| Cobalt pounds | 1,160,921 | - | n.a. | ||||||
| Gold equivalent ^2^ | 190,359 | 194,901 | (2.3)% | ||||||
| Units sold | |||||||||
| Gold ounces | 75,104 | 100,405 | (25.2)% | ||||||
| Silver ounces | 6,657 | 4,928 | 35.1 % | ||||||
| Palladium ounces | 5,131 | 4,938 | 3.9 % | ||||||
| Cobalt pounds | 132,277 | - | n.a. | ||||||
| Gold equivalent<br>^2^ | 175,419 | 175,154 | 0.2 % | ||||||
| Revenue | $ | 324,119 | $ | 254,789 | 27.2 % | ||||
| Net earnings | $ | 162,002 | $ | 94,896 | 71 % | ||||
| Per share | $ | 0.360 | $ | 0.212 | 69.8 % | ||||
| Adjusted net earnings ^1^ | $ | 161,132 | $ | 104,533 | 54.1 % | ||||
| Per share ^1^ | $ | 0.358 | $ | 0.233 | 53.6 % | ||||
| Operating cash flows | $ | 232,154 | $ | 177,588 | 30.7 % | ||||
| Per share<br>^1^ | $ | 0.516 | $ | 0.397 | 30.0 % |
All amounts in thousands except gold, palladium & gold equivalent ounces and cobalt pounds produced & sold, perounce/pound amounts & per share amounts.
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Financial Review
Revenues
Revenue was $324 million in the first quarter of 2021 representing a 27% increase from the first quarter of 2020 due primarily to a 27% increase in the average realized gold equivalent² price.
Cash Costs and Margin
Average cash costs¹ in the first quarter of 2021 were $449 per gold equivalent² ounce as compared to $382 in Q1 2020. This resulted in a cash operating margin¹ of $1,399 per gold equivalent² ounce sold, an increase of 30% as compared with the first quarter of 2020.
Balance Sheet (at March 31, 2021)
| · | Approximately $191 million of cash on hand. |
|---|---|
| · | The Company’s $2 billion revolving term loan (the “Revolving Facility”) fully repaid.<br> |
| --- | --- |
| · | During Q1 2021, the company received $112 million in proceeds from the sale of its remaining equity investment in<br>First Majestic Silver Corp. (“First Majestic”). |
| --- | --- |
| · | During Q1 2021, the Company has repaid $195 million under the Revolving Facility. |
| --- | --- |
| · | The average effective interest rate for Q1 2021 was 1.17%. |
| --- | --- |
First Quarter Asset Highlights
***Salobo:***In the first quarter of 2021, Salobo produced 46,600 ounces of attributable gold, a decrease of approximately 25% relative to the first quarter of 2020 due to lower throughput. According to Vale S.A.’s (“Vale”) First Quarter 2021 Production and Sales Report, throughput at Salobo was impacted due to changes in maintenance routines which restricted mine movement, with further impacts on feed grade for the quarter. As per Vale’s First Quarter 2021 Performance Report, physical completion of the Salobo III mine expansion was 73% at the end of the first quarter and is on track for start-up in the first half of 2022.
Pe ñ asquito: In the first quarter of 2021, Peñasquito produced 2.2 million ounces of attributable silver, a decrease of approximately 17% relative to the first quarter of 2020 primarily due to the mining of lower grade material as per the mine plan.
Antamina: In the first quarter of 2021, Antamina produced 1.6 million ounces of attributable silver, an increase of approximately 20% relative to the first quarter of 2020, due to higher grades, recovery and throughput.
San Dimas: In the first quarter of 2021, San Dimas produced 10,500 ounces of attributable gold, a decrease of approximately 7% relative to the first quarter of 2020 due primarily to lower grades. As per First Majestic’s First Quarter 2021 Production Report, increased ore development activities resulted in lower average ore grades processed in the plant. ****
Constancia: In the first quarter of 2021, Constancia produced 0.4 million ounces of attributable silver and 2,500 ounces of attributable gold, a decrease of approximately 12% and 33%, respectively, relative to the first quarter of 2020, with the reduction in gold production being primarily due to inclusion of 2,005 ounces received in the first quarter of 2020 as a delay payment relative to Pampacancha. Hudbay Minerals Inc. (“Hudbay”) announced on April 7, 2021, that the final land user agreement for Pampacancha has been completed and Hudbay now has full access to the site and has begun pit development activities. As per Hudbay’s MD&A for the year ended December 31, 2020, Hudbay no longer expects to mine four million tonnes of ore from the Pampacancha deposit by June 30, 2021, and should they fail to meet this milestone, they will be required to deliver an additional 8,020 ounces of gold to the Company in four equal quarterly installments, commencing September 30, 2021. Hudbay and the Company are currently in discussions about, among other things, alternatives to defer the additional gold deliveries over the Pampacancha mine life.
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Sudbury: In the first quarter of 2021, Vale’s Sudbury mines produced 6,200 ounces of attributable gold, a decrease of approximately 20% relative to the first quarter of 2020, due primarily to lower throughput.
OtherSilver: In the first quarter of 2021, total Other Silver attributable production was 2.6 million ounces, an increase of approximately 13% relative to the first quarter of 2020 primarily due to the initial production from the Cozamin mine. As per the precious metals purchase agreement (“PMPA”) with Capstone Mining Corp. (“Capstone”), Wheaton is entitled to any silver sold from the Cozamin mine to an offtaker as of December 1, 2020, resulting in reported production in the first quarter of 2021 including some material processed in the previous quarter.
Voisey ’ sBay: **** In the first quarter of 2021, the Voisey’s Bay mine produced 1,161,000 pounds of attributable cobalt. As at the end of the first quarter 2021, approximately 132,000 pounds of cobalt were held in inventory by Wheaton and 818,600 pounds were produced but not delivered. As per the PMPA with Vale, Wheaton is entitled to any cobalt processed at the Long Harbour Processing Plant as of January 1, 2021, resulting in reported production in the first quarter of 2021 including some material produced at the Voisey’s Bay mine in the previous quarter. As per Vale’s First Quarter 2021 Performance Report, physical completion of the Voisey’s Bay underground mine extension was 62% at the end of the first quarter and is on track for start-up in the first half of 2021, with full completion scheduled for 2023.
Rosemont: Hudbay announced on March 29, 2021, the intersection of high-grade copper sulphide and oxide mineralization at shallow depth on its wholly-owned patented mining claims located within seven kilometers of its Rosemont copper project in Arizona. As a result of the discovery, Hudbay has initiated a second phase of exploration drilling in 2021 with a 70,000 foot follow-up drill program and has doubled the number of drill rigs operating at site to six. The discovery is included in Wheaton’s area of interest under the PMPA.
Produced But Not Yet Delivered^3^
As at March 31, 2021, payable ounces and pounds attributable to the Company produced but not yet delivered amounted to:
| · | 69,300 payable gold ounces, a decrease of 1,300 ounces during Q1 2021, primarily due to a reduction during the period<br>relative to the Salobo mine partially offset by increases at the 777 and Sudbury mines. |
|---|---|
| · | 3.7 million payable silver ounces, a decrease of 0.8 million ounces during Q1 2021, primarily due to<br>reductions during the period relative to the Antamina, Yauliyacu and Peñasquito mines. |
| --- | --- |
| · | 5,400 payable palladium ounces, a decrease of 200 ounces during Q1 2021. |
| --- | --- |
| · | 818,600 payable cobalt pounds. |
| --- | --- |
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.
CorporateDevelopment
Santo Domingo Mine: On March 25, 2021, the Company announced that it had entered into a PMPA with Capstone in respect to the Santo Domingo project located in the Atacama Region, Chile. The Company will purchase 100% of the payable gold production until 285,000 ounces have been delivered, thereafter dropping to 67% of payable gold production for the life of the mine. The Company will pay Capstone a total upfront cash consideration of $290 million, $30 million of which was paid on April 21, 2021, and the remainder of which is payable during construction of the Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures. In addition, Wheaton will make ongoing payments for gold ounces delivered equal to 18% of the
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spot gold price until the market value of gold delivered to the Company, net of the per ounce cash payment, exceeds the initial upfront cash deposit, and 22% of the spot gold price thereafter.
Other Corporate Development Updates:
| · | On February 19, 2021, the previously announced PMPA relative to the Cozamin mine was closed, with the upfront cash<br>consideration of $150 million being paid to Capstone on that date. |
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| · | On April 15, 2021, the previously announced PMPA relative to the Marmato mine was closed, with the initial upfront<br>cash consideration of $34 million being paid to Aris Gold Corporation (“Aris”) on that date. |
| --- | --- |
| · | On January 5, 2021, the Company acquired a 2.0% net smelter return royalty interest relative to the Brewery Creek<br>mine located in the Yukon Territories, Canada. |
| --- | --- |
COVID-19 Community Support and Response Fund
In the second quarter of 2020, Wheaton announced the launch of a $5 million Community Support and Response Fund (the “CSR Fund”) to support global efforts to combat the COVID-19 pandemic and its impacts on our communities. The CSR Fund is designed to meet the immediate needs of the communities in which Wheaton and its mining partners operate. 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. As of March 31, 2021, the Company has made donations totalling approximately $3 million with the CSR Fund.
Webcast and Conference Call Details
A conference call and webcast will be held on Friday, May 7, 2021 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: | 1-888-231-8191 | |
|---|---|---|
| Dial from outside Canada or the US: | 1-647-427-7450 | |
| Pass code: | 3449069 | |
| Live audio webcast: | Webcast URL |
Participants should dial in five to ten minutes before the call.
The accompanying slideshow will also be available in PDF format on the ‘Events’ page of the Wheaton Precious Metals website before the conference call.
The conference call will be recorded and available until May 14, 2021 at 11:59 pm ET. 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: | 1-855-859-2056 | |
|---|---|---|
| Dial from outside Canada or the US: | 1-416-849-0833 | |
| Pass code: | 3449069 | |
| Archived audio webcast: | Webcast URL |
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.
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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.
About Wheaton Precious Metals Corp. and Outlook
Wheaton is the world’s premier precious metals streaming company with the highest-quality portfolio of long-life, low-cost assets. Its business model offers investors commodity price leverage and exploration upside but with a much lower risk profile than a traditional mining company. Wheaton delivers amongst the highest cash operating margins in the mining industry, allowing it to pay a competitive dividend and continue to grow through accretive acquisitions. As a result, Wheaton has consistently outperformed gold and silver, as well as other mining investments. Wheaton creates sustainable value through streaming.
Wheaton’s estimated attributable production in 2021 is forecast to be 370,000 to 400,000 ounces of gold, 22.5 to 24.0 million ounces of silver, and 40,000 to 45,000 gold equivalent ounces^2^ (“GEOs”) of other metals, resulting in production of approximately 720,000 to 780,000 GEOs^2^, unchanged from previous guidance. For the five-year period ending in 2025, the Company estimates that average production will amount to 810,000 GEOs^4^. For the ten-year period ending in 2030, the Company estimates that average annual production will amount to 830,000 GEOs^4^.
In accordance with Wheaton Precious Metals^™^ Corp.’s (“Wheaton Precious Metals”, “Wheaton” or the “Company”) MD&A and financial statements, reference to the Company includes the Company’s wholly owned subsidiaries.
End Notes
^1^ Please refer to non-IFRS measures at the end of this press release. Dividends declared in the referenced calendar quarter, relative to the financial results of the prior quarter.
^2^ Commodity price assumptions for the gold equivalent production and sales in 2021 and long-term forecasts are $1,800 / ounce gold, $25 / ounce silver, and $2,300 / ounce palladium and $17.75 / pound cobalt. Other metal includes palladium and cobalt.
^3^ Payable gold, silver and palladium ounces and cobalt pounds produced but not yet delivered are based on management estimates only and rely upon information provided by the owners and operators of mining operations and may be revised and updated in future periods as additional information is received.
^4^ Gold equivalent guidance based on the commodity prices outlined in note 2 above. Five- and ten-year guidance do not include optionality production from Pascua Lama, Navidad, Cotabambas, or additional expansions at Salobo outside of project currently in construction. In addition, five-year guidance also does not include any production from Rosemont, Toroparu, Kutcho, or the Victor project at Sudbury.
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Condensed Interim Consolidated Statements of Earnings
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (US dollars and shares in thousands, except per share amounts - unaudited) | 2021 | 2020 | ||||
| Sales | $ | 324,119 | $ | 254,789 | ||
| Cost of sales | ||||||
| Cost of sales, excluding depletion | $ | 78,783 | $ | 66,908 | ||
| Depletion | 70,173 | 64,841 | ||||
| Total cost of sales | $ | 148,956 | $ | 131,749 | ||
| Gross margin | $ | 175,163 | $ | 123,040 | ||
| General and administrative expenses | 11,971 | 13,181 | ||||
| Earnings from operations | $ | 163,192 | $ | 109,859 | ||
| Other (income) expense | 119 | (597) | ||||
| Earnings before finance costs and income taxes | $ | 163,073 | $ | 110,456 | ||
| Finance costs | 1,573 | 7,118 | ||||
| Earnings before income taxes | $ | 161,500 | $ | 103,338 | ||
| Income tax recovery (expense) | 502 | (8,442) | ||||
| Net earnings | $ | 162,002 | $ | 94,896 | ||
| Basic earnings per share | $ | 0.360 | $ | 0.212 | ||
| Diluted earnings per share | $ | 0.360 | $ | 0.211 | ||
| Weighted average number of shares outstanding | ||||||
| Basic | 449,509 | 447,805 | ||||
| Diluted | 450,600 | 448,891 |
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Condensed Interim Consolidated Balance Sheets
| **** | As atMarch 31 | **** | As at<br>December 31 | ||||
|---|---|---|---|---|---|---|---|
| (US dollars in thousands - unaudited) | **** | 2021 | **** | 2020 | |||
| Assets | |||||||
| Current assets | |||||||
| Cash and cash equivalents | $ | 191,162 | $ | 192,683 | |||
| Accounts receivable | 6,094 | 5,883 | |||||
| Other | 4,228 | 3,265 | |||||
| Total current assets | $ | 201,484 | $ | 201,831 | |||
| Non-current assets | |||||||
| Mineral stream interests | $ | 5,568,364 | $ | 5,488,391 | |||
| Early deposit mineral stream interests | 33,991 | 33,241 | |||||
| Mineral royalty interest | 6,606 | 3,047 | |||||
| Long-term equity investments | 86,522 | 199,878 | |||||
| Convertible notes receivable | 12,591 | 11,353 | |||||
| Property, plant and equipment | 5,991 | 6,289 | |||||
| Other | 12,863 | 13,242 | |||||
| Total non-current<br>assets | $ | 5,726,928 | $ | 5,755,441 | |||
| Total assets | $ | 5,928,412 | $ | 5,957,272 | |||
| Liabilities | |||||||
| Current liabilities | |||||||
| Accounts payable and accrued liabilities | $ | 10,394 | $ | 13,023 | |||
| Dividends payable | 58,478 | – | |||||
| Current portion of performance share units | 26,428 | 17,297 | |||||
| Current portion of lease liabilities | 789 | 773 | |||||
| Other | 883 | 76 | |||||
| Total current liabilities | $ | 96,972 | $ | 31,169 | |||
| Non-current liabilities | |||||||
| Bank debt | $ | - | $ | 195,000 | |||
| Lease liabilities | 2,687 | 2,864 | |||||
| Deferred income taxes | 235 | 214 | |||||
| Performance share units | 3,250 | 11,784 | |||||
| Pension liability | 1,841 | 1,670 | |||||
| Total non-current<br>liabilities | $ | 8,013 | $ | 211,532 | |||
| Total liabilities | $ | 104,985 | $ | 242,701 | |||
| Shareholders’ equity | |||||||
| Issued capital | $ | 3,656,400 | $ | 3,646,291 | |||
| Reserves | 68,986 | 126,882 | |||||
| Retained earnings | 2,098,041 | 1,941,398 | |||||
| Total shareholders’ equity | $ | 5,823,427 | $ | 5,714,571 | |||
| Total liabilities and shareholders’ equity | $ | 5,928,412 | $ | 5,957,272 |
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Condensed Interim Consolidated Statements of Cash Flows
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (US dollars in thousands - unaudited) | 2021 | 2020 | ||||
| Operating activities | ||||||
| Net earnings | $ | 162,002 | $ | 94,896 | ||
| Adjustments for | ||||||
| Depreciation and depletion | 70,649 | 65,352 | ||||
| Interest expense | 262 | 5,978 | ||||
| Equity settled stock based compensation | 1,325 | 1,503 | ||||
| Performance share units | 305 | 3,277 | ||||
| Pension expense | 151 | 35 | ||||
| Income tax expense (recovery) | (502) | 8,442 | ||||
| Loss (gain) on fair value adjustment of share purchase warrants held | 950 | 71 | ||||
| Fair value (gain) loss on convertible note receivable | (1,238) | 790 | ||||
| Investment income recognized in net earnings | (2) | (117) | ||||
| Other | 593 | (317) | ||||
| Change in non-cash working capital | (1,972) | 4,620 | ||||
| Cash generated from operations before income taxes and<br>interest | $ | 232,523 | $ | 184,530 | ||
| Income taxes recovered (paid) | (30) | 89 | ||||
| Interest paid | (341) | (7,148) | ||||
| Interest received | 2 | 117 | ||||
| Cash generated from operating activities | $ | 232,154 | $ | 177,588 | ||
| Financing activities | ||||||
| Bank debt repaid | $ | (195,000 | ) | $ | (159,000) | |
| Credit facility extension fees | - | (1,360) | ||||
| Share purchase options exercised | 4,793 | 6,922 | ||||
| Lease payments | (214) | (167) | ||||
| Cash (used for) generated from financing<br>activities | $ | (190,421) | $ | (153,605) | ||
| Investing activities | ||||||
| Mineral stream interests | $ | (151,019) | $ | - | ||
| Early deposit mineral stream interests | (750) | (750) | ||||
| Mineral royalty interest | (3,561) | - | ||||
| Proceeds on disposal of long-term investments | 112,188 | - | ||||
| Other | (134) | (257) | ||||
| Cash generated from (used for) investing<br>activities | $ | (43,276) | $ | (1,007) | ||
| Effect of exchange rate changes on cash and cash<br>equivalents | $ | 22 | **** | $ | (286) | |
| (Decrease) increase in cash and cash equivalents | $ | (1,521) | $ | 22,690 | ||
| Cash and cash equivalents, beginning of<br>period | 192,683 | 103,986 | ||||
| Cash and cash equivalents, end of period | $ | 191,162 | $ | 126,676 |
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Summary of Units Produced
| Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold ounces produced ² | ||||||||||||||||||||||||
| Salobo | 46,622 | 62,854 | 63,408 | 59,104 | 62,575 | 74,716 | 73,615 | 67,056 | ||||||||||||||||
| Sudbury ^3^ | 6,208 | 6,659 | 3,798 | 9,257 | 7,795 | 6,468 | 6,082 | 9,360 | ||||||||||||||||
| Constancia ^8^ | 2,453 | 3,929 | 3,780 | 3,470 | 3,681 | 4,757 | 5,172 | 4,533 | ||||||||||||||||
| San Dimas ^4, 8^ | 10,491 | 11,652 | 9,228 | 6,074 | 11,318 | 11,352 | 11,239 | 11,496 | ||||||||||||||||
| Stillwater ^5^ | 3,041 | 3,290 | 3,176 | 3,222 | 2,955 | 3,585 | 3,238 | 3,675 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Minto ^6^ | 2,638 | 789 | 1,832 | 2,928 | 2,124 | 2,189 | - | - | ||||||||||||||||
| 777<br>^9^ | 6,280 | 2,866 | 5,278 | 4,728 | 4,551 | 3,987 | 4,278 | 4,788 | ||||||||||||||||
| Total Other | 8,918 | 3,655 | 7,110 | 7,656 | 6,675 | 6,176 | 4,278 | 4,788 | ||||||||||||||||
| Total gold ounces produced | 77,733 | 92,039 | 90,500 | 88,783 | 94,999 | 107,054 | 103,624 | 100,908 | ||||||||||||||||
| Silver ounces produced<br>^2^ | ||||||||||||||||||||||||
| Peñasquito<br>^8^ | 2,202 | 2,014 | 1,992 | 967 | 2,658 | 1,895 | 2,026 | 702 | ||||||||||||||||
| Antamina ^8^ | 1,577 | 1,930 | 1,516 | 612 | 1,311 | 1,342 | 1,223 | 1,334 | ||||||||||||||||
| Constancia ^8^ | 406 | 478 | 430 | 254 | 461 | 632 | 686 | 552 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Los Filos ^8^ | 23 | 6 | 17 | 14 | 29 | 55 | 33 | 37 | ||||||||||||||||
| Zinkgruvan | 420 | 515 | 498 | 389 | 662 | 670 | 587 | 590 | ||||||||||||||||
| Yauliyacu ^8^ | 737 | 454 | 679 | 273 | 557 | 358 | 620 | 627 | ||||||||||||||||
| Stratoni | 165 | 185 | 156 | 148 | 183 | 147 | 131 | 172 | ||||||||||||||||
| Minto ^6^ | 21 | 16 | 15 | 19 | 18 | 18 | - | - | ||||||||||||||||
| Neves-Corvo | 345 | 420 | 281 | 479 | 377 | 385 | 431 | 392 | ||||||||||||||||
| Aljustrel | 474 | 440 | 348 | 388 | 352 | 325 | 240 | 322 | ||||||||||||||||
| Cozamin | 230 | - | - | - | - | - | - | - | ||||||||||||||||
| Keno Hill | 24 | - | - | - | - | - | - | - | ||||||||||||||||
| 777<br>^9^ | 130 | 51 | 96 | 108 | 96 | 81 | 62 | 93 | ||||||||||||||||
| Total Other | 2,569 | 2,087 | 2,090 | 1,818 | 2,274 | 2,039 | 2,104 | 2,233 | ||||||||||||||||
| Total silver ounces produced | 6,754 | 6,509 | 6,028 | 3,651 | 6,704 | 5,908 | 6,039 | 4,821 | ||||||||||||||||
| Palladium ounces produced ² | ||||||||||||||||||||||||
| Stillwater ^5^ | 5,769 | 5,672 | 5,444 | 5,759 | 5,312 | 6,057 | 5,471 | 5,736 | ||||||||||||||||
| Cobalt pounds produced ² | ||||||||||||||||||||||||
| Voisey’s Bay | 1,160,921 | - | - | - | - | - | - | - | ||||||||||||||||
| GEOs produced ^7^ | 190,359 | 189,682 | 181,184 | 146,857 | 194,901 | 196,850 | 194,499 | 175,185 | ||||||||||||||||
| SEOs produced ^7^ | 13,706 | 13,657 | 13,045 | 10,574 | 14,033 | 14,173 | 14,004 | 12,613 | ||||||||||||||||
| Average payable rate<br>^2^ | ||||||||||||||||||||||||
| Gold | 95.0% | 95.2% | 95.3% | 94.7% | 95.1% | 95.6% | 95.1% | 95.3% | ||||||||||||||||
| Silver | 86.6% | 86.3% | 86.1% | 81.9% | 85.6% | 85.3% | 85.1% | 83.3% | ||||||||||||||||
| Palladium | 85.1% | 98.2% | 97.0% | 86.5% | 93.0% | 99.4% | 83.5% | 87.6% | ||||||||||||||||
| Cobalt | 93.3% | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||
| GEO<br>^7^ | 90.4% | 91.1% | 91.1% | 89.8% | 90.4% | 91.5% | 90.4% | 90.4% | ||||||||||||||||
| 1) | All figures in thousands except cobalt pounds and gold and palladium ounces produced. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Comprised of the Coleman, Copper Cliff, Garson, Creighton and Totten gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 4) | Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production<br>plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or<br>increases to more than 90:1 for a period of 6 months or more, then the “70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a<br>period of 6 months or more in which event the “70” shall be reinstated. Effective April 1, 2020, the fixed gold to silver exchange ratio was revised to 90:1, with the 70:1 ratio being reinstated on October 15, 2020. For<br>reference, attributable silver production from prior periods is as follows: Q1-2021 – 437,000 ounces; Q4-2020 – 476,000 ounces;<br>Q3-2020 – 420,000 ounces; Q2-2020 – 276,000 ounces; Q1-2020 – 419,000 ounces;<br>Q4-2019 – 415,000 ounces; Q3-2019 – 410,000 ounces; and Q2-2019 – 401,000 ounces. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 5) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 6) | The Minto mine was placed into care and maintenance from October 2018 to October 2019. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 7) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 8) | Operations at these mines had been temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic. During the second half of 2020, all of the operations were restarted. Additionally, operations at Los Filos were suspended from September 3, 2020 to December 23, 2020 as the result of an<br>illegal road blockade by members of the nearby Carrizalillo community. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 9) | Operations at 777 were temporarily suspended from October 11, 2020 to November 25, 2020 as a result of an<br>incident that occurred on October 9th during routine maintenance of the hoist rope and skip. | |||||||||||||||||||||||
| --- | --- |
- 10
Summary of Units Sold
| Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold ounces sold | ||||||||||||||||||||||||
| Salobo | 51,423 | 53,197 | 59,584 | 68,487 | 74,944 | 58,137 | 63,064 | 57,715 | ||||||||||||||||
| Sudbury ^2^ | 3,691 | 7,620 | 7,858 | 7,414 | 4,822 | 7,394 | 7,600 | 8,309 | ||||||||||||||||
| Constancia ^7^ | 1,676 | 3,853 | 4,112 | 3,024 | 3,331 | 5,108 | 4,742 | 4,409 | ||||||||||||||||
| San Dimas ^7^ | 10,273 | 11,529 | 9,687 | 6,030 | 11,358 | 11,499 | 11,374 | 10,284 | ||||||||||||||||
| Stillwater ^3^ | 3,074 | 3,069 | 3,015 | 3,066 | 3,510 | 2,925 | 3,314 | 3,301 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Minto ^4^ | 2,390 | 1,540 | - | - | - | - | - | 765 | ||||||||||||||||
| 777 | 2,577 | 5,435 | 5,845 | 4,783 | 2,440 | 4,160 | 4,672 | 5,294 | ||||||||||||||||
| Total Other | 4,967 | 6,975 | 5,845 | 4,783 | 2,440 | 4,160 | 4,672 | 6,059 | ||||||||||||||||
| Total gold ounces sold | 75,104 | 86,243 | 90,101 | 92,804 | 100,405 | 89,223 | 94,766 | 90,077 | ||||||||||||||||
| Silver ounces sold | ||||||||||||||||||||||||
| Peñasquito<br>^7^ | 2,174 | 1,417 | 1,799 | 1,917 | 2,310 | 1,268 | 1,233 | 912 | ||||||||||||||||
| Antamina ^7^ | 1,930 | 1,669 | 1,090 | 788 | 1,244 | 1,227 | 1,059 | 1,186 | ||||||||||||||||
| Constancia ^7^ | 346 | 442 | 415 | 254 | 350 | 672 | 521 | 478 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Los Filos ^7^ | 27 | - | 19 | 25 | 37 | 26 | 44 | 26 | ||||||||||||||||
| Zinkgruvan | 293 | 326 | 492 | 376 | 447 | 473 | 459 | 337 | ||||||||||||||||
| Yauliyacu ^7^ | 1,014 | 15 | 580 | 704 | 9 | 561 | 574 | 542 | ||||||||||||||||
| Stratoni | 117 | 169 | 134 | 77 | 163 | 120 | 126 | 240 | ||||||||||||||||
| Minto ^4^ | 26 | 20 | - | - | - | - | - | 2 | ||||||||||||||||
| Neves-Corvo | 239 | 145 | 201 | 236 | 204 | 154 | 243 | 194 | ||||||||||||||||
| Aljustrel | 257 | 280 | 148 | 252 | 123 | 121 | 139 | 216 | ||||||||||||||||
| Cozamin | 173 | - | - | - | - | - | - | - | ||||||||||||||||
| Keno Hill | 12 | - | - | - | - | - | - | - | ||||||||||||||||
| 777 | 49 | 93 | 121 | 100 | 41 | 62 | 86 | 108 | ||||||||||||||||
| Total Other | 2,207 | 1,048 | 1,695 | 1,770 | 1,024 | 1,517 | 1,671 | 1,665 | ||||||||||||||||
| Total silver ounces sold | 6,657 | 4,576 | 4,999 | 4,729 | 4,928 | 4,684 | 4,484 | 4,241 | ||||||||||||||||
| Palladium ounces sold | ||||||||||||||||||||||||
| Stillwater ^3^ | 5,131 | 4,591 | 5,546 | 4,976 | 4,938 | 5,312 | 4,907 | 5,273 | ||||||||||||||||
| Cobalt pounds sold | ||||||||||||||||||||||||
| Voisey’s Bay | 132,277 | - | - | - | - | - | - | - | ||||||||||||||||
| GEOs sold ^5^ | 175,419 | 155,665 | 166,611 | 164,844 | 175,154 | 161,066 | 163,314 | 155,723 | ||||||||||||||||
| SEOs sold ^5^ | 12,630 | 11,208 | 11,996 | 11,869 | 12,611 | 11,597 | 11,759 | 11,212 | ||||||||||||||||
| Cumulative payable units PBND<br>^6^ | ||||||||||||||||||||||||
| Gold ounces | 69,262 | 70,555 | 75,750 | 79,632 | 88,383 | 98,475 | 85,335 | 81,535 | ||||||||||||||||
| Silver ounces | 3,717 | 4,486 | 3,437 | 3,222 | 4,961 | 4,142 | 3,796 | 3,102 | ||||||||||||||||
| Palladium ounces | 5,373 | 5,597 | 4,616 | 4,883 | 4,875 | 4,872 | 4,163 | 4,504 | ||||||||||||||||
| Cobalt pounds | 818,584 | - | - | - | - | - | - | - | ||||||||||||||||
| GEO ^5^ | 135,828 | 140,008 | 129,391 | 130,623 | 163,521 | 162,225 | 143,380 | 130,374 | ||||||||||||||||
| SEO<br>^5^ | 9,198 | 10,081 | 9,316 | 9,405 | 11,774 | 11,680 | 10,323 | 9,387 | ||||||||||||||||
| Inventory on hand | ||||||||||||||||||||||||
| Cobalt pounds | 132,277 | - | - | - | - | - | - | - | ||||||||||||||||
| 1) | All figures in thousands except cobalt pounds and gold and palladium ounces sold. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Comprised of the Coleman, Copper Cliff, Garson, Creighton and Totten gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 4) | The Minto mine was placed into care and maintenance from October 2018 to October 2019. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 5) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 6) | Payable gold, silver and palladium ounces as well as cobalt pounds produced but not yet delivered (“PBND”) are<br>based on management estimates. These figures may be updated in future periods as additional information is received. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 7) | Operations at these mines had been temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic. During the second half of 2020, all of the operations were restarted. | |||||||||||||||||||||||
| --- | --- |
- 11
Results of Operations
The operating results of the Company’s reportable operating segments are summarized in the tables and commentary below.
| Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Units<br>Produced² | Units<br>Sold | AverageRealizedPrice(‘s PerUnit) | AverageCash Cost(‘s PerUnit)3 | AverageDepletion(‘s PerUnit) | Sales | Net<br>Earnings | Cash Flow<br>From<br>Operations | Total<br>Assets | ||||||||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||||||||||||||
| Salobo | 46,622 | 51,423 | $ | 1,796 | $ | 412 | $ | 374 | $ | 92,356 | $ | 51,946 | $ | 71,163 | $ | 2,490,127 | ||||||||||||||||||||
| Sudbury ^4^ | 6,208 | 3,691 | 1,812 | 400 | 1,024 | 6,688 | 1,431 | 5,219 | 317,235 | |||||||||||||||||||||||||||
| Constancia | 2,453 | 1,676 | 1,796 | 408 | 315 | 3,010 | 1,798 | 2,326 | 105,041 | |||||||||||||||||||||||||||
| San Dimas | 10,491 | 10,273 | 1,796 | 612 | 322 | 18,450 | 8,851 | 12,162 | 178,891 | |||||||||||||||||||||||||||
| Stillwater | 3,041 | 3,074 | 1,796 | 329 | 397 | 5,521 | 3,290 | 4,510 | 223,090 | |||||||||||||||||||||||||||
| Other ^5^ | 8,918 | 4,967 | 1,812 | 629 | — | 9,000 | 5,878 | 5,855 | 7,591 | |||||||||||||||||||||||||||
| 77,733 | 75,104 | $ | 1,798 | $ | 450 | $ | 374 | $ | 135,025 | $ | 73,194 | $ | 101,235 | $ | 3,321,975 | |||||||||||||||||||||
| Silver | ||||||||||||||||||||||||||||||||||||
| Peñasquito | 2,202 | 2,174 | $ | 26.21 | $ | 4.29 | $ | 3.55 | $ | 56,983 | $ | 39,940 | $ | 47,655 | $ | 342,857 | ||||||||||||||||||||
| Antamina | 1,577 | 1,930 | 26.21 | 5.18 | 7.53 | 50,581 | 26,058 | 40,591 | 612,401 | |||||||||||||||||||||||||||
| Constancia | 406 | 346 | 26.21 | 6.02 | 7.56 | 9,072 | 4,372 | 6,988 | 214,428 | |||||||||||||||||||||||||||
| Other ^6^ | 2,569 | 2,207 | 25.95 | 9.41 | 6.30 | 57,247 | 22,589 | 39,098 | 612,237 | |||||||||||||||||||||||||||
| 6,754 | 6,657 | $ | 26.12 | $ | 6.33 | $ | 5.82 | $ | 173,883 | $ | 92,959 | $ | 134,332 | $ | 1,781,923 | |||||||||||||||||||||
| Palladium | ||||||||||||||||||||||||||||||||||||
| Stillwater | 5,769 | 5,131 | $ | 2,392 | $ | 427 | $ | 442 | $ | 12,275 | $ | 7,813 | $ | 10,084 | $ | 239,118 | ||||||||||||||||||||
| Cobalt | ||||||||||||||||||||||||||||||||||||
| Voisey’s Bay | 1,160,921 | 132,277 | $ | 22.19 | $ | 4.98 | $ | 8.17 | $ | 2,936 | $ | 1,197 | $ | (966) | $ | 225,348 | ||||||||||||||||||||
| Operating results | **** | $ | 324,119 | $ | 175,163 | $ | 244,685 | $ | 5,568,364 | |||||||||||||||||||||||||||
| Other | **** | |||||||||||||||||||||||||||||||||||
| General and administrative | $ | (11,971) | $ | (13,592) | ||||||||||||||||||||||||||||||||
| Finance costs | (1,573) | (1,229) | ||||||||||||||||||||||||||||||||||
| Other | (119) | 2,320 | ||||||||||||||||||||||||||||||||||
| Income tax | 502 | (30) | ||||||||||||||||||||||||||||||||||
| Total other | $ | (13,161) | $ | (12,531) | $ | 360,048 | ||||||||||||||||||||||||||||||
| $ | 162,002 | $ | 232,154 | $ | 5,928,412 |
All values are in US Dollars.
| 1) | Units produced and sold relative to gold, silver and palladium are reported in ounces, while cobalt is reported in pounds.<br>All figures in thousands except cobalt pounds produced and sold, gold and palladium ounces produced and sold and per unit amounts. |
|---|---|
| 2) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) at the end of this press<br>release. |
| --- | --- |
| 4) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests and the non-operating Stobie and Victor gold interests. |
| --- | --- |
| 5) | Comprised of the operating 777, Minto and Marmato gold interests, the<br>non-operating Rosemont gold interest and the newly acquired Santo Domingo gold interest. |
| --- | --- |
| 6) | Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto, Keno Hill, Cozamin,<br>Marmato and 777 silver interests and the non-operating Loma de La Plata, Pascua-Lama and Rosemont silver interests. |
| --- | --- |
On a gold equivalent and silver equivalent basis, results for the Company for the three months ended March 31, 2021 were as follows:
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ounces<br>Produced ^1, 2^ | Ounces<br>Sold ^2^ | AverageRealizedPrice(‘s PerOunce) | AverageCash Cost(‘s PerOunce) 3 | CashOperatingMargin(‘s PerOunce) 4 | AverageDepletion(‘s PerOunce) | GrossMargin(‘s PerOunce) | |||||||||||||||||
| Gold equivalent basis ^5^ | 190,359 | 175,419 | $ | 1,848 | $ | 449 | $ | 1,399 | **** | $ | 400 | $ | 999 | **** | |||||||||
| Silver equivalent basis<br>^5^ | 13,706 | 12,630 | $ | 25.66 | $ | 6.24 | $ | 19.42 | **** | $ | 5.56 | $ | 13.86 | **** |
All values are in US Dollars.
| 1) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
|---|---|
| 2) | Silver ounces produced and sold in thousands. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) at the end of this press<br>release. |
| --- | --- |
| 4) | Refer to discussion on non-IFRS measure (iv) at the end of this press<br>release. |
| --- | --- |
| 5) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. |
| --- | --- |
- 12
| Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Units<br>Produced² | Units<br>Sold | AverageRealizedPrice(‘s PerUnit) | AverageCash Cost(‘s PerUnit)3 | AverageDepletion(‘s PerUnit) | Sales | Net<br>Earnings | Cash Flow<br>From<br>Operations | Total<br>Assets | ||||||||||||||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||||||||||||||||||||
| Salobo | 62,575 | 74,944 | $ | 1,589 | $ | 408 | $ | 374 | $ | 119,094 | $ | 60,459 | $ | 89,137 | $ | 2,577,202 | ||||||||||||||||||||||||||
| Sudbury ^4^ | 7,795 | 4,822 | 1,585 | 400 | 828 | 7,641 | 1,719 | 5,616 | 340,050 | |||||||||||||||||||||||||||||||||
| Constancia | 3,681 | 3,331 | 1,589 | 404 | 338 | 5,294 | 2,823 | 3,948 | 109,281 | |||||||||||||||||||||||||||||||||
| San Dimas | 11,318 | 11,358 | 1,589 | 606 | 315 | 18,049 | 7,587 | 11,166 | 190,787 | |||||||||||||||||||||||||||||||||
| Stillwater | 2,955 | 3,510 | 1,589 | 284 | 449 | 5,578 | 3,006 | 4,582 | 228,418 | |||||||||||||||||||||||||||||||||
| Other ^5^ | 6,675 | 2,440 | 1,585 | 420 | 305 | 3,866 | 2,096 | 2,840 | 12,424 | |||||||||||||||||||||||||||||||||
| 94,999 | 100,405 | $ | 1,589 | $ | 426 | $ | 389 | $ | 159,522 | $ | 77,690 | $ | 117,289 | $ | 3,458,162 | |||||||||||||||||||||||||||
| Silver | ||||||||||||||||||||||||||||||||||||||||||
| Peñasquito | 2,658 | 2,310 | $ | 17.41 | $ | 4.26 | $ | 3.24 | $ | 40,223 | $ | 22,893 | $ | 30,383 | $ | 367,212 | ||||||||||||||||||||||||||
| Antamina | 1,311 | 1,244 | 17.41 | 3.43 | 8.74 | 21,661 | 6,524 | 17,397 | 657,937 | |||||||||||||||||||||||||||||||||
| Constancia | 461 | 350 | 17.41 | 5.96 | 7.63 | 6,088 | 1,337 | 4,004 | 225,520 | |||||||||||||||||||||||||||||||||
| Other ^6^ | 2,274 | 1,024 | 15.57 | 5.83 | 2.56 | 15,945 | 7,345 | 14,126 | 485,068 | |||||||||||||||||||||||||||||||||
| 6,704 | 4,928 | $ | 17.03 | $ | 4.50 | $ | 4.80 | $ | 83,917 | $ | 38,099 | $ | 65,910 | $ | 1,735,737 | |||||||||||||||||||||||||||
| Palladium | ||||||||||||||||||||||||||||||||||||||||||
| Stillwater | 5,312 | 4,938 | $ | 2,298 | $ | 402 | $ | 428 | $ | 11,350 | $ | 7,251 | $ | 9,364 | $ | 247,856 | ||||||||||||||||||||||||||
| Cobalt | ||||||||||||||||||||||||||||||||||||||||||
| Voisey’s Bay | - | - | $ | n.a. | $ | n.a. | $ | n.a. | $ | - | $ | - | $ | - | $ | 227,510 | ||||||||||||||||||||||||||
| Operating results | **** | $ | 254,789 | $ | 123,040 | $ | 192,563 | $ | 5,669,265 | |||||||||||||||||||||||||||||||||
| Other | **** | |||||||||||||||||||||||||||||||||||||||||
| General and administrative | $ | (13,181) | $ | (10,732) | ||||||||||||||||||||||||||||||||||||||
| Finance costs | (7,118) | (8,110) | ||||||||||||||||||||||||||||||||||||||||
| Other | 597 | 3,778 | ||||||||||||||||||||||||||||||||||||||||
| Income tax | (8,442) | 89 | ||||||||||||||||||||||||||||||||||||||||
| Total other | $ | (28,144) | $ | (14,975) | $ | 407,676 | ||||||||||||||||||||||||||||||||||||
| $ | 94,896 | $ | 177,588 | $ | 6,076,941 |
All values are in US Dollars.
| 1) | Units produced and sold relative to gold, silver and palladium are reported in ounces, while cobalt is reported in pounds.<br>All figures in thousands except cobalt pounds produced and sold, gold and palladium ounces produced and sold and per unit amounts. |
|---|---|
| 2) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) at the end of this press<br>release. |
| --- | --- |
| 4) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. |
| --- | --- |
| 5) | Comprised of the operating Minto and 777 gold interests in addition to the<br>non-operating Rosemont gold interest. |
| --- | --- |
| 6) | Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto and 777 silver<br>interests as well as the non-operating Keno Hill, Loma de La Plata, Pascua-Lama and Rosemont silver interests. |
| --- | --- |
On a gold equivalent and silver equivalent basis, results for the Company for the three months ended March 31, 2020 were as follows:
| Three Months Ended March 31, 2020 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ounces<br>Produced ^1, 2^ | Ounces<br>Sold ^2^ | AverageRealizedPrice(‘s PerOunce) | AverageCash Cost(‘s PerOunce) 3 | CashOperatingMargin(‘s PerOunce) 4 | AverageDepletion(‘s PerOunce) | GrossMargin(‘s PerOunce) | |||||||||||||||||
| Gold equivalent basis ^5^ | 194,901 | 175,154 | $ | 1,455 | $ | 382 | $ | 1,073 | **** | $ | 370 | $ | 703 | **** | |||||||||
| Silver equivalent basis<br>^5^ | 14,033 | 12,611 | $ | 20.20 | $ | 5.31 | $ | 14.89 | **** | $ | 5.14 | $ | 9.75 | **** |
All values are in US Dollars.
| 1) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
|---|---|
| 2) | Silver ounces produced and sold in thousands. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) at the end of this press<br>release. |
| --- | --- |
| 4) | Refer to discussion on non-IFRS measure (iv) at the end of this press<br>release. |
| --- | --- |
| 5) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. |
| --- | --- |
- 13
Non-IFRS Measures
Wheaton has included, throughout this document, certain non-IFRS performance measures, including (i) adjusted net earnings and adjusted net earnings per share; (ii) operating cash flow per share (basic and diluted); (iii) average cash costs of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis, with the Company receiving its first deliveries of cobalt relative to its Voisey’s Bay PMPA during the first quarter of 2021; and (iv) cash operating margin. The Company has removed the non-IFRS measure relative to net debt as Wheaton fully repaid its debt during the first quarter of 2021.
| i. | Adjusted net earnings and adjusted net earnings per share are calculated by removing the effects of non-cash impairment charges, non-cash fair value (gains) losses and other one-time (income) expenses as well as the reversal of non-cash income tax expense (recovery) which is offset by income tax expense (recovery) recognized in the Statements of Shareholders’ Equity and OCI, respectively. The Company believes that, in addition to<br>conventional measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company’s performance. |
|---|
The following table provides a reconciliation of adjusted net earnings and adjusted net earnings per share (basic and diluted).
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for per share amounts) | 2021 | 2020 | ||||
| Net earnings | $ | 162,002 | $ | 94,896 | ||
| Add back (deduct): | ||||||
| (Gain) loss on fair value adjustment of share purchase warrants held | 950 | 71 | ||||
| (Gain) loss on fair value adjustment of convertible notes receivable | (1,238) | 790 | ||||
| Income tax expense (recovery) recognized in the Statement of Shareholders’ Equity | 1,568 | (1,480) | ||||
| Income tax expense (recovery) recognized in the Statement of OCI | (2,137) | 9,853 | ||||
| Other | (13) | 403 | ||||
| Adjusted net earnings | $ | 161,132 | $ | 104,533 | ||
| Divided by: | ||||||
| Basic weighted average number of shares outstanding | 449,509 | 447,805 | ||||
| Diluted weighted average number of shares outstanding | 450,600 | 448,891 | ||||
| Equals: | ||||||
| Adjusted earnings per share - basic | $ | 0.358 | $ | 0.233 | ||
| Adjusted earnings per share - diluted | $ | 0.358 | $ | 0.233 |
- 14
| ii. | Operating cash flow per share (basic and diluted) is calculated by dividing cash generated by operating activities by<br>the weighted average number of shares outstanding (basic and diluted). The Company presents operating cash flow per share as management and certain investors use this information to evaluate the Company’s performance in comparison to other<br>companies in the precious metal mining industry who present results on a similar basis. |
|---|
The following table provides a reconciliation of operating cash flow per share (basic and diluted).
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for per share amounts) | 2021 | 2020 | ||||
| Cash generated by operating activities | $ | 232,154 | $ | 177,588 | ||
| Divided by: | ||||||
| Basic weighted average number of shares outstanding | 449,509 | 447,805 | ||||
| Diluted weighted average number of shares outstanding | 450,600 | 448,891 | ||||
| Equals: | ||||||
| Operating cash flow per share - basic | $ | 0.516 | $ | 0.397 | ||
| Operating cash flow per share - diluted | $ | 0.515 | $ | 0.396 | ||
| iii. | Average cash cost of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis is calculated by<br>dividing the total cost of sales, less depletion, by the ounces or pounds sold. In the precious metal mining industry, this is a common performance measure but does not have any standardized meaning prescribed by IFRS. In addition to conventional<br>measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. | |||||
| --- | --- |
The following table provides a calculation of average cash cost of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis.
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for gold and palladium ounces and cobalt pounds sold and per unit amounts) | 2021 | 2020 | ||||
| Cost of sales | $ | 148,956 | $ | 131,749 | ||
| Less: depletion | (70,173) | (64,841) | ||||
| Cash cost of sales | $ | 78,783 | $ | 66,908 | ||
| Cash cost of sales is comprised of: | ||||||
| Total cash cost of gold sold | $ | 33,774 | $ | 42,759 | ||
| Total cash cost of silver sold | 42,160 | 22,163 | ||||
| Total cash cost of palladium sold | 2,191 | 1,986 | ||||
| Total cash cost of cobalt sold | 658 | - | ||||
| Total cash cost of sales | $ | 78,783 | $ | 66,908 | ||
| Divided by: | ||||||
| Total gold ounces sold | 75,104 | 100,405 | ||||
| Total silver ounces sold | 6,657 | 4,928 | ||||
| Total palladium ounces sold | 5,131 | 4,938 | ||||
| Total cobalt pounds sold | 132,277 | - | ||||
| Equals: | ||||||
| Average cash cost of gold (per ounce) | $ | 450 | $ | 426 | ||
| Average cash cost of silver (per ounce) | $ | 6.33 | $ | 4.50 | ||
| Average cash cost of palladium (per ounce) | $ | 427 | $ | 402 | ||
| Average cash cost of cobalt (per pound) | $ | 4.98 | $ | n.a. |
- 15
| iv. | Cash operating margin is calculated by subtracting the average cash cost of gold, silver and palladium on a per ounce<br>basis and cobalt on a per pound basis from the average realized selling price of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis. The Company presents cash operating margin as management and certain investors use this<br>information to evaluate the Company’s performance in comparison to other companies in the precious metal mining industry who present results on a similar basis as well as to evaluate the Company’s ability to generate cash flow.<br> |
|---|
The following table provides a reconciliation of cash operating margin.
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for cobalt pounds, gold and palladium ounces sold and per unit amounts) | 2021 | 2020 | ||||
| Total sales: | ||||||
| Gold | $ | 135,025 | $ | 159,522 | ||
| Silver | $ | 173,883 | $ | 83,917 | ||
| Palladium | $ | 12,275 | $ | 11,350 | ||
| Cobalt | $ | 2,936 | $ | - | ||
| Divided by: | ||||||
| Total gold ounces sold | 75,104 | 100,405 | ||||
| Total silver ounces sold | 6,657 | 4,928 | ||||
| Total palladium ounces sold | 5,131 | 4,938 | ||||
| Total cobalt pounds sold | 132,277 | - | ||||
| Equals: | ||||||
| Average realized price of gold (per ounce) | $ | 1,798 | $ | 1,589 | ||
| Average realized price of silver (per ounce) | $ | 26.12 | $ | 17.03 | ||
| Average realized price of palladium (per ounce) | $ | 2,392 | $ | 2,298 | ||
| Average realized price of cobalt (per pound) | $ | 22.19 | $ | n.a. | ||
| Less: | ||||||
| Average cash cost of gold ^1^ (per ounce) | $ | (450) | $ | (426) | ||
| Average cash cost of silver ^1^ (per ounce) | $ | (6.33) | $ | (4.50) | ||
| Average cash cost of palladium ^1^ (per ounce) | $ | (427) | $ | (402) | ||
| Average cash cost of cobalt ^1^ (per pound) | $ | (4.98) | $ | n.a. | ||
| Equals: | ||||||
| Cash operating margin per gold ounce sold | $ | 1,348 | $ | 1,163 | ||
| As a percentage of realized price of gold | 75% | 73% | ||||
| Cash operating margin per silver ounce sold | $ | 19.79 | $ | 12.53 | ||
| As a percentage of realized price of silver | 76% | 74% | ||||
| Cash operating margin per palladium ounce sold | $ | 1,965 | $ | 1,896 | ||
| As a percentage of realized price of palladium | 82% | 83% | ||||
| Cash operating margin per cobalt pound sold | $ | 17.21 | $ | n.a. | ||
| As a percentage of realized price of cobalt | 78% | n.a. |
- Please refer to non-IFRS measure (iii), above.
These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and other companies may calculate these measures differently. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS. For more detailed information, please refer to Wheaton’s MD&A available on the Company’s website at www.wheatonpm.com and posted on SEDAR at www.sedar.com.
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
This press release contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation concerning the business, operations and financial performance of Wheaton and, in some instances, the business, mining operations and
- 16
performance of Wheaton’s PMPA counterparties. Forward-looking statements, which are all statements other than statements of historical fact, include, but are not limited to, statements with respect to the future price of commodities, the impact of epidemics (including the COVID-19 virus pandemic), including the potential heightening of other risks, the estimation of future production from Mining Operations (including in the estimation of production, mill throughput, grades, recoveries and exploration potential), the estimation of mineral reserves and mineral resources (including the estimation of reserve conversion rates) and the realization of such estimations, the commencement, timing and achievement of construction, expansion or improvement projects by Wheaton’s PMPA counterparties at mineral stream interests owned by Wheaton (the “Mining Operations”), the ability of Wheaton’s PMPA counterparties to comply with the terms of a PMPA (including as a result of the business, mining operations and performance of Wheaton’s PMPA counterparties) and the potential impacts of such on Wheaton, the costs of future production, the estimation of produced but not yet delivered ounces, the impact of the listing of the Company’s common shares on the LSE, any statements as to future dividends, the ability to fund outstanding commitments and the ability to continue to acquire accretive PMPAs, future payments by the Company in accordance with PMPAs, including any acceleration of payments, projected increases to Wheaton’s production and cash flow profile, projected changes to Wheaton’s production mix, the ability of Wheaton’s PMPA counterparties to comply with the terms of any other obligations under agreements with the Company, the ability to sell precious metals and cobalt production, confidence in the Company’s business structure, the Company’s assessment of taxes payable and the impact of the CRA Settlement for years subsequent to 2010, possible audits for taxation years subsequent to 2015, the Company’s assessment of the impact of any tax reassessments, the Company’s intention to file future tax returns in a manner consistent with the CRA Settlement, , and assessments of the impact and resolution of various legal and tax matters, including but not limited to outstanding class action and audits. Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “projects”, “intends”, “anticipates” or “does not anticipate”, or “believes”, “potential”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to risks associated with fluctuations in the price of commodities (including Wheaton’s ability to sell its precious metals or cobalt production at acceptable prices or at all), risks of significant impacts on Wheaton or the Mining Operations as a result of an epidemic (including the COVID-19 virus pandemic), risks related to the Mining Operations (including fluctuations in the price of the primary or other commodities mined at such operations, regulatory, political and other risks of the jurisdictions in which the Mining Operations are located, actual results of mining, risks associated with the exploration, development, operating, expansion and improvement of the Mining Operations, environmental and economic risks of the Mining Operations, and changes in project parameters as plans continue to be refined), the absence of control over the Mining Operations and having to rely on the accuracy of the public disclosure and other information Wheaton receives from the Mining Operations, uncertainty in the estimation of production from Mining Operations, uncertainty in the accuracy of mineral reserve and mineral resource estimation, the ability of each party to satisfy their obligations in accordance with the terms of the PMPAs, the estimation of future production from Mining Operations, Wheaton’s interpretation of, compliance with or application of, tax laws and regulations or accounting policies and rules being found to be incorrect, any challenge or reassessment by the CRA of the Company’s tax filings being successful and the potential negative impact to the Company’s previous and future tax filings, assessing the impact of the CRA Settlement for years subsequent to 2010 (including whether there will be any material change in the Company’s facts or change in law or jurisprudence), credit and liquidity, indebtedness and guarantees, mine operator concentration, hedging, competition, claims and legal proceedings against Wheaton or the Mining Operations, security over underlying assets, governmental regulations, international operations of Wheaton and the Mining
- 17
Operations, exploration, development, operations, expansions and improvements at the Mining Operations, environmental regulations and climate change, Wheaton and the Mining Operations ability to obtain and maintain necessary licenses, permits, approvals and rulings, Wheaton and the Mining Operations ability to comply with applicable laws, regulations and permitting requirements, lack of suitable infrastructure and employees to support the Mining Operations, inability to replace and expand mineral reserves, including anticipated timing of the commencement of production by certain Mining Operations (including increases in production, estimated grades and recoveries), uncertainties of title and indigenous rights with respect to the Mining Operations, Wheaton and the Mining Operations ability to obtain adequate financing, the Mining Operations ability to complete permitting, construction, development and expansion, global financial conditions, and other risks discussed in the section entitled “Description of the Business – Risk Factors” in Wheaton’s Annual Information Form available on SEDAR at www.sedar.com, Wheaton’s Form 40-F for the year ended December 31, 2020 and Form 6-K filed March 11, 2021 both on file with the U.S. Securities and Exchange Commission on EDGAR (the “Disclosure”). Forward-looking statements are based on assumptions management currently believes to be reasonable, including (without limitation): that there will be no material adverse change in the market price of commodities, that neither Wheaton nor the Mining Operations will suffer significant impacts as a result of an epidemic (including the COVID-19 virus pandemic), that the Mining Operations will continue to operate and the mining projects will be completed in accordance with public statements and achieve their stated production estimates, that the mineral reserves and mineral resource estimates from Mining Operations (including reserve conversion rates) are accurate, that each party will satisfy their obligations in accordance with the PMPAs, that Wheaton will continue to be able to fund or obtain funding for outstanding commitments, that Wheaton will be able to source and obtain accretive PMPAs, that any outbreak or threat of an outbreak of a virus or other contagions or epidemic disease will be adequately responded to locally, nationally, regionally and internationally, without such response requiring any prolonged closure of the Mining Operations or having other material adverse effects on the Company and counterparties to its PMPAs, that the trading of the Company’s common shares will not be adversely affected by the differences in liquidity, settlement and clearing systems as a result of multiple listings of the Common Shares on the LSE, the TSX and the NYSE, that the trading of the Company’s common shares will not be suspended, and that the net proceeds of sales of common shares, if any, will be used as anticipated, that expectations regarding the resolution of legal and tax matters will be achieved (including ongoing class action litigation and CRA audits involving the Company), that Wheaton has properly considered the interpretation and application of Canadian tax law to its structure and operations, that Wheaton has filed its tax returns and paid applicable taxes in compliance with Canadian tax law, that Wheaton’s application of the CRA Settlement for years subsequent to 2010 is accurate (including the Company’s assessment that there will be no material change in the Company’s facts or change in law or jurisprudence for years subsequent to 2010), and such other assumptions and factors as set out in the Disclosure. There can be no assurance that forward-looking statements will prove to be accurate and even if events or results described in the forward-looking statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Wheaton. Readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary. The forward-looking statements included herein are for the purpose of providing readers with information to assist them in understanding Wheaton’s expected financial and operational performance and may not be appropriate for other purposes. Any forward looking statement speaks only as of the date on which it is made, reflects Wheaton’s management’s current beliefs based on current information and will not be updated except in accordance with applicable securities laws. Although Wheaton has attempted to identify important factors that could cause actual results, level of activity, performance or achievements to differ materially from those contained in forward-looking statements, there may be other factors that cause results, level of activity, performance or achievements not to be as anticipated, estimated or intended.
- 18
For further information, please contact:
Patrick Drouin or Emma Murray
Investor Relations
Wheaton Precious Metals Corp.
Tel: 1-844-288-9878
Email: info@wheatonpm.com
Website: www.wheatonpm.com
EX-99.2
Exhibit 99.2
Management’s Discussion and Analysis of Results of Operations and Financial Condition forthe Three Months Ended March 31, 2021
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with Wheaton Precious Metals Corp.’s (“Wheaton” or the “Company”) unaudited condensed interim consolidated financial statements for the three months ended March 31, 2021 and related notes thereto which have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board. In addition, the following should be read in conjunction with the 2020 audited consolidated financial statements, the related MD&A and the 2020 Annual Information Form as well as other information relating to Wheaton on file with the Canadian securities regulatory authorities and on SEDAR at www.sedar.com. Reference to Wheaton or the Company includes the Company’s wholly-owned subsidiaries. This MD&A contains “forward-looking” statements that are subject to risk factors set out in the cautionary note contained on page 37 of this MD&A as well as throughout this document. All figures are presented in United States dollars unless otherwise noted. This MD&A has been prepared as of May 6, 2021.
Table ofContents
| Overview | 3 | |
|---|---|---|
| Operational Overview | 4 | |
| Highlights | 5 | |
| Outlook | 6 | |
| Mineral Stream Interests | 7 | |
| Mineral Royalty Interest | 9 | |
| Long-Term Equity Investments | 9 | |
| Convertible Notes Receivable | 11 | |
| Summary of Units Produced | 13 | |
| Summary of Units Sold | 14 | |
| Quarterly Financial Review ^1^ | 15 | |
| Results of Operations and Operational Review | 16 | |
| Liquidity and Capital Resources | 21 | |
| Share Capital | 26 | |
| Financial Instruments | 26 | |
| Future Changes to Accounting Policies | 26 | |
| Non-IFRS Measures | 27 | |
| Subsequent Events | 30 | |
| Controls and Procedures | 30 | |
| Attributable Reserves and Resources | 31 | |
| Cautionary Note Regarding Forward-Looking Statements | 37 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [2]
Overview
Wheaton Precious Metals Corp. is a precious metal streaming company which generates its revenue primarily from the sale of precious metals (gold, silver and palladium) and cobalt. The Company is listed on the New York Stock Exchange (“NYSE”), the Toronto Stock Exchange (“TSX”) and the London Stock Exchange (“LSE) and trades under the symbol WPM.
As of March 31, 2021, the Company has entered into 26 long-term purchase agreements (three of which are early deposit agreements), with 19 different mining companies, for the purchase of precious metals and cobalt (“precious metal purchase agreements” or “PMPA”) relating to 24 mining assets which are currently operating, 8 which are at various stages of development and 1 which has been placed in care and maintenance, located in 12 countries. Pursuant to the PMPAs, Wheaton acquires metal production from the counterparties for an initial upfront payment plus an additional cash payment for each ounce or pound delivered which is fixed by contract, generally at or below the prevailing market price. Attributable metal production as referred to in this MD&A and financial statements is the metal production to which Wheaton is entitled pursuant to the various PMPAs. During the three months ended March 31, 2021, the per ounce price paid by the Company for the metals acquired under the agreements averaged $6.33 for silver, $450 for gold, $427 for palladium and $4.98 per pound for cobalt. The primary drivers of the Company’s financial results are the volume of metal production at the various mining assets to which the PMPAs relate and the price realized by Wheaton upon the sale of the metals received. Throughout this MD&A, the production and sales volume of gold, silver and palladium are reported in ounces, while cobalt is reported in pounds.
COVID-19 Update
Business Continuity and Employee Health and Safety
In accordance with local government restrictions and guidelines, Wheaton temporarily closed its physical offices in mid-March 2020 and successfully transitioned to telecommuting for all of its employees. During the third quarter of 2020, the physical offices were re-opened on a voluntary basis. As Wheaton has always maintained detailed business continuity plans, the transition to working remotely was seamless with an uninterrupted flow of business.
Partner 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. During the second quarter of 2020, six partner operations located in Mexico and Peru on which the Company has PMPAs were temporarily suspended due to government restrictions focused on reducing the impacts of COVID-19, including the Constancia, Yauliyacu, San Dimas, Los Filos, Peñasquito and Antamina mines. All these mining operations resumed operations during the third quarter of 2020 and remained in operation for the balance of 2020 and are currently all in operation. There can be no assurance that our partners’ operations that are currently operational will continue to remain operational, or operate at expected levels, for the duration of the COVID-19 virus pandemic.
Community Support and Response Fund relative to theCOVID-19 pandemic
During the second quarter of 2020, 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 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.
To March 31, 2021, the Company has made donations totalling $3 million under this program.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [3]
Operational Overview
| Q1 2021 | Q1 2020 | Change | ||||||
|---|---|---|---|---|---|---|---|---|
| Units produced | ||||||||
| Gold ounces | 77,733 | 94,999 | (18.2)% | |||||
| Silver ounces | 6,754 | 6,704 | 0.7% | |||||
| Palladium ounces | 5,769 | 5,312 | 8.6% | |||||
| Cobalt pounds | 1,160,921 | - | n.a. | |||||
| Gold equivalent ounces ^2^ | 190,359 | 194,901 | (2.3)% | |||||
| Silver equivalent ounces ^2^ | 13,706 | 14,033 | (2.3)% | |||||
| Units sold | ||||||||
| Gold ounces | 75,104 | 100,405 | (25.2)% | |||||
| Silver ounces | 6,657 | 4,928 | 35.1% | |||||
| Palladium ounces | 5,131 | 4,938 | 3.9% | |||||
| Cobalt pounds | 132,277 | - | n.a. | |||||
| Gold equivalent ^2^ | 175,419 | 175,154 | 0.2% | |||||
| Silver equivalent ^2^ | 12,630 | 12,611 | 0.2% | |||||
| Change in PBND and Inventory ^3^ | ||||||||
| Gold ounces | (1,293) | (10,093 | ) | (8,800) | ||||
| Silver ounces | (769) | 820 | 1,589 | |||||
| Palladium ounces | (224) | 3 | 227 | |||||
| Cobalt pounds | 950,861 | - | (950,861) | |||||
| Gold equivalent ounces ^2^ | (4,180) | 1,296 | 5,476 | |||||
| Silver equivalent ounces ^2^ | (301) | 93 | 394 | |||||
| Per unit metrics | ||||||||
| Sales price | ||||||||
| Gold per ounce | $ | 1,798 | $ | 1,589 | 13.2% | |||
| Silver per ounce | $ | 26.12 | $ | 17.03 | 53.4% | |||
| Palladium per ounce | $ | 2,392 | $ | 2,298 | 4.1% | |||
| Cobalt per pound | $ | 22.19 | $ | n.a. | n.a. | |||
| Gold equivalent ^2^ | $ | 1,848 | $ | 1,455 | 27.0% | |||
| Silver equivalent ^2^ | $ | 25.66 | $ | 20.20 | 27.0% | |||
| Cash costs ^4^ | ||||||||
| Gold per ounce ^4^ | $ | 450 | $ | 426 | (5.6)% | |||
| Silver per ounce ^4^ | $ | 6.33 | $ | 4.50 | (40.7)% | |||
| Palladium per ounce ^4^ | $ | 427 | $ | 402 | (6.2)% | |||
| Cobalt per pound ^4^ | $ | 4.98 | $ | n.a. | n.a. | |||
| Gold equivalent ^2^ | $ | 449 | $ | 382 | (17.5)% | |||
| Silver equivalent ^2^ | $ | 6.24 | $ | 5.31 | (17.5)% | |||
| Cash operating margin ^4^ | ||||||||
| Gold per ounce ^4^ | $ | 1,348 | $ | 1,163 | 15.9% | |||
| Silver per ounce ^4^ | $ | 19.79 | $ | 12.53 | 57.9% | |||
| Palladium per ounce ^4^ | $ | 1,965 | $ | 1,896 | 3.7% | |||
| Cobalt per pound ^4^ | $ | 17.21 | $ | n.a. | n.a. | |||
| Gold equivalent ^2^ | $ | 1,399 | $ | 1,073 | 30.4% | |||
| Silver equivalent<br>^2^ | $ | 19.42 | $ | 14.89 | 30.4% | |||
| Total revenue | $ | 324,119 | $ | 254,789 | 27.2% | |||
| Gold revenue | $ | 135,025 | $ | 159,522 | (15.4)% | |||
| Silver revenue | $ | 173,883 | $ | 83,917 | 107.2% | |||
| Palladium revenue | $ | 12,275 | $ | 11,350 | 8.1% | |||
| Cobalt revenue | $ | 2,936 | $ | - | n.a. | |||
| Net earnings | $ | 162,002 | $ | 94,896 | 71% | |||
| Per share | $ | 0.360 | $ | 0.212 | 69.8% | |||
| Adjusted net earnings^4^ | $ | 161,132 | $ | 104,533 | 54.1% | |||
| Per share ^4^ | $ | 0.358 | $ | 0.233 | 53.6% | |||
| Operating cash flows | $ | 232,154 | $ | 177,588 | 30.7% | |||
| Per share^4^ | $ | 0.516 | $ | 0.397 | 30.0% | |||
| Dividends declared ^5^ | $ | 58,478 | $ | 44,815 | 30.5% | |||
| Per share | $ | 0.13 | $ | 0.10 | 30.0% | |||
| 1) | All amounts in thousands except cobalt pounds, gold and palladium ounces produced and sold, per ounce amounts and per<br>share amounts. | |||||||
| --- | --- | |||||||
| 2) | Please refer to the tables on the bottom of pages 16 and 17 for further information on the methodology of converting<br>production and sales volumes to gold-equivalent ounces (“GEOs”) and silver-equivalent ounces (“SEOs”). | |||||||
| --- | --- | |||||||
| 3) | Represents the increase (decrease) in payable ounces produced but not delivered (“PBND”) relative to the various<br>mines that the Company derives precious metal from and, for cobalt, the increase (decrease) of inventory on hand. Payable ounces PBND will be recognized in future sales as they are delivered to the Company under the terms of their contracts. Payable<br>ounces PBND to Wheaton is expected to average approximately two to three months of annualized production for both gold and palladium and two months for silver but may vary from quarter to quarter due to a number of factors, including mine ramp-up and the timing of shipments.^1^ | |||||||
| --- | --- | |||||||
| 4) | Refer to discussion on non-IFRS measures beginning on page 27 of this MD&A.<br> | |||||||
| --- | --- | |||||||
| 5) | Dividends declared in the referenced calendar quarter, relative to the financial results of the prior quarter.<br> | |||||||
| --- | --- | |||||||
| ^1^ | Statements made in this section contain forward-looking information with respect to forecast ounces produced but not yet<br>delivered and readers are cautioned that actual outcomes may vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure associated with this information.<br> | |||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [4]
Highlights
| Operations | |
|---|---|
| · | During the three months ended March 31, 2021, Wheaton generated revenue of $324 million, representing a record for<br>the Company, comprised of $135 million in gold sales, $174 million in silver sales, $12 million in palladium sales and $3 million in cobalt sales. |
| --- | --- |
| · | During the three months ended March 31, 2021, gold equivalent payable ounces produced but not delivered<br>(“PBND”) relative to the various mines that the Company derives precious metal from decreased by 4,200 ounces. |
| --- | --- |
| · | During the three months ended March 31, 2021, Wheaton generated operating cash flow of $232 million. This<br>represented a 31% increase relative to the comparable period of the prior year and resulted in the repayment of the Company’s revolving credit facility. |
| --- | --- |
| · | During the three months ended March 31, 2021, Wheaton received its first deliveries of Cobalt under the Voisey’s<br>Bay precious metal purchase agreement. |
| --- | --- |
| · | Relative to the comparable three-month period of the prior year: |
| --- | --- |
| o | The decrease in attributable gold production was primarily due to lower throughput at Salobo. |
| --- | --- |
| o | The increase in attributable silver production was primarily due to the increase in the Other mines from the recently<br>acquired Cozamin precious metal purchase agreement. |
| --- | --- |
| o | The increase in adjusted net earnings was primarily due to higher margins resulting from a 27% increase in the realized<br>gold equivalent price. |
| --- | --- |
| · | On May 6, 2021, the Board of Directors declared a dividend in the amount of $0.14 per common share representing an<br>increase of 40% relative to the comparable period in 2020. |
| --- | --- |
Corporate Development
| · | On January 5, 2021, the Company acquired a 2.0% net smelter return royalty interest relative to the Brewery Creek mine<br>located in the Yukon Territories, Canada. |
|---|---|
| · | On February 19, 2021, the previously announced precious metal purchase agreement relative to the Cozamin mine was<br>closed, with the upfront cash consideration of $150 million being paid to an affiliate of Capstone Mining Corp. (“Capstone”) on that date. |
| --- | --- |
| · | On March 25, 2021, the Company announced that it had entered into a precious metal purchase agreement with Capstone in<br>respect of the Santo Domingo project located in the Atacama region of Chile, with the initial early deposit of $30 million being paid to an affiliate of Capstone on April 21, 2021. |
| --- | --- |
| · | On April 15, 2021, the previously announced precious metal purchase agreement relative to the Marmato mine was closed,<br>with the initial upfront cash consideration of $34 million being paid to an affiliate of Aris Gold Corporation (“Aris”) on that date. |
| --- | --- |
| Other | |
| --- | --- |
| · | During the three months ended March 31, 2021, the company received $112 million in proceeds from the sale of its<br>remaining equity investment in First Majestic Silver Corp. (“First Majestic”). |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [5]
Outlook^1^
Wheaton’s estimated attributable production in 2021 is forecast to be 370,000 to 400,000 ounces of gold, 22.5 to 24.0 million ounces of silver, and 40,000 to 45,000 gold equivalent ounces (“GEOs”) of other metals, resulting in production of approximately 720,000 to 780,000 GEOs^2^, unchanged from previous guidance. For the five-year period ending in 2025, the Company estimates that average production will amount to 810,000 GEOs^2^, while for the ten-year period ending in 2030, the Company estimates that average annual production will amount to 830,000 GEOs^2^.
From a liquidity perspective, the $191 million of cash and cash equivalents as at March 31, 2021 combined with the liquidity provided by the available credit under the $2 billion revolving term loan (“Revolving Facility”) and ongoing operating cash flows positions the Company well to fund all outstanding commitments and known contingencies as well as providing flexibility to acquire additional accretive mineral stream interests.
| ^1^ | Statements made in this section contain forward-looking information with respect to forecast production, funding<br>outstanding commitments and continuing to acquire accretive mineral stream interests and readers are cautioned that actual outcomes may vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions<br>and important disclosure associated with this information. |
|---|---|
| ^2^ | Gold equivalent forecast production for 2021 and the longer term outlook are based on the following commodity price<br>assumptions: $1,800 / ounce gold, $25 / ounce silver, $2,300 / ounce palladium, and $17.75 / pound of cobalt. Other metal includes palladium and cobalt. Five- and ten-year guidance do not include optionality production from Pascua Lama, Navidad,<br>Cotabambas, or additional expansions at Salobo outside of the project currently in construction. In addition, five-year guidance also does not include any production from Rosemont, Toroparu, Kutcho, or the Victor project at Sudbury.<br> |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [6]
Mineral Stream Interests^1^
The following table summarizes the mineral stream interests currently owned by the Company:
| Mineral Stream<br><br><br>Interests | Mine<br><br><br>Owner ¹ | Location¹ | Attributable<br><br><br>Production | Per Unit<br>Production Payment 2,3 | Total Upfront<br><br><br>Consideration<br><br><br>Paid to Date ³ | Cash Flow<br><br><br>Generated to<br> <br>Date ³ | Units<br><br><br>Received to<br> <br>Date ³ | Q1-2021<br><br><br>Inventory<br> <br>&^^PBND^3,^^4^ | Term ¹ | Date of<br><br><br>Original<br> <br>Contract | ||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold | ||||||||||||||||||||||||
| Salobo | Vale | BRA | 75% | 412 | $ | 3,059,360 | $ | 1,428,389 | 1,462,652 | 37,570 | LOM | 28-Feb-13 | ||||||||||||
| Sudbury ^5^ | Vale | CAN | 70% | 400 | 623,572 | 214,907 | 227,892 | 15,691 | 20 years | 28-Feb-13 | ||||||||||||||
| Constancia | Hudbay | PER | 50% ^6^ | 408 | 135,000 | 80,147 | 82,330 | 794 | LOM | 8-Aug-12 | ||||||||||||||
| San Dimas | FM | MEX | variable ^7^ | 616 | 220,000 | 106,440 | 115,506 | 3,191 | LOM | 10-May-18 | ||||||||||||||
| Stillwater ^8^ | Sibanye | USA | 100% | 18% of spot | 237,880 | 42,631 | 33,678 | 4,637 | LOM | 16-Jul-18 | ||||||||||||||
| Other | 454,342 | 486,945 | 494,615 | 7,379 | ||||||||||||||||||||
| Minto | PERE | CAN | 100%^9^ | 65%² of spot | LOM | 20-Nov-08 | ||||||||||||||||||
| Rosemont | Hudbay | USA | 100% | 450 | LOM | 10-Feb-10 | ||||||||||||||||||
| 777 ^10^ | Hudbay | CAN | 50% | 425 | LOM | 8-Aug-12 | ||||||||||||||||||
| Marmato ^11^ | Aris | CO | 6.5% ^11^ | 18% of spot | LOM | 5-Nov-20 | ||||||||||||||||||
| Santo Domingo | Capstone | CHL | 100% ^12^ | 18% of spot | LOM | 24-Mar-21 | ||||||||||||||||||
| $ | 4,730,154 | $ | 2,359,459 | 2,416,673 | 69,262 | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||
| Peñasquito | Newmont | MEX | 25% | 4.29 | $ | 485,000 | $ | 1,046,948 | 61,975 | 1,026 | LOM | 24-Jul-07 | ||||||||||||
| Antamina | Glencore | PER | 33.75% ^13^ | 20% of spot | 900,000 | 445,210 | 31,352 | 1,420 | LOM | 3-Nov-15 | ||||||||||||||
| Constancia | Hudbay | PER | 100% | 6.02 | 294,900 | 134,989 | 11,900 | 53 | LOM | 8-Aug-12 | ||||||||||||||
| Other | 1,036,408 | 1,329,628 | 93,716 | 1,218 | ||||||||||||||||||||
| Los Filos | Equinox | MEX | 100% | 4.46 | 25 years | 15-Oct-04 | ||||||||||||||||||
| Zinkgruvan | Lundin | SWE | 100% | 4.46 | LOM | 8-Dec-04 | ||||||||||||||||||
| Yauliyacu | Glencore | PER | 100% ^14^ | 8.94 | LOM | 23-Mar-06 | ||||||||||||||||||
| Stratoni | Eldorado | GRC | 100% | 11.43 | LOM | 23-Apr-07 | ||||||||||||||||||
| Neves-Corvo | Lundin | PRT | 100% | 4.34 | 50 years | 5-Jun-07 | ||||||||||||||||||
| Aljustrel | Almina | PRT | 100% ^15^ | 50% of spot | 50 years | 5-Jun-07 | ||||||||||||||||||
| Keno Hill | Alexco | CAN | 25% | variable 2 | LOM | 2-Oct-08 | ||||||||||||||||||
| Minto | PERE | CAN | 100% | 4.31 | LOM | 20-Nov-08 | ||||||||||||||||||
| Pascua-Lama | Barrick | CHL/ARG | 25% | 3.90 | LOM | 8-Sep-09 | ||||||||||||||||||
| Rosemont | Hudbay | USA | 100% | 3.90 | LOM | 10-Feb-10 | ||||||||||||||||||
| 777<br>^10^ | Hudbay | CAN | 100% | 6.26 | LOM | 8-Aug-12 | ||||||||||||||||||
| Navidad | PAAS | ARG | 12.5% | 4.00 | LOM | n/a ^1^^6^ | ||||||||||||||||||
| Marmato ^11^ | Aris | CO | 100% ^11^ | 18% of spot | LOM | 5-Nov-20 | ||||||||||||||||||
| Cozamin | Capstone | MEX | 50% ^17^ | 10% of spot | LOM | 10-Dec-20 | ||||||||||||||||||
| $ | 2,716,308 | $ | 2,956,775 | 198,943 | 3,717 | |||||||||||||||||||
| Palladium | ||||||||||||||||||||||||
| Stillwater ^8^ | Sibanye | USA | 4.5% ^18^ | 18% of spot | $ | 262,120 | $ | 79,865 | 54,580 | 5,373 | LOM | 16-Jul-18 | ||||||||||||
| Cobalt | ||||||||||||||||||||||||
| Voisey’s Bay | Vale | CAN | 42.4% ^19^ | 18% of spot | $ | 390,000 | $ | (966 | ) | 132,277 | 950,861 | LOM | 11-Jun-18 | |||||||||||
| Total | $ | 8,098,582 | $ | 5,395,133 |
All values are in US Dollars.
| 1) | Abbreviations as follows: FM = First Majestic Silver Corp; PERE = Pembridge Resources plc; PAAS = Pan American Silver<br>Corp; BRA = Brazil; CAN = Canada; CHL = Chile, PER = Peru; MEX = Mexico; USA = United States; SWE = Sweden; GRC = Greece; PRT = Portugal; ARG = Argentina; CO = Colombia; and LOM = Life of Mine. |
|---|---|
| 2) | Please refer to the section entitled “Contractual Obligations and Contingencies – Mineral Stream Interests”<br>on page 22 of this MD&A for more information. |
| --- | --- |
| 3) | All figures in thousands except gold and palladium ounces as well as cobalt pounds and per ounce amounts. The total<br>upfront consideration paid to date excludes closing costs and capitalized interest, where applicable. Please refer to the section entitled “Other Contractual Obligations and Contingencies” on page 23 of this MD&A for details of when<br>the remaining upfront consideration to be paid becomes due. |
| --- | --- |
| 4) | Payable gold, silver, palladium and cobalt PBND are based on management estimates. These figures may be updated in the<br>future as additional information is received. |
| --- | --- |
| 5) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. As of March 31, 2021, the Company has received approximately $215 million of operating cash flows relative to the Sudbury PMPA. Should the market value of<br>gold delivered to Wheaton through the 20 year term of the contract, net of the per ounce cash payment, be lower than the initial $670 million refundable deposit, the Company will be entitled to a refund of the difference at the conclusion of<br>the term. |
| --- | --- |
| 6) | Should Hudbay fail to achieve a minimum level of throughput at the Pampacancha deposit during the 18 months ended<br>June 30, 2021, Wheaton will be entitled to an additional 8,020 ounces of gold to be delivered in 4 quarterly installments beginning in the third quarter of 2021. Hudbay and the Company are currently in discussions about, among other things,<br>alternatives to defer the additional gold deliveries over the Pampacancha mine life. |
| --- | --- |
| 7) | The original San Dimas SPA, entered into on October 15, 2004, was terminated on May 10, 2018 and concurrently<br>the Company entered into the new San Dimas PMPA. Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production plus an additional amount of gold equal to 25% of the payable silver production<br>converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or increases to more than 90:1 for a period of 6 months or more, then the<br>“70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a period of 6 months or more in which event the “70” shall be<br>reinstated. Currently, the fixed gold to silver exchange ratio is 70:1. |
| --- | --- |
| 8) | Comprised of the Stillwater and East Boulder gold and palladium interests. |
| --- | --- |
| 9) | The Company is entitled to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.<br> |
| --- | --- |
| 10) | As of March 31, 2021, the Company has received approximately $327 million of operating cash flows relative to<br>the 777 PMPA. Should the market value of gold and silver delivered to Wheaton through the initial 40 year term of the contract, net of the per ounce cash payment, be lower than the initial $455 million upfront consideration, the Company will be<br>entitled to a refund of the difference at the conclusion of the 40 year term. |
| --- | --- |
| 11) | Once Wheaton has received 190,000 ounces of gold and 2.15 million ounces of silver the Company’s attributable<br>gold and silver production will be reduced to 3.25% and 50%, respectively. |
| --- | --- |
| 12) | Once the Company has received 285,000 ounces of gold the Company’s attributable gold production will be reduced to<br>67%. |
| --- | --- |
| 13) | Once Wheaton has received 140 million ounces of silver under the Antamina PMPA, the Company’s attributable<br>silver production will be reduced to 22.5%. |
| --- | --- |
| 14) | Glencore will deliver a per annum amount to Wheaton equal to the first 1.5 million ounces of payable silver produced<br>at Yauliyacu and 50% of any excess. |
| --- | --- |
| 15) | Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.<br> |
| --- | --- |
| 16) | Wheaton and PAAS have not yet finalized the definitive terms of the agreement. |
| --- | --- |
| 17) | Once Wheaton has received 10 million ounces of silver under the Cozamin PMPA, the Company’s attributable silver<br>production will be reduced to 33%. |
| --- | --- |
| 18) | Once the Company has received 375,000 ounces of palladium under the Stillwater agreement, the Company’s attributable<br>palladium production will be reduced to 2.25%, and once the Company has received 550,000 ounces of palladium under the agreement, the Company’s attributable palladium production will be reduced to 1%. |
| --- | --- |
| 19) | Once the Company has received 31 million pounds of cobalt under the Voisey’s Bay agreement, the Company’s<br>attributable cobalt production will be reduced to 21.2%. |
| --- | --- |
| ^1^ | Statements made in this section contain forward-looking information including the timing and amount of estimated future<br>production and readers are cautioned that actual outcomes may vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure associated with this information.<br> |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [7]
Updates Relative to the Mineral Stream Interests
Acquisition of Santo Domingo Precious Metals Purchase Agreement
On March 25, 2021, the Company announced that it had entered into a PMPA with Capstone in respect to the Santo Domingo project located in the Atacama Region of Chile. Upon closing, the Company will purchase 100% of the payable gold production until 285,000 ounces have been delivered, thereafter dropping to 67% of payable gold production for the life of the mine. The Company will pay Capstone total upfront cash consideration of $290 million, $30 million of which was payable upon closing, which occurred on April 21, 2021 and the remainder of which is payable during construction of the Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures. In addition, Wheaton will make ongoing payments for gold ounces delivered equal to 18% of the spot gold price until the market value of gold delivered to the Company, net of the per ounce cash payment, exceeds the initial upfront cash deposit, and 22% of the spot gold price thereafter.
Salobo – Mill Throughput Expansion
The Salobo mine currently has a mill throughput capacity of 24 million tonnes per annum (“Mtpa”). As per Vale S.A.’s (“Vale”) third quarter 2018 report, in October 2018 Vale’s Board of Directors approved the investment in the Salobo III mine expansion (the “Salobo Expansion”). The Salobo Expansion is proposed to include a third concentrator line and will use Salobo’s existing infrastructure. As per Vale’s First Quarter 2021 Performance Report, physical completion of the Salobo III mine expansion was 73% at the end of the first quarter and is on track for start-up in the first half of 2022.
Constancia – Pampacancha Delay
Hudbay announced on April 7, 2021, that the final land user agreement for Pampacancha has been completed and Hudbay now has full access to the site to begin pit development activities.
As per Hudbay’s MD&A for the year ended December 31, 2020, Hudbay no longer expects to mine four million tonnes of ore from the Pampacancha deposit by June 30, 2021, and should they fail to meet this milestone, they will be required to deliver an additional 8,020 ounces of gold to the Company in equal quarterly installments, commencing September 30, 2021 in accordance with the Constancia PMPA. Hudbay and the Company are currently in discussions about, among other things, alternatives to defer the additional gold deliveries over the Pampacancha mine life.
Rosemont – Water Permit
On March 29, 2021, Hudbay reported that on March 24, 2021, the U.S. Army Corps of Engineers (the “Corps”) issued an approved jurisdictional determination whereby the Corps determined that waters of the United States do not occur on the Rosemont property. As a result, Rosemont is no longer subject to the Clean Water Act and does not require a Section 404 Water Permit.
777 – End of Mine Life
On March 29, 2021, Hudbay reported that based on the most recent estimate of mineral reserves, there has been no change to the expected mine life for 777, which is expected to be depleted by the end of the second quarter of 2022.
Early Deposit Mineral Stream Interests
Early deposit mineral stream interests represent agreements relative to early stage development projects whereby Wheaton can choose not to proceed with the agreement once certain documentation has been received including, but not limited to, feasibility studies, environmental studies and impact assessment studies. Once Wheaton has elected to proceed with the agreement, the carrying value of the stream will be transferred to Mineral Stream Interests.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [8]
The following table summarizes the early deposit mineral stream interests currently owned by the Company:
| AttributableProduction to bePurchased | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Early Deposit<br><br><br>Mineral Stream<br><br><br>Interests | MineOwner | Location<br><br><br>ofMine | UpfrontConsideration<br><br><br>Paid to Date^1^ | UpfrontConsiderationto be Paid^1,^^2^ | TotalUpfrontConsideration¹ | Gold | Silver | Term ofAgreement | Date ofOriginalContract | |||||||||||||||||||||||||
| Toroparu | Gold X | Guyana | $ | 15,500 | $ | 138,000 | $ | 153,500 | 10% | 50% | Life of Mine | 11-Nov-13 | ||||||||||||||||||||||
| Cotabambas | Panoro | Peru | 10,750 | 129,250 | 140,000 | 25% | ^3^ | 100% | ^3^ | Life of Mine | 21-Mar-16 | |||||||||||||||||||||||
| Kutcho | Kutcho | Canada | 7,000 | 58,000 | 65,000 | 100% | ^4^ | 100% | ^4^ | Life of Mine | 14-Dec-17 | |||||||||||||||||||||||
| $ | 33,250 | $ | 325,250 | $ | 358,500 | |||||||||||||||||||||||||||||
| 1) | Expressed in thousands of United States dollars; excludes closing costs and capitalized interest, where applicable.<br> | |||||||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||||||
| 2) | Please refer to the section entitled “Other Contractual Obligations and Contingencies” on page 23 of this<br>MD&A for details of when the remaining upfront consideration to be paid becomes due. | |||||||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||||||
| 3) | Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production will<br>decrease to 16.67% of gold production and 66.67% of silver production for the life of mine. | |||||||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||||||
| 4) | Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, the stream will decrease<br>to 66.67% of gold and silver production for the life of mine. | |||||||||||||||||||||||||||||||||
| --- | --- |
Toroparu – Gold X Acquisition by Gran Colombia Gold Corp. (“GranColombia”)
On March 15, 2021, Gold X Mining Corp. (“Gold X”), the owner of the Toroparu Gold Project in Guyana, announced the execution of an arrangement agreement under which Gran Colombia will acquire all of the issued and outstanding common shares of Gold X by exchanging 0.6948 shares of a Gran Colombia Share for each share of Gold X outstanding, for an implied price of Cdn$4.10 per Gold X common share. In addition to the Toroparu early deposit mineral stream interest, the Company owns 4.5 million shares of Gold X. The acquisition remains subject to shareholder, court and stock exchange approvals.
Mineral Royalty Interest
On January 5, 2021, the Company purchased from Alexco, for $3 million (Cdn$4 million), a 2.0% net smelter return royalty interest on the first 600,000 ounces of gold mined from ore extracted from the Golden Predator Exploration Ltd. (“Golden Predator”) owned Brewery Creek quartz mineral claims (the “Brewery Creek Mineral Claims”) located in the Yukon Territories, Canada and any mineral tenure derived therefrom, and a 2.75% net smelter returns royalty interest thereafter (the “Brewery Creek Royalty”). The Brewery Creek Royalty agreement provides, among other things, that Golden Predator may reduce the 2.75% net smelter returns royalty interest to 2.125%, on payment of the sum of Cdn$2 million to Wheaton.
Additionally, the Company has a 0.5% net smelter return royalty interest in the Metates properties (the “Metates Royalty”) located in Mexico from Chesapeake Gold Corp. (“Chesapeake”) for the life of mine. The carrying cost of the Metates Royalty is $3 million. The Company also has a right of first refusal on any silver streaming, royalty or any other transaction on the Metates properties.
To date, no revenue has been recognized and no depletion has been taken with respect to these royalty agreements.
Long-Term Equity Investments
The Company will, from time to time, invest in securities of companies for strategic purposes including, but not limited to, exploration and mining companies. The Company held the following investments as at March 31, 2021 and December 31, 2020:
| March 31 | December 31 | |||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Common shares held | $ | 83,836 | $ | 196,241 | ||
| Warrants held | 2,686 | 3,637 | ||||
| Total long-term equity investments | $ | 86,522 | $ | 199,878 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [9]
The Company’s long-term investments in common shares (“LTI’s”) are held for long-term strategic purposes and not for trading purposes. As such, the Company has elected to reflect any fair value adjustments, net of tax, as a component of other comprehensive income (“OCI”). The cumulative gain or loss will not be reclassified to net earnings on disposal of these long-term investments but is reclassified to retained earnings.
While long-term investments in warrants are also held for long-term strategic purposes, they meet the definition of a derivative and therefore are classified as financial assets with fair value adjustments being recorded as a component of net earnings under the classification Other (Income) Expense. Warrants that do not have a quoted market price are valued using a Black-Scholes option pricing model.
By holding these long-term investments, the Company is inherently exposed to various risk factors including currency risk, market price risk and liquidity risk.
A summary of the fair value of these equity investments and the fair value changes recognized as a component of the Company’s OCI during the three months ended March 31, 2021 and 2020 is presented below:
Common Shares Held
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Shares<br>Owned<br>(000’s) | % of<br>Outstanding<br>Shares<br>Owned | Fair Value at<br><br><br>Dec 31, 2020 | Cost of<br><br><br>Additions | Proceeds of<br><br><br>Disposition ^1^ | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) ^2^ | Fair Value at<br>Mar 31, 2021 | Realized Gain<br><br><br>on Disposal | |||||||||||||||||||
| Bear Creek | 13,264 | 10.70% | $ | 32,609 | $ | - | $ | - | $ | (9,720 | ) | $ | 22,889 | $ | - | ||||||||||||
| Sabina | 11,700 | 3.36% | 30,233 | - | - | (13,392 | ) | 16,841 | - | ||||||||||||||||||
| First Majestic | - | 0.00% | 95,984 | - | (112,188 | ) | 16,204 | - | 60,530 | ||||||||||||||||||
| Other | 37,415 | - | - | 6,691 | 44,106 | - | |||||||||||||||||||||
| Total | $ | 196,241 | $ | - | $ | (112,188 | ) | $ | (217 | ) | $ | 83,836 | $ | 60,530 | |||||||||||||
| 1) Disposals during 2021 were made in order to capitalize on the share appreciation related to the strong<br>commodity price environment.<br> <br>2) Fair Value Gains (Losses) are reflected as a component of Other<br>Comprehensive Income (“OCI”). | |||||||||||||||||||||||||||
| Three Months Ended March 31, 2020 | |||||||||||||||||||||||||||
| (in thousands) | Shares<br>Owned<br>(000’s) | % of<br>Outstanding<br><br><br>Shares<br> <br>Owned | Fair Value at<br>Dec 31, 2019 | Cost of<br><br><br>Additions^1^ | Proceeds of<br><br><br>Disposition | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) ^2^ | Fair Value at<br>Mar 31, 2020 | Realized Loss<br><br><br>on Disposal | |||||||||||||||||||
| Bear Creek | 13,264 | 11.92% | $ | 27,983 | $ | - | $ | - | $ | (16,950 | ) | $ | 11,033 | $ | - | ||||||||||||
| Sabina | 11,700 | 3.95% | 17,296 | - | - | (7,647 | ) | 9,649 | - | ||||||||||||||||||
| First Majestic | 20,240 | 9.65% | 248,137 | - | - | (122,854 | ) | 125,283 | - | ||||||||||||||||||
| Other | 16,341 | 1,359 | - | (6,692 | ) | 11,008 | - | ||||||||||||||||||||
| Total | $ | 309,757 | $ | 1,359 | $ | - | $ | (154,143 | ) | $ | 156,973 | $ | - | ||||||||||||||
| 1) | Additions relate to the subscription rights of Aris Gold Corporation, (“Aris Gold”, formerly Caldas Gold Corp.)<br>being automatically converted into common shares of Aris Gold on February 28, 2020. | ||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||
| 2) | Fair Value Gains (Losses) are reflected as a component of OCI. | ||||||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [10]
A summary of the fair value of the long-term investments in warrants and the fair value changes recognized as a component of net earnings during the three months ended March 31, 2021 and 2020 is presented below:
Warrants Held
| Three Months Ended March 31, 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Fair Value at<br>Dec 31, 2020 | Cost of<br><br><br>Additions | Value of<br><br><br>Warrants<br> <br>Converted into<br><br><br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br>Mar 31, 2021 | ||||||||||
| Other | $ | 3,637 | $ | - | $ | - | $ | (951 | ) | $ | 2,686 | ||||
| Three Months Ended March 31, 2020 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Fair Value at<br>Dec 31, 2019 | Cost of<br><br><br>Additions | Value of<br><br><br>Warrants<br> <br>Converted into<br><br><br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br>Mar 31, 2020 | ||||||||||
| Other | $ | - | $ | 165 | $ | - | $ | (71 | ) | $ | 94 |
Convertible Notes Receivable
Kutcho Copper Corp.
Effective December 14, 2017, in connection with the Kutcho Early Deposit Agreement, the Company advanced to Kutcho $16 million (Cdn$20 million) and received the Kutcho Convertible Note. The Kutcho Convertible Note, which has a seven year term to maturity, carries interest at 10% per annum, compounded and payable semi-annually. Kutcho elected to defer the first six interest payments, with all deferred payments being due no later than December 31, 2023. The deferred interest carries interest at 15% per annum, compounded semi-annually.
At any time prior to the maturity date, the Company has the right to convert all or any part of the outstanding amount of the Kutcho Convertible Note, excluding outstanding deferred interest, into common shares of Kutcho at Cdn$0.8125 per share. Kutcho has the right to repay the Kutcho Convertible Note early, subject to the applicable pre-payment cash penalties as follows:
| · | 20% of the outstanding amount if pre-paid on or after 36 months until 60 months; and<br> |
|---|---|
| · | 15% of the outstanding amount if pre-paid on or after 60 months until maturity.<br> |
| --- | --- |
Gold X Mining Corp.
Effective December 24, 2019, in connection with the Toroparu Early Deposit Agreement, the Company advanced $10 million to Gold X as part of a $20 million 10% secured convertible debenture private placement offering completed by Gold X (the “Gold X Convertible Note”). The Gold X Convertible Note carried interest at 10% per annum, compounded semi-annually and payable annually.
Effective July 14, 2020, the Company elected to convert the outstanding principal relative to the Gold X Convertible Note into common shares of Gold X at Cdn$3.20 per share, with the outstanding amounts being converted into Canadian dollars using the exchange rate published by the Bank of Canada on July 13, 2020. In addition, the accrued interest relative to the Gold X Convertible Note was converted to common shares of Gold X at Cdn$3.57 per share. As a result, on July 14, 2020, the Company received 4,467,317 common shares of Gold X and the Gold X Convertible Note was retired.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [11]
Convertible Notes Receivable Valuation Summary
The Kutcho Convertible Note is revalued quarterly by discounting the stream of future interest and principal payments at the rate of interest prevailing at the balance sheet date for instruments of similar term and risk, and adding this value to the value of the convertibility feature which is estimated using a Black-Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and expected remaining life of the Kutcho Convertible Note.
The value of the Gold X Convertible Note, which was converted into common shares of Gold X effective July 14, 2020, was determined by reference to the value of the shares received. Prior to electing to convert this convertible note receivable into common shares of Gold X, the Gold X Convertible Note was revalued quarterly using the same methodology as the Kutcho Convertible Note above.
A summary of the fair value of these convertible instruments and the fair value changes recognized as a component of the Company’s net earnings during the three months ended March 31, 2021 and 2020 is presented below:
| Three Months Ended March 31, 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Fair Value at<br>Dec 31, 2020 | Amount<br><br><br>Advanced | Value<br><br><br>Converted into<br> <br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br>Mar 31, 2021 | ||||||||||
| Kutcho | $ | 11,353 | $ | - | $ | - | $ | 1,238 | $ | 12,591 | |||||
| Three Months Ended March 31, 2020 | |||||||||||||||
| (in thousands) | Fair Value at<br>Dec 31, 2019 | Amount<br><br><br>Advanced | Value<br><br><br>Converted into<br> <br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br>Mar 31, 2020 | ||||||||||
| Kutcho | $ | 11,837 | $ | - | $ | - | $ | (1,000 | ) | $ | 10,837 | ||||
| Gold X | 10,019 | - | - | 210 | 10,229 | ||||||||||
| Total | $ | 21,856 | $ | - | $ | - | $ | (790 | ) | $ | 21,066 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [12]
Summary of Units Produced
| Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold ounces produced ² | ||||||||||||||||||||||||
| Salobo | 46,622 | 62,854 | 63,408 | 59,104 | 62,575 | 74,716 | 73,615 | 67,056 | ||||||||||||||||
| Sudbury ^3^ | 6,208 | 6,659 | 3,798 | 9,257 | 7,795 | 6,468 | 6,082 | 9,360 | ||||||||||||||||
| Constancia ^8^ | 2,453 | 3,929 | 3,780 | 3,470 | 3,681 | 4,757 | 5,172 | 4,533 | ||||||||||||||||
| San Dimas ^4, 8^ | 10,491 | 11,652 | 9,228 | 6,074 | 11,318 | 11,352 | 11,239 | 11,496 | ||||||||||||||||
| Stillwater ^5^ | 3,041 | 3,290 | 3,176 | 3,222 | 2,955 | 3,585 | 3,238 | 3,675 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Minto ^6^ | 2,638 | 789 | 1,832 | 2,928 | 2,124 | 2,189 | - | - | ||||||||||||||||
| 777 ^9^ | 6,280 | 2,866 | 5,278 | 4,728 | 4,551 | 3,987 | 4,278 | 4,788 | ||||||||||||||||
| Total Other | 8,918 | 3,655 | 7,110 | 7,656 | 6,675 | 6,176 | 4,278 | 4,788 | ||||||||||||||||
| Total gold ounces produced | 77,733 | 92,039 | 90,500 | 88,783 | 94,999 | 107,054 | 103,624 | 100,908 | ||||||||||||||||
| Silver ounces produced ^2^ | ||||||||||||||||||||||||
| Peñasquito ^8^ | 2,202 | 2,014 | 1,992 | 967 | 2,658 | 1,895 | 2,026 | 702 | ||||||||||||||||
| Antamina ^8^ | 1,577 | 1,930 | 1,516 | 612 | 1,311 | 1,342 | 1,223 | 1,334 | ||||||||||||||||
| Constancia ^8^ | 406 | 478 | 430 | 254 | 461 | 632 | 686 | 552 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Los Filos ^8^ | 23 | 6 | 17 | 14 | 29 | 55 | 33 | 37 | ||||||||||||||||
| Zinkgruvan | 420 | 515 | 498 | 389 | 662 | 670 | 587 | 590 | ||||||||||||||||
| Yauliyacu ^8^ | 737 | 454 | 679 | 273 | 557 | 358 | 620 | 627 | ||||||||||||||||
| Stratoni | 165 | 185 | 156 | 148 | 183 | 147 | 131 | 172 | ||||||||||||||||
| Minto ^6^ | 21 | 16 | 15 | 19 | 18 | 18 | - | - | ||||||||||||||||
| Neves-Corvo | 345 | 420 | 281 | 479 | 377 | 385 | 431 | 392 | ||||||||||||||||
| Aljustrel | 474 | 440 | 348 | 388 | 352 | 325 | 240 | 322 | ||||||||||||||||
| Cozamin | 230 | - | - | - | - | - | - | - | ||||||||||||||||
| Keno Hill | 24 | - | - | - | - | - | - | - | ||||||||||||||||
| 777 ^9^ | 130 | 51 | 96 | 108 | 96 | 81 | 62 | 93 | ||||||||||||||||
| Total Other | 2,569 | 2,087 | 2,090 | 1,818 | 2,274 | 2,039 | 2,104 | 2,233 | ||||||||||||||||
| Total silver ounces produced | 6,754 | 6,509 | 6,028 | 3,651 | 6,704 | 5,908 | 6,039 | 4,821 | ||||||||||||||||
| Palladium ounces produced ² | ||||||||||||||||||||||||
| Stillwater<br>^5^ | 5,769 | 5,672 | 5,444 | 5,759 | 5,312 | 6,057 | 5,471 | 5,736 | ||||||||||||||||
| Cobalt pounds produced ² | ||||||||||||||||||||||||
| Voisey’s Bay | 1,160,921 | - | - | - | - | - | - | - | ||||||||||||||||
| GEOs produced ^7^ | 190,359 | 189,682 | 181,184 | 146,857 | 194,901 | 196,850 | 194,499 | 175,185 | ||||||||||||||||
| SEOs produced<br>^7^ | 13,706 | 13,657 | 13,045 | 10,574 | 14,033 | 14,173 | 14,004 | 12,613 | ||||||||||||||||
| Average payable rate ^2^ | ||||||||||||||||||||||||
| Gold | 95.0% | 95.2% | 95.3% | 94.7% | 95.1% | 95.6% | 95.1% | 95.3% | ||||||||||||||||
| Silver | 86.6% | 86.3% | 86.1% | 81.9% | 85.6% | 85.3% | 85.1% | 83.3% | ||||||||||||||||
| Palladium | 85.1% | 98.2% | 97.0% | 86.5% | 93.0% | 99.4% | 83.5% | 87.6% | ||||||||||||||||
| Cobalt | 93.3% | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||
| GEO ^7^ | 90.4% | 91.1% | 91.1% | 89.8% | 90.4% | 91.5% | 90.4% | 90.4% | ||||||||||||||||
| 1) | All figures in thousands except cobalt pounds and gold and palladium ounces produced. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Comprised of the Coleman, Copper Cliff, Garson, Creighton and Totten gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 4) | Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production<br>plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or<br>increases to more than 90:1 for a period of 6 months or more, then the “70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a<br>period of 6 months or more in which event the “70” shall be reinstated. Effective April 1, 2020, the fixed gold to silver exchange ratio was revised to 90:1, with the 70:1 ratio being reinstated on October 15, 2020. For<br>reference, attributable silver production from prior periods is as follows: Q1-2021 – 437,000 ounces; Q4-2020 – 476,000 ounces;<br>Q3-2020 – 420,000 ounces; Q2-2020 – 276,000 ounces; Q1-2020 – 419,000 ounces;<br>Q4-2019 – 415,000 ounces; Q3-2019 – 410,000 ounces; and Q2-2019 – 401,000 ounces. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 5) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 6) | The Minto mine was placed into care and maintenance from October 2018 to October 2019. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 7) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 8) | Operations at these mines had been temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic. During the second half of 2020, all of the operations were restarted. Additionally, operations at Los Filos were suspended from September 3, 2020 to December 23, 2020 as the result of an<br>illegal road blockade by members of the nearby Carrizalillo community. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 9) | Operations at 777 were temporarily suspended from October 11, 2020 to November 25, 2020 as a result of an<br>incident that occurred on October 9th during routine maintenance of the hoist rope and skip. | |||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [13]
Summary of Units Sold
| Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold ounces sold | ||||||||||||||||||||||||
| Salobo | 51,423 | 53,197 | 59,584 | 68,487 | 74,944 | 58,137 | 63,064 | 57,715 | ||||||||||||||||
| Sudbury ^2^ | 3,691 | 7,620 | 7,858 | 7,414 | 4,822 | 7,394 | 7,600 | 8,309 | ||||||||||||||||
| Constancia ^7^ | 1,676 | 3,853 | 4,112 | 3,024 | 3,331 | 5,108 | 4,742 | 4,409 | ||||||||||||||||
| San Dimas ^7^ | 10,273 | 11,529 | 9,687 | 6,030 | 11,358 | 11,499 | 11,374 | 10,284 | ||||||||||||||||
| Stillwater ^3^ | 3,074 | 3,069 | 3,015 | 3,066 | 3,510 | 2,925 | 3,314 | 3,301 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Minto ^4^ | 2,390 | 1,540 | - | - | - | - | - | 765 | ||||||||||||||||
| 777 | 2,577 | 5,435 | 5,845 | 4,783 | 2,440 | 4,160 | 4,672 | 5,294 | ||||||||||||||||
| Total Other | 4,967 | 6,975 | 5,845 | 4,783 | 2,440 | 4,160 | 4,672 | 6,059 | ||||||||||||||||
| Total gold ounces sold | 75,104 | 86,243 | 90,101 | 92,804 | 100,405 | 89,223 | 94,766 | 90,077 | ||||||||||||||||
| Silver ounces sold | ||||||||||||||||||||||||
| Peñasquito ^7^ | 2,174 | 1,417 | 1,799 | 1,917 | 2,310 | 1,268 | 1,233 | 912 | ||||||||||||||||
| Antamina ^7^ | 1,930 | 1,669 | 1,090 | 788 | 1,244 | 1,227 | 1,059 | 1,186 | ||||||||||||||||
| Constancia ^7^ | 346 | 442 | 415 | 254 | 350 | 672 | 521 | 478 | ||||||||||||||||
| Other | ||||||||||||||||||||||||
| Los Filos ^7^ | 27 | - | 19 | 25 | 37 | 26 | 44 | 26 | ||||||||||||||||
| Zinkgruvan | 293 | 326 | 492 | 376 | 447 | 473 | 459 | 337 | ||||||||||||||||
| Yauliyacu ^7^ | 1,014 | 15 | 580 | 704 | 9 | 561 | 574 | 542 | ||||||||||||||||
| Stratoni | 117 | 169 | 134 | 77 | 163 | 120 | 126 | 240 | ||||||||||||||||
| Minto ^4^ | 26 | 20 | - | - | - | - | - | 2 | ||||||||||||||||
| Neves-Corvo | 239 | 145 | 201 | 236 | 204 | 154 | 243 | 194 | ||||||||||||||||
| Aljustrel | 257 | 280 | 148 | 252 | 123 | 121 | 139 | 216 | ||||||||||||||||
| Cozamin | 173 | - | - | - | - | - | - | - | ||||||||||||||||
| Keno Hill | 12 | - | - | - | - | - | - | - | ||||||||||||||||
| 777 | 49 | 93 | 121 | 100 | 41 | 62 | 86 | 108 | ||||||||||||||||
| Total Other | 2,207 | 1,048 | 1,695 | 1,770 | 1,024 | 1,517 | 1,671 | 1,665 | ||||||||||||||||
| Total silver ounces sold | 6,657 | 4,576 | 4,999 | 4,729 | 4,928 | 4,684 | 4,484 | 4,241 | ||||||||||||||||
| Palladium ounces sold | ||||||||||||||||||||||||
| Stillwater<br>^3^ | 5,131 | 4,591 | 5,546 | 4,976 | 4,938 | 5,312 | 4,907 | 5,273 | ||||||||||||||||
| Cobalt pounds sold | ||||||||||||||||||||||||
| Voisey’s Bay | 132,277 | - | - | - | - | - | - | - | ||||||||||||||||
| GEOs sold ^5^ | 175,419 | 155,665 | 166,611 | 164,844 | 175,154 | 161,066 | 163,314 | 155,723 | ||||||||||||||||
| SEOs sold<br>^5^ | 12,630 | 11,208 | 11,996 | 11,869 | 12,611 | 11,597 | 11,759 | 11,212 | ||||||||||||||||
| Cumulative payable units PBND ^6^ | ||||||||||||||||||||||||
| Gold ounces | 69,262 | 70,555 | 75,750 | 79,632 | 88,383 | 98,475 | 85,335 | 81,535 | ||||||||||||||||
| Silver ounces | 3,717 | 4,486 | 3,437 | 3,222 | 4,961 | 4,142 | 3,796 | 3,102 | ||||||||||||||||
| Palladium ounces | 5,373 | 5,597 | 4,616 | 4,883 | 4,875 | 4,872 | 4,163 | 4,504 | ||||||||||||||||
| Cobalt pounds | 818,584 | - | - | - | - | - | - | - | ||||||||||||||||
| GEO ^5^ | 135,828 | 140,008 | 129,391 | 130,623 | 163,521 | 162,225 | 143,380 | 130,374 | ||||||||||||||||
| SEO<br>^5^ | 9,198 | 10,081 | 9,316 | 9,405 | 11,774 | 11,680 | 10,323 | 9,387 | ||||||||||||||||
| Inventory on hand | ||||||||||||||||||||||||
| Cobalt pounds | 132,277 | - | - | - | - | - | - | - | ||||||||||||||||
| 1) | All figures in thousands except cobalt pounds and gold and palladium ounces sold. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Comprised of the Coleman, Copper Cliff, Garson, Creighton and Totten gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 4) | The Minto mine was placed into care and maintenance from October 2018 to October 2019. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 5) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 6) | Payable gold, silver and palladium ounces PBND and Cobalt pounds PBND are based on management estimates. These figures may<br>be updated in future periods as additional information is received. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 7) | Operations at these mines had been temporarily suspended during the second quarter of 2020 as a result of the COVID-19 pandemic. During the second half of 2020, all of the operations were restarted. | |||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [14]
Quarterly Financial Review ^1^
| xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx | Q1 2021 | Q4 2020 | Q3 2020 | Q2 2020 | Q1 2020 | Q4 2019 | Q3 2019 | Q2 2019 | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold ounces sold | 75,104 | 86,243 | 90,101 | 92,804 | 100,405 | 89,223 | 94,766 | 90,077 | ||||||||||||||||
| Realized price<br>^2^ | $ | 1,798 | $ | 1,882 | $ | 1,906 | $ | 1,716 | $ | 1,589 | $ | 1,483 | $ | 1,471 | $ | 1,320 | ||||||||
| Gold sales | $ | 135,025 | $ | 162,299 | $ | 171,734 | $ | 159,272 | $ | 159,522 | $ | 132,342 | $ | 139,433 | $ | 118,870 | ||||||||
| Silver ounces sold | 6,657 | 4,576 | 4,999 | 4,729 | 4,928 | 4,684 | 4,484 | 4,241 | ||||||||||||||||
| Realized price<br>^2^ | $ | 26.12 | $ | 24.72 | $ | 24.69 | $ | 16.73 | $ | 17.03 | $ | 17.36 | $ | 17.09 | $ | 14.93 | ||||||||
| Silver sales | $ | 173,883 | $ | 113,131 | $ | 123,434 | $ | 79,142 | $ | 83,917 | $ | 81,296 | $ | 76,631 | $ | 63,313 | ||||||||
| Palladium ounces sold | 5,131 | 4,591 | 5,546 | 4,976 | 4,938 | 5,312 | 4,907 | 5,273 | ||||||||||||||||
| Realized price<br>^2^ | $ | 2,392 | $ | 2,348 | $ | 2,182 | $ | 1,917 | $ | 2,298 | $ | 1,804 | $ | 1,535 | $ | 1,381 | ||||||||
| Palladium sales | $ | 12,275 | $ | 10,782 | $ | 12,100 | $ | 9,540 | $ | 11,350 | $ | 9,584 | $ | 7,531 | $ | 7,283 | ||||||||
| Cobalt pounds sold | 132,277 | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | n.a. | ||||||||||||||||
| Realized price<br>^2^ | $ | 22.19 | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | ||||||||
| Cobalt sales | $ | 2,936 | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | ||||||||
| Total sales | $ | 324,119 | $ | 286,212 | $ | 307,268 | $ | 247,954 | $ | 254,789 | $ | 223,222 | $ | 223,595 | $ | 189,466 | ||||||||
| Cash cost ^2, 3^ | ||||||||||||||||||||||||
| Gold / oz | $ | 450 | $ | 433 | $ | 428 | $ | 418 | $ | 426 | $ | 426 | $ | 424 | $ | 420 | ||||||||
| Silver / oz | $ | 6.33 | $ | 5.51 | $ | 5.89 | $ | 5.23 | $ | 4.50 | $ | 5.13 | $ | 5.16 | $ | 5.14 | ||||||||
| Palladium / oz | $ | 427 | $ | 423 | $ | 383 | $ | 353 | $ | 402 | $ | 321 | $ | 271 | $ | 247 | ||||||||
| Cobalt / lb | $ | 4.98 | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | ||||||||
| Depletion ^2^ | ||||||||||||||||||||||||
| Gold / oz | $ | 374 | $ | 397 | $ | 404 | $ | 405 | $ | 389 | $ | 417 | $ | 417 | $ | 420 | ||||||||
| Silver / oz | $ | 5.82 | $ | 5.16 | $ | 4.36 | $ | 4.01 | $ | 4.80 | $ | 5.12 | $ | 4.81 | $ | 4.97 | ||||||||
| Palladium / oz | $ | 442 | $ | 428 | $ | 428 | $ | 428 | $ | 428 | $ | 470 | $ | 470 | $ | 470 | ||||||||
| Cobalt / lb | $ | 8.17 | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | $ | n.a. | ||||||||
| Net earnings (loss) | $ | 162,002 | $ | 157,221 | $ | 149,875 | $ | 105,812 | $ | 94,896 | $ | 77,524 | $ | 75,960 | $ | (124,694) | ||||||||
| Per share | ||||||||||||||||||||||||
| Basic | $ | 0.360 | $ | 0.350 | $ | 0.334 | $ | 0.236 | $ | 0.212 | $ | 0.173 | $ | 0.170 | $ | (0.280) | ||||||||
| Diluted | $ | 0.360 | $ | 0.349 | $ | 0.332 | $ | 0.235 | $ | 0.211 | $ | 0.173 | $ | 0.170 | $ | (0.279) | ||||||||
| Adjusted net earnings ^3^ | $ | 161,133 | $ | 149,441 | $ | 152,007 | $ | 97,354 | $ | 104,534 | $ | 74,471 | $ | 69,914 | $ | 41,959 | ||||||||
| Per share | ||||||||||||||||||||||||
| Basic | $ | 0.358 | $ | 0.333 | $ | 0.338 | $ | 0.217 | $ | 0.233 | $ | 0.166 | $ | 0.156 | $ | 0.094 | ||||||||
| Diluted | $ | 0.358 | $ | 0.331 | $ | 0.336 | $ | 0.216 | $ | 0.233 | $ | 0.166 | $ | 0.156 | $ | 0.094 | ||||||||
| Cash flow from operations | $ | 232,154 | $ | 207,962 | $ | 228,099 | $ | 151,793 | $ | 177,588 | $ | 131,867 | $ | 142,300 | $ | 109,258 | ||||||||
| Per share ^3^ | ||||||||||||||||||||||||
| Basic | $ | 0.516 | $ | 0.463 | $ | 0.508 | $ | 0.338 | $ | 0.397 | $ | 0.295 | $ | 0.318 | $ | 0.245 | ||||||||
| Diluted | $ | 0.515 | $ | 0.461 | $ | 0.505 | $ | 0.337 | $ | 0.396 | $ | 0.294 | $ | 0.318 | $ | 0.245 | ||||||||
| Dividends declared | $ | 58,478 | $ | 53,914 | $ | 44,896 | $ | 44,862 | $ | 44,815 | $ | 40,252 | $ | 40,197 | $ | 40,133 | ||||||||
| Per share | $ | 0.13 | $ | 0.12 | $ | 0.10 | $ | 0.10 | $ | 0.10 | $ | 0.09 | $ | 0.09 | $ | 0.09 | ||||||||
| Total assets | $ | 5,928,412 | $ | 5,957,272 | $ | 6,091,187 | $ | 6,134,044 | $ | 6,076,941 | $ | 6,278,007 | $ | 6,258,859 | $ | 6,240,823 | ||||||||
| Total liabilities | $ | 104,985 | $ | 242,701 | $ | 539,849 | $ | 717,101 | $ | 838,715 | $ | 952,087 | $ | 1,057,415 | $ | 1,128,877 | ||||||||
| Total shareholders’ equity | $ | 5,823,427 | $ | 5,714,571 | $ | 5,551,338 | $ | 5,416,943 | $ | 5,238,226 | $ | 5,325,920 | $ | 5,201,444 | $ | 5,111,946 | ||||||||
| 1) | All figures in thousands except cobalt pounds, gold and palladium ounces produced and sold, per unit amounts and per share<br>amounts. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Expressed as US$ per ounce and for cobalt per pound. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Refer to discussion on non-IFRS beginning on page 27 of this MD&A.<br> | |||||||||||||||||||||||
| --- | --- |
Changes in sales, net earnings and cash flow from operations from quarter to quarter are affected primarily by fluctuations in production at the mines, the timing of shipments, changes in the price of commodities, the commencement of operations of mines under construction, as well as acquisitions of PMPAs and any related capital raising activities.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [15]
Results of Operations and Operational Review
The operating results of the Company’s reportable operating segments are summarized in the tables and commentary below.
| Three Months Ended March 31, 2021 | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Units<br><br><br>Produced² | Units<br><br><br>Sold | AverageRealizedPrice(‘s Per Unit) | AverageCash Cost(‘s Per<br>Unit)3 | AverageDepletion(‘s PerUnit) | Sales | Net<br>Earnings | Cash Flow<br>From<br>Operations | Total<br>Assets | ||||||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||||||||||||
| Salobo | 46,622 | 51,423 | $ | 1,796 | $ | 412 | $ | 374 | $ | 92,356 | $ | 51,946 | $ | 71,163 | $ | 2,490,127 | ||||||||||||||||||
| Sudbury ^4^ | 6,208 | 3,691 | 1,812 | 400 | 1,024 | 6,688 | 1,431 | 5,219 | 317,235 | |||||||||||||||||||||||||
| Constancia | 2,453 | 1,676 | 1,796 | 408 | 315 | 3,010 | 1,798 | 2,326 | 105,041 | |||||||||||||||||||||||||
| San Dimas | 10,491 | 10,273 | 1,796 | 612 | 322 | 18,450 | 8,851 | 12,162 | 178,891 | |||||||||||||||||||||||||
| Stillwater | 3,041 | 3,074 | 1,796 | 329 | 397 | 5,521 | 3,290 | 4,510 | 223,090 | |||||||||||||||||||||||||
| Other<br>^5^ | 8,918 | 4,967 | 1,812 | 629 | - | 9,000 | 5,878 | 5,855 | 7,591 | |||||||||||||||||||||||||
| 77,733 | 75,104 | $ | 1,798 | $ | 450 | $ | 374 | $ | 135,025 | $ | 73,194 | $ | 101,235 | $ | 3,321,975 | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||||||||||||
| Peñasquito | 2,202 | 2,174 | $ | 26.21 | $ | 4.29 | $ | 3.55 | $ | 56,983 | $ | 39,940 | $ | 47,655 | $ | 342,857 | ||||||||||||||||||
| Antamina | 1,577 | 1,930 | 26.21 | 5.18 | 7.53 | 50,581 | 26,058 | 40,591 | 612,401 | |||||||||||||||||||||||||
| Constancia | 406 | 346 | 26.21 | 6.02 | 7.56 | 9,072 | 4,372 | 6,988 | 214,428 | |||||||||||||||||||||||||
| Other<br>^6^ | 2,569 | 2,207 | 25.95 | 9.41 | 6.30 | 57,247 | 22,589 | 39,098 | 612,237 | |||||||||||||||||||||||||
| 6,754 | 6,657 | $ | 26.12 | $ | 6.33 | $ | 5.82 | $ | 173,883 | $ | 92,959 | $ | 134,332 | $ | 1,781,923 | |||||||||||||||||||
| Palladium | ||||||||||||||||||||||||||||||||||
| Stillwater | 5,769 | 5,131 | $ | 2,392 | $ | 427 | $ | 442 | $ | 12,275 | $ | 7,813 | $ | 10,084 | $ | 239,118 | ||||||||||||||||||
| Cobalt | ||||||||||||||||||||||||||||||||||
| Voisey’s Bay | 1,160,921 | 132,277 | $ | 22.19 | $ | 4.98 | $ | 8.17 | $ | 2,936 | $ | 1,197 | $ | (966 | ) | $ | 225,348 | |||||||||||||||||
| Operating results | **** | $ | 324,119 | $ | 175,163 | $ | 244,685 | $ | 5,568,364 | |||||||||||||||||||||||||
| Other | **** | |||||||||||||||||||||||||||||||||
| General and administrative | $ | (11,971 | ) | $ | (13,592 | ) | ||||||||||||||||||||||||||||
| Finance costs | (1,573 | ) | (1,229 | ) | ||||||||||||||||||||||||||||||
| Other | (119 | ) | 2,320 | |||||||||||||||||||||||||||||||
| Income tax | 502 | (30 | ) | |||||||||||||||||||||||||||||||
| Total other | $ | (13,161 | ) | $ | (12,531 | ) | $ | 360,048 | ||||||||||||||||||||||||||
| $ | 162,002 | $ | 232,154 | $ | 5,928,412 |
All values are in US Dollars.
| 1) | Units produced and sold relative to gold, silver and palladium are reported in ounces, while cobalt is reported in pounds.<br>All figures in thousands except cobalt pounds produced and sold, gold and palladium ounces produced and sold and per unit amounts. |
|---|---|
| 2) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) on page 28 of this MD&A.<br> |
| --- | --- |
| 4) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests and the non-operating Stobie and Victor gold interests. |
| --- | --- |
| 5) | Comprised of the operating 777, Minto and Marmato gold interests, the<br>non-operating Rosemont gold interest and the newly acquired Santo Domingo gold interest. |
| --- | --- |
| 6) | Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto, Keno Hill, Cozamin,<br>Marmato and 777 silver interests and the non-operating Loma de La Plata, Pascua-Lama and Rosemont silver interests. |
| --- | --- |
On a GEO and SEO basis, results for the Company for the three months ended March 31, 2021 were as follows:
| Three Months Ended March 31, 2021 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ounces<br>Produced ^1, 2^ | Ounces<br>Sold ^2^ | AverageRealizedPrice(‘s PerOunce) | AverageCash Cost<br>(‘s PerOunce) 3 | CashOperatingMargin(‘s PerOunce) 4 | AverageDepletion(‘s PerOunce) | GrossMargin(‘s PerOunce) | ||||||||||||||||
| Gold equivalent basis ^5^ | 190,359 | 175,419 | $ | 1,848 | $ | 449 | $ | 1,399 | **** | $ | 400 | $ | 999 | **** | ||||||||
| Silver equivalent basis<br>^5^ | 13,706 | 12,630 | $ | 25.66 | $ | 6.24 | $ | 19.42 | **** | $ | 5.56 | $ | 13.86 | **** |
All values are in US Dollars.
| 1) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
|---|---|
| 2) | Silver ounces produced and sold in thousands. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) on page 28 of this MD&A.<br> |
| --- | --- |
| 4) | Refer to discussion on non-IFRS measure (iv) on page 29 of this MD&A.<br> |
| --- | --- |
| 5) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [16]
| Three Months Ended March 31, 2020 | ||||||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Units<br><br><br>Produced² | Units<br>Sold | AverageRealizedPrice(‘s Per Unit) | AverageCash Cost(‘s PerUnit)3 | AverageDepletion(‘s PerUnit) | Sales | Net<br>Earnings | Cash Flow<br>From<br>Operations | Total<br>Assets | ||||||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||||||||||||
| Salobo | 62,575 | 74,944 | $ | 1,589 | $ | 408 | $ | 374 | $ | 119,094 | $ | 60,459 | $ | 89,137 | $ | 2,577,202 | ||||||||||||||||||
| Sudbury ^4^ | 7,795 | 4,822 | 1,585 | 400 | 828 | 7,641 | 1,719 | 5,616 | 340,050 | |||||||||||||||||||||||||
| Constancia | 3,681 | 3,331 | 1,589 | 404 | 338 | 5,294 | 2,823 | 3,948 | 109,281 | |||||||||||||||||||||||||
| San Dimas | 11,318 | 11,358 | 1,589 | 606 | 315 | 18,049 | 7,587 | 11,166 | 190,787 | |||||||||||||||||||||||||
| Stillwater | 2,955 | 3,510 | 1,589 | 284 | 449 | 5,578 | 3,006 | 4,582 | 228,418 | |||||||||||||||||||||||||
| Other ^5^ | 6,675 | 2,440 | 1,585 | 420 | 305 | 3,866 | 2,096 | 2,840 | 12,424 | |||||||||||||||||||||||||
| 94,999 | 100,405 | $ | 1,589 | $ | 426 | $ | 389 | $ | 159,522 | $ | 77,690 | $ | 117,289 | $ | 3,458,162 | |||||||||||||||||||
| Silver | ||||||||||||||||||||||||||||||||||
| Peñasquito | 2,658 | 2,310 | $ | 17.41 | $ | 4.26 | $ | 3.24 | $ | 40,223 | $ | 22,893 | $ | 30,383 | $ | 367,212 | ||||||||||||||||||
| Antamina | 1,311 | 1,244 | 17.41 | 3.43 | 8.74 | 21,661 | 6,524 | 17,397 | 657,937 | |||||||||||||||||||||||||
| Constancia | 461 | 350 | 17.41 | 5.96 | 7.63 | 6,088 | 1,337 | 4,004 | 225,520 | |||||||||||||||||||||||||
| Other ^6^ | 2,274 | 1,024 | 15.57 | 5.83 | 2.56 | 15,945 | 7,345 | 14,126 | 485,068 | |||||||||||||||||||||||||
| 6,704 | 4,928 | $ | 17.03 | $ | 4.50 | $ | 4.80 | $ | 83,917 | $ | 38,099 | $ | 65,910 | $ | 1,735,737 | |||||||||||||||||||
| Palladium | ||||||||||||||||||||||||||||||||||
| Stillwater | 5,312 | 4,938 | $ | 2,298 | $ | 402 | $ | 428 | $ | 11,350 | $ | 7,251 | $ | 9,364 | $ | 247,856 | ||||||||||||||||||
| Cobalt | ||||||||||||||||||||||||||||||||||
| Voisey’s Bay | - | - | $ | n.a. | $ | n.a. | $ | n.a. | $ | - | $ | - | $ | - | $ | 227,510 | ||||||||||||||||||
| Operating results | **** | $ | 254,789 | $ | 123,040 | $ | 192,563 | $ | 5,669,265 | |||||||||||||||||||||||||
| Other | **** | |||||||||||||||||||||||||||||||||
| General and administrative | $ | (13,181 | ) | $ | (10,732 | ) | ||||||||||||||||||||||||||||
| Finance costs | (7,118 | ) | (8,110 | ) | ||||||||||||||||||||||||||||||
| Other | 597 | 3,778 | ||||||||||||||||||||||||||||||||
| Income tax | (8,442 | ) | 89 | |||||||||||||||||||||||||||||||
| Total other | $ | (28,144 | ) | $ | (14,975 | ) | $ | 407,676 | ||||||||||||||||||||||||||
| $ | 94,896 | $ | 177,588 | $ | 6,076,941 |
All values are in US Dollars.
| 1) | Units produced and sold relative to gold, silver and palladium are reported in ounces, while cobalt is reported in pounds.<br>All figures in thousands except cobalt pounds produced and sold, gold and palladium ounces produced and sold and per unit amounts. |
|---|---|
| 2) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) on page 28 of this MD&A.<br> |
| --- | --- |
| 4) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. |
| --- | --- |
| 5) | Comprised of the operating Minto and 777 gold interests in addition to the<br>non-operating Rosemont gold interest. |
| --- | --- |
| 6) | Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto and 777 silver<br>interests as well as the non-operating Keno Hill, Loma de La Plata, Pascua-Lama and Rosemont silver interests. |
| --- | --- |
On a GEO and SEO basis, results for the Company for the three months ended March 31, 2020 were as follows:
| Three Months Ended March 31, 2020 | ||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Ounces<br>Produced ^1, 2^ | Ounces<br>Sold ^2^ | AverageRealizedPrice(‘s PerOunce) | AverageCash Cost(‘s PerOunce) 3 | CashOperatingMargin(‘s PerOunce) 4 | AverageDepletion(‘s PerOunce) | GrossMargin(‘s PerOunce) | ||||||||||||||||
| Gold equivalent basis ^5^ | 194,901 | 175,154 | $ | 1,455 | $ | 382 | $ | 1,073 | **** | $ | 370 | $ | 703 | **** | ||||||||
| Silver equivalent basis<br>^5^ | 14,033 | 12,611 | $ | 20.20 | $ | 5.31 | $ | 14.89 | **** | $ | 5.14 | $ | 9.75 | **** |
All values are in US Dollars.
| 1) | Quantity produced represent the amount of gold, silver, palladium and cobalt contained in concentrate or doré prior<br>to smelting or refining deductions. Production figures are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other information is<br>not available. Certain production figures may be updated in future periods as additional information is received.. |
|---|---|
| 2) | Silver ounces produced and sold in thousands. |
| --- | --- |
| 3) | Refer to discussion on non-IFRS measure (iii) on page 28 of this MD&A.<br> |
| --- | --- |
| 4) | Refer to discussion on non-IFRS measure (iv) on page 29 of this MD&A.<br> |
| --- | --- |
| 5) | GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,800 per<br>ounce gold; $25.00 per ounce silver; $2,300 per ounce palladium; and $17.75 per pound cobalt; consistent with those used in estimating the Company’s production guidance for 2021. |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [17]
Gold Production
For the three months ended March 31, 2021, attributable gold production was 77,700 ounces relative to 95,000 ounces for the comparable period in 2020, with the 17,300 ounce decrease being primarily attributable to the following factors:
| · | 16,000 ounce (25%) decrease related to the gold stream relative to the Salobo primarily due to throughput and grade, with<br>Vale stating in their First Quarter 2021 Production and Sales Report that throughput at Salobo was impacted due to changes in maintenance routines which restricted mine movement, with further impacts on feed grade for the quarter. The two 12 mtpa<br>lines operated at an average rate of approximately 82% of capacity during Q1-2021 as compared to 86% during Q1-2020; and |
|---|---|
| · | 1,200 ounce (33%) decrease related to the gold stream relative to the Constancia mine primarily due to the 2,005 ounces<br>received as a delay payment relative to Pampacancha in the first quarter of 2020 while no delay payment was received relative to the first quarter of 2021. |
| --- | --- |
Silver Production
For the three months ended March 31, 2021, attributable silver production was 6.8 million ounces relative to 6.7 ounces for the comparable period in 2020, with the 0.1 million ounce increase being primarily attributable to the following factors:
| · | 296,000 ounce (13%) increase related to silver production from the Other mines, primarily due to the mining of higher grade<br>material at Aljustrel, coupled with the production from the recently acquired Cozamin stream, with this contract providing for the delivery of silver sold by Capstone to an offtaker as of December 1, 2020, resulting in reported production in<br>the first quarter of 2021 including some material processed in the previous quarter; and |
|---|---|
| · | 266,000 ounce (20%) increase related to the silver stream relative to the Antamina mine, which was due to higher throughput,<br>grades and recoveries; partially offset by |
| --- | --- |
| · | 456,000 ounce (17%) decrease related to the silver stream relative to the Peñasquito mine, primarily due to the<br>mining of lower grade material. |
| --- | --- |
Palladium Production
For the three months ended March 31, 2021, attributable palladium production was 5,800 ounces relative to 5,300 ounces for the comparable period in 2020.
CobaltProduction
Effective January 1, 2021, the Company was entitled to cobalt production from the Voisey’s Bay mine, with attributable cobalt production of 1,160,900 pounds for the three months ended March 31, 2021. As per the PMPA with Vale, Wheaton is entitled to any cobalt processed at the Long Harbour Processing Plant as of January 1, 2021, resulting in reported production in the first quarter of 2021 including some material produced at the Voisey’s Bay mine in the previous quarter.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [18]
Net Earnings
For the three months ended March 31, 2021, net earnings was $162 million relative to $95 million for the comparable period in 2020, with the $67 million increase being primarily attributable to the following factors:
| Net earnings for the three months ended March 31, 2020 | $ | 94,896 | |
|---|---|---|---|
| Variance in gross margin | |||
| Variance in revenue due to: | |||
| Payable gold production | $ | (26,217) | |
| Payable silver production | 1,929 | ||
| Payable palladium production | (78) | ||
| Payable cobalt production | 24,040 | ||
| Changes in PBND | (7,047) | ||
| Prices realized per ounce sold | 76,703 | ||
| Total increase to revenue | $ | 69,330 | |
| Variance in cost of sales due to: | |||
| Sales volume | $ | 2,645 | |
| Sales mix differences | (6,906) | ||
| Cash cost per ounce | (9,082) | ||
| Depletion per ounce | (3,864) | ||
| Total increase to cost of sales | $ | (17,207) | |
| Total increase to gross margin | $ | 52,123 | |
| Other variances | |||
| General and administrative expenses (see page 19) | 1,210 | ||
| Other income / expense (see page 20) | (716) | ||
| Finance costs (see page 20) | 5,545 | ||
| Income taxes (see page 20) | 8,944 | ||
| Total increase in net earnings | $ | 67,106 | |
| Net earnings for the three months ended March 31,<br>2021 | $ | 162,002 |
General and Administrative
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Salaries and benefits | ||||||
| Salaries and benefits, excluding PSUs | $ | 4,709 | $ | 4,135 | ||
| PSUs | 305 | 3,277 | ||||
| Total salaries and benefits | $ | 5,014 | $ | 7,412 | ||
| Depreciation | 475 | 511 | ||||
| Donations | 510 | 341 | ||||
| Professional fees | 1,617 | 403 | ||||
| Other | 3,030 | 3,011 | ||||
| General and administrative before equity settled stock based compensation | $ | 10,646 | $ | 11,678 | ||
| Equity settled stock based compensation (a non-cash expense) | 1,325 | 1,503 | ||||
| Total general and administrative | $ | 11,971 | $ | 13,181 |
For the three months ended March 31, 2021, general and administrative expenses decreased by $1 million relative to the comparable period in the previous year with the decrease being primarily the result of differences in accrued costs associated with the Company’s performance share units (“PSUs”) partially offset by higher professional fees and employee compensation.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [19]
Other (Income) Expense
| Three Months Ended<br><br><br>March 31 | ||||
|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||
| Interest income | $ | (2) | $ | (117) |
| Foreign exchange loss (gain) | 417 | (1,483) | ||
| (Gain) loss on fair value adjustment of share purchase warrants held | 950 | 71 | ||
| (Gain) loss on fair value adjustment of convertible notes receivable | (1,238) | 790 | ||
| Other | (8) | 142 | ||
| Total other (income) expense | $ | 119 | $ | (597) |
Finance Costs
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Average principal outstanding during period | $ | 78,022 | $ | 784,472 | ||
| Average effective interest rate during period | 1.17% | 3.03% | ||||
| Total interest costs incurred during period | $ | 229 | $ | 5,945 | ||
| Costs related to undrawn credit facilities | 1,311 | 1,140 | ||||
| Interest expense - lease liabilities | 33 | 33 | ||||
| Total finance costs | $ | 1,573 | $ | 7,118 |
Income Tax Expense (Recovery)
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Current income tax expense (recovery) | $ | (5,413) | $ | 49 | ||
| Deferred income tax expense (recovery) related to: | ||||||
| Origination and reversal of temporary differences | $ | 11,513 | $ | 3,225 | ||
| Write down (reversal of write down) or recognition of prior period<br>temporary differences | (6,602) | 5,168 | ||||
| Total deferred income tax expense (recovery) | $ | 4,911 | $ | 8,393 | ||
| Income tax expense (recovery) recognized in net earnings | $ | (502) | $ | 8,442 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [20]
Liquidity and Capital Resources^1^
As at March 31, 2021, the Company had cash and cash equivalents of $191 million (December 31, 2020 - $193 million) and debt outstanding under its Revolving Facility of $NIL (December 31, 2020 - $195 million).
A summary of the Company’s cash flow activity is as follows:
Three Months Ended March 31, 2021
CashFlows From Operating Activities
During the three months ended March 31, 2021, the Company generated operating cash flows of $232 million compared with $178 million during the comparable period of 2020, with the increase being attributable to the following:
| Operating cash inflow for the three months ended March 31, 2020 | $ | 177,588 | ||
|---|---|---|---|---|
| Variance attributable to revenue (see page 19): | $ | 69,330 | ||
| Increase in accounts receivable relative to sales | (4,690) | |||
| Total increase to cash inflows attributable to sales | $ | 64,640 | ||
| Variance attributable to cost of sales, excluding depletion: | ||||
| Sales volume | $ | 2,263 | ||
| Sales mix differences | (5,054) | |||
| Cost per ounce | (9,082) | |||
| Decrease in accounts payable relative to cost of sales | (645) | |||
| Total increase to cash outflows attributable to cost of<br>sales | $ | (12,518) | ||
| Total increase to net cash inflows attributable to gross margin | $ | 52,122 | ||
| Other variances: | ||||
| General and administrative | (2,860) | |||
| Finance costs | 6,881 | |||
| Income taxes | (119) | |||
| Other | (1,458) | |||
| Total increase to net cash inflows | $ | 54,566 | ||
| Operating cash inflow for the three months ended March 31,<br>2021 | $ | 232,154 |
Finance Costs Variance
As more fully detailed on page 20 of this MD&A, the decrease to cash outflows relative to finance costs during the period was due to the lower average outstanding principal balance, as the Revolving Facility was fully repaid during the first quarter of 2021.
Cash Flows From Financing Activities
During the three months ended March 31, 2021, the Company had net cash outflows from financing activities of $190 million, which was primarily the result of repayments under the Company’s Revolving Facility in the amount of $195 million, partially offset by proceeds relative to the exercise of stock options in the amount of $5 million. During the three months ended March 31, 2020, the Company had net cash outflows from financing activities of $154 million which was primarily the result of repayments under the Company’s Revolving Facility in the amount of $159 million, and credit facility extension fees totaling $1 million, partially offset by proceeds relative to the exercise of stock options in the amount of $7 million.
Cash Flows From Investing Activities
During the three months ended March 31, 2021, the Company had net cash outflows from investing activities of $43 million, which was primarily the result of a $150 million payment to Capstone in connection with the acquisition of the Cozamin silver stream, $3 million payment to Alexco relating to the acquisition of the Brewery Creek Royalty and $1 million advanced to Panoro in connection with the Cotabambas Early Deposit agreement, partially offset by $112 million received relative to proceeds on the disposal of long-term equity investments (see page 10 of this MD&A for more information). During the three months ended March 31, 2020, the Company had net cash outflows from investing activities of $1 million, which was primarily the result of a payment to Panoro in connection with the Cotabambas Early Deposit Agreement.
| ^1^ | Statements made in this section contain forward-looking information with respect to funding outstanding commitments and<br>continuing to acquire accretive mineral stream interests and readers are cautioned that actual outcomes may vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure<br>associated with this information. |
|---|
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [21]
Contractual Obligations andContingencies^1^
Mineral Stream Interests
The following table summarizes the Company’s commitments to make per-ounce cash payments for gold, silver and palladium and per pound cash payments for cobalt to which it has the contractual right pursuant to the PMPAs:
| Mineral Stream Interests | Attributable Payable Production to be<br><br><br>Purchased | Per Unit of Measurement Cash Payment^1^ | Term of<br>Agreement | Date of<br>Original<br>Contract | ||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold | Silver | Palladium | Cobalt | Gold | Silver | Palladium | Cobalt | |||||||||||||||||||||
| Peñasquito | 0% | 25% | 0% | 0% | n/a | $ | 4.29 | n/a | n/a | Life of Mine | 24-Jul-07 | |||||||||||||||||
| Constancia | 50% | 100% | 0% | 0% | $ | 408 ^2^ | $ | 6.02 ^2^ | n/a | n/a | Life of Mine | 8-Aug-12 | ||||||||||||||||
| Salobo | 75% | 0% | 0% | 0% | $ | 412 | n/a | n/a | n/a | Life of Mine | 28-Feb-13 | |||||||||||||||||
| Sudbury | 70% | 0% | 0% | 0% | $ | 400 | n/a | n/a | n/a | 20 years | 28-Feb-13 | |||||||||||||||||
| Antamina | 0% | 33.75% | 0% | 0% | n/a | 20% | n/a | n/a | Life of Mine | 3-Nov-15 | ||||||||||||||||||
| San Dimas | variable ^3^ | 0% ^3^ | 0% | 0% | $ | 616 | n/a | n/a | n/a | Life of Mine | 10-May-18 | |||||||||||||||||
| Stillwater | 100% | 0% | 4.5% ^4^ | 0% | 18% ^5^ | n/a | 18% ^5^ | n/a | Life of Mine | 16-Jul-18 | ||||||||||||||||||
| Voisey’s Bay | 0% | 0% | 0% | 42.4% ^6^ | n/a | n/a | n/a | 18% ^7^ | Life of Mine | 11-Jun-18 | ||||||||||||||||||
| Other | ||||||||||||||||||||||||||||
| Los Filos | 0% | 100% | 0% | 0% | n/a | $ | 4.46 | n/a | n/a | 25 years | 15-Oct-04 | |||||||||||||||||
| Zinkgruvan | 0% | 100% | 0% | 0% | n/a | $ | 4.46 | n/a | n/a | Life of Mine | 8-Dec-04 | |||||||||||||||||
| Yauliyacu | 0% | 100%^8^ | 0% | 0% | n/a | $ | 8.94 ^9^ | n/a | n/a | Life of Mine | 23-Mar-06 | |||||||||||||||||
| Stratoni | 0% | 100% | 0% | 0% | n/a | $ | 11.43 | n/a | n/a | Life of Mine | 23-Apr-07 | |||||||||||||||||
| Neves-Corvo | 0% | 100% | 0% | 0% | n/a | $ | 4.34 | n/a | n/a | 50 years | 5-Jun-07 | |||||||||||||||||
| Aljustrel | 0% | 100% ^1^^0^ | 0% | 0% | n/a | 50% | n/a | n/a | 50 years | 5-Jun-07 | ||||||||||||||||||
| Minto | 100% ^11^ | 100% | 0% | 0% | 65% ¹² | $ | 4.31 | n/a | n/a | Life of Mine | 20-Nov-08 | |||||||||||||||||
| Keno Hill | 0% | 25% | 0% | 0% | n/a | variable ¹³ | n/a | n/a | Life of Mine | 2-Oct-08 | ||||||||||||||||||
| Pascua-Lama | 0% | 25% | 0% | 0% | n/a | $ | 3.90 | n/a | n/a | Life of Mine | 8-Sep-09 | |||||||||||||||||
| Rosemont | 100% | 100% | 0% | 0% | $ | 450 | $ | 3.90 | n/a | n/a | Life of Mine | 10-Feb-10 | ||||||||||||||||
| Loma de La Plata | 0% | 12.5% | 0% | 0% | n/a | $ | 4.00 | n/a | n/a | Life of Mine | n/a ^14^ | |||||||||||||||||
| 777 | 50% | 100% | 0% | 0% | $ | 425 ² | $ | 6.26 ^2^ | n/a | n/a | Life of Mine | 8-Aug-12 | ||||||||||||||||
| Marmato | 6.5% ^1^^5^ | 100% ^1^^5^ | 0% | 0% | 18% ^16^ | 18% ^1^^6^ | n/a | n/a | Life of Mine | 5-Nov-20 | ||||||||||||||||||
| Cozamin | 0% | 50% ^1^^7^ | 0% | 0% | n/a | 10% | n/a | n/a | Life of Mine | 10-Dec-20 | ||||||||||||||||||
| Santo Domingo | 100% ^2^^0^ | 0% | 0% | 0% | 18% ^5^ | n/a | n/a | n/a | Life of Mine | 24-Mar-21 | ||||||||||||||||||
| Early Deposit | ||||||||||||||||||||||||||||
| Toroparu | 10% | 50% | 0% | 0% | $ | 400 | $ | 3.90 | n/a | n/a | Life of Mine | 11-Nov-13 | ||||||||||||||||
| Cotabambas | 25% ^18^ | 100% ^1^^8^ | 0% | 0% | $ | 450 | $ | 5.90 | n/a | n/a | Life of Mine | 21-Mar-16 | ||||||||||||||||
| Kutcho | 100% ^1^^9^ | 100% ^1^^9^ | 0% | 0% | 20% | 20% | n/a | n/a | Life of Mine | 14-Dec-17 | ||||||||||||||||||
| 1) | The production payment is measured as either a fixed amount per unit of metal delivered, or as a percentage of the spot<br>price of the underlying metal on the date of delivery. Contracts where the payment is a fixed amount per unit of metal delivered are subject to an annual inflationary increase, with the exception of Loma de La Plata and Sudbury. Additionally, should<br>the prevailing market price for the applicable metal be lower than this fixed amount, the per unit cash payment will be reduced to the prevailing market price, with the exception of Yauliyacu where the per ounce cash payment will not be reduced<br>below $4.44, subject to an annual inflationary factor. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 2) | Subject to an increase to $9.90 per ounce of silver and $550 per ounce of gold after the initial 40-year term. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 3) | Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production<br>plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or<br>increases to more than 90:1 for a period of 6 months or more, then the “70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a<br>period of 6 months or more in which event the “70” shall be reinstated. Currently, the fixed gold to silver exchange ratio is 70:1. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 4) | The Company is committed to purchase 4.5% of Stillwater palladium production until 375,000 ounces are delivered to the<br>Company, thereafter 2.25% of Stillwater palladium production until 550,000 ounces are delivered to the Company and 1% of Stillwater palladium production thereafter for the life of mine. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 5) | To be increased to 22% once the market value of metal delivered to Wheaton, net of the per ounce cash payment, exceeds the<br>initial upfront cash deposit. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 6) | Once the Company has received 31 million pounds of cobalt, the Company’s attributable cobalt production will be<br>reduced to 21.2%. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 7) | To be increased to 22% once the market value of cobalt delivered to Wheaton, net of the per pound cash payment, exceeds<br>the initial upfront cash deposit. Additionally, on each sale of cobalt, the Company is committed to pay a variable commission depending on the market price of cobalt. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 8) | The Company will purchase an amount equal to 100% of the first 1.5 million ounces of payable silver produced at<br>Yauliyacu per annum and 50% of any excess. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 9) | Should the market price of silver exceed $20 per ounce, in addition to the $8.94 per ounce, the Company is committed to<br>pay Glencore an additional amount for each ounce of silver delivered equal to 50% of the excess, to a maximum of $10 per ounce, such that when the market price of silver is $40 or above, the Company will pay Glencore $18.94 per ounce of silver<br>delivered. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 10) | Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.<br> | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 11) | The Company is committed to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.<br> | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 12) | The Company is currently negotiating an amendment to the Minto PMPA such that the cash payment per ounce of gold delivered<br>will be the lower of 65% of the spot price of gold and $1,250. This proposed amended pricing will end on the earlier of (i) January 27, 2023; or (ii) once 27,000 ounces of gold have been delivered to the Company. Once this proposed<br>amended pricing ends, the cash payment per ounce of gold delivered will be the lower of 50% of the spot price of gold and $1,000. In the event that the parties are unable to finalize the terms of the proposed amendment, the production payment will<br>remain as set out in the existing Minto PMPA, being a fixed price of $325 per ounce. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 13) | Effective July 2020, the price paid per ounce of silver delivered under the Keno Hill PMPA has been modified to be between<br>10% of the spot price of silver when the market price of silver is at or above $23.00 per ounce, to 90% of the spot price of silver when the market price of silver is at or below $15.00 per ounce. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 14) | Terms of the agreement not yet finalized. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 15) | Once Wheaton has received 190,000 ounces of gold and 2.15 million ounces of silver under the Marmato PMPA the<br>Company’s attributable gold and silver production will be reduced to 3.25% and 50%, respectively. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 16) | To be increased to 22% of the spot price once the market value of gold and silver delivered to the Company, net of the per<br>ounce cash payment, exceeds the initial upfront cash deposit. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 17) | Once Wheaton has received 10 million ounces, the Company’s attributable silver production will be reduced to 33%<br>of silver production for the life of the mine. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 18) | Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production will<br>decrease to 16.67% of gold production and 66.67% of silver production for the life of mine. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 19) | Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, attributable production<br>will decrease to 66.67% of gold and silver production for the life of mine. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| 20) | Once the Company has received 285,000 ounces of gold the Company’s attributable gold production will be reduced to<br>67%. | |||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||
| ^1^ | Statements made in this section contain forward-looking information and readers are cautioned that actual outcomes may<br>vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure associated with this information. | |||||||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [22]
Other Contractual Obligations and Contingencies
| Obligations With Scheduled Payment Dates | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2022 - 2024 | 2025 - 2026 | After 2026 | Sub-Total | Other<br><br><br>Commitments | Total | ||||||||||||||
| Payments for mineral stream interests | |||||||||||||||||||||
| Rosemont ^1^ | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 231,150 | $ | 231,150 | |||||||
| Loma de La Plata | - | - | - | - | - | 32,400 | 32,400 | ||||||||||||||
| Marmato | 38,000 | - | - | - | 38,000 | 72,000 | 110,000 | ||||||||||||||
| Santo Domingo | 30,000 | - | - | - | 30,000 | 260,000 | 290,000 | ||||||||||||||
| Salobo ^2^ | - | 670,000 | - | - | 670,000 | - | 670,000 | ||||||||||||||
| Payments for early deposit mineral stream interest | |||||||||||||||||||||
| Toroparu | - | - | - | - | - | 138,000 | 138,000 | ||||||||||||||
| Cotabambas | 750 | 2,500 | - | - | 3,250 | 126,000 | 129,250 | ||||||||||||||
| Kutcho | - | - | - | - | - | 58,000 | 58,000 | ||||||||||||||
| Non-revolving credit facility ^3^ | 211 | - | - | - | 211 | - | 211 | ||||||||||||||
| Leases liabilities | 677 | 2,755 | 340 | - | 3,772 | - | 3,772 | ||||||||||||||
| Total contractual obligations | $ | 69,638 | $ | 675,255 | $ | 340 | $ | - | $ | 745,233 | $ | 917,550 | $ | 1,662,783 | |||||||
| 1) | Includes contingent transaction costs of $1 million. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| 2) | As more fully explained on the following page, assuming the Salobo III expansion project achieves 12 Mtpa of additional<br>processing capacity (bringing total processing capacity at Salobo to 36 Mtpa) by the end of 2022, the Company would expect to pay an estimated expansion payment of between $570 million to $670 million. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| 3) | Represents the maximum amount available to Kutcho under the Cdn$1.3 million<br>non-revolving credit facility (see the Kutcho section on the following page). | ||||||||||||||||||||
| --- | --- |
Rosemont
The Company is committed to pay Hudbay total upfront cash payments of $230 million in two installments, with the first $50 million being advanced upon Hudbay’s receipt of permitting for the Rosemont project and other customary conditions and the balance of $180 million being advanced once project costs incurred on the Rosemont project exceed $98 million and certain other customary conditions. Under the Rosemont PMPA, the Company is permitted to elect to pay the deposit in cash or the delivery of common shares. Additionally, the Company will be entitled to certain delay payments, including where construction ceases in any material respect, or if completion is not achieved within agreed upon timelines. Hudbay and certain affiliates have provided the Company with a corporate guarantee and other security.
On August 1, 2019, Hudbay announced that the U.S. District Court for the District of Arizona (“Court”) issued a ruling in the lawsuits challenging the U.S. Forest Service’s issuance of the Final Record of Decision (“FROD”) for the Rosemont project in Arizona. The Court ruled to vacate and remand the FROD such that Rosemont cannot proceed with construction at this time. On June 22, 2020 Hudbay announced that they had filed the initial brief with the U.S. Court of Appeals for the Ninth Circuit in relation to appealing this decision. As per Hudbay’s MD&A for the year ended December 31, 2020, final briefs were filed in November 2020 and the oral hearing was completed in early February 2021. Hudbay indicates that a decision from the Ninth Circuit is expected in the second half of 2021.
Loma de La Plata
In connection with the Loma de La Plata PMPA, the Company is committed to pay Pan American Silver Corp. (“PAAS”) total upfront cash payments of $32 million following the satisfaction of certain conditions, including PAAS receiving all necessary permits to proceed with the mine construction and the Company finalizing the definitive terms of the PMPA.
Marmato
In connection with the Marmato PMPA, the Company is committed to pay Aris Gold total upfront cash payments of $110 million, $34 million of which was paid on April 15, 2021; $4 million of which is payable on or before October 15, 2021; and the remaining portion of which is payable during the construction of the MDZ development portion of the Marmato mine, subject to customary conditions.
Toroparu
In connection with the Toroparu Early Deposit Agreement, the Company is committed to pay Gold X an additional $138 million, payable on an installment basis to partially fund construction of the mine. Following the delivery of certain feasibility documentation or after December 31, 2021 if the feasibility documentation has not been delivered to Wheaton by such date, Wheaton may elect not to proceed with the agreement or not pay the balance of the upfront consideration and reduce the gold stream percentage from 10% to 0.909% and the silver stream percentage from
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [23]
50% to nil. If Wheaton elects to terminate, Wheaton will be entitled to a return of the amounts advanced less $2 million which is non-refundable on the occurrence of certain events. If Wheaton elects to reduce the streams, Gold X may elect to terminate the agreement and Wheaton will be entitled to a return of the amount of the deposit already advanced less $2 million which is non-refundable.
Cotabambas
In connection with the Cotabambas Early Deposit Agreement, the Company is committed to pay Panoro a total cash consideration of $140 million, of which $11 million has been paid to date. Once certain conditions have been met, the Company will advance an additional $3 million to Panoro, spread over up to three years. Following the delivery of a bankable definitive feasibility study, environmental study and impact assessment, and other related documents (collectively, the “Cotabambas Feasibility Documentation”), and receipt of permits and construction commencing, the Company may then advance the remaining deposit or elect to terminate the Cotabambas Early Deposit Agreement. If the Company elects to terminate, the Company will be entitled to a return of the portion of the amounts advanced less $2 million payable upon certain triggering events occurring.
Kutcho
In connection with the Kutcho Early Deposit Agreement, the Company is committed to pay Kutcho a total cash consideration of $65 million, of which $7 million has been paid to date. The remaining $58 million will be advanced on an installment basis to partially fund construction of the mine once certain conditions have been satisfied.
The Company will be required to make an additional payment to Kutcho, of up to $20 million, if processing throughput is increased to 4,500 tonnes per day or more within 5 years of attaining commercial production.
Non-revolving term loan
On November 25, 2019, the Company entered into a non-revolving term loan with Kutcho, under which Kutcho can draw up to a maximum of $1 million (Cdn$1.3 million), of which $0.8 million (Cdn$1.0 million) has been drawn as at March 31, 2021. The credit facility carries interest at 15% per annum, compounded monthly and has a revised maturity date of December 31, 2021.
Salobo
The Salobo mine currently has a mill throughput capacity of 24 Mtpa. In October 2018, Vale’s Board of Directors approved the investment in the Salobo Expansion, which is proposed to include a third concentrator line and will use Salobo’s existing infrastructure. Vale anticipates that the Salobo Expansion, which is scheduled to start up in the first half of 2022 with a ramp-up of 15 months, will result in an increase of throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up.
If actual throughput is expanded above 28 Mtpa, then under the terms of the Salobo PMPA, Wheaton will be required to make an additional set payment to Vale based on the size of the expansion, the timing of completion and the grade of the material processed. The set payment ranges from $113 million if throughput is expanded beyond 28 Mtpa by January 1, 2036 up to $923 million if throughput is expanded beyond 40 Mtpa by January 1, 2022. Assuming the Salobo III expansion project achieves 12 Mtpa of additional processing capacity (bringing total processing capacity at Salobo to 36 Mtpa) by the end of 2022, the Company would expect to pay an estimated expansion payment of between $570 million to $670 million. The actual amount and timing of any expansion payment may significantly differ from this estimate depending on the size, timing and processed grade of any expansion.
Santo Domingo
In connection with the Santo Domingo PMPA, the Company is committed to pay Capstone total upfront cash payments of $290 million, $30 million of which was payable upon closing which occurred on April 21, 2021 and the remaining portion of which is payable during the construction of the Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures.
Taxes - Canada Revenue Agency – 2013-2015 Taxation Years - Domestic Reassessments ^1^
The Company received Notices of Reassessment in 2018 and 2019 for the 2013 to 2015 taxation years in which the Canada Revenue Agency (“CRA”) is seeking to change the timing of the deduction of upfront payments with respect to the Company’s PMPAs relating to Canadian mining assets, so that the cost of precious metal acquired under these Canadian PMPAs is equal to the cash cost paid on delivery plus an amortized amount of the upfront payment determined on a units-of-production basis over the estimated recoverable reserves, and where applicable, resources
| ^1^ | The assessment by management of the expected impact of the Domestic Reassessments on the Company is “forward-looking<br>information”. Statements in respect of the impact of the Domestic Reassessments are based on the expectation that the Company will be successful in challenging the Domestic Reassessments. Statements in respect of the Domestic Reassessments and<br>estimates of any future taxes that the CRA may assert are payable are subject to known and unknown risks including that the Company’s interpretation of, or compliance with, tax laws, is found to be incorrect. Please see “Cautionary Note<br>Regarding Forward-Looking Statements” in the MD&A for material risks, assumptions and important disclosure associated with this information. |
|---|
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [24]
and exploration potential at the respective mine (the “Domestic Reassessments”). In total, the Domestic Reassessments assessed tax, interest and other penalties of $8 million.
Management believes the Company’s position, as reflected in its filed Canadian income tax returns and consistent with the terms of the PMPAs, that the cost of the precious metal acquired under the Canadian PMPAs is equal to the market value while a deposit is outstanding, and the cash cost thereafter is correct. The Company has filed Notices of Objection and paid 50% of the disputed amounts in order to challenge the Domestic Reassessments.
If CRA were to apply the methodology in the Domestic Reassessments to taxation years subsequent to 2015, the Company estimates that losses would arise that could be carried back to reduce tax and interest relating to the Domestic Reassessments to approximately $2 million.
CanadianShareholder Class Action
During July 2015, the Company disclosed that the CRA was proposing that they would issue notices of reassessment for federal and provincial tax, transfer pricing penalties, interest and other penalties for the 2005-2010 taxation years (the “Reassessments”). By Notice of Action dated August 10, 2016 (as amended September 2, 2016 and supplemented by Statement of Claim filed September 9, 2016 (collectively, the “Claim”)), proposed representative plaintiff Suzan Poirier commenced proceedings pursuant to the Class Proceedings Act (Ontario) in the Ontario Superior Court of Justice against Wheaton Precious Metals Corp., Randy Smallwood, President and Chief Executive Officer and Gary Brown, Senior Vice President & Chief Financial Officer. The Claim alleges, among other things, misrepresentation pursuant to primary and secondary market civil liability provisions under the Securities Act (Ontario) and its provincial equivalents, common law negligence and negligent misrepresentation. The claim focuses on the Reassessments. The Claim purports to be brought on behalf of a proposed class of persons and entities who acquired common shares of Wheaton Precious Metals Corp. between August 14, 2013 and July 6, 2015 and held some or all of such common shares as of at least July 6, 2015. On July 21, 2020, the Company received a motion record in support of a proposed motion seeking the following (among other relief): (i) leave of the court to commence a secondary market action pursuant to section 138.3(1) of the Securities Act (Ontario) and equivalent provisions in the applicable provincial securities statutes: (ii) certification of the (amended) class and proposed common issues; (iii) leave to file an amended Statement of Claim to include further particulars and to refer to various provincial securities laws; and (iv) the appointment of a new class representative (Ms. Miriam Rosenszajn) in place of Ms. Poirier. It is expected that the certification and leave motions will be jointly heard in October 2021.
The Company believes that the allegations are without merit and intends to vigorously defend against this matter. No amounts have been recorded for potential liability arising from this claim as no value has been specified in the statement of claim and the Company cannot reasonably predict the outcome.
Please see “Cautionary Note Regarding Forward-Looking Statements” in the MD&A for material risks, assumptions and important disclosure associated with outstanding litigation.
Tax Contingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including audits and disputes.
Under the terms of the 2018 settlement with the CRA of the transfer pricing dispute relating to the 2005-2010 taxation years (“CRA Settlement”), income earned outside of Canada by the Company’s foreign subsidiaries will not be subject to income tax in Canada under transfer pricing rules. The CRA Settlement principles apply to all taxation years after 2010 subject to there being no material change in facts or change in law or jurisprudence.
It is not known or determinable by the Company when any ongoing audits by CRA of international and domestic transactions will be completed, or whether reassessments will be issued, or the basis, quantum or timing of any such potential reassessments, and it is therefore not practicable for the Company to estimate the financial effect, if any, of any ongoing audits. From time to time there may also be proposed legislative changes to law or outstanding legal actions that may have an impact on applicable law or jurisprudence, the outcome, applicability and impact of which is also not known or determinable by the Company.
General
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If the Company is unable to resolve any of these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that the Company’s estimate of the future resolution of any of the foregoing matters changes, the Company will recognize the effects of the change in its consolidated financial statements in the appropriate period relative to when such change occurs.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [25]
Share Capital
During the three months ended March 31, 2021, the Company received cash proceeds of $5 million from the exercise of 258,000 share purchase options at a weighted average exercise price of Cdn$23.24 per option. During the three months ended March 31, 2020, the Company received cash proceeds of $7 million from the exercise of 374,235 share purchase options at a weighted average exercise price of Cdn$24.83 per option.
During the three months ended March 31, 2021, the Company released 116,180 RSUs, as compared to 124,910 RSUs during the comparable period of the previous year.
The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares.
As of May 6, 2021, there were 450,049,073 outstanding common shares, 1,846,377 share purchase options, 350,758 restricted share units and 10,000,000 share purchase warrants.
At the Market Equity Program
The Company has established an at-the-market equity program (the “ATM Program”) that allows the Company to issue up to $300 million worth of common shares from treasury (“Common Shares”) to the public from time to time at the Company’s discretion and subject to regulatory requirements. Any Common Shares sold in the ATM Program will be sold (i) in ordinary brokers’ transactions on the NYSE or another US marketplace on which the Common Shares are listed, quoted or otherwise trade, (ii) in ordinary brokers’ transactions on the TSX, (iii) on another Canadian marketplace on which the Common Shares are listed, quoted or otherwise trade, or (iv) with respect to sales in the United States, at the prevailing market price, a price related to the prevailing market price or at negotiated prices. Since the Common Shares will be distributed at the prevailing market prices at the time of the sale or certain other prices, prices may vary among purchasers and during the period of distribution.
The ATM Program will be effective until the date that all Common Shares available for issue under the ATM Program have been issued or the ATM Program is terminated prior to such date by the Company or the agents under the equity offering sales agreement dated April 16, 2020.
Wheaton intends that the net proceeds from the ATM Program, if any, will be available as one potential source of funding for stream acquisitions and/or other general corporate purposes including the repayment of indebtedness. As at March 31, 2021, the Company has not issued any shares under the ATM program.
Financial Instruments
The Company owns equity interests in several companies as long-term investments (see page 9 of this MD&A) in addition to the Kutcho Convertible Note (see page 11 of this MD&A) and therefore is inherently exposed to various risk factors including currency risk, market price risk and liquidity risk.
In order to mitigate the effect of short-term volatility in gold, silver and palladium prices, the Company will occasionally enter into forward contracts in relation to gold, silver and palladium deliveries that it is highly confident will occur within a given quarter. The Company does not hedge its long-term exposure to commodity prices. Other than these very short-term forward contracts, the Company has not used derivative financial instruments to manage the risks associated with its operations and therefore, in the normal course of business, it is inherently exposed to currency, interest rate and commodity price fluctuations. No forward contracts were outstanding at March 31, 2021 and December 31, 2020.
Future Changes toAccounting Policies
The International Accounting Standards Board (“IASB”) has issued the following new or amended standards:
Amendment to IAS 16 - Property, Plant and Equipment
The amendments to IAS 16 prohibit deducting from the cost of property, plant and equipment the proceeds from selling items produced while bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management. Instead, a company will recognize such sales proceeds and related cost in the Statement of Earnings. This amendment is in effect January 1, 2022 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Statement of Earnings.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [26]
Non-IFRS Measures
Wheaton has included, throughout this document, certain non-IFRS performance measures, including (i) adjusted net earnings and adjusted net earnings per share; (ii) operating cash flow per share (basic and diluted); (iii) average cash costs of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis, with the Company receiving its first deliveries of cobalt relative to its Voisey’s Bay PMPA during the first quarter of 2021; and (iv) cash operating margin. The Company has removed the non-IFRS measure relative to net debt as Wheaton fully repaid its debt during the first quarter of 2021.
These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and other companies may calculate these measures differently. The presentation of these non-IFRS measures is intended to provide additional information and should not be considered in isolation or as a substitute for measures of performance prepared in accordance with IFRS.
| i. | Adjusted net earnings and adjusted net earnings per share are calculated by removing the effects of non-cash impairment charges, non-cash fair value (gains) losses and other one-time (income) expenses as well as the reversal of non-cash income tax expense (recovery) which is offset by income tax expense (recovery) recognized in the Statements of Shareholders’ Equity and OCI, respectively. The Company believes that, in addition to<br>conventional measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company’s performance. |
|---|
The following table provides a reconciliation of adjusted net earnings and adjusted net earnings per share (basic and diluted).
| Three Months Ended<br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for per share amounts) | 2021 | 2020 | ||||
| Net earnings | $ | 162,002 | $ | 94,896 | ||
| Add back (deduct): | ||||||
| (Gain) loss on fair value adjustment of share purchase warrants held | 950 | 71 | ||||
| (Gain) loss on fair value adjustment of convertible notes receivable | (1,238) | 790 | ||||
| Income tax expense (recovery) recognized in the Statement of Shareholders’ Equity | 1,568 | (1,480) | ||||
| Income tax expense (recovery) recognized in the Statement of OCI | (2,137) | 9,853 | ||||
| Other | (13) | 403 | ||||
| Adjusted net earnings | $ | 161,132 | $ | 104,533 | ||
| Divided by: | ||||||
| Basic weighted average number of shares outstanding | 449,509 | 447,805 | ||||
| Diluted weighted average number of shares outstanding | 450,600 | 448,891 | ||||
| Equals: | ||||||
| Adjusted earnings per share - basic | $ | 0.358 | $ | 0.233 | ||
| Adjusted earnings per share - diluted | $ | 0.358 | $ | 0.233 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [27]
| ii. | Operating cash flow per share (basic and diluted) is calculated by dividing cash generated by operating activities by the<br>weighted average number of shares outstanding (basic and diluted). The Company presents operating cash flow per share as management and certain investors use this information to evaluate the Company’s performance in comparison to other<br>companies in the precious metal mining industry who present results on a similar basis. |
|---|
The following table provides a reconciliation of operating cash flow per share (basic and diluted).
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for per share amounts) | 2021 | 2020 | ||||
| Cash generated by operating activities | $ | 232,154 | $ | 177,588 | ||
| Divided by: | ||||||
| Basic weighted average number of shares outstanding | 449,509 | 447,805 | ||||
| Diluted weighted average number of shares outstanding | 450,600 | 448,891 | ||||
| Equals: | ||||||
| Operating cash flow per share - basic | $ | 0.516 | $ | 0.397 | ||
| Operating cash flow per share - diluted | $ | 0.515 | $ | 0.396 | ||
| iii. | Average cash cost of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis is calculated by<br>dividing the total cost of sales, less depletion, by the ounces or pounds sold. In the precious metal mining industry, this is a common performance measure but does not have any standardized meaning prescribed by IFRS. In addition to conventional<br>measures prepared in accordance with IFRS, management and certain investors use this information to evaluate the Company’s performance and ability to generate cash flow. | |||||
| --- | --- |
The following table provides a calculation of average cash cost of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis.
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for gold and palladium ounces and cobalt pounds sold and per<br> unit<br>amounts) | 2021 | 2020 | ||||
| Cost of sales | $ | 148,956 | $ | 131,749 | ||
| Less: depletion | (70,173) | (64,841) | ||||
| Cash cost of sales | $ | 78,783 | $ | 66,908 | ||
| Cash cost of sales is comprised of: | ||||||
| Total cash cost of gold sold | $ | 33,774 | $ | 42,759 | ||
| Total cash cost of silver sold | 42,160 | 22,163 | ||||
| Total cash cost of palladium sold | 2,191 | 1,986 | ||||
| Total cash cost of cobalt sold | 658 | - | ||||
| Total cash cost of sales | $ | 78,783 | $ | 66,908 | ||
| Divided by: | ||||||
| Total gold ounces sold | 75,104 | 100,405 | ||||
| Total silver ounces sold | 6,657 | 4,928 | ||||
| Total palladium ounces sold | 5,131 | 4,938 | ||||
| Total cobalt pounds sold | 132,277 | - | ||||
| Equals: | ||||||
| Average cash cost of gold (per ounce) | $ | 450 | $ | 426 | ||
| Average cash cost of silver (per ounce) | $ | 6.33 | $ | 4.50 | ||
| Average cash cost of palladium (per ounce) | $ | 427 | $ | 402 | ||
| Average cash cost of cobalt (per pound) | $ | 4.98 | $ | n.a. |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [28]
| iv. | Cash operating margin is calculated by subtracting the average cash cost of gold, silver and palladium on a per ounce<br>basis and cobalt on a per pound basis from the average realized selling price of gold, silver and palladium on a per ounce basis and cobalt on a per pound basis. The Company presents cash operating margin as management and certain investors use this<br>information to evaluate the Company’s performance in comparison to other companies in the precious metal mining industry who present results on a similar basis as well as to evaluate the Company’s ability to generate cash flow.<br> |
|---|
The following table provides a reconciliation of cash operating margin.
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except for cobalt pounds, gold and palladium ounces sold and per unit<br><br><br>amounts) | 2021 | 2020 | ||||
| Total sales: | ||||||
| Gold | $ | 135,025 | $ | 159,522 | ||
| Silver | $ | 173,883 | $ | 83,917 | ||
| Palladium | $ | 12,275 | $ | 11,350 | ||
| Cobalt | $ | 2,936 | $ | - | ||
| Divided by: | ||||||
| Total gold ounces sold | 75,104 | 100,405 | ||||
| Total silver ounces sold | 6,657 | 4,928 | ||||
| Total palladium ounces sold | 5,131 | 4,938 | ||||
| Total cobalt pounds sold | 132,277 | - | ||||
| Equals: | ||||||
| Average realized price of gold (per ounce) | $ | 1,798 | $ | 1,589 | ||
| Average realized price of silver (per ounce) | $ | 26.12 | $ | 17.03 | ||
| Average realized price of palladium (per ounce) | $ | 2,392 | $ | 2,298 | ||
| Average realized price of cobalt (per pound) | $ | 22.19 | $ | n.a. | ||
| Less: | ||||||
| Average cash cost of gold ^1^ (per ounce) | $ | (450) | $ | (426) | ||
| Average cash cost of silver ^1^ (per ounce) | $ | (6.33) | $ | (4.50) | ||
| Average cash cost of palladium ^1^ (per ounce) | $ | (427) | $ | (402) | ||
| Average cash cost of cobalt ^1^ (per pound) | $ | (4.98) | $ | n.a. | ||
| Equals: | ||||||
| Cash operating margin per gold ounce sold | $ | 1,348 | $ | 1,163 | ||
| As a percentage of realized price of gold | 75% | 73% | ||||
| Cash operating margin per silver ounce sold | $ | 19.79 | $ | 12.53 | ||
| As a percentage of realized price of silver | 76% | 74% | ||||
| Cash operating margin per palladium ounce sold | $ | 1,965 | $ | 1,896 | ||
| As a percentage of realized price of palladium | 82% | 83% | ||||
| Cash operating margin per cobalt pound sold | $ | 17.21 | $ | n.a. | ||
| As a percentage of realized price of cobalt | 78% | n.a. | ||||
| 1) | Refer to discussion on non-IFRS measure (iii) on page 28 of this MD&A.<br> | |||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [29]
Subsequent Events
Declaration of Dividend
Under the Company’s dividend policy, the quarterly dividend per common share is targeted to equal approximately 30% of the average cash flow 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 $0.13 per common share for the duration of 2021. The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors.
On May 6, 2021, the Board of Directors declared a dividend in the amount of $0.14 per common share, with this dividend being payable to shareholders of record on May 21, 2021 and is expected to be distributed on or about June 3, 2021. The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares at a discount of 1% of the Average Market Price, as defined in the DRIP.
Controls andProcedures
Disclosure Controls and Procedures
Wheaton’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated the design and effectiveness of Wheaton’s disclosure controls and procedures, as defined in the rules of the U.S. Securities and Exchange Commission and Canadian Securities Administrators, as of March 31, 2021. Based on that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that Wheaton’s disclosure controls and procedures were effective as of March 31, 2021.
Internal Control Over Financial Reporting
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, are responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision of the Chief Financial Officer, the Company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. The Company’s controls include policies and procedures that:
| · | pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and<br>dispositions of the assets of the Company; |
|---|---|
| · | provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in<br>accordance with IFRS, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and, |
| --- | --- |
| · | provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the<br>Company’s assets that could have a material effect on the annual financial statements or interim financial statements. |
| --- | --- |
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s internal control over financial reporting using the framework and criteria established in Internal Control –Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management has concluded that the internal control over financial reporting was effective at as of March 31, 2021.
There have been no changes in the Company’s internal control over financial reporting during the three months ended March 31, 2021 that would materially affect, or is reasonably likely to materially affect, the Company’s internal control over financial reporting. Note that as a result of certain operating restrictions resulting from the COVID-19 pandemic, all employees of the Company are permitted to work remotely. Management has reviewed its key controls to ensure that they continued to operate effectively.
Limitation of Controls and Procedures
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, believe that any disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people, or by unauthorized override of the controls. The design of any system of controls also is based in part upon certain assumptions about the likelihood of
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [30]
future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to error or fraud may occur and not be detected.
Attributable Reserves and Resources
The following tables set forth the estimated Mineral Reserves and Mineral Resources (metals attributable to Wheaton only) for the mines relating to which the Company has PMPAs, adjusted where applicable to reflect the Company’s percentage entitlement to such metals, as of December 31, 2020, unless otherwise noted.
Attributable Proven and Probable Reserves ^(1,2,3,8,27)^
As of December 31, 2020 unless^^otherwise noted ^(6)^
| Proven | Probable | Proven & Probable | |||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnage | Grade | Contained | Tonnage | Grade | Contained | Tonnage | Grade | Contained | Process<br>Recovery %^(7)^ | ||||||||||||||||||||||||
| Mt | g/t / % | Moz / Mlbs | Mt | g/t / % | Moz / Mlbs | Mt | g/t / % | Moz / Mlbs | |||||||||||||||||||||||||
| Gold | |||||||||||||||||||||||||||||||||
| Salobo (75%) ^(10)^ | 106.7 | 0.37 | 1.27 | 761.2 | 0.30 | 7.32 | 867.8 | 0.31 | 8.59 | 76% | |||||||||||||||||||||||
| Stillwater ^(11)^ | 7.9 | 0.39 | 0.10 | 50.3 | 0.39 | 0.64 | 58.2 | 0.39 | 0.73 | 69% | |||||||||||||||||||||||
| Constancia (50%) | 234.5 | 0.06 | 0.48 | 31.8 | 0.08 | 0.08 | 266.3 | 0.07 | 0.56 | 61% | |||||||||||||||||||||||
| Sudbury (70%) ^(12)^ | 10.3 | 0.43 | 0.14 | 13.5 | 0.46 | 0.20 | 23.8 | 0.45 | 0.34 | 75% | |||||||||||||||||||||||
| San Dimas (25%) ^(13)^ | 0.5 | 4.52 | 0.07 | 0.5 | 3.09 | 0.05 | 1.0 | 3.77 | 0.12 | 95% | |||||||||||||||||||||||
| 777 (50%) | 0.6 | 2.23 | 0.04 | 0.2 | 1.86 | 0.01 | 0.8 | 2.13 | 0.05 | 58% | |||||||||||||||||||||||
| Minto | 0.4 | 0.25 | 0.003 | 2.0 | 0.67 | 0.04 | 2.4 | 0.60 | 0.05 | 75% | |||||||||||||||||||||||
| Marmato (6.5%) ^(12,14)^ | 0.1 | 5.14 | 0.01 | 1.2 | 3.11 | 0.12 | 1.3 | 3.19 | 0.13 | 90% | |||||||||||||||||||||||
| Santo Domingo ^(12,27)^ | 65.4 | 0.08 | 0.17 | 326.9 | 0.03 | 0.34 | 392.3 | 0.04 | 0.51 | 61% | |||||||||||||||||||||||
| Toroparu (10%) ^(15,16)^ | 3.0 | 1.10 | 0.10 | 9.7 | 0.98 | 0.31 | 12.7 | 1.00 | 0.41 | 89% | |||||||||||||||||||||||
| Kutcho ^(16,17)^ | - | - | - | 10.4 | 0.37 | 0.12 | 10.4 | 0.37 | 0.12 | 41% | |||||||||||||||||||||||
| Metates Royalty<br>^(18)^ | 1.4 | 0.70 | 0.03 | 4.1 | 0.45 | 0.06 | 5.5 | 0.52 | 0.09 | 91% | |||||||||||||||||||||||
| Total Gold | **** | 2.42 | **** | **** | 9.29 | **** | **** | 11.71 | **** | ||||||||||||||||||||||||
| Silver | |||||||||||||||||||||||||||||||||
| Peñasquito (25%) ^(10)^ | 28.0 | 37.8 | 34.0 | 69.0 | 32.7 | 72.4 | 97.0 | 34.1 | 106.4 | 85% | |||||||||||||||||||||||
| Constancia | 468.9 | 3.0 | 45.1 | 63.6 | 3.4 | 7.0 | 532.5 | 3.0 | 52.0 | 70% | |||||||||||||||||||||||
| Antamina (33.75%) ^(12,19)^ | |||||||||||||||||||||||||||||||||
| Copper | 46.6 | 6.8 | 10.2 | 32.1 | 7.9 | 8.1 | 78.6 | 7.2 | 18.3 | 71% | |||||||||||||||||||||||
| Copper-Zinc | 23.0 | 12.8 | 9.4 | 27.3 | 12.9 | 11.3 | 50.3 | 12.9 | 20.8 | 71% | |||||||||||||||||||||||
| Neves-Corvo | |||||||||||||||||||||||||||||||||
| Copper | 5.2 | 31.0 | 5.2 | 24.5 | 30.0 | 23.6 | 29.7 | 30.2 | 28.8 | 24% | |||||||||||||||||||||||
| Zinc | 4.7 | 71.0 | 10.8 | 25.4 | 60.6 | 49.5 | 30.1 | 62.2 | 60.3 | 30% | |||||||||||||||||||||||
| Zinkgruvan | |||||||||||||||||||||||||||||||||
| Zinc | 3.4 | 77.9 | 8.5 | 5.4 | 83.6 | 14.5 | 8.8 | 81.4 | 23.0 | 83% | |||||||||||||||||||||||
| Copper | 2.8 | 30.0 | 2.7 | 0.3 | 33.0 | 0.3 | 3.1 | 30.3 | 3.0 | 70% | |||||||||||||||||||||||
| Yauliyacu ^(20)^ | 1.3 | 78.9 | 3.4 | 6.8 | 101.1 | 22.2 | 8.2 | 97.4 | 25.6 | 83% | |||||||||||||||||||||||
| Aljustrel ^(21)^ | 9.7 | 47.4 | 14.8 | 27.4 | 46.9 | 41.4 | 37.2 | 47.1 | 56.2 | 26% | |||||||||||||||||||||||
| San Dimas (25%) ^(13)^ | 0.5 | 367.8 | 5.6 | 0.5 | 295.5 | 5.0 | 1.0 | 329.7 | 10.6 | 94% | |||||||||||||||||||||||
| Cozamin (50%) ^(12,22)^ | |||||||||||||||||||||||||||||||||
| Copper | - | - | - | 6.3 | 44.4 | 9.0 | 6.3 | 44.4 | 9.0 | 86% | |||||||||||||||||||||||
| Zinc | - | - | - | 0.7 | 44.3 | 1.1 | 0.7 | 44.3 | 1.1 | 86% | |||||||||||||||||||||||
| Keno Hill (25%) | |||||||||||||||||||||||||||||||||
| Underground | - | - | - | 0.3 | 804.5 | 7.6 | 0.3 | 804.5 | 7.6 | 96% | |||||||||||||||||||||||
| Los Filos | 26.2 | 3.5 | 3.0 | 78.1 | 10.2 | 25.5 | 104.2 | 8.5 | 28.5 | 10% | |||||||||||||||||||||||
| Stratoni | - | - | - | 0.6 | 148.0 | 2.7 | 0.6 | 148.0 | 2.7 | 80% | |||||||||||||||||||||||
| 777 | 1.1 | 31.4 | 1.1 | 0.4 | 30.0 | 0.4 | 1.5 | 31.0 | 1.5 | 45% | |||||||||||||||||||||||
| Minto | 0.4 | 3.4 | 0.0 | 2.0 | 6.0 | 0.4 | 2.4 | 5.6 | 0.4 | 78% | |||||||||||||||||||||||
| Marmato ^(12,14)^ | 0.8 | 22.1 | 0.6 | 18.9 | 6.2 | 3.8 | 19.7 | 6.9 | 4.4 | 34% | |||||||||||||||||||||||
| Rosemont ^(23)^ | 408.6 | 5.0 | 66.2 | 108.0 | 3.0 | 10.4 | 516.6 | 4.6 | 76.7 | 76% | |||||||||||||||||||||||
| Kutcho ^(16,17)^ | - | - | - | 9.9 | 34.6 | 11.0 | 9.9 | 34.6 | 11.0 | 46% | |||||||||||||||||||||||
| Metates Royalty<br>^(18)^ | 1.4 | 17.2 | 0.8 | 4.1 | 13.1 | 1.7 | 5.5 | 14.2 | 2.5 | 66% | |||||||||||||||||||||||
| Total Silver | **** | 221.5 | **** | **** | 328.9 | **** | **** | 550.3 | **** | ||||||||||||||||||||||||
| Palladium | |||||||||||||||||||||||||||||||||
| Stillwater (4.5%)<br>^(11)^ | 0.2 | 11.2 | 0.09 | 1.5 | 11.2 | 0.55 | 1.8 | 11.2 | 0.64 | 90% | |||||||||||||||||||||||
| Total Palladium | **** | 0.09 | **** | **** | 0.55 | **** | **** | 0.64 | **** | ||||||||||||||||||||||||
| Cobalt | |||||||||||||||||||||||||||||||||
| Voisey’s Bay (42.4%) ^(12,24)^ | 5.7 | 0.12 | 14.6 | 6.5 | 0.12 | 17.1 | 12.1 | 0.12 | 31.7 | 84% | |||||||||||||||||||||||
| Total Cobalt | **** | 14.6 | **** | **** | 17.1 | **** | **** | 31.7 | **** |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [31]
Attributable Measured & Indicated Resources ^(1,2,3,4,5,9,27)^
As of December 31, 2020 unless^^otherwise noted ^(6)^
| Measured | Indicated | Measured & Indicated | ||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Tonnage | Grade | Contained | Tonnage | Grade | Contained | Tonnage | Grade | Contained | ||||||||||||||||||||||
| Mt | g/t / % | Moz /<br><br><br>Mlbs | Mt | g/t / % | Moz /<br>Mlbs | Mt | g/t / % | Moz / <br>Mlbs | ||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||||||||
| Salobo (75%) ^(10)^ | 3.5 | 0.27 | 0.03 | 294.6 | 0.31 | 2.90 | 298.1 | 0.31 | 2.93 | |||||||||||||||||||||
| Stillwater ^(11)^ | 3.3 | 0.26 | 0.03 | 13.3 | 0.21 | 0.09 | 16.6 | 0.22 | 0.12 | |||||||||||||||||||||
| Constancia (50%) | 68.3 | 0.06 | 0.12 | 62.2 | 0.05 | 0.10 | 130.5 | 0.05 | 0.22 | |||||||||||||||||||||
| Sudbury (70%) ^(12)^ | 1.3 | 0.22 | 0.01 | 7.1 | 0.76 | 0.17 | 8.3 | 0.68 | 0.18 | |||||||||||||||||||||
| 777 (50%) | 0.1 | 2.31 | 0.00 | 0.0 | 1.61 | 0.00 | 0.1 | 2.01 | 0.01 | |||||||||||||||||||||
| Minto | 3.3 | 0.40 | 0.04 | 9.0 | 0.57 | 0.17 | 12.4 | 0.53 | 0.21 | |||||||||||||||||||||
| Marmato (6.5%) ^(12,14)^ | 0.1 | 5.30 | 0.01 | 1.1 | 2.62 | 0.09 | 1.1 | 2.81 | 0.10 | |||||||||||||||||||||
| Santo Domingo ^(12,27)^ | 1.4 | 0.05 | 0.00 | 120.1 | 0.03 | 0.11 | 121.5 | 0.03 | 0.12 | |||||||||||||||||||||
| Toroparu (10%) ^(15,16)^ | 1.2 | 0.93 | 0.03 | 9.0 | 0.87 | 0.25 | 10.2 | 0.87 | 0.29 | |||||||||||||||||||||
| Cotabambas (25%) ^(16,25)^ | - | - | - | 29.3 | 0.23 | 0.22 | 29.3 | 0.23 | 0.22 | |||||||||||||||||||||
| Kutcho ^(16,17)^ | - | - | - | 5.7 | 0.55 | 0.10 | 5.7 | 0.55 | 0.10 | |||||||||||||||||||||
| Brewery Creek<br>^(26)^ | - | - | - | 0.4 | 1.11 | 0.02 | 0.4 | 1.11 | 0.02 | |||||||||||||||||||||
| Total Gold | **** | 0.29 | **** | **** | 4.22 | **** | **** | 4.50 | **** | |||||||||||||||||||||
| Silver | ||||||||||||||||||||||||||||||
| Peñasquito (25%) ^(10)^ | 8.7 | 26.8 | 7.5 | 60.5 | 26.7 | 52.0 | 69.2 | 26.8 | 59.5 | |||||||||||||||||||||
| Constancia | 136.6 | 2.3 | 10.3 | 124.3 | 2.2 | 8.8 | 260.9 | 2.3 | 19.1 | |||||||||||||||||||||
| Antamina (33.75%) ^(12,19)^ | ||||||||||||||||||||||||||||||
| Copper | 31.2 | 7.0 | 7.0 | 108.1 | 9.0 | 31.3 | 139.3 | 8.6 | 38.3 | |||||||||||||||||||||
| Copper-Zinc | 10.5 | 21.0 | 7.1 | 49.4 | 19.0 | 30.2 | 59.9 | 19.4 | 37.3 | |||||||||||||||||||||
| Neves-Corvo | ||||||||||||||||||||||||||||||
| Copper | 4.8 | 55.8 | 8.7 | 28.7 | 52.4 | 48.3 | 33.5 | 52.9 | 57.0 | |||||||||||||||||||||
| Zinc | 6.7 | 61.9 | 13.4 | 35.7 | 59.0 | 67.8 | 42.4 | 59.5 | 81.2 | |||||||||||||||||||||
| Zinkgruvan | ||||||||||||||||||||||||||||||
| Zinc | 3.7 | 64.6 | 7.7 | 11.2 | 76.3 | 27.4 | 14.9 | 73.4 | 35.1 | |||||||||||||||||||||
| Copper | 1.2 | 42.4 | 1.6 | 0.2 | 39.8 | 0.3 | 1.4 | 42.0 | 1.9 | |||||||||||||||||||||
| Yauliyacu ^(20)^ | 5.9 | 101.4 | 19.2 | 8.0 | 121.8 | 31.2 | 13.9 | 113.1 | 50.4 | |||||||||||||||||||||
| Aljustrel ^(21)^ | 4.3 | 67.3 | 9.3 | 3.9 | 58.9 | 7.4 | 8.2 | 63.3 | 16.7 | |||||||||||||||||||||
| Cozamin (50%) ^(12,22)^ | ||||||||||||||||||||||||||||||
| Copper | 0.2 | 53.3 | 0.3 | 4.5 | 36.9 | 5.3 | 4.7 | 37.5 | 5.6 | |||||||||||||||||||||
| Zinc | - | - | - | 2.2 | 31.2 | 2.3 | 2.2 | 31.2 | 2.3 | |||||||||||||||||||||
| Pascua-Lama (25%) | 10.7 | 57.2 | 19.7 | 97.9 | 52.2 | 164.4 | 108.6 | 52.7 | 184.1 | |||||||||||||||||||||
| Keno Hill (25%) | ||||||||||||||||||||||||||||||
| Underground | - | - | - | 0.7 | 455.8 | 10.5 | 0.7 | 455.8 | 10.5 | |||||||||||||||||||||
| Elsa Tailings | - | - | - | 0.6 | 119.0 | 2.4 | 0.6 | 119.0 | 2.4 | |||||||||||||||||||||
| Los Filos | 88.5 | 5.3 | 15.2 | 133.7 | 8.1 | 35.0 | 222.2 | 7.0 | 50.2 | |||||||||||||||||||||
| Stratoni | - | - | - | 0.4 | 138.5 | 2.0 | 0.4 | 138.5 | 2.0 | |||||||||||||||||||||
| 777 | 0.1 | 39.0 | 0.2 | 0.1 | 30.7 | 0.1 | 0.2 | 35.5 | 0.2 | |||||||||||||||||||||
| Minto | 3.3 | 3.4 | 0.4 | 9.0 | 5.0 | 1.5 | 12.4 | 4.6 | 1.8 | |||||||||||||||||||||
| Marmato ^(12,14)^ | 0.9 | 26.5 | 0.8 | 12.8 | 8.1 | 3.4 | 13.8 | 9.4 | 4.2 | |||||||||||||||||||||
| Rosemont ^(23)^ | 112.2 | 3.9 | 14.1 | 358.0 | 2.7 | 31.5 | 470.2 | 3.0 | 45.6 | |||||||||||||||||||||
| Loma de La Plata (12.5%) | - | - | - | 3.6 | 169.0 | 19.8 | 3.6 | 169.0 | 19.8 | |||||||||||||||||||||
| Toroparu (50%) ^(15,16)^ | 21.9 | 1.1 | 0.8 | 98.5 | 0.7 | 2.3 | 120.4 | 0.8 | 3.1 | |||||||||||||||||||||
| Cotabambas ^(16,25)^ | - | - | - | 117.1 | 2.7 | 10.3 | 117.1 | 2.7 | 10.3 | |||||||||||||||||||||
| Kutcho<br>^(16,17)^ | - | - | - | 5.4 | 25.9 | 4.5 | 5.4 | 25.9 | 4.5 | |||||||||||||||||||||
| Total Silver | **** | 143.2 | **** | **** | 599.8 | **** | **** | 743.0 | **** | |||||||||||||||||||||
| Palladium | ||||||||||||||||||||||||||||||
| Stillwater (4.5%)<br>^(11)^ | 0.03 | 7.1 | 0.01 | 0.1 | 5.1 | 0.02 | 0.2 | 5.5 | 0.03 | |||||||||||||||||||||
| Total Palladium | **** | 0.01 | **** | **** | 0.02 | **** | **** | 0.03 | **** | |||||||||||||||||||||
| Cobalt | ||||||||||||||||||||||||||||||
| Voisey’s Bay (42.4%) ^(12,24)^ | 1.7 | 0.04 | 1.5 | - | - | - | 1.7 | 0.04 | 1.5 | |||||||||||||||||||||
| Total Cobalt | **** | 1.53 | **** | **** | - | **** | **** | 1.5 | **** |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [32]
Attributable Inferred Resources^(1,2,3,4,5,9,27)^
As of December 31, 2020 unless^^otherwise noted^(6)^
| Inferred | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Tonnage | Grade | Contained | ||||||||
| Mt | g/t /<br> % | Moz /<br> Mlbs | ||||||||
| Gold | ||||||||||
| Salobo (75%) ^(10)^ | 198.5 | 0.22 | 1.39 | |||||||
| Stillwater ^(11)^ | 96.2 | 0.43 | 1.32 | |||||||
| Constancia (50%) | 28.4 | 0.09 | 0.08 | |||||||
| Sudbury (70%) ^(12)^ | 2.9 | 0.49 | 0.05 | |||||||
| San Dimas (25%) ^(13)^ | 1.4 | 3.63 | 0.16 | |||||||
| Minto | 6.1 | 0.51 | 0.10 | |||||||
| Marmato (6.5%) ^(12,14)^ | 0.9 | 2.56 | 0.07 | |||||||
| Santo Domingo ^(12,27)^ | 31.8 | 0.02 | 0.03 | |||||||
| Cotabambas (25%) ^(16,25)^ | 151.3 | 0.17 | 0.84 | |||||||
| Toroparu (10%) ^(16,17)^ | 12.9 | 0.76 | 0.32 | |||||||
| Kutcho ^(16,17)^ | 8.8 | 0.25 | 0.07 | |||||||
| Brewery Creek ^(26)^ | 1.3 | 0.87 | 0.04 | |||||||
| Metates Royalty<br>^(18)^ | 0.3 | 0.39 | 0.003 | |||||||
| Total Gold | **** | 4.46 | **** | |||||||
| Silver | ||||||||||
| Peñasquito (25%) ^(10)^ | 37.7 | 26.4 | 32.0 | |||||||
| Constancia | 56.7 | 2.9 | 5.3 | |||||||
| Antamina (33.75%) ^(12,19)^ | ||||||||||
| Copper | 219.7 | 9.0 | 63.6 | |||||||
| Copper-Zinc | 104.2 | 16.0 | 53.6 | |||||||
| Neves-Corvo | ||||||||||
| Copper | 12.6 | 33.2 | 13.5 | |||||||
| Zinc | 3.7 | 63.0 | 7.4 | |||||||
| Zinkgruvan | ||||||||||
| Zinc | 19.0 | 82.0 | 50.0 | |||||||
| Copper | 0.2 | 35.0 | 0.3 | |||||||
| Yauliyacu ^(20)^ | 13.4 | 246.9 | 106.8 | |||||||
| Aljustrel ^(21)^ | 15.7 | 46.2 | 23.3 | |||||||
| San Dimas (25%) ^(13)^ | 1.4 | 340.7 | 15.1 | |||||||
| Cozamin (50%) ^(12,22)^ | ||||||||||
| Copper | 2.0 | 40.9 | 2.6 | |||||||
| Zinc | 2.6 | 37.5 | 3.2 | |||||||
| Rosemont ^(23)^ | 68.7 | 1.7 | 3.7 | |||||||
| Pascua-Lama (25%) | 3.8 | 17.8 | 2.2 | |||||||
| Keno Hill (25%) | ||||||||||
| Underground | 0.4 | 454.6 | 6.1 | |||||||
| Los Filos | 98.2 | 6.1 | 19.4 | |||||||
| Stratoni | 1.1 | 188.0 | 6.9 | |||||||
| Minto | 6.1 | 4.9 | 1.0 | |||||||
| Marmato ^(12,14)^ | 13.1 | 4.4 | 1.9 | |||||||
| Loma de La Plata (12.5%) | 0.2 | 76.0 | 0.4 | |||||||
| Cotabambas ^(16,25)^ | 605.3 | 2.3 | 45.4 | |||||||
| Toroparu (50%) ^(15,16)^ | 58.7 | 0.1 | 0.1 | |||||||
| Kutcho ^(16,17)^ | 8.8 | 20.6 | 5.8 | |||||||
| Metates Royalty<br>^(18)^ | 0.3 | 9.5 | 0.1 | |||||||
| Total Silver | **** | 469.5 | **** | |||||||
| Palladium | ||||||||||
| Stillwater (4.5%)<br>^(11)^ | 1.0 | 12.1 | 0.37 | |||||||
| Total Palladium | **** | 0.37 | **** | |||||||
| Cobalt | ||||||||||
| Voisey’s Bay (42.4%) ^(12,24)^ | 2.5 | 0.14 | 7.6 | |||||||
| Total Cobalt | **** | 7.6 | **** |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [33]
Notes on Mineral Reserves & Mineral Resources:
| 1. | All Mineral Reserves and Mineral Resources have been estimated in accordance with the 2014 Canadian Institute of<br>Mining, Metallurgy and Petroleum (CIM) Standards for Mineral Resources and Mineral Reserves and National Instrument 43-101 – Standards for Disclosure for Mineral Projects (“NI 43-101”), or the 2012 Australasian Joint Ore Reserves Committee (JORC) Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. |
|---|---|
| 2. | Mineral Reserves and Mineral Resources are reported above in millions of metric tonnes (“Mt”), grams per<br>metric tonne (“g/t”) for gold, silver and palladium, percent (“%”) for cobalt, millions of ounces (“Moz”) for gold, silver and palladium and millions of pounds (“Mlbs”) for cobalt. |
| --- | --- |
| 3. | Qualified persons (“QPs”), as defined by the NI 43-101, for the<br>technical information contained in this document (including the Mineral Reserve and Mineral Resource estimates) are: |
| --- | --- |
| a. | Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); and |
| --- | --- |
| b. | Ryan Ulansky, M.A.Sc., P.Eng. (Vice President, Engineering), |
| --- | --- |
both employees of the Company (the “Company’s QPs”).
| 4. | The Mineral Resources reported in the above tables are exclusive of Mineral Reserves. The Cozamin mine, San Dimas mine,<br>Minto mine, Neves-Corvo mine, Zinkgruvan mine, Stratoni mine, Stillwater mines, Keno Hill mines, Aljustrel mines, Santo Domingo project and Toroparu project (gold only) report Mineral Resources inclusive of Mineral Reserves. The Company’s QPs<br>have made the exclusive Mineral Resource estimates for these mines based on average mine recoveries and dilution. |
|---|---|
| 5. | Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability. |
| --- | --- |
| 6. | Other than as detailed below, Mineral Reserves and Mineral Resources are reported as of December 31, 2020 based on<br>information available to the Company as of the date of this document, and therefore will not reflect updates, if any, after such date. |
| --- | --- |
| a. | Mineral Resources for Aljustrel’s Feitais mine are reported as of July 2020, Moinho & St João<br>mines as of August 2020 and the Estação project as of July, 2018. |
| --- | --- |
| b. | Mineral Resources for the Brewery Creek project are reported as of May 31, 2020. |
| --- | --- |
| c. | Mineral Resources for the Cotabambas project are reported as of June 20, 2013. |
| --- | --- |
| d. | Mineral Resources and Mineral Reserves for the Cozamin mine are reported as of October 31, 2020.<br> |
| --- | --- |
| e. | Mineral Resources for Keno Hill’s Elsa Tailings project are reported as of April 22, 2010, Bellekeno mine<br>Indicated Mineral Resources as of September 30, 2013, Mineral Resources for the Lucky Queen, Flame & Moth and Onek mines as of March 29, 2017 and Bermingham mine as of March 28, 2019. Mineral Reserves are reported as of<br>March 28, 2019. |
| --- | --- |
| f. | Mineral Resources for the Kutcho project are reported as of September 8, 2020 and Mineral Reserves are reported as<br>of June 15, 2017. |
| --- | --- |
| g. | Mineral Resources for the Loma de La Plata project are reported as of May 20, 2009. |
| --- | --- |
| h. | Mineral Resources and Mineral Reserves for the Los Filos mine are reported as of October 31, 2018.<br> |
| --- | --- |
| i. | Mineral Resources and Mineral Reserves for the Neves-Corvo and Zinkgruvan mines are reported as of June 30, 2020.<br> |
| --- | --- |
| j. | Mineral Resources and Mineral Reserves for the Marmato mine are reported as of March 17, 2020.<br> |
| --- | --- |
| k. | Mineral Resources and Mineral Reserves for the Metates royalty are reported as of April 29, 2016.<br> |
| --- | --- |
| l. | Mineral Resources and Mineral Reserves for the Minto mine are reported as of December 31, 2018.<br> |
| --- | --- |
| m. | Mineral Resources and Mineral Reserves for the Rosemont project are reported as of March 30, 2017.<br> |
| --- | --- |
| n. | Mineral Resources for the Santo Domingo project are reported as of February 13, 2020 and Mineral Reserves as of<br>November 14, 2018. |
| --- | --- |
| o. | Mineral Resources and Mineral Reserves for the Stratoni mine are reported as of September 30, 2020.<br> |
| --- | --- |
| p. | Mineral Resources for the Toroparu project are reported as of September 20, 2018 and Mineral Reserves are reported<br>as of March 31, 2013. |
| --- | --- |
| 7. | Process recoveries are the average percentage of gold, silver, palladium or cobalt in a saleable product (doré<br>or concentrate) recovered from mined ore at the applicable site process plants as reported by the operators. |
| --- | --- |
| 8. | Mineral Reserves are estimated using appropriate process and mine recovery rates, dilution, operating costs and the<br>following commodity prices: |
| --- | --- |
| a. | Aljustrel mine – 3.5% zinc cut-off for the Feitais, Moinho and St<br>João mines and 3.0% zinc cut-off for the Estação project. |
| --- | --- |
| b. | Antamina mine - $3.08 per pound copper, $1.08 per pound zinc, $8.70 per pound molybdenum and $17.39 per ounce silver.<br> |
| --- | --- |
| c. | Constancia mine - $1,375 per ounce gold, $17.00 per ounce silver, $3.10 per pound copper and $11.00 per pound<br>molybdenum. |
| --- | --- |
| d. | Cozamin mine - NSR cut-offs of $48.04 per tonne for conventionally backfilled<br>zones for 2020-2022, $51,12 per tonne for conventionally backfilled zones for 2023 and onward, $56.51 per tonne for paste backfilled zones of Vein 10 and $56.12 per tonne for paste backfilled zones of Vein 20, all assuming $2.75 per pound copper,<br>$17.00 per ounce silver, $0.90 per pound lead and $1.00 per pound zinc. |
| --- | --- |
| e. | Keno Hill mines - $1,300 per ounce gold, $18.50 per ounce silver, $1.00 per pound lead and $1.15 per pound zinc.<br> |
| --- | --- |
| f. | Kutcho project – 1.5% copper cut-off for the Main deposit and 1.0% copper cut-off for the Esso deposit, both assuming $2.75 per pound copper, $1.10 per pound zinc, $1,250 per ounce gold and $17.00 per ounce silver. |
| --- | --- |
| g. | Los Filos mine - $1,200 per ounce gold and $4.39 per ounce silver. |
| --- | --- |
| h. | Marmato mine – 2.23 grams per tonne gold cut-off for the Upper Mine, 1.91<br>grams per tonne gold cut-off for the Transition Zone and 1.61 grams per tonne gold cut-off for the MDZ, all assuming $1,400 per ounce gold. |
| --- | --- |
| i. | Metates royalty – 0.34 grams per tonne gold equivalent cut-off assuming<br>$1,200 per ounce gold and $19.20 per ounce silver. |
| --- | --- |
| j. | Minto mine – 1.2% copper cut-off assuming $300 per ounce gold, $3.90 per<br>ounce silver and $2.50 per pound copper. |
| --- | --- |
| k. | Neves-Corvo mine – 1.34% copper equivalent cut-off for the copper Mineral<br>Reserves and 5.34% zinc equivalent cut-off for the zinc Mineral Reserves, both assuming $3.00 per pound copper, $0.95 per pound lead and $1.00 per pound zinc. |
| --- | --- |
| l. | Peñasquito mine - $1,200 per ounce gold, $17.00 per ounce silver, $0.90 per pound lead and $1.15 per pound zinc.<br> |
| --- | --- |
| m. | Rosemont project - $6.00 per ton NSR cut-off assuming $18.00 per ounce silver,<br>$3.15 per pound copper and $11.00 per pound molybdenum. |
| --- | --- |
| n. | Salobo mine – 0.253% copper equivalent cut-off assuming $1,290 per ounce<br>gold and $3.18 per pound copper. |
| --- | --- |
| o. | San Dimas mine – $1,700 per ounce gold and $17.50 per ounce silver. |
| --- | --- |
| p. | Santo Domingo project - variable throughput rates and cut-offs assuming $3.00<br>per pound copper,$1,290 per ounce gold and $100 per tonne iron. |
| --- | --- |
| q. | Stillwater mines - combined platinum and palladium cut-off of 6.8 g/t.<br> |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [34]
| r. | Stratoni mine – $273.40 per tonne NSR cut-off assuming $16.00 per ounce<br>silver, $0.91 per pound lead and $1.00 per pound zinc. |
|---|---|
| s. | Sudbury mines - $1,300 per ounce gold, $8.16 per pound nickel, $3.18 per pound copper, $1,155 per ounce platinum,<br>$1,093 per ounce palladium and $22.68 per pound cobalt. |
| --- | --- |
| t. | Toroparu project – 0.38 grams per tonne gold cut-off assuming $1,070 per<br>ounce gold for fresh rock and 0.35 grams per tonne gold cut-off assuming $970 per ounce gold for saprolite. |
| --- | --- |
| u. | Voisey’s Bay mines: |
| --- | --- |
| i. | Ovoid and SE Extension – Cdn $20.56 per tonne cut-off assuming $6.80 per<br>pound nickel, $3.08 per pound copper and $29.48 per pound cobalt. |
| --- | --- |
| ii. | Discovery Hill - $29.52 per tonne cut-off assuming $8.16 per pound nickel,<br>$3.18 per pound copper and $22.68 per pound cobalt. |
| --- | --- |
| iii. | Reid Brook Division 1 - $225.00 per tonne cut-off assuming $6.35 per pound<br>nickel, $2.90 per pound copper and $20.41 per pound cobalt. |
| --- | --- |
| iv. | Reid Brook Divisions 2-4 - $275.00 per tonne<br>cut-off assuming $9.71 per pound nickel, $3.40 per pound copper and $11.52 per pound cobalt.Eastern Deeps Mineral Reserves - $175.00 per tonne cut-off assuming $6.35 per<br>pound nickel, $2.90 per pound copper and $20.41 per pound cobalt. |
| --- | --- |
| v. | Yauliyacu mine - $17.39 per ounce silver, $3.08 per pound copper, and $1.08 per pound zinc. |
| --- | --- |
| w. | Zinkgruvan mine – 6.1% zinc equivalent cut-off for the zinc Mineral<br>Reserve and 1.4% copper cut-off for the copper Mineral Reserve, both assuming $3.00 per pound copper and $0.95 per pound lead and $1.00 per pound zinc. |
| --- | --- |
| x. | 777 mine – $1,766.67 per ounce gold, $20.67 per ounce silver, $2.90 per pound copper and $1.04 per pound zinc.<br> |
| --- | --- |
| 9. | Mineral Resources are estimated using appropriate recovery rates and the following commodity prices:<br> |
| --- | --- |
| a. | Aljustrel mine – 3.5% zinc cut-off for Feitais, Moinho and St João<br>mines and 3.0% zinc cut-off for the Estação project. |
| --- | --- |
| b. | Antamina mine - $3.30 per pound copper, $1.18 per pound zinc, $10.54 per pound molybdenum and $20.82 per ounce silver.<br> |
| --- | --- |
| c. | Brewery Creek project – 0.37 g/t gold cut-off assuming $1,500 per ounce<br>gold. |
| --- | --- |
| d. | Constancia mine – $1,375 per ounce gold, $17.00 per ounce silver, $3.10 per pound copper and $11.00 per pound<br>molybdenum. |
| --- | --- |
| e. | Cotabambas project – 0.2% copper equivalent cut-off assuming $1,350 per<br>ounce gold, $23.00 per ounce silver, $3.20 per pound copper and $12.50 per pound molybdenum. |
| --- | --- |
| f. | Cozamin mine - $50 per tonne NSR cut-off assuming $3.25 per pound copper,<br>$20.00 per ounce silver, $1.00 per pound lead and $1.20 per pound zinc. |
| --- | --- |
| g. | Keno Hill mines: |
| --- | --- |
| i. | Bellekeno mine – Cdn $185 per tonne NSR cut-off assuming $22.50 per ounce<br>silver, $0.85 per pound lead and $0.95 per pound zinc. |
| --- | --- |
| ii. | Lucky Queen and Flame & Moth mines – Cdn $185 per tonne NSR<br>cut-off assuming $1,300 per ounce gold, $20.00 per ounce silver, $0.94 per pound lead and $1.00 per pound zinc. |
| --- | --- |
| iii. | Onek mine - Cdn $185 per tonne NSR cut-off assuming $1,250 per ounce gold,<br>$20.00 per ounce silver, $0.90 per pound lead and $0.95 per pound zinc. |
| --- | --- |
| iv. | Bermingham mine - Cdn $185 per tonne NSR cut-off assuming $20.00 per ounce<br>silver, $0.95 per pound lead, $1.00 per pound zinc and $1,300 per ounce gold. |
| --- | --- |
| v. | Elsa Tailings project – 50 grams per tonne silver cut-off assuming $17.00<br>per ounce silver and $1,000 per ounce gold. |
| --- | --- |
| h. | Kutcho project – 1.0% copper equivalent cut-off for the Main and Sumac<br>deposits and 0.9% copper equivalent cut-off for Esso, all assuming $3.25 per pound copper, $1.25 per pound zinc, $1,550 per ounce gold and $20.00 per ounce silver. |
| --- | --- |
| i. | Loma de La Plata project – 50 grams per tonne silver equivalent cut-off<br>assuming $12.50 per ounce silver and $0.50 per pound lead. |
| --- | --- |
| j. | Los Filos mine - $1,400 per ounce gold and $4.39 per ounce silver. |
| --- | --- |
| k. | Marmato mine – 1.9 grams per tonne gold cut-off for the Upper Mine and 1.3<br>grams per tonne gold cut-off for the MDZ and Transition Zone, all assuming $1,500 per ounce gold. |
| --- | --- |
| l. | Metates royalty – 0.34 grams per tonne gold equivalent cut-off assuming<br>$1,200 per ounce gold and $19.20 per ounce silver. |
| --- | --- |
| m. | Minto mine – 0.5% copper cut-off for Open Pit and 1.0% copper cut-off for Underground. |
| --- | --- |
| n. | Neves-Corvo mine – 1.0% copper cut-off for the copper Mineral Resource and<br>4.5% zinc cut-off for the zinc Mineral Resource. |
| --- | --- |
| o. | Pascua-Lama project – $1,500 per ounce gold, $18.75 per ounce silver and $3.50 per pound copper.<br> |
| --- | --- |
| p. | Peñasquito mine - $1,400 per ounce gold, $20.00 per ounce silver, $1.10 per pound lead and $1.40 per pound zinc.<br> |
| --- | --- |
| q. | Rosemont project – $5.70 per ton NSR cut-off assuming $18.00 per ounce<br>silver, $3.15 per pound copper and $11.00 per pound molybdenum. |
| --- | --- |
| r. | Salobo mine – 0.253% copper equivalent cut-off assuming $1,290 per ounce<br>gold and $3.18 per pound copper. |
| --- | --- |
| s. | San Dimas mine – $1,750 per ounce gold and $18.50 per ounce silver. |
| --- | --- |
| t. | Santo Domingo project - 0.125% copper equivalent cut-off assuming $3.50 per<br>pound copper, $1,300 per ounce gold and $99 per tonne iron. |
| --- | --- |
| u. | Stillwater mines – geologic boundaries for Inferred Mineral Resources at both the Stillwater mine and East Boulder<br>mine. |
| --- | --- |
| v. | Stratoni mine – Geologically constrained to massive sulfide contacts. |
| --- | --- |
| w. | Sudbury mines - $1,300 per ounce gold, $8.16 per pound nickel, $3.18 per pound copper, $1,155 per ounce platinum,<br>$1,093 per ounce palladium and $22.68 per pound cobalt. |
| --- | --- |
| x. | Toroparu project – 0.30 grams per tonne gold cut-off assuming $1,350 per<br>ounce gold and $3.00 per pound copper. |
| --- | --- |
| y. | Voisey’s Bay mines: |
| --- | --- |
| i. | Reid Brook Divisions 2-4 - $275.00 per tonne<br>cut-off assuming $9.71 per pound nickel, $3.40 per pound copper and $11.52 per pound cobalt. |
| --- | --- |
| ii. | Discovery Hill - $29.52 per tonne assuming $8.16 per pound nickel, $3.18 per pound copper and $22.68 per pound cobalt.<br> |
| --- | --- |
| z. | Yauliyacu mine – $20.82 per ounce silver, $3.30 per pound copper, and $1.18 per pound zinc. |
| --- | --- |
| aa. | Zinkgruvan mine – 4.5% zinc cut-off for the zinc Mineral Resource and 1.0%<br>copper cut-off for the copper Mineral Resource. |
| --- | --- |
| bb. | 777 mine – $1,766.67 per ounce gold, $20.67 per ounce silver, $2.90 per pound copper and $1.04 per pound zinc.<br> |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [35]
| 10. | The scientific and technical information in these tables regarding the Peñasquito mine was sourced by the<br>Company from the following filed documents: |
|---|---|
| a. | Peñasquito – Newmont’s December 31, 2020 Resources and<br>Reserves press release<br> <br>(https://www.newmont.com/investors/news-release/news-details/2021/Newmont-Reports-2020-Mineral-Reserves-of-94-Million-Gold-Ounces-Replacing-80-Percent-of-Depletion/default.aspx<br>) and |
| --- | --- |
| b. | Salobo – The Company has filed a technical report for the Salobo Mine, which is available on SEDAR at<br>www.sedar.com |
| --- | --- |
The Company QP’s have approved this partner disclosed scientific and technical information in respect of the Peñasquito mine, as well as, the Company’s Mineral Resource and Mineral Reserve estimates for the Salobo mine.
| 11. | The Stillwater precious metals purchase agreement provides that effective July 1, 2018, Sibanye-Stillwater will<br>deliver 100% of the gold production for the life of the mines and 4.5% of palladium production until 375,000 ounces are delivered, 2.25% of palladium production until a further 175,000 ounces are delivered and 1.0% of the palladium production<br>thereafter for the life of the mines. Attributable palladium Mineral Reserves and Mineral Resources have been calculated based upon the 4.5% / 2.25% / 1.0% production entitlements. |
|---|
The Stillwater mine has been in operation since 1986 and the East Boulder mine since 2002. Individual grades for platinum, palladium, gold and rhodium are estimated using ratios applied to the combined platinum plus palladium grades based upon average historic production results provided to the Company as of the date of this document. As such, the Attributable Mineral Resource and Mineral Reserve palladium and gold grades for the Stillwater mines have been estimated using the following ratios:
| a. | Stillwater mine: Pd = (Pt + Pd) / (1/3.5 + 1) and Au = (Pd + Pt) x 0.0238 |
|---|---|
| b. | East Boulder mine: Pd = (Pt + Pd) / (1/3.6 + 1) and Au = (Pd + Pt) x 0.0323 |
| --- | --- |
| 12. | The Company’s attributable Mineral Resources and Mineral Reserves for the Antamina silver interest, Cozamin silver<br>interest, Marmato gold and silver interests, Santo Domingo gold interest, Sudbury gold interest and Voisey’s Bay cobalt interest have been constrained to the production expected for the various contracts. |
| --- | --- |
| 13. | Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production<br>plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or<br>increases to more than 90:1 for a period of 6 months or more, then the “70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a<br>period of 6 months or more in which event the “70” shall be reinstated. |
| --- | --- |
| 14. | The Marmato purchase agreement provides that Caldas will deliver 6.5% of the gold production until 190 thousand<br>ounces are delivered and 3.25% of gold production thereafter, as well as, 100% of the silver production until 2.15 million ounces are delivered and 50% of silver production thereafter. Attributable reserves and resources have been calculated on<br>the 6.5% / 3.25% basis for gold and 100% / 50% basis for silver. |
| --- | --- |
| 15. | The Company’s agreement with Gold X Mining Corp is an Early Deposit agreement, whereby the Company will be entitled<br>to purchase 10% of the gold production and 50% of the silver production from the Toroparu project for the life of mine. |
| --- | --- |
| 16. | The Company has the option in the Early Deposit agreements, to terminate the agreement following the delivery of a<br>feasibility study or if feasibility study has not been delivered within a required time frame. |
| --- | --- |
| 17. | The Company’s agreement with Kutcho Copper is an Early Deposit agreement, whereby the Company will be entitled to<br>purchase 100% of the gold and silver production from the Kutcho project until 51,000 ounces of gold and 5.6 million ounces of silver have been delivered, after which both streams will decrease to 66.67% for the remaining life of mine.<br>Attributable reserves and resources have been calculated on the 100% / 66.67% basis. |
| --- | --- |
| 18. | The Company’s agreement with Chesapeake Gold Corp (Chesapeake) is a royalty whereby the Company will be entitled to a<br>0.5% net smelter return royalty. |
| --- | --- |
| 19. | The Antamina silver purchase agreement in respect to the Antamina mine (November 3, 2015) provides that Glencore will<br>deliver 33.75% of the silver production until 140 million ounces are delivered and 22.5% of silver production thereafter, for a 50 year term that can be extended in increments of 10 years at the Company’s discretion. Attributable reserves<br>and resources have been calculated on the 33.75% / 22.5% basis. |
| --- | --- |
| 20. | The Yauliyacu mine silver purchase agreement provides that Glencore will deliver to the Company a per annum amount<br>equal to the first 1.5 million ounces of payable silver produced at the Yauliyacu mine and 50% of any excess for the life of the mine. |
| --- | --- |
| 21. | The Company only has the rights to silver contained in concentrates containing less than 15% copper at the Aljustrel mine.<br> |
| --- | --- |
| 22. | The Cozamin silver purchase agreement provides that Capstone will deliver 50% of the silver production until<br>10 million ounces are delivered and 33% thereafter for the life of the mine. Attributable reserves and resources have been calculated on the 50% / 33% basis. |
| --- | --- |
| 23. | The Rosemont mine Mineral Resources and Mineral Reserves do not include the Oxide material. |
| --- | --- |
| 24. | The Voisey’s Bay cobalt purchase agreement provides that effective January 1, 2021, Vale will deliver 42.4% of<br>the cobalt production until 31 million pounds are delivered to the Company and 21.2% of cobalt production thereafter, for the life of the mine. Attributable reserves and resources have been calculated on the 42.4% / 21.2% basis.<br> |
| --- | --- |
| 25. | The Company’s agreement with Panoro is an Early Deposit agreement, whereby the Company will be entitled to<br>purchase 100% of the silver production and 25% of the gold production from the Cotabambas project until 90 million silver equivalent ounces have been delivered, at which point the stream will drop to 66.67% of silver production and 16.67% of<br>gold production for the life of mine. |
| --- | --- |
| 26. | The Company’s agreement with Golden Predator is a royalty, whereby the Company will be entitled to a 2.0% net smelter<br>return royalty for the first 600,000 ounces of gold produced, above which the NSR will increase to 2.75%. Golden Predator has the right to repurchase 0.625% of the increased NSR by paying the Company Cdn$2.0M. Attributable resources have been<br>calculated on the 2.0% / 2.75% basis. |
| --- | --- |
| 27. | The Santo Domingo gold purchase agreement provides that Capstone will deliver 100% of the gold production until 285,000<br>ounces are delivered and 67% thereafter for the life of the mine. Attributable reserves and resources have been calculated on the 100% / 67% basis. |
| --- | --- |
| 28. | Precious metals and cobalt are by-product metals at all of the Mining Operations,<br>other than gold at the Marmato mine, silver at the Keno Hill mines and the Loma de La Plata zone of the Navidad project, gold at the Toroparu project and palladium at the Stillwater mines and therefore, the economic cut off applied to the reporting<br>of precious metals and cobalt reserves and resources will be influenced by changes in the commodity prices of other metals at the mines. |
| --- | --- |
Statements made in this section contain forward-looking information. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure associated with this information.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [36]
Cautionary Note Regarding Forward-Looking Statements
The information contained herein contains “forward-looking statements” within the meaning of the United States Private Securities Litigation Reform Act of 1995 and “forward-looking information” within the meaning of applicable Canadian securities legislation. Forward-looking statements, which are all statements other than statements of historical fact, include, but are not limited to, statements with respect to:
| · | the future price of commodities; |
|---|---|
| · | the impact of epidemics (including the COVID-19 virus pandemic), including the<br>potential heightening of other risks; |
| --- | --- |
| · | the estimation of future production from Mining Operations (including in the estimation of production, mill throughput,<br>grades, recoveries and exploration potential); |
| --- | --- |
| · | the estimation of mineral reserves and mineral resources (including the estimation of reserve conversion rates) and the<br>realization of such estimations); |
| --- | --- |
| · | the commencement, timing and achievement of construction, expansion or improvement projects by Wheaton’s PMPA<br>counterparties at Mining Operations; |
| --- | --- |
| · | the ability of Wheaton’s PMPA counterparties to comply with the terms of a PMPA (including as a result of the<br>business, mining operations and performance of Wheaton’s PMPA counterparties) and the potential impacts of such on Wheaton; |
| --- | --- |
| · | the costs of future production; |
| --- | --- |
| · | the estimation of produced but not yet delivered ounces; |
| --- | --- |
| · | statements as to the impact of the listing of the Company’s common shares on the LSE; |
| --- | --- |
| · | any statements as to future dividends; |
| --- | --- |
| · | the ability to fund outstanding commitments and the ability to continue to acquire accretive PMPAs, future payments by<br>the Company in accordance with PMPAs, including any acceleration of payments; |
| --- | --- |
| · | projected increases to Wheaton’s production and cash flow profile; |
| --- | --- |
| · | projected changes to Wheaton’s production mix; |
| --- | --- |
| · | the ability of Wheaton’s PMPA counterparties to comply with the terms of any other obligations under agreements with<br>the Company; |
| --- | --- |
| · | the ability to sell precious metals and cobalt production; |
| --- | --- |
| · | confidence in the Company’s business structure; |
| --- | --- |
| · | the Company’s assessment of taxes payable and the impact of the CRA Settlement for years subsequent to 2010;<br> |
| --- | --- |
| · | possible audits for taxation years subsequent to 2015; |
| --- | --- |
| · | the Company’s assessment of the impact of any tax reassessments; |
| --- | --- |
| · | the Company’s intention to file future tax returns in a manner consistent with the CRA Settlement;<br> |
| --- | --- |
| · | the future sales of Common Shares under, the amount of net proceeds from and the use of the net proceeds from, the ATM<br>Program; |
| --- | --- |
| · | assessments of the impact and resolution of various legal and tax matters, including but not limited to the<br>outstanding class action and audits. |
| --- | --- |
Generally, these forward-looking statements can be identified by the use of forward-looking terminology such as “plans”, “expects” or “does not expect”, “is expected”, “budget”, “scheduled”, “estimates”, “forecasts”, “projects”, “intends”, “anticipates” or “does not anticipate”, or “believes”, “potential”, or variations of such words and phrases or statements that certain actions, events or results “may”, “could”, “would”, “might” or “will be taken”, “occur” or “be achieved”. Forward-looking statements are subject to known and unknown risks, uncertainties and other factors that may cause the actual results, level of activity, performance or achievements of Wheaton to be materially different from those expressed or implied by such forward-looking statements, including but not limited to:
| · | risks associated with fluctuations in the price of commodities (including Wheaton’s ability to sell its precious<br>metals or cobalt production at acceptable prices or at all); |
|---|---|
| · | risks of significant impacts on Wheaton or the Mining Operations as a result of an epidemic (including the COVID-19 virus pandemic); |
| --- | --- |
| · | risks related to the Mining Operations (including fluctuations in the price of the primary or other commodities mined at<br>such operations, regulatory, political and other risks of the jurisdictions in which the Mining Operations are located, actual results of mining, risks associated with exploration, development, operating, expansion and improvement at the Mining<br>Operations, environmental and economic risks of the Mining Operations, and changes in project parameters as Mining Operations plans continue to be refined); |
| --- | --- |
| · | absence of control over the Mining Operations and having to rely on the accuracy of the public disclosure and other<br>information Wheaton receives from the owners and operators of the Mining Operations as the basis for its analyses, forecasts and assessments relating to its own business; |
| --- | --- |
| · | risks related to the uncertainty in the accuracy of mineral reserve and mineral resource estimation;<br> |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [37]
| · | risks related to the satisfaction of each party’s obligations in accordance with the terms of the Company’s<br>PMPAs, including the ability of the companies with which the Company has PMPAs to perform their obligations under those PMPAs in the event of a material adverse effect on the results of operations, financial condition, cash flows or business of such<br>companies, any acceleration of payments, estimated throughput and exploration potential; |
|---|---|
| · | risks relating to production estimates from Mining Operations, including anticipated timing of the commencement of<br>production by certain Mining Operations; |
| --- | --- |
| · | Wheaton’s interpretation of, or compliance with, or application of, tax laws and regulations or accounting policies<br>and rules, being found to be incorrect or the tax impact to the Company’s business operations being materially different than currently contemplated; |
| --- | --- |
| · | any challenge or reassessment by the CRA of the Company’s tax filings being successful and the potential negative<br>impact to the Company’s previous and future tax filings; |
| --- | --- |
| · | risks in assessing the impact of the CRA Settlement for years subsequent to 2010 (including whether there will be any<br>material change in the Company’s facts or change in law or jurisprudence); |
| --- | --- |
| · | counterparty credit and liquidity risks; |
| --- | --- |
| · | mine operator concentration risks; |
| --- | --- |
| · | indebtedness and guarantees risks; |
| --- | --- |
| · | hedging risk; |
| --- | --- |
| · | competition in the streaming industry risk; |
| --- | --- |
| · | risks related to claims and legal proceedings against Wheaton or the Mining Operations; |
| --- | --- |
| · | risks relating to security over underlying assets; |
| --- | --- |
| · | risks related to governmental regulations; |
| --- | --- |
| · | risks related to international operations of Wheaton and the Mining Operations; |
| --- | --- |
| · | risks relating to exploration, development, operating, expansions and improvements at the Mining Operations;<br> |
| --- | --- |
| · | risks related to environmental regulations and climate change; |
| --- | --- |
| · | the ability of Wheaton and the Mining Operations to obtain and maintain necessary licenses, permits, approvals and<br>rulings; |
| --- | --- |
| · | the ability of Wheaton and the Mining Operations to comply with applicable laws, regulations and permitting requirements;<br> |
| --- | --- |
| · | lack of suitable infrastructure and employees to support the Mining Operations; |
| --- | --- |
| · | inability to replace and expand mineral reserves, including anticipated timing of the commencement of production by<br>certain Mining Operations (including increases in production, estimated grades and recoveries); |
| --- | --- |
| · | uncertainties related to title and indigenous rights with respect to the mineral properties of the Mining Operations;<br> |
| --- | --- |
| · | the ability of Wheaton and the Mining Operations to obtain adequate financing; |
| --- | --- |
| · | the ability of the Mining Operations to complete permitting, construction, development and expansion;<br> |
| --- | --- |
| · | challenges related to global financial conditions; |
| --- | --- |
| · | risks related to Wheaton’s acquisition strategy; |
| --- | --- |
| · | risks related to the market price of the common shares of Wheaton (the “Common Shares”); |
| --- | --- |
| · | risks associated with multiple listings of the Common Shares on the LSE, NYSE and TSX; |
| --- | --- |
| · | risks associated with a possible suspension of trading of Common Shares; |
| --- | --- |
| · | risks associated with the sale of Common Shares under the ATM Program, including the amount of any net proceeds from such<br>offering of Common Shares and the use of any such proceeds; |
| --- | --- |
| · | equity price risks related to Wheaton’s holding of long-term investments in<br>other companies; |
| --- | --- |
| · | risks related to interest rates; |
| --- | --- |
| · | risks related to the declaration, timing and payment of dividends; |
| --- | --- |
| · | the ability of Wheaton and the Mining Operations to retain key management employees or procure the services of skilled<br>and experienced personnel; |
| --- | --- |
| · | risks relating to activist shareholders; |
| --- | --- |
| · | risks relating to reputational damage; |
| --- | --- |
| · | risks relating to unknown defects and impairments; |
| --- | --- |
| · | risks related to ensuring the security and safety of information systems, including cyber security risks;<br> |
| --- | --- |
| · | risks related to the adequacy of internal control over financial reporting; |
| --- | --- |
| · | risks related to fluctuations in commodity prices of metals produced from the Mining Operations other than precious<br>metals or cobalt; |
| --- | --- |
| · | risks relating to future sales or the issuance of equity securities; and |
| --- | --- |
| · | other risks discussed in the section entitled “Description of the Business – Risk Factors” in<br>Wheaton’s Annual Information Form available on SEDAR at www.sedar.com, and in Wheaton’s Form 40-F for the year ended December 31, 2020 and Form 6-K filed<br>March 11, 2021 both on file with the U.S. Securities and Exchange Commission in Washington, D.C. and available on EDGAR (the “Disclosure”). |
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [38]
Forward-looking statements are based on assumptions management currently believes to be reasonable, including but not limited to:
| · | that there will be no material adverse change in the market price of commodities; |
|---|---|
| · | that neither Wheaton nor the Mining Operations will suffer significant impacts as a result of an epidemic (including the COVID-19 virus pandemic); |
| --- | --- |
| · | that the Mining Operations will continue to operate and the mining projects will be completed in accordance with public<br>statements and achieve their stated production estimates; |
| --- | --- |
| · | that the mineral reserves and mineral resource estimates from Mining Operations (including reserve conversion rates) are<br>accurate; |
| --- | --- |
| · | that each party will satisfy their obligations in accordance with the PMPAs; |
| --- | --- |
| · | that Wheaton will continue to be able to fund or obtain funding for outstanding commitments; |
| --- | --- |
| · | that Wheaton will be able to source and obtain accretive PMPAs; |
| --- | --- |
| · | that any outbreak or threat of an outbreak of a virus or other contagions or epidemic disease will be adequately<br>responded to locally, nationally, regionally and internationally, without such response requiring any prolonged closure of the Mining Operations or having other material adverse effects on the Company and counterparties to its PMPAs;<br> |
| --- | --- |
| · | that the sale of Common Shares under the ATM Program will not have a significant impact on the market price of the<br>Company’s Common Shares and that the net proceeds of sales of Common Shares, if any, will be used as anticipated; |
| --- | --- |
| · | that the trading of the Company’s Common Shares will not be adversely affected by the differences in liquidity,<br>settlement and clearing systems as a result of multiple listings of the Common Shares on the LSE, the TSX and the NYSE; |
| --- | --- |
| · | that the trading of the Company’s Common Shares will not be suspended; |
| --- | --- |
| · | that expectations regarding the resolution of legal and tax matters will be achieved (including ongoing class action<br>litigation and CRA audits involving the Company); |
| --- | --- |
| · | that Wheaton has properly considered the application of Canadian tax law to its structure and operations;<br> |
| --- | --- |
| · | that Wheaton has filed its tax returns and paid applicable taxes in compliance with Canadian tax law;<br> |
| --- | --- |
| · | that Wheaton’s application of the CRA Settlement for years subsequent to 2010 is accurate (including the<br>Company’s assessment that there has been no material change in the Company’s facts or change in law or jurisprudence for years subsequent to 2010); |
| --- | --- |
| · | the estimate of the recoverable amount for any PMPA with an indicator of impairment; and |
| --- | --- |
| · | such other assumptions and factors as set out in the Disclosure. |
| --- | --- |
Although Wheaton has attempted to identify important factors that could cause actual results, level of activity, performance or achievements to differ materially from those contained in forward-looking statements, there may be other factors that cause results, level of activity, performance or achievements not to be as anticipated, estimated or intended. There can be no assurance that forward-looking statements will prove to be accurate and even if events or results described in the forward-looking statements are realized or substantially realized, there can be no assurance that they will have the expected consequences to, or effects on, Wheaton. Accordingly, readers should not place undue reliance on forward-looking statements and are cautioned that actual outcomes may vary. The forward-looking statements included herein are for the purpose of providing investors with information to assist them in understanding Wheaton’s expected financial and operational performance and may not be appropriate for other purposes. Any forward looking statement speaks only as of the date on which it is made. Wheaton does not undertake to update any forward-looking statements that are included or incorporated by reference herein, except in accordance with applicable securities laws.
Cautionary Language Regarding Reserves And Resources
For further information on Mineral Reserves and Mineral Resources and on Wheaton more generally, readers should refer to Wheaton’s Annual Information Form for the year ended December 31, 2020 and other continuous disclosure documents filed by Wheaton since January 1, 2021, available on SEDAR at www.sedar.com. Wheaton’s Mineral Reserves and Mineral Resources are subject to the qualifications and notes set forth therein. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
Cautionary Note to United States InvestorsConcerning Estimates of Measured, Indicated and Inferred Resources:
The information contained herein has been prepared in accordance with the requirements of the securities laws in effect in Canada, which differ from the requirements of United States securities laws. The terms “mineral reserve”, “proven mineral reserve” and “probable mineral reserve” are Canadian mining terms defined in accordance with Canadian National Instrument 43-101 – Standards of Disclosure for Mineral Projects (“NI 43-101”) and the Canadian Institute of Mining, Metallurgy and Petroleum (the “CIM”) – CIM Definition Standards on Mineral Resources and
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [39]
Mineral Reserves, adopted by the CIM Council, as amended (the “CIM Standards”). In addition, the terms “mineral resource”, “measured mineral resource”, “indicated mineral resource” and “inferred mineral resource” are defined in and required to be disclosed by NI 43-101. Investors are cautioned not to assume that any part or all of the mineral deposits in these categories will ever be converted into reserves. “Inferred mineral resources” have a great amount of uncertainty as to their existence and as to their economic and legal feasibility. It cannot be assumed that all or any part of an inferred mineral resource will ever be upgraded to a higher category. Under Canadian rules, estimates of inferred mineral resources may not form the basis of feasibility or pre-feasibility studies, except in rare cases. Investors are cautioned not to assume that all or any part of an inferred mineral resource exists or is economically or legally mineable. Mineral resources that are not mineral reserves do not have demonstrated economic viability. Disclosure of “contained ounces” in a resource is permitted disclosure under Canadian regulations. The SEC has adopted amendments to its disclosure rules to modernize the mineral property disclosure requirements for issuers whose securities are registered with the SEC under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”). These amendments became effective February 25, 2019 (the “SEC Modernization Rules”) with compliance required for the first fiscal year beginning on or after January 1, 2021. Under the SEC Modernization Rules, the historical property disclosure requirements for mining registrants included in SEC Industry Guide 7 will be rescinded and replaced with disclosure requirements in subpart 1300 of SEC Regulation S-K. Following the transition period, as a foreign private issuer that is eligible to file reports with the SEC pursuant to the multi-jurisdictional disclosure system, the Company is not required to provide disclosure on its mineral properties under the SEC Modernization Rules and will continue to provide disclosure under NI 43-101. As a result of the adoption of the SEC Modernization Rules, the SEC will recognize estimates of “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources.” In addition, the SEC has amended its definitions of “proven mineral reserves” and “probable mineral reserves” to be “substantially similar” to the corresponding definitions under the CIM Definition Standards that are required under NI 43-101. However, while the above terms are “substantially similar” to CIM Definition Standards, there are differences in the definitions under the SEC Modernization Rules and the CIM Definition Standards. Accordingly, there is no assurance any mineral reserves or mineral resources that the Company may report as “proven mineral reserves”, “probable mineral reserves”, “measured mineral resources”, “indicated mineral resources” and “inferred mineral resources” under NI 43-101 would be the same had the Company prepared the reserve or resource estimates under the standards adopted under the SEC Modernization Rules. Accordingly, information contained herein that describes Wheaton’s mineral deposits may not be comparable to similar information made public by U.S. companies subject to reporting and disclosure requirements under the United States federal securities laws and the rules and regulations thereunder. United States investors are urged to consider closely the disclosure in Wheaton’s Form 40-F, a copy of which may be obtained from Wheaton or from http://www.sec.gov/edgar.html.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [40]
Condensed Interim Consolidated Statements of Earnings
| Three Months Ended<br><br><br>March 31 | |||||||||
|---|---|---|---|---|---|---|---|---|---|
| (US dollars and shares in thousands, except per share amounts - unaudited) | Note | 2021 | 2020 | ||||||
| Sales | 6 | $ | 324,119 | $ | 254,789 | ||||
| Cost of sales | |||||||||
| Cost of sales, excluding depletion | $ | 78,783 | $ | 66,908 | |||||
| Depletion | 10 | 70,173 | 64,841 | ||||||
| Total cost of sales | $ | 148,956 | $ | 131,749 | |||||
| Gross margin | $ | 175,163 | $ | 123,040 | |||||
| General and administrative expenses | 7 | 11,971 | 13,181 | ||||||
| Earnings from operations | $ | 163,192 | $ | 109,859 | |||||
| Other (income) expense | 8 | 119 | (597) | ||||||
| Earnings before finance costs and income taxes | $ | 163,073 | $ | 110,456 | |||||
| Finance costs | 16.3 | 1,573 | 7,118 | ||||||
| Earnings before income taxes | $ | 161,500 | $ | 103,338 | |||||
| Income tax recovery (expense) | 22 | 502 | (8,442) | ||||||
| Net earnings | $ | 162,002 | $ | 94,896 | |||||
| Basic earnings per share | $ | 0.360 | $ | 0.212 | |||||
| Diluted earnings per share | $ | 0.360 | $ | 0.211 | |||||
| Weighted average number of shares outstanding | |||||||||
| Basic | 20 | 449,509 | 447,805 | ||||||
| Diluted | 20 | 450,600 | 448,891 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [41]
Condensed Interim Consolidated Statements of Comprehensive Income
| Three Months Ended <br>March 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (US dollars in thousands - unaudited) | Note | 2021 | 2020 | ||||||||
| Net earnings | $ | 162,002 | $ | 94,896 | |||||||
| Other comprehensive income | |||||||||||
| Items that will not be reclassified to net earnings | |||||||||||
| Loss on LTIs¹ | 14 | $ | (217) | $ | (154,143) | ||||||
| Income tax recovery (expense) related to LTIs¹ | 22 | (2,137) | 9,853 | ||||||||
| Total other comprehensive loss | $ | (2,354) | $ | (144,290) | |||||||
| Total comprehensive income | $ | 159,648 | $ | (49,394) | |||||||
| 1) | LTIs = long-term investments – common shares held. | ||||||||||
| --- | --- |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [42]
Condensed Interim Consolidated Balance Sheets
| Note | As at<br>March 31 | As at<br><br><br>December 31 | |||||||
|---|---|---|---|---|---|---|---|---|---|
| (US dollars in thousands - unaudited) | 2021 | 2020 | |||||||
| Assets | |||||||||
| Current assets | |||||||||
| Cash and cash equivalents | $ | 191,162 | $ | 192,683 | |||||
| Accounts receivable | 9 | 6,094 | 5,883 | ||||||
| Other | 23 | 4,228 | 3,265 | ||||||
| Total current assets | $ | 201,484 | $ | 201,831 | |||||
| Non-current assets | |||||||||
| Mineral stream interests | 10 | $ | 5,568,364 | $ | 5,488,391 | ||||
| Early deposit mineral stream interests | 11 | 33,991 | 33,241 | ||||||
| Mineral royalty interest | 12 | 6,606 | 3,047 | ||||||
| Long-term equity investments | 14 | 86,522 | 199,878 | ||||||
| Convertible notes receivable | 13 | 12,591 | 11,353 | ||||||
| Property, plant and equipment | 15 | 5,991 | 6,289 | ||||||
| Other | 24 | 12,863 | 13,242 | ||||||
| Total non-current<br>assets | $ | 5,726,928 | $ | 5,755,441 | |||||
| Total assets | $ | 5,928,412 | $ | 5,957,272 | |||||
| Liabilities | |||||||||
| Current liabilities | |||||||||
| Accounts payable and accrued liabilities | $ | 10,394 | $ | 13,023 | |||||
| Dividends payable | 17.2 | 58,478 | - | ||||||
| Current portion of performance share units | 19.1 | 26,428 | 17,297 | ||||||
| Current portion of lease liabilities | 16.2 | 789 | 773 | ||||||
| Other | 883 | 76 | |||||||
| Total current liabilities | $ | 96,972 | $ | 31,169 | |||||
| Non-current liabilities | |||||||||
| Bank debt | 16.1 | $ | - | $ | 195,000 | ||||
| Lease liabilities | 16.2 | 2,687 | 2,864 | ||||||
| Deferred income taxes | 22 | 235 | 214 | ||||||
| Performance share units | 19.1 | 3,250 | 11,784 | ||||||
| Pension liability | 1,841 | 1,670 | |||||||
| Total non-current<br>liabilities | $ | 8,013 | $ | 211,532 | |||||
| Total liabilities | $ | 104,985 | $ | 242,701 | |||||
| Shareholders’ equity | |||||||||
| Issued capital | 17 | $ | 3,656,400 | $ | 3,646,291 | ||||
| Reserves | 18 | 68,986 | 126,882 | ||||||
| Retained earnings | 2,098,041 | 1,941,398 | |||||||
| Total shareholders’ equity | $ | 5,823,427 | $ | 5,714,571 | |||||
| Total liabilities and shareholders’ equity | $ | 5,928,412 | $ | 5,957,272 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [43]
Condensed Interim Consolidated Statements of Cash Flows
| Three Months Ended<br><br><br>March 31 | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (US dollars in thousands - unaudited) | Note | 2021 | 2020 | ||||||||
| Operating activities | |||||||||||
| Net earnings | $ | 162,002 | $ | 94,896 | |||||||
| Adjustments for | |||||||||||
| Depreciation and depletion | 70,649 | 65,352 | |||||||||
| Interest expense | 16.3 | 262 | 5,978 | ||||||||
| Equity settled stock based compensation | 1,325 | 1,503 | |||||||||
| Performance share units | 19.1 | 305 | 3,277 | ||||||||
| Pension expense | 151 | 35 | |||||||||
| Income tax expense (recovery) | 22 | (502) | 8,442 | ||||||||
| Loss (gain) on fair value adjustment of share purchase warrants held | 8,14 | 950 | 71 | ||||||||
| Fair value (gain) loss on convertible note receivable | 13 | (1,238) | 790 | ||||||||
| Investment income recognized in net earnings | (2) | (117) | |||||||||
| Other | 593 | (317) | |||||||||
| Change in non-cash working<br>capital | 21 | (1,972) | 4,620 | ||||||||
| Cash generated from operations before income taxes and interest | $ | 232,523 | $ | 184,530 | |||||||
| Income taxes recovered (paid) | (30) | 89 | |||||||||
| Interest paid | (341) | (7,148) | |||||||||
| Interest received | 2 | 117 | |||||||||
| Cash generated from operating activities | $ | 232,154 | $ | 177,588 | |||||||
| Financing activities | |||||||||||
| Bank debt repaid | 16.1 | $ | (195,000) | $ | (159,000) | ||||||
| Credit facility extension fees | 16.1 | - | (1,360) | ||||||||
| Share purchase options exercised | 18.2 | 4,793 | 6,922 | ||||||||
| Lease payments | 16.2 | (214) | (167) | ||||||||
| Cash (used for) generated from financing<br>activities | $ | (190,421) | $ | (153,605) | |||||||
| Investing activities | |||||||||||
| Mineral stream interests | 10 | $ | (151,019) | $ | - | ||||||
| Early deposit mineral stream interests | 11 | (750) | (750) | ||||||||
| Mineral royalty interest | 12 | (3,561) | - | ||||||||
| Proceeds on disposal of long-term investments | 14 | 112,188 | - | ||||||||
| Other | (134) | (257) | |||||||||
| Cash generated from (used for) investing<br>activities | $ | (43,276) | $ | (1,007) | |||||||
| Effect of exchange rate changes on cash and cash<br>equivalents | $ | 22 | $ | (286) | |||||||
| (Decrease) increase in cash and cash equivalents | $ | (1,521) | $ | 22,690 | |||||||
| Cash and cash equivalents, beginning of period | 192,683 | 103,986 | |||||||||
| Cash and cash equivalents, end of period | $ | 191,162 | $ | 126,676 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [44]
Condensed Interim Consolidated Statements of Shareholders’ Equity
| Reserves | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (US dollars in thousands - unaudited) | Number of<br><br><br>Shares<br> <br>(000’s) | Issued<br><br><br>Capital | Share<br><br><br>Purchase<br> <br>Warrants<br><br><br>Reserve | Share<br><br><br>Purchase<br> <br>Options<br><br><br>Reserve | Restricted<br><br><br>Share<br> <br>Units<br><br><br>Reserve | LTI ^1^<br><br><br>Revaluation<br> <br>Reserve<br>(Net of Tax) | Total<br>Reserves | Retained<br><br><br>Earnings | Total | ||||||||||||||||||
| At January 1, 2020 | 447,771 | $ | 3,599,203 | $ | 83,077 | $ | 24,010 | $ | 6,405 | $ | 47,209 | $ | 160,701 | $ | 1,566,016 | $ | 5,325,920 | ||||||||||
| Total comprehensive income (loss) | |||||||||||||||||||||||||||
| Net earnings | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 94,897 | $ | 94,897 | |||||||||||
| OCI ^1^ | - | - | - | - | (144,290) | (144,290) | - | (144,290) | |||||||||||||||||||
| Total comprehensive income (loss) | $ | - | $ | - | $ | - | $ | - | $ | (144,290) | $ | (144,290) | $ | 94,897 | $ | (49,393) | |||||||||||
| Income tax recovery (expense) | $ | (1,480) | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | (1,480) | |||||||||||
| SBC ^1^ expense | - | - | 647 | 856 | - | 1,503 | - | 1,503 | |||||||||||||||||||
| Options ^1^ exercised | 375 | 7,994 | - | (1,503) | - | - | (1,503) | - | 6,491 | ||||||||||||||||||
| RSUs ^1^ released | 125 | 2,784 | - | - | (2,784) | - | (2,784) | - | - | ||||||||||||||||||
| Dividends (Note 17.2) | 0 | - | - | - | - | - | - | (44,815) | (44,815) | ||||||||||||||||||
| At March 31, 2020 | 448,271 | $ | 3,608,501 | $ | 83,077 | $ | 23,154 | $ | 4,477 | $ | (97,081) | $ | 13,627 | $ | 1,616,098 | $ | 5,238,226 | ||||||||||
| Total comprehensive income | |||||||||||||||||||||||||||
| Net earnings | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 412,907 | $ | 412,907 | |||||||||||
| OCI ^1^ | - | - | - | - | 168,280 | 168,280 | - | 168,280 | |||||||||||||||||||
| Total comprehensive income | $ | - | $ | - | $ | - | $ | - | $ | 168,280 | $ | 168,280 | $ | 412,907 | $ | 581,187 | |||||||||||
| Income tax recovery (expense) | $ | 659 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 659 | |||||||||||
| SBC ^1^ expense | - | - | 1,518 | 2,411 | - | 3,929 | - | 3,929 | |||||||||||||||||||
| Options ^1^ exercised | 682 | 15,783 | - | (2,817) | - | - | (2,817) | - | 12,966 | ||||||||||||||||||
| RSUs ^1^ released | 3 | 73 | - | - | (73) | - | (73) | - | - | ||||||||||||||||||
| Dividends (Note 17.2) | 502 | 21,275 | - | - | - | - | - | (143,671) | (122,396) | ||||||||||||||||||
| Realized gain on disposal of LTIs ¹ | - | - | - | - | (56,064) | (56,064) | 56,064 | - | |||||||||||||||||||
| At December 31, 2020 | 449,458 | $ | 3,646,291 | $ | 83,077 | $ | 21,855 | $ | 6,815 | $ | 15,135 | $ | 126,882 | $ | 1,941,398 | $ | 5,714,571 | ||||||||||
| Total comprehensive income | |||||||||||||||||||||||||||
| Net earnings | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 162,002 | $ | 162,002 | |||||||||||
| OCI ^1^ | - | - | - | - | (2,354) | (2,354) | - | (2,354) | |||||||||||||||||||
| Total comprehensive income | $ | - | $ | - | $ | - | $ | - | $ | (2,354) | $ | (2,354) | $ | 162,002 | $ | 159,648 | |||||||||||
| Income tax recovery (expense) | $ | 1,568 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 1,568 | |||||||||||
| SBC ^1^ expense | - | - | 516 | 809 | - | 1,325 | - | 1,325 | |||||||||||||||||||
| Options ^1^exercised | 258 | 5,741 | - | (948) | - | - | (948) | - | 4,793 | ||||||||||||||||||
| RSUs ^1^ released | 116 | 2,800 | - | - | (2,800) | - | (2,800) | - | - | ||||||||||||||||||
| Dividends (Note 17.2) | - | - | - | - | - | - | (58,478) | (58,478) | |||||||||||||||||||
| Realized gain on disposal of LTIs ¹ (Note 18.4) | - | - | - | - | (53,119) | (53,119) | 53,119 | - | |||||||||||||||||||
| At March 31, 2021 | 449,832 | $ | 3,656,400 | $ | 83,077 | $ | 21,423 | $ | 4,824 | $ | (40,338) | $ | 68,986 | $ | 2,098,041 | $ | 5,823,427 | ||||||||||
| 1) | Definitions as follows: “OCI” = Other Comprehensive Income (Loss); “SBC” = Equity Settled Stock Based<br>Compensation; “Options” = Share Purchase Options; “RSUs” = Restricted Share Units; “LTI’s” = Long-Term Investments; “Warrants” = Share Purchase Warrants. | ||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||
| The | accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.<br> | ||||||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [45]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 1. | Description of Business and Nature of Operations |
|---|
Wheaton Precious Metals Corp. is a precious metal streaming company which generates its revenue primarily from the sale of precious metals (gold, silver and palladium) and cobalt. Wheaton Precious Metals Corp. (“Wheaton” or the “Company”), which is the ultimate parent company of its consolidated group, is incorporated and domiciled in Canada, and its principal place of business is at Suite 3500
- 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3. The Company trades on the Toronto Stock Exchange (“TSX”), the New York Stock Exchange (“NYSE”) and the London Stock Exchange (“LSE”) under the symbol WPM.
As of March 31, 2021, the Company has entered into 26 long-term purchase agreements (three of which are early deposit agreements), with 19 different mining companies, for the purchase of precious metals and cobalt (“precious metal purchase agreements” or “PMPA”) relating to 24 mining assets which are currently operating, 8 which are at various stages of development and 1 which has been placed in care and maintenance, located in 12 countries. Pursuant to the PMPAs, Wheaton acquires metal production from the counterparties for an initial upfront payment plus an additional cash payment for each ounce or pound delivered which is fixed by contract, generally at or below the prevailing market price.
The condensed interim consolidated financial statements of the Company for the three months ended March 31, 2021 were authorized for issue as of May 6, 2021 in accordance with a resolution of the Board of Directors.
Business Continuity andEmployee Health and Safety
In accordance with local government restrictions and guidelines, Wheaton temporarily closed its physical offices in mid-March 2020 and successfully transitioned to telecommuting for all of its employees. During the third quarter of 2020, the physical offices were re-opened on a voluntary basis.
Partner Operations
During the second quarter of 2020, six partner operations located in Mexico and Peru on which the Company has PMPAs were temporarily suspended due to government restrictions focused on reducing the impacts of COVID-19, including the Constancia, Yauliyacu, San Dimas, Los Filos, Peñasquito and Antamina mines. All these mining operations resumed operations during the third quarter of 2020 and remained in operation for the balance of 2020 and are currently all in operation. There can be no assurance that our partners’ operations that are currently operational will continue to remain operational, or operate at expected levels, for the duration of the COVID-19 virus pandemic.
| 2. | Basis of Presentation and Statement of Compliance |
|---|
These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments which have been measured at fair value as at the relevant balance sheet date. The consolidated financial statements are presented in United States (“US”) dollars, which is the Company’s functional currency, and all values are rounded to the nearest thousand US dollars (US$ 000’s) unless otherwise noted. References to “Cdn$” refer to Canadian dollars.
These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board. The accounting policies applied in these unaudited condensed interim consolidated financial statements are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and have been prepared using the same accounting policies and methods of application as disclosed in Note 3 to the audited consolidated financial statements for the year ended December 31, 2020 and were consistently applied to all the periods presented unless otherwise stated below. These unaudited condensed interim consolidated financial statements do not include all the information and note disclosures required by IFRS for annual consolidated financial statements and therefore should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2020.
The preparation of financial statements in accordance with IAS 34 requires the use of certain accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4.
In the opinion of management, all adjustments (including normal recurring adjustments) necessary to present fairly the financial position at March 31, 2021 and the results of operations and cash flows for all periods presented have been made. The interim results are not necessarily indicative of results for a full year.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [46]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 3. | Significant Accounting Policies |
|---|---|
| 3.1. | Future Changes to Accounting Policies |
| --- | --- |
The IASB has issued the following new or amended standards:
Amendment to IAS 16 -Property, Plant and Equipment
The amendments to IAS 16 prohibit deducting from the cost of property, plant and equipment the proceeds from selling items produced while bringing the assets to the location and condition necessary for them to be capable of operating in the manner intended by management. Instead, a company will recognize such sales proceeds and related cost in the Statement of Earnings. This amendment is in effect January 1, 2022 with early adoption permitted. The adoption of this guidance is not expected to have a material impact on the Company’s Consolidated Statement of Earnings.
| 4. | Key Sources of Estimation Uncertainty and Critical Accounting Judgments |
|---|
The preparation of the Company’s condensed interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.
Information about significant areas of estimation uncertainty and judgments made by management in preparing the consolidated financial statements are described below.
Key Sources of Estimation Uncertainty
| 4.1. | Attributable Reserve, Resource and Exploration Potential Estimates |
|---|
Mineral stream interests are significant assets of the Company, with a carrying value of $5.6 billion at March 31, 2021. This amount represents the capitalized expenditures related to the acquisition of the mineral stream interests, net of accumulated depletion and accumulated impairment charges, if any. The Company estimates the reserves, resources and exploration potential relating to each agreement. Reserves are estimates of the amount of metals contained in ore that can be economically and legally extracted from the mining properties in respect of which the Company has PMPAs. Resources are estimates of the amount of metals contained in mineralized material for which there is a reasonable prospect for economic extraction from the mining properties in respect of which the Company has PMPAs. Exploration potential represents an estimate of additional reserves and resources which may be discovered through the mine operator’s exploration program. The Company adjusts its estimates of reserves, resources (where applicable) and exploration potential (where applicable) to reflect the Company’s percentage entitlement to metals produced from such mines. The Company compiles its estimates of its reserves and resources based on information supplied by appropriately qualified persons relating to the geological data on the size, density and grade of the ore body, and require complex geological and geostatistical judgments to interpret the data. The estimation of recoverable reserves and resources is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and production costs along with geological assumptions and judgments made in estimating the size and grade of the ore body. The Company estimates exploration potential based on assumptions surrounding the ore body continuity which requires judgment as to future success of any exploration programs undertaken by the mine operator. Changes in the reserve estimates, resource estimates or exploration potential estimates may impact upon the carrying value of the Company’s mineral stream interests and depletion charges.
| 4.2. | Depletion |
|---|
The Company’s mineral stream interests are separately allocated to reserves, resources and exploration potential. The value allocated to reserves is classified as depletable and is depleted on a unit-of-production basis over the estimated recoverable proven and probable reserves at the mine corresponding to the specific agreement. The value associated with resources and exploration potential is the value beyond proven and probable reserves at acquisition and is classified as non-depletable until such time as it is transferred to the depletable category as a result of the conversion of resources and/or exploration potential into reserves. To make this allocation, the Company estimates the recoverable reserves, resources and exploration potential at each mining operation. These calculations require the use of estimates and assumptions, including the amount of contained metals, recovery rates and payable rates. Changes to these assumptions may impact the estimated recoverable reserves, resources or exploration potential which could directly impact the depletion rates used. Changes to depletion rates are accounted for prospectively.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [47]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 4.3. | Impairment of Assets |
|---|
The Company assesses each PMPA at the end of every reporting period to determine whether any indication of impairment or impairment reversal exists. If such an indication exists, the recoverable amount of the PMPA is estimated in order to determine the extent of the impairment or impairment reversal (if any). The calculation of the recoverable amount requires the use of estimates and assumptions such as long-term commodity prices, discount rates, recoverable ounces of attributable metals, and operating performance.
The price of precious metals and cobalt has been extremely volatile over the past several years. The Company monitors spot and forward metal prices and if necessary re-evaluates the long-term metal price assumptions used for impairment testing. Should price levels decline or increase in the future, either for an extended period of time or due to known macro economic changes, the Company may need to re-evaluate the long-term metal price assumptions used for impairment testing. A significant decrease in long-term metal price assumptions may be an indication of potential impairment, while a significant increase in long-term metal price assumptions may be an indication of potential impairment reversal. Should the Company conclude that it has an indication of impairment or impairment reversal at any balance sheet date, the Company is required to perform an impairment assessment.
| 4.4. | Valuation of Stock Based Compensation |
|---|
The Company has various forms of stock based compensation, including share purchase options, restricted share units (“RSUs”) and performance share units (“PSUs”). The calculation of the fair value of share purchase options, RSUs and PSUs issued requires the use of estimates as more fully described in Notes 18.2, 18.3, and 19.1, respectively.
| 4.5. | Contingencies |
|---|
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including those matters described in Note 25. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If the Company is unable to resolve any of these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements in the appropriate period relative to when such changes occur.
Critical Accounting Judgments
| 4.6. | Functional Currency |
|---|
The functional currency for the Company and each of its subsidiaries is the currency of the primary economic environment in which the entity operates. As a result of the following factors, the Company has determined that the functional currency of each entity is the US dollar:
| ● | The entities’ revenues are denominated in US dollars; |
|---|---|
| ● | The entities’ cash cost of sales are denominated in US dollars; |
| --- | --- |
| ● | The majority of the entities’ cash is held in US dollars; and |
| --- | --- |
| ● | The Company generally seeks to raise capital in US dollars. |
| --- | --- |
Determination of the functional currency may involve certain judgments to determine the primary economic environment and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which determined the primary economic environment.
| 4.7. | Income Taxes |
|---|
The interpretation and application of existing tax laws, regulations or rules in Canada, the Cayman Islands, Barbados, Luxembourg, the Netherlands or any of the countries in which the Company’s subsidiaries or the mining operations are located or to which deliveries of precious metals, precious metal credits or cobalt are made requires the use of judgment. The likelihood that tax positions taken will be sustained is assessed based on facts and circumstances of the relevant tax position considering all available evidence. Differing interpretation of these laws, regulations or rules could result in an increase in the Company’s taxes, or other governmental charges, duties or impositions. Refer to Note 25 for more information.
In assessing the probability of realizing deferred income tax assets, the Company makes estimates related to expectations of future taxable income, including the expected timing of reversals of existing temporary differences. Such estimates are based on forecasted cash flows from operations which require the use of estimates and assumptions such as long-term commodity prices and recoverable metal ounces. The amount of deferred income tax assets recognized on
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [48]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
the balance sheet could be reduced if the actual taxable income differs significantly from expected taxable income. The Company reassesses its deferred income tax assets at the end of each reporting period.
| 4.8. | Leases |
|---|
The Company assesses whether a contract contains a lease and, if so, recognizes a lease liability by discounting the future lease payments by using the Company’s estimated incremental borrowing rate. If the lease agreement contains an option to extend the lease, the Company must assess the likelihood of whether that option will be exercised. The determination of whether an option to extend a lease will be exercised requires significant management judgment, and providing the Company concludes that it is reasonably certain that the option to extend will be exercised, the lease payments during the extension period will comprise part of the right-of-use asset and corresponding lease liability.
| 5. | Financial Instruments |
|---|---|
| 5.1. | Capital Risk Management |
| --- | --- |
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the return to stakeholders through the optimization of the debt and equity balance.
The capital structure of the Company consists of debt (Note 16) and equity attributable to common shareholders, comprising of issued capital (Note 17), accumulated reserves (Note 18) and retained earnings.
The Company is not subject to any externally imposed capital requirements with the exception of complying with the minimum tangible net worth covenant under the credit agreement governing bank debt (Note 16).
The Company is in compliance with the debt covenants at March 31, 2021, as described in Note 16.1.
| 5.2. | Categories of Financial Assets and Liabilities |
|---|
The non-revolving term loan, which requires regularly scheduled payments of interest and principal, is carried at amortized cost. Trade receivables from sales of cobalt and other receivables are non-interest bearing and are stated at amortized cost, which approximate fair values due to the short terms to maturity. Where necessary, the non-revolving term loan and the other receivables are reported net of allowances for uncollectable amounts. All other financial assets are reported at fair value. Fair value adjustments on financial assets are reflected as a component of net earnings with the exception of fair value adjustments associated with the Company’s long-term investments in common shares held. As these long-term investments are held for strategic purposes and not for trading, the Company has made a one time, irrevocable election to reflect the fair value adjustments associated with these investments as a component of OCI. Financial liabilities are reported at amortized cost using the effective interest method. The following table summarizes the classification of the Company’s financial assets and liabilities:
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [49]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| Note | March 31 | December 31 | ||||||
|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||||
| Financial assets | ||||||||
| Financial assets mandatorily measured at FVTNE<br>^1^ | ||||||||
| Cash and cash equivalents | $ | 191,162 | $ | 192,683 | ||||
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 6, 9 | 2,809 | 5,429 | |||||
| Long-term investments - warrants held | 14 | 2,686 | 3,637 | |||||
| Convertible notes receivable | 13 | 12,591 | 11,353 | |||||
| Investments in equity instruments designated at FVTOCI<br>^1^ | ||||||||
| Long-term investments - common shares held | 14 | 83,836 | 196,241 | |||||
| Financial assets measured at amortized cost | ||||||||
| Non-revolving term loan | 23 | 823 | 813 | |||||
| Trade receivables from sales of cobalt | 9 | 2,936 | - | |||||
| Other accounts receivable | 9 | 349 | 454 | |||||
| Total financial assets | $ | 297,192 | $ | 410,610 | ||||
| Financial liabilities | ||||||||
| Financial liabilities at amortized cost | ||||||||
| Accounts payable and accrued liabilities | 10,394 | 13,023 | ||||||
| Bank debt | 16 | - | 195,000 | |||||
| Dividends payable | 17.2 | 58,478 | - | |||||
| Pension liability | 1,841 | 1,670 | ||||||
| Total financial liabilities | $ | 70,713 | $ | 209,693 | ||||
| 1) | FVTNE refers to Fair Value Through Net Earnings, FVTOCI refers to Fair Value Through Other Comprehensive Income<br> | |||||||
| --- | --- | |||||||
| 5.3. | Credit Risk | |||||||
| --- | --- |
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets, the Company has established policies to limit the concentration of credit risk, to ensure counterparties demonstrate minimum acceptable credit worthiness and to ensure liquidity of available funds.
The Company closely monitors its financial assets and does not have any significant concentration of credit risk. The Company invests surplus cash in short-term, high credit quality, money market instruments. In addition, counterparties used to sell precious metals are all large, international organizations with strong credit ratings and the balance of trade receivables owed to the Company in the ordinary course of business is not significant. Therefore, credit risk associated with trade receivables at March 31, 2021 is considered to be negligible.
The Company’s maximum exposure to credit risk related to its financial assets is as follows:
| March 31 | December 31 | |||||||||
| (in thousands) | Note | 2021 | 2020 | |||||||
| Cash and cash equivalents | $ | 191,162 | $ | 192,683 | ||||||
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 9 | 2,809 | 5,429 | |||||||
| Trade receivables from sales of cobalt | 9 | 2,936 | - | |||||||
| Other accounts receivables | 9 | 349 | 454 | |||||||
| Non-revolving term loan | 23 | 823 | 813 | |||||||
| Convertible notes receivable | 13 | 12,591 | 11,353 | |||||||
| Maximum exposure to credit risk related to financial<br>assets | $ | 210,670 | $ | 210,732 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [50]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
As it relates to the non-revolving term loan and the convertible note receivable, the Company has a security interest in the applicable mining concessions relative to Kutcho Copper Corp. (“Kutcho”) and with some exceptions, all present and after acquired property of Kutcho and its applicable subsidiaries.
| 5.4. | Liquidity Risk |
|---|
The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansionary plans. The Company ensures that there are sufficient committed loan facilities to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. As at March 31, 2021, the Company had cash and cash equivalents of $191 million (December 31, 2020 - $193 million) and working capital of $105 million (December 31, 2020 - $171 million).
The Company holds equity investments of several companies (Note 14) with a combined market value at March 31, 2021 of $87 million (December 31, 2020 - $200 million). The daily exchange traded volume of these shares, including the shares underlying the warrants, is not sufficient for the Company to liquidate its position in a short period of time without potentially affecting the market value of the shares. These shares and warrants are held for strategic purposes and are considered long-term investments and therefore, as part of the Company’s planning, budgeting and liquidity analysis process, these investments are not relied upon to provide operational liquidity.
The following table summarizes the timing associated with the Company’s remaining contractual payments relating to its financial liabilities. The table reflects the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay (assuming that the Company is in compliance with all of its obligations). The table includes both interest and principal cash flows. To the extent that applicable interest rates are floating in nature, the interest charges are estimated based on market-based forward interest rate curves at the end of the reporting period.
| As at March 31, 2021 | ||||||||||||||||||||
| (in thousands) | 2021 | 2022 - 2024 | 2025 - 2026 | After 2026 | Total | |||||||||||||||
| Non-derivative financial liabilities | ||||||||||||||||||||
| Accounts payable and accrued liabilities | $ | 10,394 | $ | - | $ | - | $ | - | $ | 10,394 | ||||||||||
| Performance share units ^1^ | 16,868 | 12,810 | - | - | 29,678 | |||||||||||||||
| Pension liability ^2^ | 1,841 | - | - | - | 1,841 | |||||||||||||||
| Lease liability | 1,053 | 3,204 | 400 | - | 4,657 | |||||||||||||||
| Dividends payable | 58,478 | - | - | - | 58,478 | |||||||||||||||
| Total | $ | 88,634 | $ | 16,014 | $ | 400 | $ | - | $ | 105,048 | ||||||||||
| 1) | Assumes a weighted average performance factor of 186% (see Note 19.1). | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| 2) | Any benefits under the SERP will be paid out to the employee over a 10-year<br>period, or at the employee’s election, a shorter period upon the employee’s retirement from the Company. | |||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [51]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 5.5. | Currency Risk |
|---|
The Company undertakes certain transactions denominated in Canadian dollars, including certain operating expenses and the acquisition of strategic long-term investments. As a result, the Company is exposed to fluctuations in the value of the Canadian dollar relative to the United States dollar. The carrying amounts of the Company’s Canadian dollar denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
| March 31 | December 31 | |||||||
| (in thousands) | 2021 | 2020 | ||||||
| Monetary assets | ||||||||
| Cash and cash equivalents | $ | 3,853 | $ | 5,041 | ||||
| Accounts receivable | 99 | 71 | ||||||
| Long-term investments - common shares held | 83,411 | 195,816 | ||||||
| Long-term investments - warrants held | 2,686 | 3,637 | ||||||
| Convertible note receivable | 12,591 | 11,353 | ||||||
| Non-revolving term loan | 823 | 813 | ||||||
| Other long-term assets | 3,563 | 3,519 | ||||||
| Total Canadian dollar denominated monetary assets | $ | 107,026 | $ | 220,250 | ||||
| Monetary liabilities | ||||||||
| Accounts payable and accrued liabilities | $ | 6,193 | $ | 8,011 | ||||
| Performance share units | 23,881 | 23,405 | ||||||
| Lease liability | 2,310 | 2,403 | ||||||
| Pension liability | 1,841 | 1,670 | ||||||
| Total Canadian dollar denominated monetary liabilities | $ | 34,225 | $ | 35,489 |
The following tables detail the Company’s sensitivity to a 10% increase or decrease in the Canadian dollar relative to the United States dollar, representing the sensitivity used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in exchange rates.
| As at March 31, 2021 | |||||||
|---|---|---|---|---|---|---|---|
| Change in Canadian Dollar | |||||||
| (in thousands) | 10%<br>Increase | 10%<br>Decrease | |||||
| Increase (decrease) in net earnings | $ | (1,061 | ) | $ | 1,061 | ||
| Increase (decrease) in other comprehensive<br>income | 8,341 | (8,341 | ) | ||||
| Increase (decrease) in total comprehensive income | $ | 7,280 | $ | (7,280 | ) | ||
| As at December 31, 2020 | |||||||
| Change in Canadian Dollar | |||||||
| (in thousands) | 10%<br>Increase | 10%<br>Decrease | |||||
| Increase (decrease) in net earnings | $ | (1,105 | ) | $ | 1,105 | ||
| Increase (decrease) in other comprehensive income | 19,582 | (19,582 | ) | ||||
| Increase (decrease) in total comprehensive income | $ | 18,477 | $ | (18,477 | ) |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [52]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 5.6. | Interest Rate Risk |
|---|
The Company is exposed to interest rate risk on its outstanding borrowings and short-term investments. Presently, all of the Company’s outstanding borrowings are at floating interest rates. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this risk. During the three months ended March 31, 2021, the weighted average effective interest rate paid by the Company on its outstanding borrowings was 1.17% (2020 – 3.03%).
During the three months ended March 31, 2021 and 2020, a fluctuation in interest rates of 100 basis points (1 percent) would have impacted the amount of interest expensed by approximately $0.2 million and $2 million, respectively.
| 5.7. | Other Price Risk |
|---|
The Company is exposed to equity price risk as a result of holding long-term investments in common shares of various companies. The Company does not actively trade these investments.
If equity prices had been 10% higher or lower at the respective balance sheet date, other comprehensive income for the three months ended March 31, 2021 and 2020 would have increased/decreased by approximately $8 million and $16 million, respectively as a result of changes in the fair value of common shares held.
| 5.8. | Fair Value Estimation |
|---|
The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of the inputs used in making the measurements as defined in IFRS 13 – Fair Value Measurements (“IFRS 13”).
Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Unobservable inputs which are supported by little or no market activity.
The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by IFRS 13, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
| March 31, 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Note | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| Cash and cash equivalents | $ | 191,162 | $ | 191,162 | $ | - | $ | - | |||||||
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 9 | 2,809 | - | 2,809 | - | ||||||||||
| Long-term investments - common shares held | 14 | 83,836 | 83,836 | - | - | ||||||||||
| Long-term investments - warrants held | 14 | 2,686 | - | 2,686 | - | ||||||||||
| Kutcho Convertible Note | 13 | 12,591 | - | - | 12,591 | ||||||||||
| $ | 293,084 | $ | 274,998 | $ | 5,495 | $ | 12,591 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [53]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| December 31, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Note | Total | Level 1 | Level 2 | Level 3 | ||||||||||
| Cash and cash equivalents | $ | 192,683 | $ | 192,683 | $ | - | $ | - | |||||||
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 9 | 5,429 | - | 5,429 | - | ||||||||||
| Long-term investments - common shares held | 14 | 196,241 | 196,241 | - | - | ||||||||||
| Long-term investments - warrants held | 14 | 3,637 | - | 3,637 | - | ||||||||||
| Kutcho Convertible Note | 13 | 11,353 | - | - | 11,353 | ||||||||||
| $ | 409,343 | $ | 388,924 | $ | 9,066 | $ | 11,353 |
The non-revolving term loan, which requires regularly scheduled payments of interest and principal, is carried at amortized cost. Trade accounts receivables, other accounts receivables and accounts payables and accrued liabilities are non-interest bearing and are stated at carrying values, which approximate fair values due to the short terms to maturity. Where necessary, the non-revolving term loan as well as other receivables are reported net of allowances for uncollectable amounts.
The Company’s bank debt (Note 16.1) is reported at amortized cost using the effective interest method. The carrying value of the bank debt approximates its fair value.
| 5.8.1. | Valuation Techniques for Level 1 Assets |
|---|
Cash and Cash Equivalents
The Company’s cash and cash equivalents are valued using quoted market prices in active markets and, as such, are classified within Level 1 of the fair value hierarchy.
Long-Term Investments in CommonShares Held
The Company’s long-term investments in common shares held are valued using quoted market prices in active markets and, as such, are classified within Level 1 of the fair value hierarchy. The fair value of the long-term investments in common shares held is calculated as the quoted market price of the common share multiplied by the quantity of shares held by the Company.
| 5.8.2. | Valuation Techniques for Level 2 Assets |
|---|
Accounts Receivable Arising from Sales of Metal Concentrates
The Company’s trade receivables and accrued liabilities from provisional concentrate sales are valued based on forward prices of gold and silver to the expected date of final settlement (Note 6). As such, these receivables and/or liabilities are classified within Level 2 of the fair value hierarchy.
Long-Term Investments in Warrants Held
The fair value of the Company’s long-term investments in warrants held that are not traded in an active market are determined using a Black-Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and expected warrant life which are supported by observable current market conditions and as such are classified within Level 2 of the fair value hierarchy. The use of reasonably possible alternative assumptions would not significant affect the Company’s results.
| 5.8.3. | Valuation Techniques for Level 3 Assets |
|---|
Convertible Notes Receivable
The fair value of the Kutcho Convertible Note and the previously owned Gold X Convertible Note (Note 13), which are not traded in an active market, is determined by discounting the stream of future interest and principal payments at the rate of interest prevailing at the balance sheet date for instruments of similar term and risk (the market interest rate), and adding this value to the value of the convertibility feature which is estimated using a Black-Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and expected remaining life of the respective convertible notes receivable.
As the expected volatility and market interest rate are not observable inputs, these convertible notes receivable are classified within Level 3 of the fair value hierarchy and any changes in fair value are reflected on the Consolidated Statement of Earnings under the classification Other (Income) Expense (Note 8).
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [54]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
Relative to the Kutcho Convertible Note, management estimates that the market interest rate on similar borrowings without the conversion feature was approximately 29% and has used an implied volatility of 30% in valuing the
convertibility feature.
Holding all other variables constant, a fluctuation in interest rates of 1% and a fluctuation in the implied volatility used of 5% would have impacted the valuation as below:
| As at March 31, 2021 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Change in interest rate | Change in volatility | |||||||||||
| (in thousands) | Increase<br><br><br>1% | Decrease<br><br><br>1% | Increase<br><br><br>5% | Decrease<br><br><br>5% | ||||||||
| Kutcho Convertible Note | $ | (372) | $ | 386 | $ | 355 | $ | (326) | ||||
| 6. | Revenue | |||||||||||
| --- | --- | |||||||||||
| Three Months Ended<br><br><br>March 31 | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| (in thousands) | 2021 | 2020 | ||||||||||
| Sales | ||||||||||||
| Gold credit sales | $ | 135,025 | 41 | % | $ | 159,522 | 63 | % | ||||
| Silver | ||||||||||||
| Silver credit sales | $ | 146,163 | 45 | % | $ | 69,506 | 27 | % | ||||
| Concentrate sales | 27,720 | 9 | % | 14,411 | 6 | % | ||||||
| Total silver sales | $ | 173,883 | 54 | % | $ | 83,917 | 33 | % | ||||
| Palladium credit sales | $ | 12,275 | 4 | % | $ | 11,350 | 4 | % | ||||
| Cobalt sales | $ | 2,936 | 1 | % | $ | - | 0 | % | ||||
| Total sales revenue | $ | 324,119 | 100 | % | $ | 254,789 | 100 | % |
Gold, Silver and Palladium Credit Sales
Under certain PMPAs, precious metal is acquired from the mine operator in the form of precious metal credits, which is then sold through a network of third party brokers or dealers. Revenue from precious metal credit sales is recognized at the time of the sale of such credits, which is also the date that control of the precious metal is transferred to the customer.
The Company will occasionally enter into forward contracts in relation to precious metal deliveries that it is highly confident will occur within a given quarter. No forward contracts were outstanding at March 31, 2021 or December 31, 2020. The sales price is fixed at the delivery date based on either the terms of these short-term forward sales contracts or the spot price of precious metal.
Concentrate Sales
Under certain PMPAs, gold and/or silver is acquired from the mine operator in concentrate form, which is then sold under the terms of the concentrate sales contracts to third-party smelters or traders. Where the Company acquires precious metal in concentrate form, final precious metal prices are set on a specified future quotational period (the “Quotational Period”) pursuant to the concentrate sales contracts with third-party smelters, typically one to three months after the shipment date, based on market prices for precious metal. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted gold and silver prices. Final settlement is based upon the average applicable price for the Quotational Period applied to the actual number of precious metal ounces recovered calculated using confirmed smelter weights and settlement assays. Revenues and the associated cost of sales are recorded on a gross basis under these contracts at the time title passes to the customer, which is also the date that control of the precious metal is transferred to the customer. The Company has concluded that the adjustments relating to the final assay results for the quantity of concentrate sold and the retroactive pricing adjustment for the Quotational Period are not significant and do not constrain the recognition of revenue.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [55]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
Cobalt Sales
Cobalt is sold to a third-party sales agent who then onsells the cobalt to Wheaton approved third party customers. Revenue from the sale of cobalt is recognized once the third party customer and sales terms have been agreed to between Wheaton and the third-party sales agent, which is also the date that control of the cobalt is transferred to the third-party sales agent.
| 7. | General and Administrative | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |
| Three Months Ended<br><br><br>March 31 | ||||||||||
| (in thousands) | Note | 2021 | 2020 | |||||||
| Salaries and benefits | ||||||||||
| Salaries and benefits, excluding PSUs | $ | 4,709 | $ | 4,135 | ||||||
| PSUs ^1^ | 19.1 | 305 | 3,277 | |||||||
| Total salaries and benefits | $ | 5,014 | $ | 7,412 | ||||||
| Depreciation | 475 | 511 | ||||||||
| Donations | 510 | 341 | ||||||||
| Professional fees | 1,617 | 403 | ||||||||
| Other | 3,030 | 3,011 | ||||||||
| General and administrative before equity settled stock based compensation | $ | 10,646 | $ | 11,678 | ||||||
| Equity settled stock based compensation ^2^ | ||||||||||
| Stock options | 18.2 | $ | 516 | $ | 647 | |||||
| RSUs | 18.3 | 809 | 856 | |||||||
| Total equity settled stock based compensation | $ | 1,325 | $ | 1,503 | ||||||
| Total general and administrative | $ | 11,971 | $ | 13,181 | ||||||
| 1) | The PSU accrual related to the anticipated fair value of the PSUs issued uses a weighted average performance factor of<br>186% during the three months ended March 31, 2021 as compared to 190% during the comparable period of 2020. | |||||||||
| --- | --- | |||||||||
| 2) | Equity settled stock based compensation is a non-cash expense.<br> | |||||||||
| --- | --- | |||||||||
| 8. | Other (Income) Expense | |||||||||
| --- | --- | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Three Months Ended<br><br><br>March 31 | ||||||||||
| (in thousands) | Note | 2021 | 2020 | |||||||
| Interest income | $ | (2) | $ | (117) | ||||||
| Foreign exchange loss (gain) | 417 | (1,483) | ||||||||
| Net (gain) loss arising on financial assets mandatorily measured at FVTPL<br>¹ | ||||||||||
| (Gain) loss on fair value adjustment of share purchase warrants held | 14 | 950 | 71 | |||||||
| (Gain) loss on fair value adjustment of convertible notes receivable | 13 | (1,238) | 790 | |||||||
| Other | (8) | 142 | ||||||||
| Total other (income) expense | $ | 119 | $ | (597) | ||||||
| 1) | FVTPL refers to Fair Value Through Profit or Loss. | |||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [56]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 9. | Accounts Receivable | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31 | December 31 | |||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | ||||||||||||||
| (in thousands) | Note | 2021 | 2020 | |||||||||||||||||||
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 6 | $ | 2,809 | $ | 5,429 | |||||||||||||||||
| Trade receivables from sales of cobalt | 6 | 2,936 | - | |||||||||||||||||||
| Other accounts receivable | 349 | 454 | ||||||||||||||||||||
| Total accounts receivable | $ | 6,094 | $ | 5,883 | ||||||||||||||||||
| 10. | Mineral Stream Interests | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| Three Months Ended March 31, 2021 | ||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Cost | Accumulated Depletion & Impairment ^1^ | Carrying<br><br><br>Amount<br> <br>Mar 31, 2021 | ||||||||||||||||||||
| (in thousands) | Balance Jan<br>1, 2021 | Additions<br>(Reductions) | Balance<br>Mar 31, 2021 | Balance<br><br><br>Jan 1, 2021 | Depletion | Balance<br>Mar 31, 2021 | ||||||||||||||||
| Gold interests | ||||||||||||||||||||||
| Salobo | $ | 3,059,876 | $ | - | $ | 3,059,876 | $ | (550,532 | ) | $ | (19,217 | ) | $ | (569,749 | ) | $ | 2,490,127 | |||||
| Sudbury ^2^ | 623,864 | - | 623,864 | (302,848 | ) | (3,781 | ) | (306,629 | ) | 317,235 | ||||||||||||
| Constancia | 136,058 | - | 136,058 | (30,489 | ) | (528 | ) | (31,017 | ) | 105,041 | ||||||||||||
| San Dimas | 220,429 | - | 220,429 | (38,227 | ) | (3,311 | ) | (41,538 | ) | 178,891 | ||||||||||||
| Stillwater ^3^ | 239,352 | - | 239,352 | (15,042 | ) | (1,220 | ) | (16,262 | ) | 223,090 | ||||||||||||
| Other ^4^ | 402,232 | 65 | 402,297 | (394,706 | ) | - | (394,706 | ) | 7,591 | |||||||||||||
| $ | 4,681,811 | $ | 65 | $ | 4,681,876 | $ | (1,331,844 | ) | $ | (28,057 | ) | $ | (1,359,901 | ) | $ | 3,321,975 | ||||||
| Silver interests | ||||||||||||||||||||||
| Peñasquito | $ | 524,626 | - | 524,626 | $ | (174,054 | ) | $ | (7,715 | ) | $ | (181,769 | ) | $ | 342,857 | |||||||
| Antamina | 900,343 | - | 900,343 | (273,409 | ) | (14,533 | ) | (287,942 | ) | 612,401 | ||||||||||||
| Constancia | 302,948 | - | 302,948 | (85,904 | ) | (2,616 | ) | (88,520 | ) | 214,428 | ||||||||||||
| Other ^5^ | 1,281,228 | 151,162 | 1,432,390 | (806,253 | ) | (13,900 | ) | (820,153 | ) | 612,237 | ||||||||||||
| $ | 3,009,145 | $ | 151,162 | $ | 3,160,307 | $ | (1,339,620 | ) | $ | (38,764 | ) | $ | (1,378,384 | ) | $ | 1,781,923 | ||||||
| Palladium interests | ||||||||||||||||||||||
| Stillwater<br>^3^ | $ | 263,721 | $ | - | $ | 263,721 | $ | (22,332 | ) | $ | (2,271 | ) | $ | (24,603 | ) | $ | 239,118 | |||||
| Cobalt interests | ||||||||||||||||||||||
| Voisey’s Bay | $ | 393,422 | $ | - | $ | 393,422 | $ | (165,912 | ) | $ | (2,162 | ) | $ | (168,074 | ) | $ | 225,348 | |||||
| $ | 8,348,099 | $ | 151,227 | $ | 8,499,326 | $ | (2,859,708 | ) | $ | (71,254 | ) | $ | (2,930,962 | ) | $ | 5,568,364 | ||||||
| 1) | Includes cumulative impairment charges to March 31, 2021 as follows: Keno Hill silver interest - $11 million;<br>Pascua-Lama silver interest - $338 million; 777 silver interest - $64 million; 777 gold interest - $151 million; Sudbury gold interest - $120 million; and Voisey’s Bay cobalt interest - $166 million.<br> | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 2) | Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton, Totten and Victor gold interests.<br> | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 3) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 4) | Comprised of the Minto, Rosemont, 777, Marmato and Santo Domingo gold interests. | |||||||||||||||||||||
| --- | --- | |||||||||||||||||||||
| 5) | Comprised of the Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata,<br>Pascua-Lama, Rosemont, 777, Marmato and Cozamin silver interests. | |||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [57]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| Year Ended December 31, 2020 | ||||||||||||||||||||||||
| Cost | Accumulated Depletion & Impairment ^1^ | Carrying<br><br><br>Amount<br> <br>Dec 31, 2020 | ||||||||||||||||||||||
| (in thousands) | Balance<br>Jan 1, 2020 | Additions<br>(Reductions) | Balance<br>Dec 31, 2020 | Balance<br><br><br>Jan 1, 2020 | Depletion | Balance<br><br><br>Dec 31, 2020 | ||||||||||||||||||
| Gold interests | ||||||||||||||||||||||||
| Salobo | $ | 3,059,876 | $ | - | $ | 3,059,876 | $ | (454,619 | ) | $ | (95,913 | ) | $ | (550,532 | ) | $ | 2,509,344 | |||||||
| Sudbury ^2^ | 623,864 | - | 623,864 | (279,821 | ) | (23,027 | ) | (302,848 | ) | 321,016 | ||||||||||||||
| Constancia | 136,058 | - | 136,058 | (25,652 | ) | (4,837 | ) | (30,489 | ) | 105,569 | ||||||||||||||
| San Dimas | 220,429 | - | 220,429 | (26,062 | ) | (12,165 | ) | (38,227 | ) | 182,202 | ||||||||||||||
| Stillwater ^3^ | 239,352 | - | 239,352 | (9,358 | ) | (5,684 | ) | (15,042 | ) | 224,310 | ||||||||||||||
| Other ^4^ | 402,232 | - | 402,232 | (389,064 | ) | (5,642 | ) | (394,706 | ) | 7,526 | ||||||||||||||
| $ | 4,681,811 | $ | - | $ | 4,681,811 | $ | (1,184,576 | ) | $ | (147,268 | ) | $ | (1,331,844 | ) | $ | 3,349,967 | ||||||||
| Silver interests | ||||||||||||||||||||||||
| Peñasquito | $ | 524,626 | - | $ | 524,626 | $ | (149,924 | ) | $ | (24,130 | ) | $ | (174,054 | ) | $ | 350,572 | ||||||||
| Antamina | 900,343 | - | 900,343 | (231,533 | ) | (41,876 | ) | (273,409 | ) | 626,934 | ||||||||||||||
| Constancia | 302,948 | - | 302,948 | (74,761 | ) | (11,143 | ) | (85,904 | ) | 217,044 | ||||||||||||||
| Other ^5^ | 1,283,054 | (1,826 | ) | 1,281,228 | (795,361 | ) | (10,892 | ) | (806,253 | ) | 474,975 | |||||||||||||
| $ | 3,010,971 | $ | (1,826 | ) | $ | 3,009,145 | $ | (1,251,579 | ) | $ | (88,041 | ) | $ | (1,339,620 | ) | $ | 1,669,525 | |||||||
| Palladium interests<br>Stillwater ^3^ | $ | 263,721 | $ | - | $ | 263,721 | $ | (13,752 | ) | $ | (8,580 | ) | $ | (22,332 | ) | $ | 241,389 | |||||||
| Cobalt interests<br>Voisey’s Bay | $ | 393,422 | $ | - | $ | 393,422 | $ | (165,912 | ) | $ | - | $ | (165,912 | ) | $ | 227,510 | ||||||||
| $ | 8,349,925 | $ | (1,826 | ) | $ | 8,348,099 | $ | (2,615,819) | $ | (243,889 | ) | $ | (2,859,708 | ) | $ | 5,488,391 | ||||||||
| 1) | Includes cumulative impairment charges to December 31, 2020 as follows: Keno Hill silver interest - $11 million;<br>Pascua-Lama silver interest - $338 million; 777 silver interest - $64 million; 777 gold interest - $151 million; Sudbury gold interest - $120 million; and Voisey’s Bay cobalt interest - $166 million.<br> | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton, Totten and Victor gold interests.<br> | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 4) | Comprised of the Minto, Rosemont, 777, and Marmato gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 5) | Comprised of the Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata,<br>Pascua-Lama, Rosemont, Cozamin and 777 silver interests. During the third quarter of 2020, Wheaton agreed to modify the Keno Hill PMPA as it relates to the delivery payment per ounce of silver in exchange for 2 million common share purchase<br>warrants from Alexco. The fair value of these warrants have been reflected as a reduction to the cost base of the Keno Hill silver interest. | |||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [58]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
The value allocated to reserves is classified as depletable upon a mining operation achieving first production and is depleted on a unit-of-production basis over the estimated recoverable proven and probable reserves at the mine. The value associated with resources and exploration potential is allocated at acquisition and is classified as non-depletable until such time as it is transferred to the depletable category, generally as a result of the conversion of resources or exploration potential into reserves.
| March 31, 2021 | December 31, 2020 | |||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Depletable | Non-<br><br><br>Depletable | Total | Depletable | Non-<br><br><br>Depletable | Total | ||||||||||||
| Gold interests | ||||||||||||||||||
| Salobo | $ | 2,097,654 | $ | 392,473 | $ | 2,490,127 | $ | 2,085,359 | $ | 423,985 | $ | 2,509,344 | ||||||
| Sudbury ^1^ | 254,174 | 63,061 | 317,235 | 269,834 | 51,182 | 321,016 | ||||||||||||
| Constancia | 98,060 | 6,981 | 105,041 | 97,539 | 8,030 | 105,569 | ||||||||||||
| San Dimas | 72,741 | 106,150 | 178,891 | 73,514 | 108,688 | 182,202 | ||||||||||||
| Stillwater ^2^ | 200,157 | 22,933 | 223,090 | 199,616 | 24,694 | 224,310 | ||||||||||||
| Other ^3^ | 7,526 | 65 | 7,591 | 7,526 | - | 7,526 | ||||||||||||
| $ | 2,730,312 | $ | 591,663 | $ | 3,321,975 | $ | 2,733,388 | $ | 616,579 | $ | 3,349,967 | |||||||
| Silver interests | ||||||||||||||||||
| Peñasquito | $ | 258,558 | $ | 84,299 | $ | 342,857 | $ | 258,267 | $ | 92,305 | $ | 350,572 | ||||||
| Antamina | 265,326 | 347,075 | 612,401 | 279,859 | 347,075 | 626,934 | ||||||||||||
| Constancia | 202,907 | 11,521 | 214,428 | 202,475 | 14,569 | 217,044 | ||||||||||||
| Other ^4^ | 292,563 | 319,674 | 612,237 | 98,383 | 376,592 | 474,975 | ||||||||||||
| $ | 1,019,354 | $ | 762,569 | $ | 1,781,923 | $ | 838,984 | $ | 830,541 | $ | 1,669,525 | |||||||
| Palladium interests | ||||||||||||||||||
| Stillwater ^2^ | $ | 229,148 | $ | 9,970 | $ | 239,118 | $ | 231,747 | $ | 9,642 | $ | 241,389 | ||||||
| Cobalt interests | ||||||||||||||||||
| Voisey’s Bay | $ | 201,741 | $ | 23,607 | $ | 225,348 | $ | 203,436 | $ | 24,074 | $ | 227,510 | ||||||
| $ | 4,180,555 | $ | 1,387,809 | $ | 5,568,364 | $ | 4,007,555 | $ | 1,480,836 | $ | 5,488,391 | |||||||
| 1) | Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton, Totten and Victor gold interests.<br> | |||||||||||||||||
| --- | --- | |||||||||||||||||
| 2) | Comprised of the Stillwater and East Boulder gold and palladium interests. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| 3) | Comprised of the Minto, Rosemont, 777 and Marmato gold interests. | |||||||||||||||||
| --- | --- | |||||||||||||||||
| 4) | Comprised of the Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata,<br>Pascua-Lama, Rosemont, Cozamin and 777 silver interests. | |||||||||||||||||
| --- | --- |
Acquisition of Santo Domingo Precious Metals Purchase Agreement
On March 25, 2021, the Company announced that it had entered into a PMPA with Capstone in respect to the Santo Domingo project located in the Atacama Region of Chile. Upon closing, the Company will purchase 100% of the payable gold production until 285,000 ounces have been delivered, thereafter dropping to 67% of payable gold production for the life of the mine. The Company will pay Capstone a total upfront cash consideration of $290 million, $30 million of which was payable upon closing which occurred on April 21, 2021 and the remainder of which is payable during construction of the Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures. In addition, Wheaton will make ongoing payments for gold ounces delivered equal to 18% of the spot gold price until the market value of gold delivered to the Company, net of the per ounce cash payment, exceeds the initial upfront cash deposit, and 22% of the spot gold price thereafter.
| 11. | Early Deposit Mineral Stream Interests |
|---|
Early deposit mineral stream interests represent agreements relative to early stage development projects whereby Wheaton can choose not to proceed with the agreement once certain documentation has been received including, but not limited to, feasibility studies, environmental studies and impact assessment studies (please see Note 25 for more information). Once Wheaton has elected to proceed with the agreement, the carrying value of the stream will be transferred to Mineral Stream Interests.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [59]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
The following table summarizes the early deposit mineral stream interests currently owned by the Company:
| Mine<br><br><br>Owner | Attributable<br><br><br>Production to be<br><br><br>Purchased | |||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Early Deposit Mineral<br><br><br>Stream Interests | Location of<br><br><br>Mine | Upfront<br><br><br>Consideration<br> <br>Paid to Date^1^ | Upfront<br><br><br>Consideration<br> <br>to be Paid^1,^^2^ | Total<br><br><br>Upfront<br> <br>Consideration¹ | Gold | Silver | Term of<br><br><br>Agreement | |||||||||||||||||||||||
| Toroparu | Gold X | Guyana | $ | 15,500 | $ | 138,000 | $ | 153,500 | 10% | 50% | Life of Mine | |||||||||||||||||||
| Cotabambas | Panoro | Peru | 10,750 | 129,250 | 140,000 | 25% | ³ | 100% | ³ | Life of Mine | ||||||||||||||||||||
| Kutcho | Kutcho | Canada | 7,000 | 58,000 | 65,000 | 100% | ^4^ | 100% | ^4^ | Life of Mine | ||||||||||||||||||||
| $ | 33,250 | $ | 325,250 | $ | 358,500 | |||||||||||||||||||||||||
| 1) | Expressed in thousands of United States dollars; excludes closing costs and capitalized interest, where applicable.<br> | |||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||
| 2) | Please refer to Note 25 for details of when the remaining upfront consideration to be paid becomes due.<br> | |||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||
| 3) | Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production will<br>decrease to 16.67% of gold production and 66.67% of silver production for the life of mine. | |||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||
| 4) | Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, the stream will decrease<br>to 66.67% of gold and silver production for the life of mine. | |||||||||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||||||||
| 12. | Mineral Royalty Interest | |||||||||||||||||||||||||||||
| --- | --- |
On January 5, 2021, the Company purchased from Alexco, for $3 million (Cdn$4 million), a 2.0% net smelter return royalty interest on the first 600,000 ounces of gold mined from ore extracted from the Golden Predator Exploration Ltd. (“Golden Predator”) owned Brewery Creek quartz mineral claims (the “Brewery Creek Mineral Claims”) located in the Yukon Territories, Canada and any mineral tenure derived therefrom, and a 2.75% net smelter returns royalty interest thereafter (the “Brewery Creek Royalty”). The Brewery Creek Royalty agreement provides, among other things, that Golden Predator may reduce the 2.75% net smelter returns royalty interest to 2.125%, on payment of the sum of Cdn$2 million to Wheaton.
Additionally, the Company has a 0.5% net smelter return royalty interest in the Metates properties (the “Metates Royalty”) located in Mexico from Chesapeake Gold Corp. (“Chesapeake”) for the life of mine. The carrying cost of the Metates Royalty is $3 million. The Company also has a right of first refusal on any silver streaming, royalty or any other transaction on the Metates properties.
To date, no revenue has been recognized and no depletion has been taken with respect to these royalty agreements.
| 13. | Convertible Notes Receivable |
|---|
Kutcho Copper Corp.
Effective December 14, 2017, in connection with the Kutcho Early Deposit Agreement, the Company advanced to Kutcho $16 million (Cdn$20 million) and received the Kutcho Convertible Note. The Kutcho Convertible Note, which has a seven year term to maturity, carries interest at 10% per annum, compounded and payable semi-annually. Kutcho elected to defer the first six interest payments, with all deferred payments being due no later than December 31, 2023. The deferred interest carries interest at 15% per annum, compounded semi-annually.
At any time prior to the maturity date, the Company has the right to convert all or any part of the outstanding amount of the Kutcho Convertible Note, excluding outstanding deferred interest, into common shares of Kutcho at Cdn$0.8125 per share. Kutcho has the right to repay the Kutcho Convertible Note early, subject to the applicable pre-payment cash penalties as follows:
| · | 20% of the outstanding amount if pre-paid on or after 36 months until 60 months; and<br> |
|---|---|
| · | 15% of the outstanding amount if pre-paid on or after 60 months until maturity.<br> |
| --- | --- |
Gold X Mining Corp.
Effective December 24, 2019, in connection with the Toroparu Early Deposit Agreement (Note 11), the Company advanced $10 million to Gold X as part of a $20 million 10% secured convertible debenture private placement offering completed by Gold X (the “Gold X Convertible Note”). The Gold X Convertible Note carried interest at 10% per annum, compounded semi-annually and payable annually.
Effective July 14, 2020, the Company elected to convert the outstanding principal relative to the Gold X Convertible Note into common shares of Gold X at Cdn$3.20 per share, with the outstanding amounts being converted into Canadian dollars using the exchange rate published by the Bank of Canada on July 13, 2020. In addition, the accrued interest relative to the Gold X Convertible Note was converted to common shares of Gold X at Cdn$3.57 per share. As a result,
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [60]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
on July 14, 2020 the Company received 4,467,317 common shares of Gold X and the Gold X Convertible Note was retired.
Convertible Notes Receivable Valuation Summary
The Kutcho Convertible Note is revalued quarterly by discounting the stream of future interest and principal payments at the rate of interest prevailing at the balance sheet date for instruments of similar term and risk, and adding this value to the value of the convertibility feature which is estimated using a Black-Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and expected remaining life of the Kutcho Convertible Note.
The value of the Gold X Convertible Note, which was converted into common shares of Gold X effective July 14, 2020, was determined by reference to the value of the shares received. Prior to electing to convert this convertible note receivable into common shares of Gold X, the Gold X Convertible Note was revalued quarterly using the same methodology as the Kutcho Convertible Note above.
A summary of the fair value of these convertible instruments during the three months ended March 31, 2021 and 2020 is presented below:
| Three Months Ended March 31, 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Fair Value at<br><br><br>Dec 31, 2020 | Amount<br><br><br>Advanced | Value<br><br><br>Converted into<br> <br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br><br><br>Mar 31, 2021 | ||||||||||
| Kutcho | $ | 11,353 | $ | - | $ | - | $ | 1,238 | $ | 12,591 | |||||
| Three Months Ended March 31, 2020 | |||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Fair Value at<br><br><br>Dec 31, 2019 | Amount<br><br><br>Advanced | Value<br><br><br>Converted into<br> <br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br><br><br>Mar 31, 2020 | ||||||||||
| Kutcho | $ | 11,837 | $ | - | $ | - | $ | (1,000) | $ | 10,837 | |||||
| Gold X | 10,019 | - | - | 210 | 10,229 | ||||||||||
| Total | $ | 21,856 | $ | - | $ | - | $ | (790) | $ | 21,066 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [61]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 14. | Long-Term Equity Investments |
|---|
Common Shares Held
| Three Months Ended March 31, 2021 | |||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Shares<br><br><br>Owned<br> <br>(000’s) | % of<br><br><br>Outstanding<br> <br>Shares<br><br><br>Owned | Fair Value at<br><br><br>Dec 31, 2020 | Cost of<br><br><br>Additions | Proceeds of<br><br><br>Disposition ^1^ | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) ^2^ | Fair Value at<br><br><br>Mar 31, 2021 | Realized Gain<br><br><br>on Disposal | |||||||||||||||||
| Bear Creek | 13,264 | 10.70 | % | $ | 32,609 | $ | - | $ | - | $ | (9,720) | $ | 22,889 | $ | - | ||||||||||
| Sabina | 11,700 | 3.36 | % | 30,233 | - | - | (13,392) | 16,841 | - | ||||||||||||||||
| First Majestic | - | 0.00 | % | 95,984 | - | (112,188) | 16,204 | - | 60,530 | ||||||||||||||||
| Other | 37,415 | - | - | 6,691 | 44,106 | - | |||||||||||||||||||
| Total | $ | 196,241 | $ | - | $ | (112,188) | $ | (217) | $ | 83,836 | $ | 60,530 | |||||||||||||
| 1) | Disposals during 2021 were made in order to capitalize on the share appreciation related to the strong commodity price<br>environment. | ||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||
| 2) | Fair Value Gains (Losses) are reflected as a component of OCI. | ||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||
| Three Months Ended March 31, 2020 | |||||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Shares<br><br><br>Owned<br> <br>(000’s) | % of<br><br><br>Outstanding<br> <br>Shares<br><br><br>Owned | Fair Value at<br><br><br>Dec 31, 2019 | Cost of<br><br><br>Additions ^1^ | Proceeds of<br><br><br>Disposition | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) ^2^ | Fair Value at<br><br><br>Mar 31, 2020 | Realized Loss<br><br><br>on Disposal | |||||||||||||||||
| Bear Creek | 13,264 | 11.92 | % | $ | 27,983 | $ | - | $ | - | $ | (16,950) | $ | 11,033 | $ | - | ||||||||||
| Sabina | 11,700 | 3.95 | % | 17,296 | - | - | (7,647) | 9,649 | - | ||||||||||||||||
| First Majestic | 20,240 | 9.65 | % | 248,137 | - | - | (122,854) | 125,283 | - | ||||||||||||||||
| Other | 16,341 | 1,359 | - | (6,692) | 11,008 | - | |||||||||||||||||||
| Total | $ | 309,757 | $ | 1,359 | $ | - | $ | (154,143) | $ | 156,973 | $ | - | |||||||||||||
| 1) | Additions relate to the subscription rights of Aris Gold Corporation, (“Aris Gold”, formerly Caldas Gold Corp.)<br>being automatically converted into common shares of Aris Gold on February 28, 2020. | ||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||
| 2) | Fair value gains (losses) are reflected as a component of OCI. | ||||||||||||||||||||||||
| --- | --- |
Warrants Held
| Three Months Ended March 31, 2021 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Fair Value at<br><br><br>Dec 31, 2020 | Cost of<br><br><br>Additions | Value of<br><br><br>Warrants<br> <br>Converted into<br><br><br>Shares | Fair Value<br><br><br>Adjustment<br> <br>Gains<br><br><br>(Losses) | Fair Value at<br><br><br>Mar 31, 2021 | ||||||||||
| Other | $ | 3,637 | $ | - | $ | - | $ | (950 | ) | $ | 2,686 | ||||
| Three Months Ended March 31, 2020 | |||||||||||||||
| (in thousands) | Fair Value at<br><br><br>Dec 31, 2019 | Cost of<br> Additions | Value of<br><br><br>Warrants<br> <br>Converted into<br><br><br>Shares | Fair Value<br><br><br>Adjustment Gains<br> <br>(Losses) | Fair Value at<br><br><br>Mar 31, 2020 | ||||||||||
| Other | $ | - | $ | 165 | $ | - | $ | (71 | ) | $ | 94 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [62]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
The Company’s long-term investments in common shares (“LTI’s”) are held for long-term strategic purposes and not for trading purposes. As such, the Company has elected to reflect any fair value adjustments, net of tax, as a component of other comprehensive income (“OCI”). The cumulative gain or loss will not be reclassified to net earnings on disposal of these long-term investments but is reclassified to retained earnings.
While long-term investments in warrants are also held for long-term strategic purposes, they meet the definition of a derivative and therefore are classified as financial assets with fair value adjustments being recorded as a component of net earnings under the classification Other (Income) Expense. Warrants that do not have a quoted market price are valued using a Black-Scholes option pricing model.
By holding these long-term investments, the Company is inherently exposed to various risk factors including currency risk, market price risk and liquidity risk.
| 15. | Property, Plant and Equipment | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31, 2021 | |||||||||||||
| (in thousands) | Leasehold<br><br><br>Improvements | Right of Use<br><br><br>Assets -<br> <br>Property | Other | Total | |||||||||
| Cost | |||||||||||||
| Balance - January 1, 2021 | $ | 4,382 | $ | 4,793 | $ | 4,131 | $ | 13,306 | |||||
| Additions | - | - | 81 | 81 | |||||||||
| Disposals | - | - | - | - | |||||||||
| Balance - March 31, 2021 | $ | 4,382 | $ | 4,793 | $ | 4,212 | $ | 13,387 | |||||
| Accumulated Depreciation | |||||||||||||
| Balance - January 1, 2021 | $ | (2,906 | ) | $ | (1,444 | ) | $ | (2,667 | ) | $ | (7,017 | ) | |
| Disposals | - | - | - | - | |||||||||
| Depreciation | (80 | ) | (187 | ) | (112 | ) | (379 | ) | |||||
| Balance - March 31, 2021 | $ | (2,986 | ) | $ | (1,631 | ) | $ | (2,779 | ) | $ | (7,396 | ) | |
| Net book value - March 31, 2021 | $ | 1,396 | $ | 3,162 | $ | 1,433 | $ | 5,991 | |||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| December 31, 2020 | |||||||||||||
| (in thousands) | Leasehold<br><br><br>Improvements | Right of Use<br><br><br>Assets -<br> <br>Property | Other | Total | |||||||||
| Cost | |||||||||||||
| Balance - January 1, 2020 | $ | 4,380 | $ | 4,738 | $ | 3,836 | $ | 12,954 | |||||
| Additions | 2 | 55 | 429 | 486 | |||||||||
| Disposals | - | - | (134 | ) | (134 | ) | |||||||
| Balance - December 31, 2020 | $ | 4,382 | $ | 4,793 | $ | 4,131 | $ | 13,306 | |||||
| Accumulated Depreciation | |||||||||||||
| Balance - January 1, 2020 | $ | (2,518 | ) | $ | (704 | ) | $ | (2,421 | ) | $ | (5,643 | ) | |
| Disposals | - | - | 134 | 134 | |||||||||
| Depreciation | (388 | ) | (740 | ) | (380 | ) | (1,508 | ) | |||||
| Balance - December 31, 2020 | $ | (2,906 | ) | $ | (1,444 | ) | $ | (2,667 | ) | $ | (7,017 | ) | |
| Net book value - December 31, 2020 | $ | 1,476 | $ | 3,349 | $ | 1,464 | $ | 6,289 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [63]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 16. | Credit Facilities | |||||||
|---|---|---|---|---|---|---|---|---|
| 16.1. | Bank Debt | |||||||
| --- | --- | |||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- |
| March 31 | December 31 | |||||||
| (in thousands) | 2021 | 2020 | ||||||
| Current portion | $ | - | $ | - | ||||
| Long-term portion | - | 195,000 | ||||||
| Gross bank debt outstanding ^1^ | $ | - | $ | 195,000 | ||||
| ^1)^ | There is $5 million unamortized debt issue costs associated with the Revolving Facility which have been recorded as a<br>long-term asset under the classification Other (see Note 24). | |||||||
| --- | --- |
The Company’s $2 billion revolving term loan (“Revolving Facility”) matures on February 27, 2025.
The Company’s Revolving Facility has financial covenants which require the Company to maintain: (i) a net debt to tangible net worth ratio of less than or equal to 0.75:1; and (ii) an interest coverage ratio of greater than or equal to 3.00:1. Only cash interest expenses are included for the purposes of calculating the interest coverage ratio. The Company is in compliance with these debt covenants as at March 31, 2021.
Effective February 27, 2020, at the Company’s option, amounts drawn under the Revolving Facility incur interest based on the Company’s leverage ratio at either (i) LIBOR plus 1.00% to 2.05%; or (ii) the Bank of Nova Scotia’s Base Rate plus 0.00% to 1.05%. Undrawn amounts under the Revolving Facility are subject to a stand-by fee of 0.20% to 0.41% per annum, dependent on the Company’s leverage ratio.
The Revolving Facility, which is classified as a financial liability and reported at amortized cost using the effective interest method, can be drawn down at any time to finance acquisitions, investments or for general corporate purposes.
| 16.2. | Lease Liabilities |
|---|
The lease liability relative to the Company’s offices located in Vancouver, Canada and the Cayman Islands is as follows:
| March 31 | December 31 | |||||||
| (in thousands) | 2021 | 2020 | ||||||
| Current portion | $ | 789 | $ | 773 | ||||
| Long-term portion | 2,687 | 2,864 | ||||||
| Total lease liabilities | $ | 3,476 | $ | 3,637 |
The maturity analysis of these leases is as follows:
| March 31 | ||||
| (in thousands) | 2021 | |||
| Not later than 1 year | $ | 789 | ||
| Later than 1 year and not later than 5 years | 2,687 | |||
| Later than 5 years | - | |||
| Total lease liabilities | $ | 3,476 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [64]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 16.3. | Finance Costs |
|---|
A summary of the Company’s finance costs relative to the above facilities during the period is as follows:
| Three Months Ended<br><br><br>March 31 | ||||||||||
| (in thousands) | Note | 2021 | 2020 | |||||||
| Interest Expense During Period | ||||||||||
| Average principal outstanding during period | $ | 78,022 | $ | 784,472 | ||||||
| Average effective interest rate during period | 16.1 | 1.17% | 3.03% | |||||||
| Total interest expense incurred during period | $ | 229 | $ | 5,945 | ||||||
| Costs related to undrawn credit facilities | 16.1 | 1,311 | 1,140 | |||||||
| Interest expense - lease liabilities | 16.2 | 33 | 33 | |||||||
| Total finance costs | $ | 1,573 | $ | 7,118 | ||||||
| 17. | Issued Capital | |||||||||
| --- | --- | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Note | March 31 | December 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||||
| Issued capital | ||||||||||
| Share capital issued and outstanding: 449,832,574 common shares<br>(December 31, 2020: 449,458,394 common shares) | 17.1 | $ | 3,656,400 | $ | 3,646,291 | |||||
| 17.1. | Shares Issued | |||||||||
| --- | --- |
The Company is authorized to issue an unlimited number of common shares having no par value and an unlimited number of preference shares issuable in series. As at March 31, 2021, the Company had no preference shares outstanding.
A continuity schedule of the Company’s issued and outstanding common shares from January 1, 2020 to March 31, 2021 is presented below:
| Number<br><br><br>of<br> <br>Shares | Weighted<br><br><br>Average<br> <br>Price | |||||
|---|---|---|---|---|---|---|
| At January 1, 2020 | 447,771,433 | |||||
| Share purchase options exercised ^1^ | 374,235 | Cdn$ | 24.83 | |||
| Restricted share units released ^1^ | 124,910 | Cdn$ | 0.00 | |||
| At March 31, 2020 | 448,270,578 | |||||
| Share purchase options exercised ^1^ | 682,128 | Cdn$ | 26.17 | |||
| Restricted share units released ^1^ | 3,495 | Cdn$ | 0.00 | |||
| Dividend reinvestment plan ^2^ | 502,193 | US$ | 37.87 | |||
| At December 31, 2020 | 449,458,394 | |||||
| Share purchase options exercised ^1^ | 258,000 | Cdn$ | 23.24 | |||
| Restricted share units released ^1^ | 116,180 | Cdn$ | 0.00 | |||
| At March 31, 2021 | 449,832,574 | |||||
| 1) | The weighted average price of share purchase options exercised and restricted share units released represents the<br>respective exercise price. | |||||
| --- | --- | |||||
| 2) | The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect to have<br>dividends reinvested directly into additional Wheaton common shares. The weighted average price for common shares issued under the DRIP represents the volume weighted average price of the common shares on the five trading days preceding the dividend<br>payment date, less a discount of 1%. | |||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [65]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
At the Market Equity Program
The Company has established an at-the-market equity program (the “ATM Program”) that allows the Company to issue up to $300 million worth of common shares from treasury (“Common Shares”) to the public from time to time at the Company’s discretion and subject to regulatory requirements. Any Common Shares sold in the ATM Program will be sold (i) in ordinary brokers’ transactions on the NYSE or another US marketplace on which the Common Shares are listed, quoted or otherwise trade, (ii) in ordinary brokers’ transactions on the TSX, (iii) on another Canadian marketplace on which the Common Shares are listed, quoted or otherwise trade, or (iv) with respect to sales in the United States, at the prevailing market price, a price related to the prevailing market price or at negotiated prices. Since the Common Shares will be distributed at the prevailing market prices at the time of the sale or certain other prices, prices may vary among purchasers and during the period of distribution.
The ATM Program will be effective until the date that all Common Shares available for issue under the ATM Program have been issued or the ATM Program is terminated prior to such date by the Company or the agents under the equity offering sales agreement dated April 16, 2020.
Wheaton intends that the net proceeds from the ATM Program, if any, will be available as one potential source of funding for stream acquisitions and/or other general corporate purposes including the repayment of indebtedness. As at March 31, 2021, the Company has not issued any shares under the ATM program.
| 17.2. | Dividends Declared | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| --- | --- | --- | --- | --- | --- | --- | --- | |||
| Three Months Ended March 31 | ||||||||||
| (in thousands, except per share amounts) | 2021 | 2020 | ||||||||
| Dividends declared per share | $ | 0.13 | $ | 0.10 | ||||||
| Average number of shares eligible for dividend | 449,828 | 448,145 | ||||||||
| Total dividends declared | $ | 58,478 | $ | 44,815 | ||||||
| 1) | The Company has implemented a DRIP whereby shareholders can elect to have dividends reinvested directly into additional<br>Wheaton common shares. | |||||||||
| --- | --- | |||||||||
| 2) | As at March 31, 2021, cumulative dividends of $1,325 million have been declared by the Company.<br> | |||||||||
| --- | --- | |||||||||
| 18. | Reserves | |||||||||
| --- | --- | |||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Note | March 31 | December 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||||
| Reserves | ||||||||||
| Share purchase warrants | 18.1 | $ | 83,077 | $ | 83,077 | |||||
| Share purchase options | 18.2 | 21,423 | 21,855 | |||||||
| Restricted share units | 18.3 | 4,824 | 6,815 | |||||||
| Long-term investment revaluation reserve, net of tax | 18.4 | (40,338) | 15,135 | |||||||
| Total reserves | $ | 68,986 | $ | 126,882 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [66]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 18.1. | Share Purchase Warrants |
|---|
The Company’s share purchase warrants (“warrants”) are presented below:
| Number of<br>Warrants | Weighted<br>Average<br>Exercise<br><br><br>Price | Exchange<br>Ratio | Share<br>Purchase<br>Warrants<br> Reserve | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Warrants outstanding | 10,000,000 | 43.75 | 1.00 | $ | 83,077 |
All values are in US Dollars.
The warrants expire on February 28, 2023. Each warrant entitles the holder the right to purchase one of the Company’s common shares. ****
| 18.2. | Share Purchase Options |
|---|
The Company has established an equity settled share purchase option plan whereby the Company’s Board of Directors may, from time to time, grant options to employees or consultants. The maximum term of any share purchase option may be ten years, but generally options are granted with a term to expiry of five to seven years. The exercise price of an option is not less than the closing price on the TSX on the last trading day preceding the grant date. The vesting period of the options is determined at the discretion of the Company’s Board of Directors at the time the options are granted, but generally vest over a period of two to three years.
Each share purchase option converts into one common share of Wheaton on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options do not carry rights to dividends or voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry, subject to certain black-out periods.
The Company expenses the fair value of share purchase options that are expected to vest on a straight-line basis over the vesting period using the Black-Scholes option pricing model to estimate the fair value for each option at the date of grant. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions. The model requires the use of subjective assumptions, including expected share price volatility. Historical data has been considered in setting the assumptions. Expected volatility is determined by considering the trailing 30-month historic average share price volatility. The weighted average fair value of share purchase options granted and principal assumptions used in applying the Black-Scholes option pricing model are as follows:
| Three Months Ended<br><br><br>March 31 | ||||||||
| 2021 | 2020 | |||||||
| Black-Scholes weighted average assumptions | ||||||||
| Grant date share price and exercise price | Cdn$49.86 | Cdn$33.47 | ||||||
| Expected dividend yield | 1.53% | 1.78% | ||||||
| Expected volatility | 35% | 30% | ||||||
| Risk-free interest rate | 0.51% | 0.52% | ||||||
| Expected option life, in years | 3.0 | 2.5 | ||||||
| Weighted average fair value per option granted | Cdn$10.69 | Cdn$5.57 | ||||||
| Number of options issued during the period | 317,560 | 451,110 | ||||||
| Total fair value of options issued (000’s) | $ | 2,720 | $ | 1,807 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [67]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
A continuity schedule of the Company’s outstanding share purchase options from January 1, 2020 to March 31, 2021 is presented below:
| Number of<br><br><br>Options<br> <br>Outstanding | Weighted<br><br><br>Average<br><br><br>Exercise Price | |||||
|---|---|---|---|---|---|---|
| At January 1, 2020 | 2,394,490 | Cdn$27.08 | ||||
| Granted (fair value - 2 million or Cdn5.57 per option) | 451,110 | 33.47 | ||||
| Exercised | (374,235) | 24.83 | ||||
| At March 31, 2020 | 2,471,365 | Cdn$28.91 | ||||
| Exercised | (682,128) | 26.17 | ||||
| Forfeited | (2,420) | 32.01 | ||||
| At December 31, 2020 | 1,786,817 | Cdn$29.54 | ||||
| Granted (fair value - 3 million or Cdn10.69 per option) | 317,560 | 49.86 | ||||
| Exercised | (258,000) | 23.24 | ||||
| At March 31, 2021 | 1,846,377 | Cdn$33.90 |
All values are in US Dollars.
As it relates to share purchase options, during the three months ended March 31, 2021, the weighted average share price at the time of exercise was Cdn$49.23, as compared to Cdn$39.17 per share during the comparable period in 2020.
| 18.3. | Restricted Share Units (“RSUs”) |
|---|
The Company has established an RSU plan whereby RSUs will be issued to eligible employees or directors as determined by the Company’s Board of Directors or the Company’s Compensation Committee. RSUs give the holder the right to receive a specified number of common shares at the specified vesting date. RSUs generally vest over a period of two to three years. Compensation expense related to RSUs is recognized over the vesting period based upon the fair value of the Company’s common shares on the grant date and the awards that are expected to vest. The fair value is calculated with reference to the closing price of the Company’s common shares on the TSX on the business day prior to the date of grant.
RSU holders receive a cash payment based on the dividends paid on the Company’s common shares in the event that the holder of a vested RSU has elected to defer the release of the RSU to a future date. This cash payment is reflected as a component of net earnings under the classification General and Administrative.
A continuity schedule of the Company’s restricted share units outstanding from January 1, 2020 to March 31, 2021 is presented below:
| Number of<br><br><br>RSUs<br> <br>Outstanding | Weighted<br><br><br>Average<br><br><br>Intrinsic Value at<br>Date Granted | |||||
|---|---|---|---|---|---|---|
| At January 1, 2020 | 366,323 | $21.67 | ||||
| Granted (fair value - 3 million) | 131,730 | 24.08 | ||||
| Released | (124,910) | 22.29 | ||||
| At March 31, 2020 | 373,143 | $22.32 | ||||
| Granted | 1,230 | 43.61 | ||||
| Released | (3,495) | 20.85 | ||||
| Forfeited | (620) | 24.11 | ||||
| At December 31, 2020 | 370,258 | $22.40 | ||||
| Granted (fair value - 4 million) | 96,680 | 39.95 | ||||
| Released | (116,180) | 24.73 | ||||
| At March 31, 2021 | 350,758 | $26.68 |
All values are in US Dollars.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [68]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
During the three months ended March 31, 2021, the Company issued 96,680 RSUs with a fair value of $4 million or Cdn$49.86 per RSU. For the same period in 2020, the Company issued 131,730 RSUs with a fair value of $3 million or Cdn$33.48 per RSU.
| 18.4. | Long-Term Investment Revaluation Reserve |
|---|
The Company’s long-term investments in common shares (Note 14) are held for long-term strategic purposes and not for trading purposes. The Company has chosen to designate these long-term investments in common shares as financial assets with fair value adjustments being recorded as a component of OCI as it believes that this provides a more meaningful presentation for long-term strategic investments, rather than reflecting changes in fair value as a component of net earnings. As some of these long-term investments are denominated in Canadian dollars, changes in their fair value is affected by both the change in share price in addition to changes in the Cdn$/US$ exchange rate.
Where the fair value of a long-term investment in common shares held exceeds its tax cost, the Company recognizes a deferred income tax liability. To the extent that the value of the long-term investment subsequently declines, the deferred income tax liability is reduced. However, where the fair value of the long-term investment decreases below the tax cost, the Company does not recognize a deferred income tax asset on the unrealized capital loss unless it is probable that the Company will generate future capital gains that will offset the loss.
A continuity schedule of the Company’s long-term investment revaluation reserve from January 1, 2020 to March 31, 2021 is presented below:
| (in thousands) | Change in<br><br><br>Fair Value | Deferred<br>Tax<br>Recovery<br>(Expense) | Total | |||||||||
| At January 1, 2020 | $ | 57,062 | $ | (9,853) | $ | 47,209 | ||||||
| Unrealized gain (loss) on LTIs ^1^ | (154,143) | 9,853 | (144,290) | |||||||||
| At March 31, 2020 | $ | (97,081) | $ | - | $ | (97,081) | ||||||
| Unrealized gain (loss) on LTIs ^1^ | 179,999 | (11,719) | 168,280 | |||||||||
| Reallocate reserve to retained earnings upon disposal of LTIs ^1^ | (60,815) | 4,751 | (56,064) | |||||||||
| At December 31, 2020 | $ | 22,103 | $ | (6,968) | $ | 15,135 | ||||||
| Unrealized gain (loss) on LTIs ^1^ | (217) | (2,137) | (2,354) | |||||||||
| Reallocate reserve to retained earnings upon disposal of LTIs^1^ | (60,530) | 7,411 | (53,119) | |||||||||
| At March 31, 2021 | $ | (38,644) | $ | (1,694) | $ | (40,338) | ||||||
| 1) | LTIs refers to long-term investments in common shares held. | |||||||||||
| --- | --- | |||||||||||
| 19. | Stock Based Compensation | |||||||||||
| --- | --- |
The Company’s stock based compensation consists of share purchase options (Note 18.2), restricted share units (Note 18.3) and performance share units (Note 19.1). The accrued value of share purchase options and restricted share units are reflected as reserves in the shareholder’s equity section of the Company’s balance sheet while the accrued value associated with performance share units is reflected as an accrued liability.
| 19.1. | Performance Share Units (“PSUs”) |
|---|
The Company has established a Performance Share Unit Plan (“the PSU plan”) whereby PSUs will be issued to eligible employees as determined by the Company’s Board of Directors or the Company’s Compensation Committee. PSUs issued under the PSU plan entitle the holder to a cash payment at the end of a three year performance period equal to the number of PSUs granted, multiplied by a performance factor and multiplied by the fair market value of a Wheaton common share on the expiry of the performance period. The performance factor can range from 0% to 200% and is determined by comparing the Company’s total shareholder return to those achieved by various peer companies, the Philadelphia Gold and Silver Index and the price of gold and silver.
Compensation expense for the PSUs is recorded on a straight-line basis over the three year vesting period. The amount of compensation expense is adjusted at the end of each reporting period to reflect (i) the fair value of common shares; (ii) the number of PSUs anticipated to vest; and (iii) the anticipated performance factor.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [69]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
A continuity schedule of the Company’s outstanding PSUs (assuming a performance factor of 100% is achieved over the performance period) and the Company’s PSU accrual from January 1, 2020 to March 31, 2021 is presented below:
| (in thousands, except for number of PSUs outstanding) | Number of<br><br><br>PSUs<br> <br>Outstanding | PSU accrual<br><br><br>liability | ||||
| At January 1, 2020 | 604,692 | $ 19,069 | ||||
| Granted | 193,830 | - | ||||
| Accrual related to the fair value of the PSUs outstanding | - | 3,277 | ||||
| Foreign exchange adjustment | - | (1,303) | ||||
| At March 31, 2020 | 798,522 | $ 21,043 | ||||
| Accrual related to the fair value of the PSUs outstanding | - | 18,249 | ||||
| Foreign exchange adjustment | - | 1,917 | ||||
| Paid | (204,142) | (12,123) | ||||
| Forfeited | (1,230) | (5) | ||||
| At December 31, 2020 | 593,150 | $ 29,081 | ||||
| Granted | 134,180 | - | ||||
| Accrual related to the fair value of the PSUs outstanding | - | 305 | ||||
| Foreign exchange adjustment | - | 292 | ||||
| At March 31, 2021 | 727,330 | $ 29,678 |
A summary of the PSUs outstanding at March 31, 2021 is as follows:
| Year<br><br><br>of Grant | Year of<br><br><br>Maturity | Number<br><br><br>outstanding | Estimated Value<br>Per PSU at<br><br><br>Maturity | Anticipated<br><br><br>Performance<br> <br>Factor<br><br><br>at Maturity | Percent of<br><br><br>Vesting Period<br> <br>Complete at<br><br><br>Mar 31, 2021 | PSU<br><br><br>Liability at<br> <br>Mar 31, 2021 | |||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| 2018 | 2021 | 213,820 | 39.45 | 200% | 100% | 16,868 | |||||||||||||
| 2019 | 2022 | 186,730 | 39.04 | 198% | 67% | 9,688 | |||||||||||||
| 2020 | 2023 | 192,600 | 38.52 | 119% | 35% | 3,051 | |||||||||||||
| 2021 | 2024 | 134,180 | 38.08 | 101% | 1% | 71 | |||||||||||||
| 727,330 | $ | 29,678 |
All values are in US Dollars.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [70]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 20. | Earnings per Share (“EPS”) and Diluted Earnings per Share (“Diluted EPS”) |
|---|
Diluted earnings per share is calculated using the treasury method which assumes that outstanding share purchase options and warrants, with exercise prices that are lower than the average market price of the Company’s common shares for the relevant period, are exercised and the proceeds are used to purchase shares of the Company at the average market price of the common shares for the relevant period.
Diluted EPS is calculated based on the following weighted average number of shares outstanding:
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Basic weighted average number of shares outstanding | 449,509 | 447,805 | ||||
| Effect of dilutive securities | ||||||
| Share purchase options | 718 | 706 | ||||
| Restricted share units | 373 | 380 | ||||
| Diluted weighted average number of shares outstanding | 450,600 | 448,891 |
The following table lists the number of share purchase options and share purchase warrants excluded from the computation of diluted earnings per share because the exercise prices exceeded the average market value of the common shares of Cdn$50.25, compared to Cdn$38.82 for the comparable period in 2020.
| Three Months Ended<br><br><br>March 31 | ||||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Share purchase options | - | 8 | ||||
| Share purchase warrants | 10,000 | 10,000 | ||||
| Total | 10,000 | 10,008 | ||||
| 21. | Supplemental Cash Flow Information | |||||
| --- | --- |
Change in Non-Cash Working Capital
| Three Months Ended<br><br><br>March 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Change in non-cash working capital | ||||||||
| Accounts receivable | $ | (212) | $ | 4,322 | ||||
| Accounts payable and accrued liabilities | (1,879) | 543 | ||||||
| Other | 119 | (245) | ||||||
| Total change in non-cash<br>working capital | $ | (1,972) | $ | 4,620 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [71]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 22. | Income Taxes |
|---|
A summary of the Company’s income tax expense (recovery) is as follows:
Income tax recognized in net earnings is comprised of the following:
| Three Months Ended<br><br><br>March 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Current income tax expense (recovery) | $ | (5,413) | $ | 49 | ||||
| Deferred income tax expense (recovery) related to: | ||||||||
| Origination and reversal of temporary differences | $ | 11,513 | $ | 3,225 | ||||
| Write down (reversal of write down) or recognition of prior period<br>temporary differences | (6,602) | 5,168 | ||||||
| Total deferred income tax expense (recovery) | $ | 4,911 | $ | 8,393 | ||||
| Income tax expense (recovery) recognized in net<br>earnings | $ | (502) | $ | 8,442 |
Income tax recognized as a component of OCI is comprised of the following:
| Three Months Ended<br><br><br>March 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Income tax expense (recovery) related to LTIs - common shares<br>held | $ | 2,137 | $ | (9,853) |
Income tax recognized directly in equity is comprised of the following:
| Three Months Ended<br><br><br>March 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Income tax expense (recovery) recognized in equity | $ | (1,568) | $ | 1,480 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [72]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
The provision for income taxes differs from the amount that would be obtained by applying the statutory income tax rate to consolidated earnings before income taxes due to the following:
| Three Months Ended<br><br><br>March 31 | ||||||||
| (in thousands) | 2021 | 2020 | ||||||
| Earnings before income taxes | $ | 161,500 | $ | 103,338 | ||||
| Canadian federal and provincial income tax rates | 27.00% | 27.00% | ||||||
| Income tax expense (recovery) based on above rates | $ | 43,605 | $ | 27,901 | ||||
| Non-deductible stock based compensation and other | 763 | 858 | ||||||
| Differences in tax rates in foreign jurisdictions | (42,442) | (29,347) | ||||||
| Current period unrecognized temporary differences | 4,174 | 3,862 | ||||||
| Write down (reversal of write down) or recognition of prior period<br>temporary differences | (6,602) | 5,168 | ||||||
| Income tax expense (recovery) | $ | (502) | $ | 8,442 |
The majority of the Company’s income generating activities, including the sale of precious metals, is conducted by its 100% owned subsidiary Wheaton Precious Metals International Ltd., which operates in the Cayman Islands and is not subject to income tax.
The recognized deferred income tax assets and liabilities are offset on the balance sheet and relate to Canada, except for the foreign withholding tax. The movement in deferred income tax assets and liabilities for the three months ended March 31, 2021 and the year ended December 31, 2020 is shown below:
| Three Months Ended March 31, 2021 | ||||||||||||||||||||
| Recognized deferred income tax assets and<br><br><br>liabilities | Opening<br>Balance | Recovery<br>(Expense)<br>Recognized<br>In Net<br>Earnings | Recovery<br>(Expense)<br>Recognized<br>In OCI | Recovery<br>(Expense)<br>Recognized<br>In<br>Shareholders’<br>Equity | Closing<br><br><br>Balance | |||||||||||||||
| Deferred tax assets | ||||||||||||||||||||
| Non-capital loss carryforward ^1^ | $ | 5,894 | $ | (682) | $ | - | $ | (384) | $ | 4,828 | ||||||||||
| Capital loss carryforward | 761 | - | (761) | - | - | |||||||||||||||
| Other ^2^ | 5,500 | (4,057) | - | - | 1,443 | |||||||||||||||
| Deferred tax liabilities | ||||||||||||||||||||
| Interest capitalized for accounting | (87) | - | - | - | (87) | |||||||||||||||
| Debt and share financing fees ^3^ | (728) | 20 | - | - | (708) | |||||||||||||||
| Unrealized gains on long-term investments | (7,808) | 7 | 6,035 | - | (1,766) | |||||||||||||||
| Mineral stream interests ^4^ | (3,532) | (178) | - | - | (3,710) | |||||||||||||||
| Foreign withholding tax | (214) | (21) | - | - | (235) | |||||||||||||||
| Total | $ | (214) | $ | (4,911) | $ | 5,274 | $ | (384) | $ | (235) | ||||||||||
| 1) | As at March 31, 2021, the Company had recognized the tax effect on $18 million of<br>non-capital losses against deferred tax liabilities. | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| 2) | Other includes capital assets, charitable donation carryforward and PSU and pension liabilities. | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| 3) | Debt and share financing fees are deducted over a five year period for Canadian income tax purposes. For accounting<br>purposes, debt financing fees are deducted over the term of the credit facility and share financing fees are charged directly to issued capital. | |||||||||||||||||||
| --- | --- | |||||||||||||||||||
| 4) | The Company’s position, as reflected in its filed Canadian income tax returns and consistent with the terms of the<br>PMPAs, is that the cost of the precious metal acquired under the Canadian PMPAs is equal to the market value while a deposit is outstanding (where applicable to an agreement), and the cash cost thereafter. For accounting purposes, the cost of the<br>mineral stream interests is depleted on a unit-of-production basis as described in Note 4.2. | |||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [73]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| Year Ended December 31, 2020 | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Recognized deferred income tax assets and liabilities | Opening<br><br><br>Balance | Recovery<br><br><br>(Expense)<br> <br>Recognized<br><br><br>In Net<br> <br>Earnings | Recovery<br><br><br>(Expense)<br> <br>Recognized<br><br><br>In OCI | Recovery<br><br><br>(Expense)<br> <br>Recognized<br><br><br>In<br> <br>Shareholders’<br><br><br>Equity | Closing<br><br><br>Balance | ||||||||||
| Deferred tax assets | |||||||||||||||
| Non-capital loss carryforward | $ | 8,756 | $ | (2,077) | $ | - | $ | (785) | $ | 5,894 | |||||
| Capital loss carryforward | 8,953 | (4,733) | (3,459) | - | 761 | ||||||||||
| Other | 694 | 4,806 | - | - | 5,500 | ||||||||||
| Deferred tax liabilities | |||||||||||||||
| Interest capitalized for accounting | (87) | - | - | - | (87) | ||||||||||
| Debt and share financing fees | (711) | 18 | - | (35) | (728) | ||||||||||
| Unrealized gains on long-term investments | (14,073) | (79) | 6,344 | - | (7,808) | ||||||||||
| Mineral stream interests | (3,532) | - | - | - | (3,532) | ||||||||||
| Foreign withholding tax | (148) | (66) | - | - | (214) | ||||||||||
| Total | $ | (148) | $ | (2,131) | $ | 2,885 | $ | (820) | $ | (214) |
Deferred income tax assets in Canada not recognized are shown below:
| March 31 | December 31 | |||||
|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2020 | ||||
| Non-capital loss carryforward ^1^ | $ | 20,542 | $ | 26,313 | ||
| Mineral stream interests | 94,143 | 96,646 | ||||
| Other | 6,526 | 2,296 | ||||
| Kutcho Convertible Note | 1,255 | 1,330 | ||||
| Unrealized losses on long-term investments | 7,412 | 5,125 | ||||
| Total | $ | 129,878 | $ | 131,710 | ||
| 1) | As at March 31, 2021, the Company had not recognized the tax effect on $76 million of non-capital losses as a deferred tax asset. | |||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [74]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 23. | Other Current Assets |
|---|
The composition of other current assets is shown below:
| March 31 | December 31 | ||||||||||
| (in thousands) | Note | 2021 | 2020 | ||||||||
| Non-revolving term loan | $ | 823 | $ | 813 | |||||||
| Prepaid expenses | 1,703 | 2,388 | |||||||||
| Cobalt inventory | 1,638 | - | |||||||||
| Other | 64 | 64 | |||||||||
| Total other current assets | $ | 4,228 | $ | 3,265 |
Non-revolving term loan
On November 25, 2019, the Company entered into a non-revolving term loan with Kutcho, under which Kutcho can draw up to a maximum of $1 million (Cdn$1.3 million). The credit facility carries interest at 15% per annum, compounded monthly and has a revised maturity date of December 31, 2021.
Cobalt inventory
When cobalt is delivered to the Company it is recorded as inventory until such time as it is sold and the cost of the cobalt is recorded as a cost of sale. Inventory is stated at the lower of cost and net realizable value less estimated costs necessary to make the sale and includes depletion.
| 24. | Other Long-Term Assets |
|---|
The composition of other long-term assets is shown below:
| March 31 | December 31 | |||||||||||
| (in thousands) | Note | 2021 | 2020 | |||||||||
| Intangible assets | $ | 2,940 | $ | 3,036 | ||||||||
| Debt issue costs - Revolving Facility | 16.1 | 4,881 | 5,202 | |||||||||
| Other | 5,042 | 5,004 | ||||||||||
| Total other long-term assets | $ | 12,863 | $ | 13,242 |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [75]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 25. | Commitments and Contingencies |
|---|
Mineral Stream Interests
The following table summarizes the Company’s commitments to make per-ounce cash payments for gold, silver and palladium and per pound cash payments for cobalt to which it has the contractual right pursuant to the PMPAs:
| Mineral Stream Interests | Attributable Payable Production to be<br><br><br>Purchased | Per Unit of Measurement Cash Payment^1^ | Term of<br><br><br>Agreement | Date of<br><br><br>Original<br> <br>Contract | |||||||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Gold | Silver | Palladium | Cobalt | Gold | Silver | Palladium | Cobalt | ||||||||||||||||||||||||||||
| Peñasquito | 0% | 25% | 0% | 0% | n/a | $ | 4.29 | n/a | n/a | Life of Mine | 24-Jul-07 | ||||||||||||||||||||||||
| Constancia | 50% | 100% | 0% | 0% | $ | 408 ² | $ | 6.02 ² | n/a | n/a | Life of Mine | 8-Aug-12 | |||||||||||||||||||||||
| Salobo | 75% | 0% | 0% | 0% | $ | 412 | n/a | n/a | n/a | Life of Mine | 28-Feb-13 | ||||||||||||||||||||||||
| Sudbury | 70% | 0% | 0% | 0% | $ | 400 | n/a | n/a | n/a | 20 years | 28-Feb-13 | ||||||||||||||||||||||||
| Antamina | 0% | 33.75% | 0% | 0% | n/a | 20% | n/a | n/a | Life of Mine | 3-Nov-15 | |||||||||||||||||||||||||
| San Dimas | variable ^3^ | 0% ^3^ | 0% | 0% | $ | 616 | n/a | n/a | n/a | Life of Mine | 10-May-18 | ||||||||||||||||||||||||
| Stillwater | 100% | 0% | 4.5% ^4^ | 0% | 18% ^5^ | n/a | 18%^5^ | n/a | Life of Mine | 16-Jul-18 | |||||||||||||||||||||||||
| Voisey’s Bay | 0% | 0% | 0% | 42.4% ^6^ | n/a | n/a | n/a | 18%^7^ | Life of Mine | 11-Jun-18 | |||||||||||||||||||||||||
| Other | |||||||||||||||||||||||||||||||||||
| Los Filos | 0% | 100% | 0% | 0% | n/a | $ | 4.46 | n/a | n/a | 25 years | 15-Oct-04 | ||||||||||||||||||||||||
| Zinkgruvan | 0% | 100% | 0% | 0% | n/a | $ | 4.46 | n/a | n/a | Life of Mine | 8-Dec-04 | ||||||||||||||||||||||||
| Yauliyacu | 0% | 100%^8^¸ | 0% | 0% | n/a | $ | 8.94^9^ | n/a | n/a | Life of Mine | 23-Mar-06 | ||||||||||||||||||||||||
| Stratoni | 0% | 100% | 0% | 0% | n/a | $ | 11.43 | n/a | n/a | Life of Mine | 23-Apr-07 | ||||||||||||||||||||||||
| Neves-Corvo | 0% | 100% | 0% | 0% | n/a | $ | 4.34 | n/a | n/a | 50 years | 5-Jun-07 | ||||||||||||||||||||||||
| Aljustrel | 0% | 100%^10^ | 0% | 0% | n/a | 50% | n/a | n/a | 50 years | 5-Jun-07 | |||||||||||||||||||||||||
| Minto | 100%^11^ | 100% | 0% | 0% | 65% ¹² | $ | 4.31 | n/a | n/a | Life of Mine | 20-Nov-08 | ||||||||||||||||||||||||
| Keno Hill | 0% | 25% | 0% | 0% | n/a | variable ¹³ | n/a | n/a | Life of Mine | 2-Oct-08 | |||||||||||||||||||||||||
| Pascua-Lama | 0% | 25% | 0% | 0% | n/a | $ | 3.90 | n/a | n/a | Life of Mine | 8-Sep-09 | ||||||||||||||||||||||||
| Rosemont | 100% | 100% | 0% | 0% | $ | 450 | $ | 3.90 | n/a | n/a | Life of Mine | 10-Feb-10 | |||||||||||||||||||||||
| Loma de La Plata | 0% | 12.5% | 0% | 0% | n/a | $ | 4.00 | n/a | n/a | Life of Mine | n/a ^14´^ | ||||||||||||||||||||||||
| 777 | 50% | 100% | 0% | 0% | $ | 425 ² | $ | 6.26 ² | n/a | n/a | Life of Mine | 8-Aug-12 | |||||||||||||||||||||||
| Marmato | 6.5% ^15^ | 100% ^15^ | 0% | 0% | 18% ^16^ | 18%^16^ | n/a | n/a | Life of Mine | 5-Nov-20 | |||||||||||||||||||||||||
| Cozamin | 0% | 50%^17^ | 0% | 0% | n/a | 10% | n/a | n/a | Life of Mine | 10-Dec-20 | |||||||||||||||||||||||||
| Santo Domingo | 100%^20^ | 0% | 0% | 0% | 18%^5^ | n/a | n/a | n/a | Life of Mine | 24-Mar-21 | |||||||||||||||||||||||||
| Early Deposit | |||||||||||||||||||||||||||||||||||
| Toroparu | 10% | 50% | 0% | 0% | $ | 400 | $ | 3.90 | n/a | n/a | Life of Mine | 11-Nov-13 | |||||||||||||||||||||||
| Cotabambas | 25% ^18^ | 100% ^¸18^ | 0% | 0% | $ | 450 | $ | 5.90 | n/a | n/a | Life of Mine | 21-Mar-16 | |||||||||||||||||||||||
| Kutcho | 100% ^19^ | 100% ^19^ | 0% | 0% | 20% | 20% | n/a | n/a | Life of Mine | 14-Dec-17 | |||||||||||||||||||||||||
| 1) | The production payment is measured as either a fixed amount per ounce of metal delivered, or as a percentage of the spot<br>price of the underlying metal on the date of delivery. Contracts where the payment is a fixed amount per ounce of metal delivered are subject to an annual inflationary increase, with the exception of Loma de La Plata and Sudbury. Additionally,<br>should the prevailing market price for the applicable metal be lower than this fixed amount, the per ounce cash payment will be reduced to the prevailing market price, with the exception of Yauliyacu where the per ounce cash payment will not be<br>reduced below $4.44, subject to an annual inflationary factor. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 2) | Subject to an increase to $9.90 per ounce of silver and $550 per ounce of gold after the initial 40-year term. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 3) | Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production<br>plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or<br>increases to more than 90:1 for a period of 6 months or more, then the “70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a<br>period of 6 months or more in which event the “70” shall be reinstated. Currently, the fixed gold to silver exchange ratio is 70:1. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 4) | The Company is committed to purchase 4.5% of Stillwater palladium production until 375,000 ounces are delivered to the<br>Company, thereafter 2.25% of Stillwater palladium production until 550,000 ounces are delivered to the Company and 1% of Stillwater palladium production thereafter for the life of mine. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 5) | To be increased to 22% once the market value of metal delivered to Wheaton, net of the per ounce cash payment, exceeds the<br>initial upfront cash deposit. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 6) | Once the Company has received 31 million pounds of cobalt, the Company’s attributable cobalt production will be<br>reduced to 21.2%. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 7) | To be increased to 22% once the market value of cobalt delivered to Wheaton, net of the per pound cash payment, exceeds<br>the initial upfront cash deposit. Additionally, on each sale of cobalt, the Company is committed to pay a variable commission depending on the market price of cobalt. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 8) | The Company will purchase an amount equal to 100% of the first 1.5 million ounces of payable silver produced at<br>Yauliyacu per annum and 50% of any excess. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 9) | Should the market price of silver exceed $20 per ounce, in addition to the $8.94 per ounce, the Company is committed to<br>pay Glencore an additional amount for each ounce of silver delivered equal to 50% of the excess, to a maximum of $10 per ounce, such that when the market price of silver is $40 or above, the Company will pay Glencore $18.94 per ounce of silver<br>delivered. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 10) | Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.<br> | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 11) | The Company is committed to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.<br> | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 12) | The Company is currently negotiating an amendment to the Minto PMPA such that the cash payment per ounce of gold delivered<br>will be the lower of 65% of the spot price of gold and $1,250. This proposed amended pricing will end on the earlier of (i) January 27, 2023; or (ii) once 27,000 ounces of gold have been delivered to the Company. Once this proposed<br>amended pricing ends, the cash payment per ounce of gold delivered will be the lower of 50% of the spot price of gold and $1,000. In the event that the parties are unable to finalize the terms of the proposed amendment, the production payment will<br>remain as set out in the existing Minto PMPA, being a fixed price of $325 per ounce. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 13) | Effective July 2020, the price paid per ounce of silver delivered under the Keno Hill PMPA has been modified to be between<br>10% of the spot price of silver when the market price of silver is at or above $23.00 per ounce, to 90% of the spot price of silver when the market price of silver is at or below $15.00 per ounce. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 14) | Terms of the agreement not yet finalized. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 15) | Once Wheaton has received 190,000 ounces of gold and 2.15 million ounces of silver under the Marmato PMPA the<br>Company’s attributable gold and silver production will be reduced to 3.25% and 50%, respectively. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 16) | To be increased to 22% of the spot price once the market value of gold and silver delivered to the Company, net of the per<br>ounce cash payment, exceeds the initial upfront cash deposit. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 17) | Once Wheaton has received 10 million ounces, the Company’s attributable silver production will be reduced to 33%<br>of silver production for the life of the mine. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 18) | Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production will<br>decrease to 16.67% of gold production and 66.67% of silver production for the life of mine. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 19) | Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, attributable production<br>will decrease to 66.67% of gold and silver production for the life of mine. | ||||||||||||||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||||||||||||||
| 20) | Once the Company has received 285,000 ounces of gold the Company’s attributable gold production will be reduced to<br>67%. | ||||||||||||||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [76]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
Other Contractual Obligations and Contingencies
| Obligations With Scheduled Payment Dates | |||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | 2021 | 2022 - 2024 | 2025 - 2026 | After 2026 | Sub-Total | Other<br>Commitments | Total | ||||||||||||||
| Payments for mineral stream interests | |||||||||||||||||||||
| Rosemont ^1^ | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 231,150 | $ | 231,150 | |||||||
| Loma de La Plata | - | - | - | - | - | 32,400 | 32,400 | ||||||||||||||
| Marmato | 38,000 | - | - | - | 38,000 | 72,000 | 110,000 | ||||||||||||||
| Santo Domingo | 30,000 | - | - | - | 30,000 | 260,000 | 290,000 | ||||||||||||||
| Salobo ^2^ | - | 670,000 | - | - | 670,000 | - | 670,000 | ||||||||||||||
| Payments for early deposit mineral stream interest | |||||||||||||||||||||
| Toroparu | - | - | - | - | - | 138,000 | 138,000 | ||||||||||||||
| Cotabambas | 750 | 2,500 | - | - | 3,250 | 126,000 | 129,250 | ||||||||||||||
| Kutcho | - | - | - | - | - | 58,000 | 58,000 | ||||||||||||||
| Non-revolving credit facility ^3^ | 211 | - | - | - | 211 | - | 211 | ||||||||||||||
| Leases liabilities | 677 | 2,755 | 340 | - | 3,772 | - | 3,772 | ||||||||||||||
| Total contractual obligations | $ | 69,638 | $ | 675,255 | $ | 340 | $ | - | $ | 745,233 | $ | 917,550 | $ | 1,662,783 | |||||||
| 1) | Includes contingent transaction costs of $1 million. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| 2) | As more fully explained on the following page, assuming the Salobo III expansion project achieves 12 Mtpa of additional<br>processing capacity (bringing total processing capacity at Salobo to 36 Mtpa) by the end of 2022, the Company would expect to pay an estimated expansion payment of between $570 million to $670 million. | ||||||||||||||||||||
| --- | --- | ||||||||||||||||||||
| 3) | Represents the maximum amount available to Kutcho under the non-revolving credit<br>facility (Note 24). | ||||||||||||||||||||
| --- | --- |
Rosemont
The Company is committed to pay Hudbay total upfront cash payments of $230 million in two installments, with the first $50 million being advanced upon Hudbay’s receipt of permitting for the Rosemont project and other customary conditions and the balance of $180 million being advanced once project costs incurred on the Rosemont project exceed $98 million and certain other customary conditions. Under the Rosemont PMPA, the Company is permitted to elect to pay the deposit in cash or the delivery of common shares. Additionally, the Company will be entitled to certain delay payments, including where construction ceases in any material respect, or if completion is not achieved within agreed upon timelines. Hudbay and certain affiliates have provided the Company with a corporate guarantee and other security.
On August 1, 2019, Hudbay announced that the U.S. District Court for the District of Arizona (“Court”) issued a ruling in the lawsuits challenging the U.S. Forest Service’s issuance of the Final Record of Decision (“FROD”) for the Rosemont project in Arizona. The Court ruled to vacate and remand the FROD such that Rosemont cannot proceed with construction at this time. On June 22, 2020 Hudbay announced that they had filed the initial brief with the U.S. Court of Appeals for the Ninth Circuit in relation to appealing this decision. As per Hudbay’s MD&A for the year ended December 31, 2020, final briefs were filed in November 2020 and the oral hearing was completed in early February 2021. Hudbay indicates that a decision from the Ninth Circuit is expected in the second half of 2021.
Loma de La Plata
In connection with the Loma de La Plata PMPA, the Company is committed to pay Pan American Silver Corp. (“Pan American”) total upfront cash payments of $32 million following the satisfaction of certain conditions, including Pan American receiving all necessary permits to proceed with the mine construction and the Company finalizing the definitive terms of the PMPA.
Marmato
In connection with the Marmato PMPA, the Company is committed to pay Aris Gold total upfront cash payments of $110 million, $34 million of which was paid on April 15, 2021; $4 million of which is payable on or before October 15, 2021; and the remaining portion of which is payable during the construction of the MDZ development portion of the Marmato mine, subject to customary conditions.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [77]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
Toroparu
In connection with the Toroparu Early Deposit Agreement, the Company is committed to pay Gold X an additional $138 million, payable on an installment basis to partially fund construction of the mine. Following the delivery of certain feasibility documentation or after December 31, 2021 if the feasibility documentation has not been delivered to Wheaton by such date, Wheaton may elect not to proceed with the agreement or not pay the balance of the upfront consideration and reduce the gold stream percentage from 10% to 0.909% and the silver stream percentage from 50% to nil. If Wheaton elects to terminate, Wheaton will be entitled to a return of the amounts advanced less $2 million which is non-refundable on the occurrence of certain events. If Wheaton elects to reduce the streams, Gold X may elect to terminate the agreement and Wheaton will be entitled to a return of the amount of the deposit already advanced less $2 million which is non-refundable. Gold X has filed a Preliminary Economic Assessment defining the re-scoping of the Toroparu project, including a revised operating plan.
Cotabambas
In connection with the Cotabambas Early Deposit Agreement, the Company is committed to pay Panoro a total cash consideration of $140 million, of which $11 million has been paid to date. Once certain conditions have been met, the Company will advance an additional $3 million to Panoro, spread over up to three years. Following the delivery of a bankable definitive feasibility study, environmental study and impact assessment, and other related documents (collectively, the “Cotabambas Feasibility Documentation”), and receipt of permits and construction commencing, the Company may then advance the remaining deposit or elect to terminate the Cotabambas Early Deposit Agreement. If the Company elects to terminate, the Company will be entitled to a return of the portion of the amounts advanced less $2 million payable upon certain triggering events occurring.
Kutcho
In connection with the Kutcho Early Deposit Agreement, the Company is committed to pay Kutcho a total cash consideration of $65 million, of which $7 million has been paid to date. The remaining $58 million will be advanced on an installment basis to partially fund construction of the mine once certain conditions have been satisfied.
The Company will be required to make an additional payment to Kutcho, of up to $20 million, if processing throughput is increased to 4,500 tonnes per day or more within 5 years of attaining commercial production.
Salobo
The Salobo mine currently has a mill throughput capacity of 24 million tonnes per annum (“Mtpa”). In October 2018, Vale’s Board of Directors approved the investment in the Salobo III mine expansion (the “Salobo Expansion”). The Salobo Expansion is proposed to include a third concentrator line and will use Salobo’s existing infrastructure. Vale anticipates that the Salobo Expansion, which is scheduled to start up in the first half of 2022 with a ramp-up of 15 months, will result in an increase of throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up.
If actual throughput is expanded above 28 Mtpa, then under the terms of the Salobo PMPA, Wheaton will be required to make an additional set payment to Vale based on the size of the expansion, the timing of completion and the grade of the material processed. The set payment ranges from $113 million if throughput is expanded beyond 28 Mtpa by January 1, 2036 up to $923 million if throughput is expanded beyond 40 Mtpa by January 1, 2022. Assuming the Salobo III expansion project achieves 12 Mtpa of additional processing capacity (bringing total processing capacity at Salobo to 36 Mtpa) by the end of 2022, the Company would expect to pay an estimated expansion payment of between $570 million to $670 million. The actual amount and timing of any expansion payment may significantly differ from this estimate depending on the size, timing and processed grade of any expansion.
Santo Domingo
In connection with the Santo Domingo PMPA, the Company is committed to pay Capstone total upfront cash payments of $290 million, $30 million of which was payable upon closing which occurred on April 21, 2021 and the remaining portion of which is payable during the construction of the Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures.
Canada Revenue Agency – Canada Revenue Agency – 2013-2015 Taxation Years - Domestic Reassessments
The Company received Notices of Reassessment in 2018 and 2019 for the 2013 to 2015 taxation years in which the Canada Revenue Agency (“CRA”) is seeking to change the timing of the deduction of upfront payments with respect to the Company’s PMPAs relating to Canadian mining assets, so that the cost of precious metal acquired under these Canadian PMPAs is equal to the cash cost paid on delivery plus an amortized amount of the upfront payment determined on a units-of-production basis over the estimated recoverable reserves, and where applicable, resources and exploration potential at the respective mine (the “Domestic Reassessments”). In total, the Domestic Reassessments assessed tax, interest and other penalties of $8 million.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [78]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
Management believes the Company’s position, as reflected in its filed Canadian income tax returns and consistent with the terms of the PMPAs, that the cost of the precious metal acquired under the Canadian PMPAs is equal to the market value while a deposit is outstanding, and the cash cost thereafter is correct. The Company has filed Notices of Objection and paid 50% of the disputed amounts in order to challenge the Domestic Reassessments.
If CRA were to apply the methodology in the Domestic Reassessments to taxation years subsequent to 2015, the Company estimates that losses would arise that could be carried back to reduce tax and interest relating to the Domestic Reassessments to approximately $2 million.
CanadianShareholder Class Action
During July 2015, the Company disclosed that the CRA was proposing that they would issue notices of reassessment for federal and provincial tax, transfer pricing penalties, interest and other penalties for the 2005-2010 taxation years (the “Reassessments”). By Notice of Action dated August 10, 2016 (as amended September 2, 2016 and supplemented by Statement of Claim filed September 9, 2016 (collectively, the “Claim”)), proposed representative plaintiff Suzan Poirier commenced proceedings pursuant to the Class Proceedings Act (Ontario) in the Ontario Superior Court of Justice against Wheaton Precious Metals Corp., Randy Smallwood, President and Chief Executive Officer and Gary Brown, Senior Vice President & Chief Financial Officer. The Claim alleges, among other things, misrepresentation pursuant to primary and secondary market civil liability provisions under the Securities Act (Ontario) and its provincial equivalents, common law negligence and negligent misrepresentation. The claim focuses on the Reassessments. The Claim purports to be brought on behalf of proposed a class of persons and entities who acquired common shares of Wheaton Precious Metals Corp. between August 14, 2013 and July 6, 2015 and held some or all of such common shares as of at least July 6, 2015. On July 21, 2020, the Company received a motion record in support of a proposed motion seeking the following (among other relief): (i) leave of the court to commence a secondary market action pursuant to section 138.3(1) of the Securities Act (Ontario) and equivalent provisions in the applicable provincial securities statutes: (ii) certification of the (amended) class and proposed common issues; (iii) leave to file an amended Statement of Claim to include further particulars and to refer to various provincial securities laws; and (iv) the appointment of a new class representative (Ms. Miriam Rosenszajn) in place of Ms. Poirier. It is expected that the certification and leave motions will be jointly heard in October 2021.
The Company believes that the allegations are without merit and intends to vigorously defend against this matter. No amounts have been recorded for potential liability arising from this claim as no value has been specified in the statement of claim and the Company cannot reasonably predict the outcome.
TaxContingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including audits and disputes.
Under the terms of the 2018 settlement with the CRA of the transfer pricing dispute relating to the 2005-2010 taxation years (“CRA Settlement”), income earned outside of Canada by the Company’s foreign subsidiaries will not be subject to income tax in Canada under transfer pricing rules. The CRA Settlement principles apply to all taxation years after 2010 subject to there being no material change in facts or change in law or jurisprudence.
It is not known or determinable by the Company when any ongoing audits by CRA of international and domestic transactions will be completed, or whether reassessments will be issued, or the basis, quantum or timing of any such potential reassessments, and it is therefore not practicable for the Company to estimate the financial effect, if any, of any ongoing audits. From time to time there may also be proposed legislative changes to law or outstanding legal actions that may have an impact on applicable law or jurisprudence, the outcome, applicability and impact of which is also not known or determinable by the Company.
General
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If the Company is unable to resolve any of these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that the Company’s estimate of the future resolution of any of the foregoing matters changes, the Company will recognize the effects of the change in its consolidated financial statements in the appropriate period relative to when such change occurs.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [79]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 26. | Segmented Information |
|---|
Operating Segments
The Company’s reportable operating segments, which are the components of the Company’s business where discrete financial information is available and which are evaluated on a regular basis by the Company’s Chief Executive Officer (“CEO”), who is the Company’s chief operating decision maker, for the purpose of assessing performance, are summarized in the tables below:
| Three Months Ended March 31, 2021 | ||||||||||||||||||||||||
| Sales | Cost<br><br><br>of Sales | Depletion | Net<br><br><br>Earnings | Cash Flow<br><br><br>From<br> <br>Operations | Total<br><br><br>Assets | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||
| Salobo | $ | 92,356 | $ | 21,193 | $ | 19,217 | $ | 51,946 | $ | 71,163 | $ | 2,490,127 | ||||||||||||
| Sudbury ^1^ | 6,688 | 1,476 | 3,781 | 1,431 | 5,219 | 317,235 | ||||||||||||||||||
| Constancia | 3,010 | 684 | 528 | 1,798 | 2,326 | 105,041 | ||||||||||||||||||
| San Dimas | 18,450 | 6,288 | 3,311 | 8,851 | 12,162 | 178,891 | ||||||||||||||||||
| Stillwater | 5,521 | 1,011 | 1,220 | 3,290 | 4,510 | 223,090 | ||||||||||||||||||
| Other<br>^2^ | 9,000 | 3,122 | - | 5,878 | 5,855 | 7,591 | ||||||||||||||||||
| Total gold interests | $ | 135,025 | $ | 33,774 | $ | 28,057 | $ | 73,194 | $ | 101,235 | $ | 3,321,975 | ||||||||||||
| Silver | ||||||||||||||||||||||||
| Peñasquito | $ | 56,983 | $ | 9,328 | $ | 7,715 | $ | 39,940 | $ | 47,655 | $ | 342,857 | ||||||||||||
| Antamina | 50,581 | 9,990 | 14,533 | 26,058 | 40,591 | 612,401 | ||||||||||||||||||
| Constancia | 9,072 | 2,084 | 2,616 | 4,372 | 6,988 | 214,428 | ||||||||||||||||||
| Other<br>^3^ | 57,247 | 20,758 | 13,900 | 22,589 | 39,098 | 612,237 | ||||||||||||||||||
| Total silver interests | $ | 173,883 | $ | 42,160 | $ | 38,764 | $ | 92,959 | $ | 134,332 | $ | 1,781,923 | ||||||||||||
| Palladium | ||||||||||||||||||||||||
| Stillwater | $ | 12,275 | $ | 2,191 | $ | 2,271 | $ | 7,813 | $ | 10,084 | $ | 239,118 | ||||||||||||
| Cobalt | ||||||||||||||||||||||||
| Voisey’s Bay | $ | 2,936 | $ | 658 | $ | 1,081 | $ | 1,197 | $ | (966) | $ | 225,348 | ||||||||||||
| Total mineral stream interests | $ | 324,119 | $ | 78,783 | $ | 70,173 | $ | 175,163 | $ | 244,685 | $ | 5,568,364 | ||||||||||||
| Other | ||||||||||||||||||||||||
| General and administrative | $ | (11,971) | $ | (13,592) | ||||||||||||||||||||
| Finance costs | (1,573) | (1,229) | ||||||||||||||||||||||
| Other | (119) | 2,321 | ||||||||||||||||||||||
| Income tax | 502 | (31) | ||||||||||||||||||||||
| Total other | $ | (13,161) | $ | (12,531) | $ | 360,048 | ||||||||||||||||||
| Consolidated | $ | 162,002 | $ | 232,154 | $ | 5,928,412 | ||||||||||||||||||
| 1) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Where a gold interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value and<br>is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the gold interest has been summarized under Other gold interests. Other gold interests are comprised of the operating 777, Minto and Marmato gold<br>interests and the non-operating Rosemont gold interest. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Where a silver interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value<br>and is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the silver interest has been summarized under Other silver interests. Other silver interests are comprised of the operating Los Filos,<br>Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto, Keno Hill, Cozamin, Marmato and 777 silver interests and the non-operating Loma de La Plata, Pascua-Lama and Rosemont silver interests.<br> | |||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [80]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| Three Months Ended March 31, 2020 | ||||||||||||||||||||||||
| Sales | Cost<br><br><br>of Sales | Depletion | Net<br><br><br>Earnings | Cash Flow<br><br><br>From<br> <br>Operations | Total<br><br><br>Assets | |||||||||||||||||||
| (in thousands) | ||||||||||||||||||||||||
| Gold | ||||||||||||||||||||||||
| Salobo | $ | 119,094 | $ | 30,580 | $ | 28,055 | $ | 60,459 | $ | 89,137 | $ | 2,577,202 | ||||||||||||
| Sudbury ^1^ | 7,641 | 1,929 | 3,993 | 1,719 | 5,616 | 340,050 | ||||||||||||||||||
| Constancia | 5,294 | 1,346 | 1,125 | 2,823 | 3,948 | 109,281 | ||||||||||||||||||
| San Dimas | 18,049 | 6,882 | 3,580 | 7,587 | 11,166 | 190,787 | ||||||||||||||||||
| Stillwater | 5,578 | 996 | 1,576 | 3,006 | 4,582 | 228,418 | ||||||||||||||||||
| Other<br>^2^ | 3,866 | 1,026 | 744 | 2,096 | 2,840 | 12,424 | ||||||||||||||||||
| Total gold interests | $ | 159,522 | $ | 42,759 | $ | 39,073 | $ | 77,690 | $ | 117,289 | $ | 3,458,162 | ||||||||||||
| Silver | ||||||||||||||||||||||||
| Peñasquito | $ | 40,223 | $ | 9,840 | $ | 7,490 | $ | 22,893 | $ | 30,383 | $ | 367,212 | ||||||||||||
| Antamina | 21,661 | 4,264 | 10,873 | 6,524 | 17,397 | 657,937 | ||||||||||||||||||
| Constancia | 6,088 | 2,084 | 2,667 | 1,337 | 4,004 | 225,520 | ||||||||||||||||||
| Other<br>^3^ | 15,945 | 5,975 | 2,625 | 7,345 | 14,127 | 485,068 | ||||||||||||||||||
| Total silver interests | $ | 83,917 | $ | 22,163 | $ | 23,655 | $ | 38,099 | $ | 65,911 | $ | 1,735,737 | ||||||||||||
| Palladium | ||||||||||||||||||||||||
| Stillwater | $ | 11,350 | $ | 1,986 | $ | 2,113 | $ | 7,251 | $ | 9,364 | $ | 247,856 | ||||||||||||
| Cobalt | ||||||||||||||||||||||||
| Voisey’s Bay | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 227,510 | ||||||||||||
| Total mineral stream interests | $ | 254,789 | $ | 66,908 | $ | 64,841 | $ | 123,040 | $ | 192,564 | $ | 5,669,265 | ||||||||||||
| Other | ||||||||||||||||||||||||
| General and administrative | $ | (13,181) | $ | (10,732) | ||||||||||||||||||||
| Finance costs | (7,118) | (8,110) | ||||||||||||||||||||||
| Other | 597 | 3,777 | ||||||||||||||||||||||
| Income tax | (8,442) | 89 | ||||||||||||||||||||||
| Total other | $ | (28,144) | $ | (14,976) | $ | 407,676 | ||||||||||||||||||
| Consolidated | $ | 94,896 | $ | 177,588 | $ | 6,076,941 | ||||||||||||||||||
| 1) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 2) | Where a gold interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value and<br>is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the gold interest has been summarized under Other gold interests. Other gold interests are comprised of the operating 777 and Minto gold<br>interests and the non-operating Rosemont gold interest. | |||||||||||||||||||||||
| --- | --- | |||||||||||||||||||||||
| 3) | Where a silver interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value<br>and is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the silver interest has been summarized under Other silver interests. Other silver interests are comprised of the operating Los Filos,<br>Zinkgruvan, Yauliyacu, Stratoni, Aljustrel, Neves-Corvo, Minto, and 777 silver interests and the non-operating Keno Hill, Loma de La Plata, Pascua-Lama and Rosemont silver interests. | |||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [81]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
Geographical Areas
The Company’s geographical information, which is based on the location of the mining operations to which the mineral stream interests relate, are summarized in the tables below:
| Carrying Amount at March 31, 2021 | |||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Sales:<br><br><br>Three Months<br> <br>Ended<br><br><br>Mar 31, 2021 | Gold<br><br><br>Interests | Silver<br><br><br>Interests | Palladium<br><br><br>Interests | Cobalt<br><br><br>Interests | Total | |||||||||||||||||
| North America | |||||||||||||||||||||||
| Canada | $ | 20,876 | 6% | $ | 324,762 | $ | 28,382 | $ | - | $ | 225,348 | $ | 578,492 | 10% | |||||||||
| United States | 17,796 | 5% | 223,090 | 566 | 239,118 | - | 462,774 | 8% | |||||||||||||||
| Mexico | 80,666 | 25% | 178,889 | 492,528 | - | - | 671,417 | 12% | |||||||||||||||
| Europe | |||||||||||||||||||||||
| Greece | 2,941 | 1% | - | - | - | - | - | 0% | |||||||||||||||
| Portugal | 12,802 | 4% | - | 19,929 | - | - | 19,929 | 0% | |||||||||||||||
| Sweden | 7,444 | 2% | - | 32,565 | - | - | 32,565 | 1% | |||||||||||||||
| South America | |||||||||||||||||||||||
| Argentina/Chile ^1^ | - | 0% | - | 253,514 | - | - | 253,514 | 5% | |||||||||||||||
| Argentina | - | 0% | - | 10,889 | - | - | 10,889 | 0% | |||||||||||||||
| Chile | - | 0% | 65 | - | - | - | 65 | 0% | |||||||||||||||
| Brazil | 92,356 | 28% | 2,490,128 | - | - | - | 2,490,128 | 45% | |||||||||||||||
| Peru | 89,238 | 29% | 105,041 | 943,169 | - | - | 1,048,210 | 19% | |||||||||||||||
| Colombia | - | 0% | - | 381 | - | - | 381 | 0% | |||||||||||||||
| Consolidated | $ | 324,119 | 100% | $ | 3,321,975 | $ | 1,781,923 | $ | 239,118 | $ | 225,348 | $ | 5,568,364 | 100% | |||||||||
| 1) | Includes the Pascua-Lama project, which straddles the border of Argentina and Chile. | ||||||||||||||||||||||
| --- | --- | ||||||||||||||||||||||
| Carrying Amount at March 31, 2020 | |||||||||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in thousands) | Sales:<br><br><br>Three Months<br> <br>Ended<br><br><br>Mar 31, 2020 | Gold<br><br><br>Interests | Silver<br><br><br>Interests | Palladium<br><br><br>Interests | Cobalt<br><br><br>Interests | Total | |||||||||||||||||
| North America | |||||||||||||||||||||||
| Canada | $ | 12,238 | 5% | $ | 352,475 | $ | 31,956 | $ | - | $ | 227,510 | $ | 611,941 | 11% | |||||||||
| United States | 16,928 | 7% | 228,418 | 566 | 247,856 | - | 476,840 | 8% | |||||||||||||||
| Mexico | 58,919 | 22% | 190,787 | 368,520 | - | - | 559,307 | 10% | |||||||||||||||
| Europe | |||||||||||||||||||||||
| Greece | 2,223 | 1% | - | 428 | - | - | 428 | 0% | |||||||||||||||
| Portugal | 5,096 | 2% | - | 21,072 | - | - | 21,072 | 0% | |||||||||||||||
| Sweden | 7,092 | 3% | - | 34,487 | - | - | 34,487 | 1% | |||||||||||||||
| South America | |||||||||||||||||||||||
| Argentina/Chile ^1^ | - | 0% | - | 264,403 | - | - | 264,403 | 5% | |||||||||||||||
| Brazil | 119,094 | 47% | 2,577,202 | - | - | - | 2,577,202 | 45% | |||||||||||||||
| Peru | 33,199 | 13% | 109,280 | 1,014,305 | - | - | 1,123,585 | 20% | |||||||||||||||
| Consolidated | $ | 254,789 | 100% | $ | 3,458,162 | $ | 1,735,737 | $ | 247,856 | $ | 227,510 | $ | 5,669,265 | 100% | |||||||||
| 1) | Includes the Pascua-Lama project, which straddles the border of Argentina and Chile. | ||||||||||||||||||||||
| --- | --- |
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [82]
Notes to the Condensed Interim Consolidated Financial Statements
Three Months Ended March 31, 2021 (US Dollars)
| 27. | Subsequent Events |
|---|
Declaration of Dividend
Under the Company’s dividend policy, the quarterly dividend per common share is targeted to equal approximately 30% of the average cash flow 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 $0.13 per common share for the duration of 2021. The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors.
On May 6, 2021, the Board of Directors declared a dividend in the amount of $0.14 per common share, with this dividend being payable to shareholders of record on May 21, 2021 and is expected to be distributed on or about June 3, 2021. The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares at a discount of 1% of the Average Market Price, as defined in the DRIP.
WHEATON PRECIOUS METALS 2021 FIRST QUARTER REPORT [83]
CORPORATE
INFORMATION
| CANADA – HEAD OFFICE | TRANSFER AGENT | |
|---|---|---|
| WHEATON PRECIOUS METALS CORP. | AST Trust Company | |
| Suite 3500 | 1600 – 1066 West Hastings Street | |
| 1021 West Hastings Street | Vancouver, BC V6E 3X1 | |
| Vancouver, BC V6E 0C3 | ||
| Canada | Toll-free in Canada and the United States: | |
| T: 1 604 684 9648 | 1 800 387 0825 | |
| F: 1 604 684 3123 | ||
| Outside of Canada and the United States: | ||
| CAYMAN ISLANDS OFFICE | 1 416 682 3860 | |
| Wheaton Precious Metals International Ltd. | ||
| Suite 300, 94 Solaris Avenue | E: inquiries@canstockta.com | |
| Camana Bay | ||
| P.O. Box 1791 GT, Grand Cayman | AUDITORS | |
| Cayman Islands KY1-1109 | Deloitte LLP | |
| Vancouver, BC | ||
| STOCK EXCHANGE LISTING | ||
| Toronto Stock Exchange: WPM | INVESTOR RELATIONS | |
| New York Stock Exchange: WPM | ||
| London Stock Exchange: LSE | PATRICK DROUIN | |
| Senior Vice President, Investor Relations | ||
| DIRECTORS | T: 1 604 684 9648 | |
| GEORGE BRACK | TF: 1 800 380 8687 | |
| JOHN BROUGH | E: info@wheatonpm.com | |
| PETER GILLIN | ||
| CHANTAL GOSSELIN | ||
| DOUGLAS HOLTBY, Chairman | ||
| GLENN IVES | ||
| CHARLES JEANNES | ||
| EDUARDO LUNA | ||
| MARILYN SCHONBERNER | ||
| RANDY SMALLWOOD | ||
| OFFICERS | ||
| RANDY SMALLWOOD | ||
| President & Chief Executive Officer | ||
| CURT BERNARDI | ||
| Senior Vice President, | ||
| Legal & Corporate Secretary | ||
| GARY BROWN | ||
| Senior Vice President | ||
| & Chief Financial Officer | ||
| PATRICK DROUIN | ||
| Senior Vice President, | ||
| Investor Relations | ||
| HAYTHAM HODALY | ||
| Senior Vice President, | ||
| Corporate Development |
EX-99.3
Exhibit 99.3
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULLCERTIFICATE
I, Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim<br>filings”) of Wheaton Precious Metals Corp. (the “issuer”) for the interim period ended March 31, 2021. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings<br>do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period<br>covered by the interim filings. |
| --- | --- |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial<br>report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented<br>in the interim filings. |
| --- | --- |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and<br>maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure inIssuers’ Annual and Interim Filings, for the issuer. |
| --- | --- |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other<br>certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| --- | --- |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that<br> |
| --- | --- |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the<br>interim filings are being prepared; and |
| --- | --- |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or<br>submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| --- | --- |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the<br>reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| --- | --- |
- 2
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to<br>design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. |
|---|---|
| 5.2 | N/A |
| --- | --- |
| 5.3 | N/A |
| --- | --- |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the<br>issuer’s ICFR that occurred during the period beginning on January 1, 2021 and ended on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| --- | --- |
| Date: May 6, 2021 | |
| --- | --- |
| /s/ Randy Smallwood | |
| Name: | Randy Smallwood |
| Title: | President and Chief Executive Officer |
EX-99.4
Exhibit 99.4
FORM 52-109F2
CERTIFICATION OF INTERIM FILINGS
FULLCERTIFICATE
I, Gary Brown, Senior Vice President and Chief Financial Officer of Wheaton Precious Metals Corp., certify the following:
| 1. | Review: I have reviewed the interim financial report and interim MD&A (together, the “interim<br>filings”) of Wheaton Precious Metals Corp. (the “issuer”) for the interim period ended March 31, 2021. |
|---|---|
| 2. | No misrepresentations: Based on my knowledge, having exercised reasonable diligence, the interim filings<br>do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period<br>covered by the interim filings. |
| --- | --- |
| 3. | Fair presentation: Based on my knowledge, having exercised reasonable diligence, the interim financial<br>report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented<br>in the interim filings. |
| --- | --- |
| 4. | Responsibility: The issuer’s other certifying officer(s) and I are responsible for establishing and<br>maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in National Instrument 52-109 Certification of Disclosure inIssuers’ Annual and Interim Filings, for the issuer. |
| --- | --- |
| 5. | Design: Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer’s other<br>certifying officer(s) and I have, as at the end of the period covered by the interim filings |
| --- | --- |
| (a) | designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that<br> |
| --- | --- |
| (i) | material information relating to the issuer is made known to us by others, particularly during the period in which the<br>interim filings are being prepared; and |
| --- | --- |
| (ii) | information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or<br>submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and |
| --- | --- |
| (b) | designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the<br>reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer’s GAAP. |
| --- | --- |
- 2
| 5.1 | Control framework: The control framework the issuer’s other certifying officer(s) and I used to<br>design the issuer’s ICFR is Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. |
|---|---|
| 5.2 | N/A |
| --- | --- |
| 5.3 | N/A |
| --- | --- |
| 6. | Reporting changes in ICFR: The issuer has disclosed in its interim MD&A any change in the<br>issuer’s ICFR that occurred during the period beginning on January 1, 2021 and ended on March 31, 2021 that has materially affected, or is reasonably likely to materially affect, the issuer’s ICFR. |
| --- | --- |
| Date: May 6, 2021 | |
| --- | --- |
| /s/ Gary Brown | |
| Name: | Gary Brown |
| Title: | Senior Vice President and Chief Financial Officer |