WPM Wheaton Precious Metals Corp

Designated News Release
SECOND QUARTER FINANCIAL RESULTS

VANCOUVER, BC, Aug. 10, 2023 /PRNewswire/ - "Wheaton delivered solid operational results during the quarter, generating over $200 million of operating cash flow, primarily driven by significant sequential improvement at the recently commissioned expansion at our largest asset, Salobo. Furthermore, we continued to see momentum on the corporate development front with the addition of a new gold stream on Lumina Gold's Cangrejos project and the expansion of our existing gold stream on Artemis Gold's Blackwater project," said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. "Despite operations at Peñasquito being suspended in early June, we achieved quarter-over-quarter gold equivalent production growth. As such, we are reiterating our 2023 production guidance, which we now expect to have a slightly higher weighting toward gold, highlighting the resilience of our high-quality, diversified portfolio. Lastly, we are proud to have published our 2022 Sustainability Report and inaugural 2022 Climate Change Report, demonstrating our continued commitment to sustainability and focus on delivering value to all of our stakeholders."

Solid Financial Results and Strong Balance Sheet

• Second quarter of 2023: $265 million in revenue, $202 million in operating cash flow, $141 million in net earnings and $143 million in adjusted net earnings¹
• A cash balance of $829 million and no debt as at June 30, 2023, after making total upfront cash payments of $89 million relative to mineral stream interests in the quarter
• Undrawn $2 billion revolving credit facility extended by an additional year with the facility now maturing on June 22, 2028
• Declared a quarterly dividend¹ of $0.15 per common share

High Quality Asset Base

• Streaming agreements on 19 operating mines and 13 development projects
• 93% of attributable production from assets in the lowest half of their respective cost curves^2,3
• 30 years of mine life based on Proven and Probable Mineral Reserves and potential additional mine life from mineral resource conversion and exploration^2,4
• Accretive portfolio growth:
• • Acquired a 6.6% gold stream on Lumina Gold Corp.'s ("Lumina") Cangrejos Project ("Cangrejos")
  • Expanded the gold stream on Artemis Gold Inc.'s Blackwater Project ("Blackwater")
• Further de-risked growth profile: the Goose Project was acquired by B2Gold Corp ("B2Gold"). and Aris Mining Corporation ("Aris Mining") received approval of the Environmental Management Plan which now permits the development of the Marmato Lower Mine
• Second quarter production amounted to 147,700 gold equivalent ounces³ ("GEOs"), underscored by significant progress at the recently commissioned expansion at Salobo
• Average annual production guidance for 2023 of 600,000 to 660,000 GEOs^2,3 maintained, with sector-leading growth resulting in five and ten-year average annual production guidance of approximately 810,000 and 850,000 GEOs^2,3, respectively

Leadership in Sustainability

• Top Rankings: #1 out of 117 precious metals companies and ranked in the Global Top 50 companies by Sustainalytics, AA rated by MSCI, and Prime rated by ISS
• Published inaugural Climate Change Report, detailing progress towards Net-Zero Carbon Emissions by 2050 and covering all material emissions including Scope 3
• Published fourth annual Sustainability Report highlighting our commitment to progress and providing a comprehensive review of Wheaton's performance in environmental, social and governance topics

Operational Overview 

Financial Review

Revenues
Revenue in the second quarter of 2023 was $265 million (56% gold, 41% silver, 2% palladium and 1% cobalt), with the $38 million decrease relative to the prior period quarter being primarily due to relative changes in the GEOs³ produced but not yet delivered partially offset by a 4% increase in realized commodity prices.

Revenue was $479 million in the six months ended June 30, 2023, representing a $131 million decrease from the comparable period of the previous year due primarily to a 21% decrease in the number of GEOs³ sold, resulting from lower production and relative changes in the GEOs³ produced but not yet delivered.

Cash Costs and Margin
Average cash costs¹ in the second quarter of 2023 were $422 per GEO³ as compared to $452 in the second quarter of 2022. This resulted in a cash operating margin¹ of $1,487 per GEO³ sold, an increase of 8% as compared with the second quarter of 2022, a result of the higher realized price per ounce.

Average cash costs¹ for the six months ended June 30, 2023 were $432 per GEO³ as compared to $446 in the comparable period of the previous year. This resulted in a cash operating margin¹ of $1,439 per GEO³ sold, virtually unchanged from the comparable period of the previous year.

Cash Flow from Operations
Operating cash flow in the second quarter of 2023 amounted to $202 million, with the $4 million decrease due primarily to the lower sales volumes, partially offset by higher amounts of interest received in the second quarter of 2023 coupled with the timing of the payout of the Company's performance share units ("PSUs"), with the PSUs being paid out in the second quarter of 2022 while in 2023, they were paid out in the first quarter.

Operating cash flows for the six months ended June 30, 2023 amounted to $337 million, with the $79 million decrease from the comparable period of the previous year being due primarily to the lower sales volumes, partially offset by higher amounts of interest received during the current year.

Balance Sheet (at June 30, 2023)

• Approximately $829 million of cash on hand
• The Company extended its existing undrawn $2 billion revolving term loan (the "Revolving Facility") with its maturity date now June 22, 2028
• During the second quarter of 2023, the Company made total upfront cash payments of $89 million relative to the mineral stream interests consisting of
• • a $31 million payment relative to the Goose Project precious metals purchase agreement ("PMPA")
  • a $35 million payment relative to the Blackwater Silver PMPA
  • a $10 million payment relative to the expansion of the Blackwater Gold PMPA
  • a $12 million payment relative to the Cangrejos PMPA
• With the existing cash on hand coupled with the fully undrawn $2 billion revolving credit facility, the Company is well positioned to fund all outstanding commitments and known contingencies as well as providing flexibility to acquire additional accretive mineral stream interests.

Second Quarter Operating Asset Highlights

Salobo: In the second quarter of 2023, Salobo produced 54,800 ounces of attributable gold, an increase of approximately 61% relative to the second quarter of 2022, driven by higher throughput and grades. According to Vale S.A. ("Vale"), production in the second quarter was driven by a better-than-expected ramp up of Salobo III partially offset by planned maintenance activities and additional work on the crushers at Salobo I and II. Vale reports that planned maintenance activities will continue in the second half of 2023, and that the ramp up of Salobo III is expected to be fully completed in 2024.

Antamina: In the second quarter of 2023, Antamina produced 1.0 million ounces of attributable silver, a decrease of approximately 28% relative to the second quarter of 2022, primarily due to lower grades as per the mine plan.

Peñasquito: In the second quarter of 2023, Peñasquito produced 1.7 million ounces of attributable silver, a decrease of approximately 17% relative to the second quarter of 2022 due to lower throughput.

On June 8, 2023, Newmont Corporation ("Newmont") reported that it had suspended operations at the Peñasquito mine due to a labour dispute. To date, Newmont has indicated that it is in ongoing discussions with the leadership for the National Union of Mine and Metal Workers of the Mexican Republic and remains focused on finding a sustainable resolution to the dispute.

Constancia: In the second quarter of 2023, Constancia produced 0.4 million ounces of attributable silver and 7,400 ounces of attributable gold, a decrease of approximately 28% and 7%, respectively, relative to the second quarter of 2022, with the decrease in both metals being primarily due to lower throughput and grades. As per Hudbay, full mining activities resumed in the Pampacancha pit in February and the period of higher planned stripping activities in the Pampacancha pit was completed in June, with higher-than-expected production forecast for the second half of the year.

Sudbury: In the second quarter of 2023, Vale's Sudbury mines produced 7,700 ounces of attributable gold, an increase of approximately 46% relative to the second quarter of 2022. As per Vale, the increase in production from Sudbury was driven primarily due to lower production in the second quarter of 2022 due to a 28-day maintenance shutdown at the Sudbury smelter and refiner.

Stillwater: In the second quarter of 2023, the Stillwater mines produced 2,000 ounces of attributable gold and 3,900 ounces of attributable palladium, a decrease of approximately 7% for gold relative to the second quarter of 2022 while palladium production was virtually unchanged. As reported by Sibanye-Stillwater Limited, production in the quarter was impacted due to an incident in March at Stillwater West involving the shaft headgear, winder house and winder rope. As a result, production from the Stillwater West mine below the 50 level was suspended for approximately five weeks but recommenced on April 16, 2023.

San Dimas: In the second quarter of 2023, San Dimas produced 11,200 ounces of attributable gold, an increase of approximately 11% relative to the second quarter of 2022. First Majestic Silver Corp. reported that exploration drill holes at the San Dimas property intersected significant gold and silver mineralization in three separate veins: the Sinaloa North-Elia vein, the Santa Teresa vein and the Perez vein.

Other Gold: In the second quarter of 2023, total Other Gold attributable production was 1,900 ounces, a decrease of approximately 71% relative to the second quarter of 2022, primarily due to the closure of the 777 mine in June 2022 and the suspension of operations at the Minto mine in May 2023.

Other Silver: In the second quarter of 2023, total Other Silver attributable production was 1.3 million ounces, a decrease of approximately 48% relative to the second quarter of 2022, primarily due to the closure of the 777 mine and the termination of the Keno Hill and Yauliyacu PMPAs. 

Voisey's Bay: In the second quarter of 2023, the Voisey's Bay mine produced 152,000 pounds of attributable cobalt, an increase of approximately 11% relative to the second quarter of 2022, primarily due to mining lower grade material during the ongoing transitional period between the depletion of the Ovoid open-pit mine and ramp-up to full production of the Voisey's Bay underground project. Production in the second quarter was also impacted as the annual maintenance schedule at the Long Harbour refinery (from May to July) was planned longer than the previous year. Vale reports that physical completion of the Voisey's Bay underground mine extension was 85% at the end of the second quarter, with Reid Brook's bulk material handling system expected to be delivered in the third quarter of 2023, and lateral development advancing on the Eastern Deeps. Vale achieved the first ore production from the Reid Brook deposit, the first of two underground mines to be developed in the project, in the second quarter of 2021. Eastern Deeps, the second deposit, has started to extract development ore from the deposit and is scheduled to start the main production ramp-up in the second half of 2023.

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.

Second Quarter Development Asset Highlights

Blackwater Project: On June 14, 2023, the Company amended the Blackwater Gold PMPA. Under the terms of the amended agreement, the Company is entitled to purchase an amount of gold equal to 8% of the payable gold production until 464,000 ounces have been delivered (previously 279,908 ounces), with this threshold to increase should there be a delay in the anticipated timing of deliveries. Once the threshold has been achieved, the Company's attributable gold production will drop to 4% of payable gold production for the life of the mine. In exchange for the amendment, the Company is committed to pay additional upfront cash consideration of $40 million, payable in four installments, with the first payment of $10 million having been paid on June 15, 2023. In conjunction with this amendment, Artemis announced that they were committing additional investment as part of its Phase 1 development in order to facilitate the potential fast-tracking of the Phase 2 expansion.

In addition, on July 4, 2023, Artemis announced receipt of the Fisheries Act Authorization for development of Blackwater, which will facilitate the commencement of construction of water diversion structures and dams in the Davidson Creek valley which runs through the basin of the Blackwater tailings storage facility.

Marmato Mine: On July 12, 2023, Aris Mining announced that they have received approval from the Corporación Autónoma Regional del Caldas, a regional environmental authority in Colombia, of the Environmental Management Plan which now permits the development of the Marmato Lower Mine.

Copper World Complex: On April 5, 2023, Hudbay announced the receipt of confirmation from the Army Corps of Engineers ("ACOE") that Hudbay's previous surrender of the Section 404 Clean Water Act permit for the former Rosemont project was formally accepted and revoked as requested. The ACOE also reaffirmed the validity of the March 2021 approved jurisdictional determinations whereby the ACOE determined there are no waters of the U.S. on the property, and therefore, a 404 Permit is not required. Hudbay continues to expect to receive the two remaining state permits required (an Aquifer Protection Permit and an Air Quality Permit) in the second half of 2023. Clearing and grading work to prepare for the Copper World site, including the construction of roads and other facilities, continues to be underway. As per Hudbay, pre-feasibility activities for the private land Phase I of the Copper World project are well-advanced and a pre-feasibility study is expected to be released in the third quarter of 2023.

Goose Project: On April 19, 2023, B2Gold acquired Sabina Gold & Silver Corp ("Sabina"), the owners of the Goose Project. Subsequent to closing, B2Gold exercised the option to acquire 33% of the stream under the Goose PMPA in exchange for a cash payment in the amount of $46 million, resulting in a gain on partial disposal of the Goose PMPA in the amount of $5 million. B2Gold continues to advance construction of the Goose Project, moving toward commencement of production in 2025 and initiating an exploration program to further define untapped potential and unlock further opportunities for growth.

Curipamba Project: On August 2, 2023, Adventus Mining Corp. provided an update that the Constitutional Court of Ecuador (the "Constitutional Court") has admitted for processing an unconstitutionality claim filed by the indigenous group CONAIE and other complainants against Presidential Decree 754 (the "Decree") that regulates environmental consultation for all public and private industries and sectors in Ecuador. Adventus also notes that the Constitutional Court ordered the provisional suspension of the Decree until the same Constitutional Court resolves the claim filed. Adventus indicates that the immediate effect of the provisional suspension of the Decree is that no medium or high impact projects, from any sector or industry in the country, including the Curipamba project, shall be able to obtain an environmental license until the Constitutional Court resolves this issue. Adventus reports that the Government of Ecuador has stated that it will employ all measures at its disposal to respond to the Constitutional Court.

Corporate Development

Cangrejos PMPA: On May 16, 2023, the Company entered into a PMPA with Lumina in respect of its 100% owned Cangrejos gold-copper project located in El Oro Province, Ecuador. Under the terms of the agreement, Wheaton will purchase 6.6% of the payable gold production until 700,000 ounces of gold have been delivered, at which point the stream will be reduced to 4.4% of the payable gold production for the life of the mine. Under the terms of the Cangrejos PMPA, the Company is committed to pay Lumina total upfront cash payments of $300 million, $48 million of which is available pre-construction, with the remainder to be paid in staged equal installments during construction of the mine, subject to various customary conditions being satisfied. As it relates to the $48 million, payments will be made in four installments, including (i) $12 million which was paid on closing; (ii) $10 million to be paid six months after closing; (iii) $15 million to be paid 12 months after closing; and (iv) $11 million that can be drawn upon for committed acquisition of surface rights.

Sustainability

Annual Sustainability Report

• Wheaton published its fourth annual Sustainability Report on May 15, 2023, highlighting its commitment to progress and providing a comprehensive review of Wheaton's performance in environmental, social and governance topics including:
• • Strategy and Governance: Established a sustainability linked element in connection with the revolving credit facility
  • Diversity, Equity and Inclusion: Achieved target of 30% female Board members two years early
  • Investment Decisions and Due Diligence: 100% of new streaming agreements in 2022 screened for ESG issues and risks, and 85% of Wheaton's mining partners are committed to implementing one or more industry sustainability standards, representing 89% of attributable 2022 production
  • Recognition: 'ESG Industry Top-Rated' in precious metals and 'ESG Global 50 Top Rated' out of over 15,000 multi-sector companies by Sustainalytics, 'AA' rated by MSCI and 'Prime' rated by ISS

Inaugural Climate Change Report: 

• Wheaton published its inaugural Climate Change Report on June 15, 2023, highlighting:
• • Details on climate-related governance, strategy, risk management, and metrics and performance
  • Expanded information on the pathway to achieve net-zero carbon emissions by 2050 and progress to date on this topic
  • Identification of climate risks and opportunities and management strategies
  • Commitment to support our partners' decarbonization and climate solutions efforts
  • 68% of 2021 Scope 3 financed emissions covered by emissions reductions targets aligned to 2°C or less
  • Limited assurance over Scope 2 and Scope 3 finance emissions
• On April 27, 2023, Hudbay announced the signing of a new 10-year power purchase agreement with ENGIE Energía Perú for access to a 100% renewable energy supply to Hudbay's Constancia operations in Peru. As reported by Hudbay, Hudbay's Scope 1 and Scope 2 greenhouse gas emissions are expected to significantly decline as a result of the new Constancia renewable energy supply agreement, which should reduce Wheaton's attributable scope 3 emissions from the Constancia mine and help advance the Company's Net Zero targets.

Community Investment Program:

• During the quarter, Wheaton confirmed its support for a new Vale initiative aimed at reducing extreme poverty in the communities surrounding the Salobo mine. The program builds upon the success of previous initiatives supported by both Wheaton and the Vale Foundation aimed at promoting social and economic development.
• During the quarter, the Wheaton Walk Through Time was completed at the University of British Columbia. Funded by Wheaton, the outdoor exhibit links the Pacific Museum of Earth and the Beaty Biodiversity Museum with an objective to garner interest among children and youth in earth sciences. It includes a Timeline of the geological and biological history of the earth since its formation 4.5 billion years ago in combination with a Tree of Life showing the evolutionary relationship between all living things.
• The 2023 Courage to Come Back Awards Presented by Wheaton celebrated its 25th anniversary, attracting over 1,700 guests and raising over C$2.7 million for Coast Mental Health.

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 is committed to strong ESG practices and giving back to the communities where Wheaton and its mining partners operate. Wheaton creates sustainable value through streaming for all of its stakeholders.

Wheaton's estimated attributable production in 2023 is forecast to be 320,000 to 350,000 ounces of gold, 20.0 to 22.0 million ounces of silver, and 22,000 to 25,000 GEOs of other metals, resulting in production of approximately 600,000 to 660,000 GEOs, unchanged from previous guidance^2,3. Due to the suspension of the Peñasquito mine as a result of the ongoing labour dispute and the Company's inability to forecast when it will be resolved, Wheaton now expects its full-year production to have a slightly higher weighting toward gold. Assuming the dispute is resolved and operations resume by the end of the third quarter of 2023, the Company expects to achieve its total GEO^2,3 guidance of approximately 600,000 to 660,000 GEOs. For the five-year period ending in 2027, the Company estimates that average production will amount to 810,000 GEOs, while for the ten-year period ending in 2032, the Company estimates that average annual production will amount to 850,000 GEOs, also unchanged from previous guidance^2,3.

In accordance with Wheaton Precious Metals™ Corp.'s ("Wheaton Precious Metals", "Wheaton" or the "Company") MD&A and Financial Statements, reference to the Company and Wheaton includes the Company's wholly owned subsidiaries.

Webcast and Conference Call Details

A conference call will be held on Friday, August 11, 2023, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call please use one of the following methods:

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The conference call will be recorded and available until August 18, 2023 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:

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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.sedarplus.ca.

Mr. Wes Carson, P.Eng., Vice President, Mining Operations, Neil Burns, P.Geo., Vice President, Technical Services for Wheaton Precious Metals and Ryan Ulansky, P.Eng., Vice President, Engineering, are a "qualified person" as such term is defined under National Instrument 43-101, and have reviewed and approved the technical information disclosed in this news release (specifically Mr. Carson has reviewed production figures, Mr. Burns has reviewed mineral resource estimates and Mr. Ulansky has reviewed the mineral reserve estimates).

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.

End Notes

Condensed Interim Consolidated Statements of Earnings

Condensed Interim Consolidated Balance Sheets

Condensed Interim Consolidated Statements of Cash Flows

Summary of Units Produced

Summary of Units Sold

Results of Operations 

The operating results of the Company's reportable operating segments are summarized in the tables and commentary below.

On a gold equivalent and silver equivalent basis, results for the Company for the three months ended June 30, 2023 were as follows: