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Wheaton posts best year ever

Wheaton Precious Metals delivered record revenue of more than US$1 billion in 2020, despite the impacts of the COVID-19 pandemic, as it narrowly missed its pre-pandemic guidance.
Wheaton posts best year ever Wheaton posts best year ever Wheaton posts best year ever Wheaton posts best year ever Wheaton posts best year ever

Vale's Salobo copper mine in Brazil

"In the face of the pandemic, we not only survived but thrived," Wheaton Precious Metals president and CEO Randy Smallwood told Mining Journal.

"The ability of our team to transition into working from home and dealing with the challenge of remote due diligence to stay on top of our existing assets and virtual mine tours to come out with actual growth in the year was amazing.

"The quality of our assets really stood through as we were 2% off our original guidance when though several assets had operations suspended for more than two months, which is why we like investing in first and second quartile assets."

Wheaton added two new deals in 2020 with streams on the Marmato gold development project in Caldas, Colombia, now owned by Aris Gold, and Capstone Mining's Cozamin copper mine in Zacatecas, Mexico.

And with the copper price heating up, Smallwood said more deals were in the pipeline with the company looking at transactions in the $300-500 million range.

"Base metals are waking-up from a slumber and reinvesting back into itself and streaming is one of the most attractive ways to finance a base metals project," he said.

"We will pay more for a precious metals by-product than their shareholders value them at. When travel opens up we will be very busy. We have a couple of assets we want to get on the ground to see and I am looking forward to having our own team on the ground."

The company is guiding towards 750,000oz gold-equivalent for 2021, 10% more than 2020. The company also issued its first ever 10-year guidance featuring growth to 830,000oz/y. However, this could be understated depending upon how Vale seeks to continue with the development of its Salobo copper mine in Brazil, where the phase three development is due to enter production in 2022.

"Vale hasn't made a decision about whether it will continue stockpiling low-grade material or process all materials through the mill," Smallwood said.

"We took a conservative approach that everything will be milled and as it is lower grade, it would mean only a slight increase in gold production. However, the economics support continuing to stockpile and we have an incentive with an expansion payment that drives them towards stockpiling which could push our production closer to 1Moz/y."

Wheaton maintained its dividend policy of returning 30% of cash flow to shareholders but bumped up its base quarterly dividend from 10c to 13c. "To promote stability, we announce a new floor price each year which we won't let the dividend fall below. With cash flow approaching $1 billion/y our objective is to put money back in the ground but if we see the cash balance build up we will have to look at increasing the dividend and returning cash to shareholders," said Smallwood.

Shares in Wheaton Precious Metals are trading at $39.30, valuing the company at $17.6 billion.