TSX: WPM
NYSE: WPM
VANCOUVER, July 16, 2018 /CNW/ - Wheaton Precious Metals™ Corp.
("Wheaton" or the "Company") is pleased to announce that its wholly-owned subsidiary, Wheaton Precious Metals International Ltd
("Wheaton International") has agreed to acquire from Sibanye Gold Limited ("Sibanye-Stillwater") (JSE: SGL; NYSE:SBGL) an
amount of gold and palladium equal to a fixed percentage of production from the Stillwater and
East Boulder mines, collectively "Stillwater" (the "Precious Metals Stream"). Wheaton
International will pay Sibanye-Stillwater upfront cash consideration of US$500 million upon closing
of the Precious Metals Stream. In addition, Wheaton will make ongoing payments equal to 18% of the spot gold price and spot
palladium price until the reduction of the advanced payment to nil, and 22% of the spot gold price and spot palladium price
thereafter. The Precious Metals Stream is effective July 1, 2018.
TRANSACTION HIGHLIGHTS
- Adds to Wheaton's existing high-quality portfolio
-
- Wheaton International will receive an amount of gold equal to 100% of the Stillwater
gold production for the life of mine.
- Wheaton International will initially receive an amount of palladium equal to 4.5% of Stillwater palladium production, decreasing to 2.25% and then 1% based on defined delivery thresholds,
for the life of mine.
- Stillwater is one of the lowest cost platinum group metals mines globally and is
located in Montana in the United States.
- Subsequent to the closing of this acquisition, Wheaton's estimated Proven and Probable gold reserves increase by 410
thousand ounces ("Koz") and Inferred gold resources increase by 920 Koz. And, for the first time, Wheaton will have
estimated Proven and Probable palladium reserves of 610 Koz and Inferred palladium resources of 430 Koz.1
- Adds long-term production and exploration upside potential
-
- For the 10 years starting in 2019, production is forecast to average approximately 14.5 Koz of gold and 29 Koz of
palladium per year, or approximately 37 Koz of gold equivalent per year.2
- For the 20 years starting in 2019, production is forecast to average approximately 14.7 Koz of gold and 24 Koz of
palladium per year, or approximately 33 Koz of gold equivalent per year.2
- Declared current reserves are sufficient to support mining activities at Stillwater
until 2041, but this could be significantly extended should inferred resources be upgraded.3
- Significant exploration potential exists both regionally and at depth below current mineral reserves and resources. Of
significance is the 12.2 kilometre undeveloped mineralized section between the currently producing Stillwater and East Boulder mines
- Immediate production and cash flow
-
- This acquisition increases Wheaton's production profile with attributable sales starting July 1,
2018 with expected production in the second half of 2018 forecast to be approximately 5.4 thousand gold ounces and
10.4 thousand palladium ounces.
"Stillwater is another accretive addition to Wheaton's portfolio of assets that is expected
to contribute both production and cash flow for decades to come," said Randy Smallwood, Wheaton's
President and Chief Executive Officer. "What mainly attracted us to this opportunity was the quality and size of the J-M Reef
deposit, coupled with the ongoing expansion at the Blitz Project. There are over 12 kilometres of undeveloped mineralization
associated with the J-M Reef between the two currently producing mines. With a mine life extending well into the foreseeable
future, we believe Stillwater will be one of Wheaton's foundational assets for many years to
come. Finally, the acquisition will be funded through our current revolving credit facility, which we are comfortable utilizing
given our industry leading cash flow."
TRANSACTION TERMS
- The Precious Metals Stream is effective July 1, 2018.
- Wheaton International will be entitled to receive from Sibanye-Stillwater an amount of gold equal to 100% of Stillwater gold production for the life of mine.
- Wheaton International will be entitled to an amount of palladium equal to
-
- 4.5% of Stillwater palladium production until 375 Koz delivered to Wheaton;
- Thereafter, 2.25% of Stillwater palladium production until 550 Koz delivered to
Wheaton; and,
- 1% of Stillwater palladium production thereafter for the life of mine.
- Wheaton International will pay Sibanye-Stillwater cash consideration of US$500 million upon
closing of the Precious Metals Stream.
- Wheaton International will make ongoing payments equal to 18% of the spot gold price and spot palladium price until the
reduction of the advanced payment to nil, and 22% of the spot gold price and spot palladium price thereafter.4
- Payable rates for gold and palladium have been fixed at 99.0% and 99.6%, respectively.
- Gold and palladium deliveries will be the obligation of Sibanye-Stillwater but will be guaranteed by certain
Sibanye-Stillwater subsidiaries, including Stillwater Mining Company (the owner of Stillwater).
- The Precious Metals Stream includes a completion test on the development of the Blitz Project, including completion of
underground development, critical surface infrastructure and concentrator production output.
- The stream area of interest is defined as the area inclusive of all patented and unpatented claims at the Stillwater mining operations.
- Closing of the transaction is expected to occur shortly following announcement and is subject to the completion of certain
corporate matters and customary conditions.
ABOUT STILLWATER
Stillwater is the only US-based mine for platinum group metals ("PGM"s) and the largest
primary producer of PGMs outside of South Africa and the Russian
Federation. Located in Montana, US, Stillwater's
operations consist of two underground PGM mines (the Stillwater Mine and East Boulder Mine), the Blitz Project and the Columbus
metallurgical complex. The mining assets are located in the front range of the Beartooth Mountains with elevations exceeding
1,500 metres above mean sea level.
The Stillwater Mine and East Boulder Mine have been in operation since 1986 and 2002, respectively. The mines produce from the
J-M Reef, the world's highest-grade PGM deposit. Each mine has its own milling and concentrator infrastructure on site. The Blitz
Project, part of the Stillwater mine, started ore production in 2017 and is expected to ramp up
to full production in 2021.
The Columbus metallurgical complex is a state-of-the-art operation that is capable of providing smelting and refining
processes for mine concentrates. The complex produces a PGM-rich filter cake that is shipped to a third-party precious metal
refinery.
Below are Wheaton's attributable Mineral Reserves and Resources in respect of the Stillwater
mine.
Attributable Mineral Reserves and Mineral Resources – Stillwater, effective as of
December 31, 2017
Category
|
Streamed
Metal
|
Tonnage
Mt
|
Grade
Au g/t
|
Grade
Pd g/t
|
Contained
Au Moz
|
Contained
Pd Moz
|
Proven
|
Gold
|
5.0
|
0.31
|
|
0.05
|
|
Probable
|
36.8
|
0.31
|
|
0.36
|
|
Proven
|
Palladium
|
0.2
|
|
13.2
|
|
0.08
|
Probable
|
1.3
|
|
12.6
|
|
0.53
|
Total P&P
|
Gold
|
41.8
|
0.31
|
|
0.41
|
|
Palladium
|
1.5
|
|
12.7
|
|
0.61
|
Inferred
|
Gold
|
92.5
|
0.31
|
|
0.92
|
|
Palladium
|
1.0
|
|
12.9
|
|
0.43
|
FINANCING THE TRANSACTION
The initial upfront cash payment of US$500 million will be paid by using amounts drawn from the
Company's US$2 billion revolving credit facility. At March 31, 2018,
the Company had approximately US$116 million of cash on hand and US$663
million outstanding under the revolving credit facility. The Company recently acquired a cobalt stream from Vale S.A.'s
Voisey's Bay mine, which was also funded using the revolving credit facility. Net debt for the company, including the acquisition
costs of streams on Stillwater and Voisey's Bay will be approximately $1.4 billion. With trailing four-quarter operating cash flow of just under $550
million 5, the Company believes it has ample capacity to service the additional debt resulting from this
transaction, especially given the low interest rate and flexible nature of the covenants under the revolving credit facility
(minimum net debt to total net worth and minimum interest coverage tests).
PALLADIUM – A PRECIOUS METAL WITH A PURPOSE 6
Palladium is a PGM and is generally considered a precious metal and offers significant practical application as it is
considered to be integral to reducing emissions caused by gasoline-powered internal combustion engines.
Palladium mine supply is highly concentrated, with approximately 80% of annual supply coming from just two countries:
South Africa and Russia. Disruption in either country has potential for outsized market
influence. In addition, palladium is mined overwhelmingly as a by-product, which results in mine supply being relatively
price-inelastic (i.e. the economics of mine supply is driven primarily by consideration of other metals). Half of mine supply
comes from nickel-copper mines, 40% comes from primary platinum mines and just under 10% comes from primary palladium
mines.
The automobile industry became the biggest end-user of PGMs in the late-1970s. PGMs in autocatalytic converters help reduce
harmful emissions caused by internal combustion engines. Palladium resists oxidation, high temperature corrosion and is
particularly effective in scrubbing hydrocarbon emissions. Its application by the industry began to accelerate in the late-1990s
and has in the intervening years replaced its cousin – platinum – in gasoline-powered vehicles. A spate of recent government
announcements from around the world regarding diesel-powered vehicles strongly suggests that gasoline-based engines – and thus
palladium – is expected to be gaining market share at the expense of diesel for the foreseeable future.
Fully-electric vehicles do not use PGMs; however, vehicles that are the intermediate stage between combustion and pure battery
power (e.g. hybrids, plug-in hybrids) do use PGMs. While it is reasonable to expect combustion-vehicles to lose market share
over the coming decades, the rise of overall vehicle sales and higher loadings per vehicle are anticipated to maintain demand for
PGMs. Though North American and European markets are saturated, the analyst community expects vehicle growth in China and India to raise the overall global total. Tightening emission
targets around the world add further support for the long-term necessity of palladium. While the pie slice may eventually shrink,
the overall pie is growing and there will be more palladium per slice (and that's delicious).
UPDATED FIVE-YEAR PRODUCTION GUIDANCE
Wheaton is pleased to provide its updated five-year production guidance, which now includes both palladium and cobalt
production estimates, in the table below. Given the timing of the effectiveness of the Stillwater and Voisey's Bay streams, palladium and cobalt production are given as average annual production
as of 2019 and 2021, respectively. Average annual gold production is inclusive of gold from Stillwater from 2019 to 2022 as gold production from Stillwater in 2018 is
only for half of the year. For context, on a gold equivalent ounce ("GEO") basis, five-year average annual production is
approximately 730 thousand GEOs based on gold, silver and palladium, or approximately 800 thousand GEOs if cobalt is included as
well.7
Forecast Average Annual Production
|
Metal Streamed
|
Average Annual Production
|
2018E
|
2019E
|
2020E
|
2021E
|
2022E
|
Gold
|
385 thousand ounces / year8
|
Silver
|
25 Million ounces / year
|
Palladium
|
10.4 koz
|
27 thousand ounces / year
|
Cobalt
|
|
2.1 million pounds / year
|
ABOUT SIBANYE-STILLWATER
Stillwater was purchased by Sibanye-Stillwater in May 2017.
Sibanye-Stillwater is the third largest producer of platinum and palladium and features amongst the world's top gold producing
companies with operations in two main regions: South Africa and the
United States. Sibanye-Stillwater has over the years developed several safety initiatives, including the creation and
investment in "Digimine," a joint venture between Sibanye-Stillwater, academic institutions and other stakeholders. This
initiative prioritizes the use of digital technology for enhanced safety applications including focus areas of seismicity and
pro-active monitoring of underground environmental conditions. Wheaton is pleased to have the opportunity to support
Sibanye-Stillwater's initiatives through further investment linked to Digimine, facilitating the fast tracking of certain
technology prototypes into Sibanye-Stillwater's underground environment.
CONFERENCE CALL
A conference call will be held on July 16, 2018, starting at 11:00 am
(Eastern Time) to discuss this transaction. A presentation on the transaction will be available on the Company's website
shortly before the conference call. To participate in the live call please use one of the following methods:
Dial toll free from Canada or the US:
|
888-231-8191
|
Dial from outside Canada or the US:
|
647-427-7450
|
Pass code:
|
9391518
|
Live audio webcast:
|
www.wheatonpm.com
|
Participants should dial in ten to fifteen minutes before the call.
The conference call will be recorded and available until July 23, 2018 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:
|
855-859-2056
|
Dial from outside Canada or the US:
|
416-849-0833
|
Pass code:
|
9391518
|
Archived audio webcast:
|
www.wheatonpm.com
|
Mr. Neil Burns, Vice President of Technical Services for Wheaton, is a "qualified person" as
such term is defined under National Instrument 43-101 and has reviewed and approved the technical disclosure in this news release
including information on Mineral Reserves and Mineral Resources.
ADVISORS AND COUNSEL
RBC Capital Markets acted as financial advisor and Cassels Brock & Blackwell LLP acted as
legal counsel to Wheaton.
End Notes
___________________________
|
1) Please refer to the Mineral Reserves & Mineral Resources table at
the end of this news release for full disclosure of reserves and resources associated with Stillwater including
accompanying footnotes.
|
2) Production estimates based upon Competent Person's Report of the Montana
Platinum Group Metal Mineral Assets for Sibanye Gold Limited, United States of America, dated November 2017, and prepared
by The Mineral Corporation. Assumptions for converting to GEOs: Pd $990/oz and Gold $1,270/oz. Production forecast
contain forward looking information and readers are cautioned that actual outcomes may vary. Please see "Cautionary
Note Regarding Forward Looking-Statements" at the end of this news release for material risks, assumptions, and important
disclosure associated with this information.
|
3) Mine life is based on recoverable reserves and resources as of December
31, 2017 and based on the mine plan provided by Sibanye-Stillwater as of June 2018.
|
4) Production payment is subject to further downward adjustment based upon
Sibanye-Stillwater's leverage ratios.
|
5) Operating cash flow based on Q2, Q3, and Q4 of 2017, and Q1
2018
|
6) The following sources were referenced in the discussion on palladium:
Loferski, Patricia J. "Platinum-Group Metals (Ir, Os, Pd, Pt, Rh, Ru)" Metal Prices in the United States Through 2010.
United States Geological Survey. 05-Mar-2010; Steel, James. "PGM Outlook" Commodities, Precious Metals, HSBC Global
Research. 22-Nov-2017; Agate, Nell, Johann Steyn and Raghav Gupta-Chaudhary. "PGMs: Demand impact of LDV diesel-engine
erosion" Commodities Industry Focus, Commodities. Citi Research. 13-Oct-2017; Metals Focus. Platinum & Palladium
Focus 2017. May-2017.
|
7) GEOs are calculated based on the following commodity prices: $1,270 per
gold ounce, $16.50 per silver ounce, $960 per palladium ounce, and $40 per cobalt pound.
|
8) Average annual five-year gold production is the sum of the expected
average annual production for all streamed assets over 2018-2022 except for Stillwater; as 2018 is only a partial year of
production, the average annual production for Stillwater from 2019-2022 was used in the calculation for the total average
annual gold production for 2018-2022.
|
ATTRIBUTABLE MINERAL RESERVES & MINERAL RESOURCES FOR STILLWATER
Effective as of December 31, 2017
Mine
|
Category
|
Stream
|
Mt
|
Au g/t
|
Pd g/t
|
Au Moz
|
Pd Moz
|
Stillwater
|
Proven
|
Gold
|
2.6
|
0.31
|
|
0.03
|
|
Probable
|
15.1
|
0.31
|
|
0.15
|
|
Proven
|
Palladium
|
0.1
|
|
16.0
|
|
0.05
|
Probable
|
0.5
|
|
15.7
|
|
0.27
|
East
Boulder
|
Proven
|
Gold
|
2.4
|
0.30
|
|
0.02
|
|
Probable
|
21.6
|
0.31
|
|
0.21
|
|
Proven
|
Palladium
|
0.1
|
|
10.2
|
|
0.03
|
Probable
|
0.8
|
|
10.5
|
|
0.26
|
Total
|
P&P
|
Gold
|
41.8
|
0.31
|
|
0.41
|
|
Palladium
|
1.5
|
|
12.7
|
|
0.61
|
Stillwater
|
Inferred
|
Gold
|
48.9
|
0.27
|
|
0.42
|
|
East
Boulder
|
43.6
|
0.36
|
|
0.50
|
|
Stillwater
|
Inferred
|
Palladium
|
0.5
|
|
13.6
|
|
0.24
|
East
Boulder
|
0.5
|
|
12.2
|
|
0.19
|
Total
|
Inferred
|
Gold
|
92.5
|
0.31
|
|
0.92
|
|
Palladium
|
1.0
|
|
12.9
|
|
0.43
|
Notes on Mineral Reserves and Mineral Resources
- All Mineral Reserves and Mineral Resources have been estimated in accordance with the 2014 Canadian Institute of 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.
- Mineral Reserves and Mineral Resources are reported above in millions of metric tonnes ("Mt"), grams per metric tonne
("g/t") and millions of ounces ("Moz").
- Qualified persons ("QPs"), as defined by the NI 43-101, for the Mineral Reserve and Mineral Resource estimates are:
-
- Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); and
- Ryan Ulansky, M.A.Sc., P.Eng. (Senior Director, Engineering),
- The Mineral Resources reported in the above tables are exclusive of Mineral Reserves.
- Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
- Mineral Reserves and Mineral Resources are reported as of December 31, 2017 based on
information available to the Company as of the date of this document, and therefore will not reflect updates, if any, after
such date.
- Process recoveries of palladium to a PGM concentrate average approximately 92%. Process recoveries of gold, being a
by-product, is not measured but has been assumed to be line with palladium.
- Mineral Reserves at Stillwater are estimated using appropriate process and mine recovery
rates, dilution, operating costs and the following cut-offs:
-
- Stillwater mine – combined platinum and palladium grade cut-offs of 10.29 g/t for
Off-shaft areas and 6.86 g/t for Farwest
- East Boulder mine – combined platinum and palladium cut-off of 6.86 g/t
- Mineral Resources at Stillwater are estimated using appropriate process recovery rates and
the following cut-offs:
-
- Stillwater mine and East Boulder mine – geologic
boundaries for Inferred Mineral Resources
- The Stillwater precious metals purchase agreement provides that effective July 1, 2018. Sibanye-Stillwater will deliver 100% of the gold production for the life of the mine 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 thereafter for the life of the mine. 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 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:
-
- Stillwater mine: Pd = (Pt + Pd) / (1/3.51 + 1) and Au = (Pd + Pt) x 0.0153
- East Boulder mine: Pd = (Pt + Pd) / (1/3.6 + 1) and Au = (Pd + Pt) x 0.022
- Gold is produced as a by-product metal; therefore, the economic cut-off applied to the reporting of gold Mineral Resources
and Mineral Reserves will be influenced by changes in platinum and palladium prices at the time.
- Full Mineral Reserve and Mineral Resource tables are available on the Company's website, www.wheatonpm.com.
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 payment of the upfront cash consideration of US$500 million to Sibanye-Stillwater in
connection with the Precious Metals Stream;
- the timing of delivery of gold and palladium by Sibanye-Stillwater under the Precious Metals Stream;
- the receipt of Wheaton of gold and palladium production in respect of Stillwater;
- the demand, uses and supply of gold and palladium;
- the construction timeline, including completion, of the Blitz Project.
- the commencement and timing of delivery of gold and palladium by Sibanye-Stilwater under the Precious Metals Stream;
- the construction timeline, including completion, of the mine expansion, including the underground mines, at Voisey's Bay by
Vale;
- the commencement and timing of delivery of cobalt by Vale under the Cobalt Stream;
- the receipt of cobalt by Wheaton of cobalt production in respect of Voisey's Bay;
- future payments by the Company in accordance with precious metal purchase agreements, including any acceleration of
payments, estimated throughput and exploration potential;
- projected increases to Wheaton's production and cash flow profile;
- the expansion and exploration potential at the Salobo and Peñasquito mines;
- projected changes to Wheaton's production mix;
- anticipated increases in total throughput;
- the estimated future production;
- the future price of commodities;
- the estimation of mineral reserves and mineral resources;
- the realization of mineral reserve estimates;
- the timing and amount of estimated future production (including 2018 and average attributable annual production over the
next five years);
- the costs of future production;
- reserve determination;
- estimated reserve conversion rates and produced but not yet delivered ounces;
- any statements as to future dividends, the ability to fund outstanding commitments and the ability to continue to acquire
accretive precious metal stream interests;
- confidence in the Company's business structure;
- the Company's position relating to any dispute with the CRA and the Company's intention to defend reassessments issued by
the CRA; the impact of potential taxes, penalties and interest payable to the CRA; possible audits for taxation years
subsequent to 2015; estimates as to amounts that may be reassessed by the CRA in respect of taxation years subsequent to 2010;
amounts that may be payable in respect of penalties and interest; the Company's intention to file future tax returns in a
manner consistent with previous filings; that the CRA will continue to accept the Company posting security for amounts sought
by the CRA under notices of reassessment for the 2005-2010 taxation years or will accept posting security for any other amounts
that may be sought by the CRA under other notices of reassessment; the length of time it would take to resolve any dispute with
the CRA or an objection to a reassessment; and assessments of the impact and resolution of various tax matters, including
outstanding audits, proceedings with the CRA and proceedings before the courts; and
- assessments of the impact and resolution of various legal and tax matters, including but not limited to outstanding class
actions.
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:
- that each party does not satisfy its obligations in accordance with the terms of the Precious Metals Stream;
- Sibanye-Stillwater is unable to commence, or the timing of delivery of gold and palladium by Sibanye-Stillwater is delayed
or deferred under the Precious Metals Stream or Wheaton International is unable to sell its gold or palladium production
delivered under the Precious Metals Stream at acceptable prices or at all;
- the decrease in demand for palladium, the decrease in uses for palladium or the discovery of new supplies of palladium, any
or all of which could result in a decrease to the price of palladium or a decrease in the ability to sell palladium;
- Sibanye-Stillwater does not meet the construction timeline, including anticipated completion of the Blitz Project;
- each party does not satisfy its obligations in accordance with the terms of the Cobalt Stream;
- Vale does not meet the construction timeline, including anticipated completion, of the mine expansion, including the
underground mines, at Voisey's Bay;
- Vale is unable to commence, or the timing of delivery of cobalt by Vale is delayed or deferred under the Cobalt Stream or
Wheaton is unable to sell its cobalt production delivered under the Cobalt Stream at acceptable prices or at all;
- the decrease in demand for cobalt, the decrease in uses for cobalt or the discovery of new supplies of cobalt, any or all
of which could result in a decrease to the price of cobalt or a decrease in the ability to sell cobalt;
- risks related to the satisfaction of each party's obligations in accordance with the terms of Wheaton's precious metal
purchase agreements, including any acceleration of payments, estimated throughput and exploration potential;
- fluctuations in the price of commodities;
- risks related to the Mining Operations including risks related to fluctuations in the price of the primary commodities
mined at such operations, actual results of mining and exploration activities, environmental, economic and political risks of
the jurisdictions in which the Mining Operations are located, and changes in project parameters as 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
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;
- differences in the interpretation or application of tax laws and regulations or accounting policies and rules;
- Wheaton's interpretation of, or compliance with, tax laws and regulations or accounting policies 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 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;
- the Company's business or ability to enter into precious metal purchase agreements being materially impacted as a result of
any CRA reassessment;
- any reassessment of the Company's tax filings and the continuation or timing of any such process is outside the Company's
control;
- any requirement to pay reassessed tax, and the amount of any tax, interest and penalties that may be payable changing due
to currency fluctuations;
- the Company not being assessed taxes on its foreign subsidiary's income on the same basis that the Company pays taxes on
its Canadian income, if taxable in Canada;
- interest and penalties associated with a CRA reassessment having an adverse impact on the Company's financial
position;
- litigation risk associated with a challenge to the Company's tax filings;
- credit and liquidity risks;
- indebtedness and guarantees risks;
- mine operator concentration risks;
- hedging risk;
- competition in the mining industry;
- risks related to Wheaton's acquisition strategy;
- risks related to the market price of the common shares of Wheaton;
- equity price risks related to Wheaton's holding of long‑term investments in other exploration and mining 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 and
experienced personnel;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Wheaton or the Mining Operations;
- risks relating to unknown defects and impairments;
- risks relating to security over underlying assets;
- risks related to ensuring the security and safety of information systems, including cyber security risks;
- risks related to the adequacy of internal control over financial reporting;
- risks related to governmental regulations;
- risks related to international operations of Wheaton and the Mining Operations;
- risks relating to exploration, development and operations at the Mining Operations;
- risks related to the ability of the companies with which Wheaton has precious metal purchase agreements to perform their
obligations under those precious metal purchase agreements in the event of a material adverse effect on the results of
operations, financial condition, cash flows or business of such companies;
- 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
rulings;
- the ability of Wheaton and the Mining Operations to comply with applicable laws, regulations and permitting
requirements;
- lack of suitable infrastructure and employees to support the Mining Operations;
- uncertainty in the accuracy of mineral reserve and mineral resource estimates;
- inability to replace and expand mineral reserves;
- risks relating to production estimates from Mining Operations, including anticipated timing of the commencement of
production by certain Mining Operations;
- uncertainties related to title and indigenous rights with respect to the mineral properties of the Mining Operations;
- fluctuations in the commodity prices other than silver or gold;
- 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;
- challenges related to global financial conditions;
- 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 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, 2017 and Form 6-K filed March 21, 2018 both
on file with the U.S. Securities and Exchange Commission in Washington, D.C. (the
"Disclosure"). Where applicable, readers should also consider any updates to such Disclosure that may be provided by Wheaton in
its quarterly Management's Discussion and Analysis.
Forward-looking statements are based on assumptions management currently believes to be reasonable, including but not limited
to:
- the payment of US$500 million to Sibanye-Stillwater and the satisfaction of each party's
obligations in accordance with the terms of the Precious Metals Stream;
- Sibanye-Stillwater is able to commence and meet its timing for delivery of gold and palladium under the Precious Metals
Stream and Wheaton International is able to sell palladium production delivered under the Precious Metals Stream at acceptable
prices;
- the demand and uses for palladium will not significantly decrease and the supply of palladium will not significantly
increase;
- Sibanye-Stillwater is able to meet the construction timeline, including anticipated completion, of the Blitz Project;
- Sibanye-Stillwater is able to commence and meet its timing for delivery of gold and palladium under the Precious Metals
Stream and Wheaton is able to sell gold and palladium production delivered under the Precious Metals Stream at acceptable
prices;
- Vale is able to meet the construction timeline, including anticipated completion, of the mine expansion, including the
underground mines, at Voisey's Bay;
- Vale is able to commence and meet its timing for delivery of cobalt under the Cobalt Stream and Wheaton is able to sell
cobalt production delivered under the Cobalt Stream at acceptable prices;
- Vale meets its obligations under the development agreement with the Government of Newfoundland and Labrador and the impacts and benefits agreements with
the Innu Nation and the Nunatsiavut government;
- the demand and uses for cobalt will not significantly decrease and the supply of cobalt will not significantly
increase;
- that each party will satisfy their obligations in accordance with the precious metal purchase agreements;
- that there will be no material adverse change in the market price of commodities;
- 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 Wheaton will continue to be able to fund or obtain funding for outstanding commitments;
- that Wheaton will be able to source and obtain accretive precious metal stream interests;
- expectations regarding the resolution of legal and tax matters, including the ongoing class action litigation and CRA
audits involving the Company;
- that Wheaton will be successful in challenging any reassessment by the CRA;
- that Wheaton has properly considered the application of Canadian tax law to its structure and operations;
- that Wheaton will continue to be permitted to post security for amounts sought by the CRA under notices of
reassessment;
- that Wheaton has filed its tax returns and paid applicable taxes in compliance with Canadian tax law;
- that Wheaton will not change its business as a result of any CRA reassessment;
- that Wheaton's ability to enter into new precious metal purchase agreements will not be impacted by any CRA
reassessment;
- expectations and assumptions concerning prevailing tax laws and the potential amount that could be reassessed as additional
tax, penalties and interest by the CRA;
- that any foreign subsidiary income, if taxable in Canada, would be subject to the same or
similar tax calculations as Wheaton's Canadian income, including the Company's position, in respect of precious metal purchase
agreements with upfront payments paid in the form of a deposit, that the estimates of income subject to tax is based on the
cost of precious metal acquired under such precious metal purchase agreements being equal to the market value of such precious
metal while the deposit is outstanding, and the cash cost thereafter;
- the estimate of the recoverable amount for any precious metal purchase agreement 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.
Non IFRS Measures
Wheaton has included, certain non-IFRS performance measures, including operating cash flow. The Company believes that, in
addition to conventional measures prepared in accordance with IFRS, management and certain investors use this information to
evaluate the Company's performance. Operating cash flow is based on current market cobalt prices of approximately
$40 per pound of cobalt, 2.6 million pounds of cobalt produced annually, a payable cobalt rate of
93.3%, production payment of 18%, and an assumed cobalt marketing fee. Non-IFRS measures do not have any standardized meaning
prescribed by IFRS, and other companies may calculate these measures differently. The presentation of 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 Management Discussion and
Analysis available on the Company's website at www.wheatonpm.com and posted
on SEDAR at www.sedar.com.
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, 2017 and other continuous
disclosure documents filed by Wheaton since January 1, 2018, 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 Investors Concerning 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
Mineral Reserves, adopted by the CIM Council, as amended (the "CIM Standards"). These definitions differ from the definitions in
Industry Guide 7 ("SEC Industry Guide 7") under the U.S. Securities Act of 1933, as amended (the "U.S. Securities Act"). Under
U.S. standards, mineralization may not be classified as a "reserve" unless the determination has been made that the
mineralization could be economically and legally produced or extracted at the time the reserve determination is made. Also, under
SEC Industry Guide 7 standards, a "final" or "bankable" feasibility study is required to report reserves, the three-year
historical average price is used in any reserve or cash flow analysis to designate reserves and the primary environmental
analysis or report must be filed with the appropriate governmental authority. 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; however, these terms are not defined terms under SEC Industry Guide 7 and are normally not permitted to
be used in reports and registration statements filed with the SEC. 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; however, the SEC normally only permits issuers to report mineralization that does not
constitute "reserves" by SEC standards as in place tonnage and grade without reference to unit measures. 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.shtml.
View original content:http://www.prnewswire.com/news-releases/wheaton-precious-metals-acquires-gold-and-palladium-stream-on-stillwater-300681070.html
SOURCE Wheaton Precious Metals Corp.
View original content: http://www.newswire.ca/en/releases/archive/July2018/16/c1260.html