CIBCHave a US$82.00 target. GLTA
EQUITY RESEARCH
November 7, 2024 Earnings Update
WHEATON PRECIOUS METALS CORP.
Q3 Earnings A Slight Beat; Guidance Maintaine
Our Conclusion
Wheaton Precious Metals reported a clean quarter, with EPS of $0.34,
slightly ahead of our estimate and consensus of $0.33. Operationally, the
company reported production of 144k gold-equivalent ounces (GEOs), ahead
of our estimate of 138k and consensus of 140k. More importantly, WPM
maintained its guidance for the year at 550k-620k GEOs, and with 448.4k
produced year-to-date, the company is well on track to achieve its target for
the year. WPM continues to solidify its leadership position amongst the group
of streaming and royalty companies, and we maintain our Outperformer
rating and $82 price target. On valuation, WPM shares currently trade at 1.7x
P/NAV, vs. its peer group at 1.5x P/NAV. Near-term growth continues to be
de-risked, with construction activities continuing at Blackwater, Goose,
Platreef and Mineral Park, all of which are expected to add to production
within the next 12 months. Longer term, WPM is targeting growth to 800k
GEOs by 2028, and to grow further to an average of 850k GEOs for the
period 2029-2033.
Key Points
Corporate Development Updates: Subsequent to the quarter, WPM
entered into two agreements. On October 21, WPM amended its initial gold
stream on the Fenix precious metals purchase agreement (PMPA) and
increased its entitlement under the contract. Subsequently, on October 23,
the company entered into a PMPA with Montage Gold on its Kon project in
exchange for an up to $700M financing package. Based on the spot gold
price on the day of the transactions, the two PMPAs were respectively
valued at ~0.7x and ~0.8x P/NAV, making them financially accretive to WPM.
The two deals showcased WPM's financial strength and ability to also extend
financial support through loan facilities, providing partners with a more
complete financing package.
Visit To Salobo: On October 3, we had the opportunity to attend a tour of
the Salobo mine, jointly hosted by WPM and Vale (the operator). The Salobo
stream is the most important asset for the company, representing >35% of
the company’s NAV, and this site tour highlighted continued operational
improvements at this operation, as well as further upside into the future. The
Salobo III expansion was a key highlight of the tour. This third concentrator
line will bring combined throughput to 36 million tonnes per annum (Mtpa),
up from 24 Mtpa historically. The Salobo mine is currently host to 1.1 billion
tonnes of reserves at 0.62% copper and 0.35 g/t gold, translating to a 30+
year mine life. Vale management pointed to the expansion potential at the
mine (Salobo 3.5 and 4), as well as the exploration opportunities in the area.
Q3 Operational Highlights: Quarterly production was consistent year-over-
year, with lower contribution from Salobo and Constancia offset by higher
contribution from Penasquito.