Earnings Call Transcript - WPM Q1 2025

Operator, Operator

Good morning ladies and gentlemen. Thank you for standing by. Welcome to the Wheaton Precious Metals 2025 First Quarter Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. Thank you. I would like to remind everyone that this conference call is being recorded on Friday, May 9th, 2025 at 11 A.M. Eastern Time. I will now turn the conference over to Emma Murray, Vice President of Investor Relations. Please go ahead.

Emma Murray, Vice President of Investor Relations

Thank you, Andrew. Good morning ladies and gentlemen and thank you for participating in today's call. I'm joined today by Randy Smallwood, Wheaton Precious Metals' President and Chief Executive Officer; Vincent Lau, Senior Vice President and Chief Financial Officer; Haytham Hodaly, Senior Vice President, Corporate Development; and Wes Carson, Vice President, Mining Operations. Please note for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the Presentations' page of our website. Some of the comments on today's call may include forward-looking statements. Please refer to Slide 2 for important cautionary information and disclosures. It should be noted that all figures referred to on today's call are in U.S. dollars. With that, I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Randy Smallwood, CEO

Thank you, Emma and good morning everyone. Thank you for joining us today to discuss Wheaton's first quarter results of 2025. Before we begin, I would like to take a moment to honor founding Board member Peter Gillin, who passed away last week. As our longest-serving Director, Peter played a pivotal role in shaping Wheaton into the company that it is today. His unwavering integrity, strategic vision, and deep commitment left a lasting impact on all of us. More than a respected leader, Peter was a trusted colleague and a very dear friend. On behalf of the Board of Directors, management, and staff, we extend our heartfelt condolences to Peter's family and loved ones during this difficult time. I'd now like to turn back to our quarterly results, which marked a very strong start to the year. As several of our core assets exceeded production expectations, we delivered record quarterly revenue, adjusted net earnings, and operating cash flow. Looking ahead 2025 is shaping up to be a catalyst-rich year with four development projects scheduled to come online over the course of this year. Notably, the Blackwater Mine, owned by Artemis Gold achieved its first gold and silver pour in January and just last week announced commercial production. Our corporate development team remains actively engaged in evaluating new opportunities and we continue to see a healthy appetite for streaming as a competitive source of capital for the mining industry. During the quarter, we were once again recognized among Corporate Knight's 100 Most Sustainable Corporations in the World for 2025, a multi-sector accolade that we are very proud of. Founders and architects of sustainable streaming, this accomplishment is reflective of our continuing commitment to operate responsibly in all facets of our business. This includes our work to help build healthy vibrant communities through purposeful investments wherever our partners' stream-related operations are located. Following the success of Wheaton's inaugural Future of Mining Challenge, an initiative that seeks to support the mining industry to become more efficient while minimizing its environmental impact. I am pleased to announce the theme, the 2025-2026 initiative will focus on sustainable water management, an exceptionally important component for any mining operation. The company will begin receiving expressions of interest next month. So please stay tuned for further details. And with that, I would now like to turn the call over to Wes Carson, our Vice President of Operations, who will provide more details on our operating results. Wes?

Wes Carson, Vice President of Operations

Thanks, Randy, and good morning, everyone. Overall production in the first quarter came in higher than expected, primarily driven by strong outperformance at Salobo. In the first quarter of 2025, Salobo delivered over 71,300 ounces of attributable gold production, an increase of approximately 16% compared to Q1 2024. This was primarily driven by higher throughput and grades. Strong overall performance this quarter reflects the ongoing ramp-up of the Salobo III expansion and continued operational improvements at Salobo 1 and 2. On March 4, 2025, Vale Base Metals informed us that the second phase of the Salobo III expansion had been completed, having achieved a sustained throughput capacity of over 35 million tonnes per annum over a 90-day period. Following our review of the test results, Wheaton advanced the final expansion payment of $144 million to Vale Base Metals in early April. Constancia produced over 550,000 ounces of attributable silver and 4,900 ounces of attributable gold in Q1 of 2025, a decrease of approximately 13% and 65%, respectively, compared to Q1 2024. The reduction to gold and silver production was expected and due mainly to lower grades as ore material was mined from the Constancia pit and reclaimed from the stockpile compared to the prior year. Pampacancha deposit, which contains relatively higher gold grades is expected to be depleted by early 2025. As Randy stated, we were excited to see the Blackwater announce the first gold pour and silver in the first quarter, resulting in attributable production of 1,000 ounces of gold and 35,000 ounces of silver. Most recently, on May 2, Artemis declared that commercial production had been achieved at the Blackwater mine, delivering in excess of 90% of its planned tonnage. Production is expected to increase throughout the year as Artemis continues to ramp up. The production outlook for 2025 remains unchanged with total attributable production expected to fall between 600,000 and 670,000 gold equivalent ounces. Production is forecast to be consistent at Salobo through the remainder of 2025 with slightly lower grades as per the mine plan, offset by increasing throughput across Salobo 1, 2, and 3. Production at Antamina is forecast to increase over the remainder of the year due to expected higher silver grades caused by the ratio of copper zinc ore versus copper-only ore being 2025. Production from Mineral Park, Goose and Platreef continues to be forecast for the second half of 2025 with construction at these assets proceeding in line with expectations. Looking ahead, we project annual production to grow at an industry-leading rate of approximately 40%, reaching 870,000 GEOs by 2029. This growth will come from operating assets, including Antamina and Blackwater with additional contributions from development projects that are currently under construction and/or permitted, such as Mineral Park, Goose, Platreef, Kurmuk, Kone, Fenix, El Domo and Copper World. Furthermore, attributable production is forecast to average over 950,000 GEOs from 2030 to 2034, incorporating expected additional incremental production from these predevelopment assets. That concludes the operational review. And with that, I will turn the call over to Vincent.

Vincent Lau, CFO

Thank you. As described by Wes, production in Q1 was 151,000 GEOs, a 4% decrease from Q1 of 2024 due mainly to the lower production from Peñasquito and Constancia partially offset by higher production from Salobo and Antamina. Sales volumes were 161,000 GEOs, an increase of 16% from Q1 of 2024, as strong production levels in Q4 of 2024 resulted in an increase in sales realized in Q1 of 2025, due to the inherent timing delay between production and sales. As at March 31, 2025, approximately 136,000 GEOs were produced but not yet delivered or PBND, which represents approximately three months of payable production. The company expects PBND levels to stay at the higher end of our forecasted range of two to three months by the end of 2025, in part due to the ramp-up of new mines, forecast to commence operations in the second half of the year. Strong commodity prices coupled with our strong production resulted in record quarterly revenue of $470 million, an increase of 59% compared to the prior year. With the increase due mainly to a 36% increase in realized commodity prices, coupled with the 16% increase in sales volume. Gross margin increased by 86% compared to the prior year to $319 million. Notably, year-over-year margin growth exceeded the appreciation in gold prices over the same period, underscoring the effectiveness of our business model and leveraging rising commodity prices while maintaining strong cash operating margins. Adjusted net earnings amounted to $251 million, representing a quarterly record, and an increase of 53% compared to the prior year. Wheaton delivered robust cash operating margins in the first quarter, resulting in record quarterly cash flow from operations of $361 million, an increase of 65% compared to the prior year, and declared a dividend of $0.165 per share, an increase of 6.5% compared to the prior year. For 2025, the company continues to expect that G&A expenses will amount to approximately $50 million. During the quarter, Wheaton paid total upfront cash payments for streams of approximately $95 million, including $40 million from Mineral Park, $30 million for Blackwater, and $25 million for Fenix. Overall, net cash inflows amounted to $267 million in the quarter, resulting in a cash balance of $1.1 billion at March 31. This cash balance combined with a fully undrawn $2 billion revolving credit facility positions the company exceptionally well to satisfy its funding commitments and acquire additional accretive streams. That concludes the financial summary. And with that, I turn the call back to Randy.

Randy Smallwood, CEO

Thank you, Vincent. In summary, the first quarter was a very strong start for the year for Wheaton, distinguished by several key highlights. We achieved record three month revenue, earnings, and cash flow, and declared a $0.165 quarterly dividend, a 6.5% increase from Q1 of 2024. Our pipeline of development projects was further de-risked by construction advancements from multiple assets scheduled to come online within a year, further supporting our impressive anticipated organic growth profile of over 40% by 2029. We continue to maintain low and predictable costs which when coupled with our leverage to increasing commodity prices resulted in some of the highest margins in the entire precious metals space. Our balance sheet also remains strong providing ample capacity to add accretive high-quality streams into our portfolio. And lastly, we take pride in being a leader amongst precious metal streamers in sustainability by supporting our partners and the communities in which we live and operate. So with that, operator, I would like to open up this call for questions.

Operator, Operator

Your first question is from Cosmos Chiu from CIBC. Please go ahead.

Cosmos Chiu, Analyst

Thanks, Randy and team, and welcome, Vincent. Congratulations on achieving record earnings for Q1. My first question concerns the sales versus production figures. Vincent, you noted that production was 151,000 ounces, and sales were actually higher. Typically, production exceeds sales, so I’m curious if there's any indication of future trends, or if this reflects past performance. You mentioned that PBND has been consistent, so I'm looking to confirm whether we should expect sales and production to remain fairly aligned moving forward.

Vincent Lau, CFO

Yes. So on a production basis, we're a bit back-end loaded this year in terms of the production levels. So being at the higher end of the range that we are forecasting throughout the year, you would expect some pickup in the PBND. So about three months is what we're forecasting. So I think you're right. You're going to see production levels being at similar levels as sales, but factoring in this PBND movement.

Randy Smallwood, CEO

Cosmos, to add to that, we had a strong fourth quarter, but the overproduction came from Salobo, which deals with copper concentrates. These concentrates typically take longer to be sold because they need to be shipped overseas and go through smelting and refining. As shown in the presentation charts, our production is primarily gold, and most of our gold actually comes from copper concentrates from the mines. Consequently, the high production at Salobo in the fourth quarter is expected to positively impact sales in the first quarter since the concentrate takes time to process. This sets up a scenario where gold production is favored because the majority of it comes from copper assets, pushing us closer to the three-month timeline for sales, while our silver, mainly from Dore, can usually be converted to sales in about two months.

Cosmos Chiu, Analyst

That's right. Thanks, Randy. Maybe that leads in well to my next question here, Salobo. You made the final payment on the expansion of $144 million on April 4, 2025. However, that might not be the last payment. I believe there could be a potential to make additional payments of $5.1 million to $8.5 million annually if they pursue a high-grade mine plan. Any updates on the possibility of needing to make that payment? Or any insights on the high-grade mine plan?

Haytham Hodaly, Senior Vice President, Corporate Development

Thanks, Cosmos. They are working on that high-grade mine plan. It really is a higher throughput higher movement that they need from the mine is the main kind of factoring that along with a higher copper grade from the miner consistently higher copper grade from the mine. So Salobo has been working towards that over the last several years. It's not imminent that we're going to hit those levels. So we continue to monitor it with Vale Base Metals and we'll continue to speak to them about it, but I don't see that happening within the next year or so certainly.

Cosmos Chiu, Analyst

For sure. And then Wes or Randy, I saw in your longer-term growth profile you've included CopperWorld. Could you maybe give us an update on CopperWorld? Is that now considered fully "permitted" because I was reading up on your PMPA once again I guess it says $50 million could be advanced upon Hudbay's receipt of permitting. And so I guess number one timing? Number two is it considered fully permitted? And number three, this is a negotiation that was completed many years ago for $230 million. Any kind of potential changes to that number?

Randy Smallwood, CEO

Yes, it's not a negotiation. This contract was signed many years ago and is currently in place. No money will be advanced until Hudbay not only obtains all necessary permits, which they currently have, but also secures proper financing that demonstrates their capacity to build the project and begins construction. Therefore, payments from us will not occur until these conditions are met. In our current five-year guidance, we may have this timeline at the very end, but it won't significantly affect our production goals related to the 40% growth. We estimate this could be five to six years out, although I hope Hudbay can expedite the process. It’s an impressive project, and the Rosemont and CopperWorld areas represent a collective zone that stems from successful exploration efforts we initiated around 15 years ago, which has now become the main resource for CopperWorld. Hudbay is an important partner, and we continually seek ways to support them while ensuring value. There's been much discussion in the market regarding the future of this, and while we have a contract in place, we are eager to collaborate with Hudbay to move things forward. Currently, it seems their focus is on finding a joint venture partner to help mitigate some of the capital expenses tied to this project, and we are looking forward to assisting them.

Cosmos Chiu, Analyst

So Randy, I guess your advancement of any payment will not happen until a joint venture partnership or joint venture partners is in place?

Randy Smallwood, CEO

We can start down that path if they choose to do so. If they decide against it, all that's needed is a financial plan that meets our satisfaction regarding funding. They have the option to pursue this with a joint venture partner or keep 100% ownership of the asset by handling it internally. It's an impressive asset, and while I don't fully understand the reasoning behind outsourcing capital to facilitate the project's construction, it's not dependent on finding a joint venture partner but rather on having a satisfactory financial plan.

Cosmos Chiu, Analyst

Great. And then maybe one last question switching gears a little bit on Cobalt, not the biggest part of your portfolio. But I noticed that the production has increased kind of makes sense, given that they're ramping up. So two parts of my question. I guess number one it's – a 540,000 pounds now in Q1. Is that going to continue to increase, number one? And number two, I noticed that shipping or sales was only about half of that 540,000 pounds. And it's always lumpy. So again how should we model the shipment or sales which in turn affects earnings?

Wes Carson, Vice President of Operations

Thanks, Cosmos. So they did have an exceptional first quarter there. For the rest of the year here we're forecasting really slightly lower than that but kind of consistently in more of that kind of 450,000-pound a quarter kind of range. And really the sales are very lumpy on that one and it's really just because of the shipments on that. They go over to Europe and we get paid kind of at that point when they go over there. So there is quite a lag in that, and we will see those sales start to catch up over this quarter with that production. So it's been a great ramp-up there over the last really 18 months. They did announce that they completed earlier this year as well the underground and they are at full production on those. So it's been a long project to get it going. It's the worst water in our portfolio that got affected by COVID for sure. So it's great to see them up and running and getting that consistent high-volume production out of there.

Cosmos Chiu, Analyst

Yes. And I forget, Wes. Its 2 million pounds in annum. Is that what they're aiming for after the expansion – I don't remember.

Wes Carson, Vice President of Operations

Yes. Yes, to our job, yes in that range. That's to our account.

Cosmos Chiu, Analyst

To your account, yes, for sure. Cool. Thanks, Randy, Wes, and Vincent. Thanks for answering all my questions and have a good week.

Randy Smallwood, CEO

Thank you, Cosmos.

Operator, Operator

Your next question comes from Daniel Major from UBS. Please go ahead.

Daniel Major, Analyst

Hi. Thanks so much for the questions. So yes, a couple to start with the Antamina has had some downtime this quarter. Can you provide any feedback you might have had from the joint venture and potential impacts it might have on the profile in the second quarter or indeed the full year?

Wes Carson, Vice President of Operations

Thanks, Daniel. So we did have – obviously, a very unfortunate incident there this past month ago now. So – and really it's one of those things that we have been in contact with the partner on it and it's very, very unfortunate to see those types of things happen. We keep a very close eye on the safety record of all of our operations certainly. They were down for about 36 hours due to the incident. We don't expect it to affect production for the year at all. We are actually heading down the site in a couple of weeks here. So we'll get a good idea of what things look like for the rest of the year after that but at this point don't expect any change to our current forecast.

Daniel Major, Analyst

Thanks for that. I wanted to follow up on Antamina. What are your expectations for the changes in the mine plan for 2026-2027 compared to where we currently stand with Antamina?

Wes Carson, Vice President of Operations

We are seeing a fairly significant ramp up this year as they move back into those copper-zinc zones, which have quite a bit higher silver in them than what we've seen in the last couple of years. And we do expect that to continue through 2026 and 2027 as well. They have moved that primary crusher out at the bottom of the pit now and there was quite a bit of high grade that was tied up with that. So they are moving into really higher grade silver zones over the next couple of years, which is why you do see that ramp up in production.

Daniel Major, Analyst

Great. Thanks. And then the next question, I appreciate it's associated with the movement in the share price, but you booked $12 million of share-based compensation this quarter. How is the distribution through the year? And if shares stay the same here should we expect a similar run rate? Or how should we be modeling that line item?

Vincent Lau, CFO

Yeah. $1 million this quarter is really driven by the share price outperformance. Run rate on the PSU side will be around $3 million to $4 million going forward per quarter.

Daniel Major, Analyst

You reported $1 million this quarter due to the share price outperformance. Going forward, we anticipate a run rate of approximately $3 million to $4 million each quarter. Additionally, you have $1.1 billion on the balance sheet. While you're likely exploring opportunities, is there any possibility of considering interim distributions or adjusting cash return structures if prices remain at current levels? Or is the plan to continue accumulating cash while seeking deals?

Haytham Hodaly, Senior Vice President, Corporate Development

Maybe I'll take that question Daniel. This is Haytham. Thanks for the question. I will say that given the number of opportunities that we have in the pipeline right now, it's definitely double digit and we're seeing a lot of different development stage opportunities looking for funding. We're seeing higher commodity prices prompting the sale of existing secondary royalties. We're seeing balance sheet repair opportunities and we're also seeing rationalization of assets by larger seniors. So there are so many opportunities right now for the potential expenditure of capital towards streaming projects and then some larger royalty opportunities as well that we are pretty comfortable with our existing structure.

Randy Smallwood, CEO

Yeah, Daniel, I would just add. I mean this run-up in gold prices and what we've seen is actually really starting to firm up enough that people are starting to make commitments into building. And so what we are seeing a lot of is gold streams on gold mines or silver streams on gold mines. There's lots of activity there. I'd love to see it strengthen in the copper space because there are some pretty promising copper projects out there that are waiting for, I think, a better cost base to make decisions to go into construction but there's definitely a lot of activity on the gold side.

Haytham Hodaly, Senior Vice President, Corporate Development

Just because we've got $1 billion as of the last quarter, keep in mind we've managed to spend almost $900 million a year for the last 10 years. So there are lots of opportunities. It may be a little bumpy; maybe one year is more than the other, but we've never had an issue deploying capital accretively.

Daniel Major, Analyst

Great. Have a great weekend.

Randy Smallwood, CEO

Thanks, Daniel.

Operator, Operator

Your next question is from Tanya Jakusconek from Scotiabank. Please go ahead.

Tanya Jakusconek, Analyst

Yes. Good morning, everybody. And again, my sympathies for Peter. Very sad to see that news.

Randy Smallwood, CEO

Thank you for that, Tanya.

Tanya Jakusconek, Analyst

I’m going to start by saying that many of my questions have already been answered. I just want to follow up on a few points for confirmation. Regarding the distribution for the year, during the last conference call, we discussed a 45%-55% split between the first half and the second half in terms of the production profile. Is that still the case with all the start-ups planned for the latter part of the year?

Wes Carson, Vice President of Operations

Yeah. Thanks. With the strong performance in Q1, we're actually looking at about kind of 47%-53% now, I would say, if you kind of measure it that way. So it's still back-end loaded but a little bit less so than...

Tanya Jakusconek, Analyst

Okay. Depending on price movements, that influences the GEO sales. I understand. So will the PBND align with that 47 to 53 percent?

Wes Carson, Vice President of Operations

Yeah, exactly.

Vincent Lau, CFO

Yeah. We are blessed with the fact that a lot of the new mines that are starting up are producing Doré. And so as that new production does come on, it won't be as long. Now whenever a new mine starts up, you have to get systems in place and such. So there's probably going to be a bit of initial delays in terms of converting that to sales. But yeah, there's not a lot of growth on the concentrate side in our portfolio over the next while, it's mostly in the Doré side.

Tanya Jakusconek, Analyst

Okay. That's good. I want to go back to Copper World and understand what Hudbay is seeking in a financing partner to share some of the risk. I'm trying to clarify if you would consider increasing your exposure to this asset, particularly on a stream basis rather than as a joint venture partner, since you mentioned your support for them.

Wes Carson, Vice President of Operations

We would not participate as a joint venture partner, as that level of risk does not align with our business model. Our value in acquiring streams is to instill confidence in our shareholders. While we won't engage as a joint venture partner, there are opportunities available. One challenge is that we currently have streaming rights for 100% of the gold and silver from this project, which means we're already receiving all of the precious metals. However, we could explore other ways to support the project, such as taking copper as ancillary support to help it progress, even though we've stated we are not focused on copper. Additionally, Hudbay has strong gold production from other assets, presenting another option for us to access additional streams. Hudbay is a diverse company, and we currently have a strong stream from Constancia, though our stream from 777 has not performed well since it is no longer operating. Our relationship with them has been long and productive, and we look forward to further developing it in a supportive capacity. They have a capable operating and management team with a solid track record of successful project execution, as seen with Constancia. Though they are currently exploring a potential joint venture partner to mitigate their risks, we believe they have the capability to proceed without one. Ultimately, it's up to them to determine their path, and we will do everything we can to assist them.

Tanya Jakusconek, Analyst

Thanks for the clarification. I just wanted to ensure that no one is getting involved as an operator. I've seen that situation before. Regarding the operating environment and the deal environment, I appreciate the insights provided. I would like to revisit a couple of points about the current conditions you are observing. Have you noticed any changes in the size of the deals?

Haytham Hodaly, Senior Vice President, Corporate Development

Yes.

Tanya Jakusconek, Analyst

Yes, okay.

Haytham Hodaly, Senior Vice President, Corporate Development

There are still many smaller deals available, but we are starting to see some larger ones. The smaller deals range from $1 million to $350 million, while a few larger deals are now in the range of $500 million to $1 billion. We have a lot of options to consider. However, not every opportunity is suitable for us. We will not engage in anything that compromises the integrity of our model, and we remain cautious about adding growth that enhances value. Please keep this in mind.

Randy Smallwood, CEO

Tanya, I think it's just worth highlighting and you can look at two very, very real examples here just recently Artemis at Blackwater and how we've supported them through the startup. I think if you asked the team at Artemis, they'd be very happy with their Wheaton relationship in terms of how we've stepped in to sort of adjust and add a bit of value to the stream at a timely basis for them as they're turning on the switches there. And so I think that example of being supportive through the start-up process has caught a lot of people's eyes. And then I would go to the Montage deal on Koné. And the fact that that deal was structured where we supplied the bulk of the capital in terms of getting that project up and running and they're going to turn the switches on that mine and have no project debt and be producing 300,000 ounces a year to their credit. And those two transactions have really caught the eye of a lot of other developers in this space. And so we're now starting to get a lot of larger-sized opportunities where they're saying okay well let's look at Wheaton taking a larger role in terms of how we finance these projects into production on a go-forward basis. And we're always happy to put into high-margin high-quality assets. So they are out there.

Tanya Jakusconek, Analyst

What about the base metal companies given the volatility in some of those commodities and the high gold price? Have they been able to realize more value from their precious metals assets? Have you noticed an increase?

Randy Smallwood, CEO

Yes, there's a lot more discussion about it. I just haven't seen a lot of the base metal projects commit to going into construction moving forward. I think they're waiting for a better copper price, and it's mostly in the copper space that we're talking. We don't see much activity in the lead-zinc space. However, in the copper area, they just want to see a bit stronger prices; there are many predictions for higher copper prices. Unfortunately, some de-globalization efforts around the world are impacting demand and consequently the pricing of copper. We just haven't seen people making commitments to move into construction. They seem to want to see a stronger market for copper before making that decision. So, the discussions are ongoing, but they aren't as advanced as what we are observing in the precious metal space, specifically in gold.

Haytham Hodaly, Senior Vice President, Corporate Development

We'll add one thing, Tanya. I'd say of the split of opportunities we're looking at approximately half would be for precious metals as a byproduct from these poly-metallic assets.

Tanya Jakusconek, Analyst

Okay. And you said, you were up to like 20-ish or so. Is that what I heard?

Haytham Hodaly, Senior Vice President, Corporate Development

We're somewhere around 15% to 17% in that range, but it changes every day.

Tanya Jakusconek, Analyst

And then I guess the last one I would have to add is just ask is on corporate transactions. How do you view that in your mix?

Randy Smallwood, CEO

Yes. I would just say that as long as we have 15 to 20 assets in front of us, our preference is to pursue that option. We have been in this business for over 20 years, and I believe a traditional Wheaton stream has many benefits and strengths regarding its structure and security. When you start considering corporate transactions, you are essentially taking on someone else's challenges. We have observed that many are willing to compromise on structural integrity or deal arrangements just to enter the market, which leads to weaknesses. We have seen plenty of recent examples of companies facing difficulties because they accepted those structural compromises and are now dealing with the consequences. Therefore, we prefer the traditional Wheaton model. That said, we do explore other streams. We have previously acquired asset portfolios; for instance, two years ago, we purchased various assets from Orion, which were existing streams, and they were appropriately repriced. If they had robust structures, they were likely valued higher. This is something we are very attentive to. Our preference remains to establish our own deals, and we continue to see a strong appetite for that.

Haytham Hodaly, Senior Vice President, Corporate Development

Tanya, I'll just add one thing. We do keep our finger on the pulse. So we're always modeling a lot of these junior companies are the ones that we think have or could create value for us down the road. But as Randy said, as long as we continue to be able to acquire assets at net asset value or less stream size, that's through we'll take.

Tanya Jakusconek, Analyst

Okay. Great. Thank you and congrats on a good start to the year.

Operator, Operator

Your next question is from Derick Ma from TD Cowen. Please go ahead.

Derick Ma, Analyst

Thank you very much. Picking up on your comments on Hudbay, we've talked in the past about levels of royalties which could potentially overburden any one individual asset. How do you think about royalty burden or leverage more holistically from a corporate level of your partners? And is that looking that concerns you?

Haytham Hodaly, Senior Vice President, Corporate Development

From our perspective, we try not to focus too much on the economics of any particular asset. Many of the older contracts were made when precious metals were less significant, leading to some higher levels of precious metal streams. However, in our recent actions, we aim to keep those levels well below a reasonable threshold so that even if commodity prices decline significantly, we won't overburden the assets to the point of requiring shutdowns or major changes. We are very cautious in this current environment.

Derick Ma, Analyst

What is the reasonable amount of economics in terms of an individual asset?

Haytham Hodaly, Senior Vice President, Corporate Development

Optimally, we'd like to stay under 20%, 25%.

Randy Smallwood, CEO

Yes, every project has its own operating margins, and that's something we need to monitor closely. Wes and the operations team keep a close eye on our partners' performance. We specifically focus on first and second quartile assets because they provide healthy margins not just for us, but crucially for our operating partners as well. If our operating partners aren't in good shape, we aren't either. We're always attentive to that situation. What sets Wheaton apart is our proactive management of our portfolio. We don't just acquire assets and let them sit idle; we recognize the strategic timing of when streams can serve as a competitive source of capital. However, as mines mature, they can become burdensome, and we are willing to make adjustments by stepping back from mines that are becoming costlier and less productive. We aim to maintain a focused and profitable asset portfolio, which differentiates us from our peers. We avoid a scattergun approach to asset acquisition and instead prioritize a concise and effective group of assets that we actively manage rather than solely expanding our portfolio.

Haytham Hodaly, Senior Vice President, Corporate Development

If I'll add one more thing, Derick, I'll say, if you look at our contract structures, they are very thoughtful structures. They typically start with higher streams when they've got higher grades and as the grades drop off, the streams drop off. And that's all factored into the original valuation, and it's all based on threshold levels being met, etc. So we ensure that we're not overburdening the asset throughout its existing life.

Randy Smallwood, CEO

It's so important. If our partners aren't profitable, we are not profitable. So we need to do everything we can to stay on top of that and make sure that we work that way. And I really think that's the difference of a streaming partnership versus some of the traditional space in this business.

Derick Ma, Analyst

I appreciate that. And maybe that's a good segue to my next question, which is on amendments to existing campus. Appreciating every situation is different. But broadly speaking, what kind of considerations are as is Wheaton looking for when you start these negotiations with your partners? And when does amendments make sense for Wheaton?

Haytham Hodaly, Senior Vice President, Corporate Development

Sure. We're only looking to change contracts when it makes sense. That usually happens towards the end of a mine's life when grades decline and is influenced by the commodity price cycle. We're not proactively seeking amendments. Typically, our partners approach us with insights, expressing the need for expansion or further drilling, but they often feel it’s unfeasible due to the project's economics. In those cases, we'll explore ways to expand our overall portfolio through other opportunities they might have identified. When we give up something of value, we always ensure that we receive value in return. We don't make amendments that would harm our shareholders.

Wes Carson, Vice President of Operations

I'd say, Derick, as well. That's one of the reasons that we monitor very closely the health of all of our assets so that we're aware of how these streams are doing and at what point and what things are actually negotiable. But as Haytham said, really, it is we need to get value back for any of those amendments that we do.

Derick Ma, Analyst

Great. Thank you for that.

Randy Smallwood, CEO

Thanks, Derick.

Operator, Operator

Your next question is from Brian MacArthur from Raymond James. Please go ahead.

Brian MacArthur, Analyst

Good morning and thank you for taking my question. I kind of want to go back to what Tanya was talking about. When you talk about these $500 million to $1 billion deals now are they what I would call Salobo deals where it's $1 billion of streaming? Or are they more $500 million streams and say $300 million of equity and other things? And just in general if you can maybe comment as you do more of these full funding packages what sort of ratio you look for in the stream component of the deal on a full value basis? Because obviously the streaming model is very unique and nice and tends to get a better multiple than maybe equity does if you're buying that in a deal.

Haytham Hodaly, Senior Vice President, Corporate Development

Sure. I'm happy to answer your question, Brian. It's Haytham again. I would say that streams are our core business. When we refer to $500 million to $1 billion in streams or royalties, that's the primary contract we're discussing. This does not include revolvers, working capital facilities, equity, or debt; it focuses solely on streaming. There are certainly opportunities where we will contribute a significant portion of the total funding, but we generally prefer to see some subsequent involvement from the counterparty. In response to your second question regarding the ratio, I would say that if we're going to invest anything that isn't a stream, at least 80 percent of that value needs to be from a stream.

Brian MacArthur, Analyst

Great. Thanks very much. Very clear.

Randy Smallwood, CEO

And with that, thank you everyone for your time today. Q1 set a strong foundation for what we expect will be another strong year as Wheaton's portfolio of high-quality assets, sector-leading growth profile, and commitment to sustainability provides our stakeholders with a solid outlook for the future. In times of economic uncertainty, gold is viewed as a reliable store of value and our Q1 results demonstrate why we believe Wheaton offers one of the best lower-risk opportunities for investors seeking exposure to gold and precious metals. We look forward to speaking with you all again. Thank you.

Operator, Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines.