Wheaton Precious Metals Corp. (WPM) Earnings Call Transcript

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals' 2026 Third Quarter Results Conference Call. [Operator Instructions]. I would like to remind everyone that this conference call is being recorded on Friday, November 6, 2026 at 11:00 a.m. Eastern Time. I will now turn the conference over to Emma Murray, Vice President of Investor Relations. Please go ahead.

Thank you, Julian. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Haytham Hodaly, Weaken Precious Metals' President and Chief Executive Officer; Vincent Lau, Chief Financial Officer; Wes Carson, Vice President, Mining Operations; and Neil Burns, Vice President, Corporate Development. Please note for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the presentation 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 disclosure. It should be noted that all figures referred to on today's call are in U.S. dollars unless otherwise noted. With that, I'd like to turn the call over to Haytham Hodaly, Wheaton's President and Chief Executive Officer.

Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's third quarter results of 2026. Wheaton's momentum continued in the third quarter, supporting a record-breaking first 9 months for the company. Year-to-date, we have delivered record production sales volumes, revenue earnings and operating cash flow. Our portfolio of long-life, low-cost assets produced 231,000 gold equivalent ounces in the third quarter led by our operating assets, including Salobo, Antamina and Penasquito, together with the continued ramp-up of our development assets, keeping us firmly on track to achieve our 2026 production guidance range. Our corporate development team continues to evaluate a robust pipeline of opportunities while maintaining the discipline to pursue only the most accretive transactions. At the same time, the quarter was exceptionally active across our portfolio, with a series of catalysts and further derisk that further derisk our growth pipeline and marked meaningful progress towards future growth. Vale Base miles announced plans to implement a particle flotation circuit at Salobo, an investment that is expected to add 6 million tonnes to Salobo's annual processing capacity and one that underscores Vale's long-term commitment to the operation. In Côte d'Ivoire, Montage Gold achieved first gold for its coning project. And in Ethiopia, Allied Gold has begun production at its [indiscernible] the transition of 2 key development assets into production. This week, [ B2Gold ] announced that they have completed Phase 1 upgrades to the fixed crushing circuit of the Goose project in [indiscernible]. We also received our first deliveries related to Ivanhoe's port project in South Africa, an important step as that project continues to ramp up. Furthermore, Hudbay approved construction at the Copper World project in Arizona, a significant milestone as this long life asset advances towards production. And in Australia, [ K&GL ] Resources approved a final investment decision for its [ JurVoice ] project. Collectively, these catalysts reinforce our confidence in Wheaton's sector-leading organic growth profile of 50% by 2030. That growth is already embedded in our existing portfolio and is not reliant on future transactions. Our balance sheet remains strong with approximately $3 billion in total liquidity between cash on hand and our revolving credit facility as of September 30. Together with our robust forecasted operating cash flows, we believe this provides ample flexibility to fund all outstanding commitments and pursue new accretive streaming opportunities. Importantly, we remain disciplined in employing that capital. Our corporate development team continues to see healthy demand for streaming with a focus on high-quality opportunities that are structured to enhance our existing portfolio and further strengthen our growth profile. At our Investor Day held during the quarter, we highlighted what we call the Wheaton difference, showcasing how our focus on high-quality assets, superior structuring and strong partnerships underpins our disciplined approach to capital allocation. Turning to sustainability. Innovation remains critical to advancing more efficient and sustainable mining practices. We have been encouraged by the submissions to our third annual future mining challenge, which is focused on mine optimization and reducing land impacts. Three finalists are expected to be announced in February in the winter selected in March 2027. With that, I would now like to turn the call over to Wes Carson, our Vice President of Mining Operations, who will provide more detail on our operating results. Wes?

Thanks,. Good morning, everyone. Overall production in the third quarter was 231,000 gold equivalent ounces, a 13% year-over-year increase, primarily driven by the addition of the [ BHP Antamina stream ] together with new production from [ Hemlo Phoenix Platt Reef ] and Mineral Park. In Q3, Salobo produced 65,800 ounces of attributable gold, decreased approximately 2% relative to Q3 2025, primarily the result of lower grades due to mine sequencing, partially offset by higher recoveries and throughput. As Haytham mentioned, during the quarter, Vale Base Metals reported that core particle flotation is expected to be the key near-term growth driver at Salobo, supporting loves expansion from 12 million to 18 million tonnes per annum and targeting total throughput for the operation of 42 million tonnes per annum by 2029. In Q3, Antamina produced 2.7 million ounces of attributable silver an increase of approximately 60% relative to Q3 2025. The increase was primarily driven by the newly acquired BHP Antamina stream, which increased the company's share of silver production in Antamina from 33.75% to 67.5% effective April 1, 2026. The increased production share was partially offset by lower silver rates, which were attributable to bid sequencing with a greater portion of copper-only ore processed during the quarter relative to copper in corp, which contains more silver. On September 26, 2026, Montage Gold reported that it achieved for [indiscernible] at its Kona mine on budget and ahead of schedule. Montage reported that the oxide surgeon is expected to reach commercial production in Q4 2026, while construction of the hard rock combination circuit remains on budget and on track for completion in Q2 of 2027. Several development projects continue to ramp up in Q3 2026, including Mineral Park, Phoenix and Platreef with commercial production at both Phoenix and Platreef expected in Q4 of 2026. [indiscernible] Allied Gold reported that or had been introduced into the processing plant and the mine is now in production, ramping up into the end of the year with commercial production expected before year-end. We also saw a significant derisking across the rest of our development pipeline. At Couple world, Hudbay and Mitsubishi announced the results of the definitive feasibility study and formally approved the final investment decision to proceed with construction with first targeted production in the second half of 2029. In Australia, the KGL Resources Board approved the final investment decision for the [ Javoice ] project, which is fully funded with first concentrate production targeted for the first half of 2028. At Marathon Generation Mining commenced construction following the earlier announcement that it had secured final funding with early works expected to run through Q4 2026 and into 2027. With [ KONE and Kimo ] now transitioning into production to voice targeted for the first production in 2020 at Copper World for the second half of 2029, these catalysts are expected to continue to derisk the development pipeline that underpins our industry-leading growth profile. Wheaton's production outlook for 2026 remains unchanged with strong year-to-date production of approximately 640,000 GEOs. We remain well positioned to achieve our annual production guidance of 860,000 to 940,000 GEOs and maintain a strong production forecast across the portfolio for the fourth quarter. Looking ahead, we expect annual production to grow to an industry -- at an industry-leading rate reached 1.2 million TEUs by 2030 and with average annual production forecast to remain at approximately 1.2 million GEOs from 2031 to 2035. That concludes the operations overview. And with that, I'll turn the call over to [indiscernible].

Thank you, Wes. Production in the third quarter was 231,000 GEOs, a 13% increase year-over-year, driven primarily by the addition of the BHP Antamina stream and continued contributions from newly operating assets, including Hemlo, Phoenix, Platreef and Mineral Park. Sales volumes were 192,000 GEOs, a 19% increase from the prior year. At the end of the third quarter, the produced but not yet delivered or PBND balance was estimated to be 179,000 GEOs, representing 2.6 months of payable production. This represents an increase from the prior quarter due primarily to the timing differences between production and sales. Looking ahead, we expect increased production in the fourth quarter to result in a slightly higher PBND balance with higher sales volumes expected in the first quarter of 2027 due to the timing differences between production and sales. Strong commodity prices together with higher sales volumes generated quarterly revenue of $772 million, an increase of 62% compared to the prior year. This increase was driven by a 36% increase in the average realized gold equivalent price combined with a 9% increase in the GEOs sold. Of this revenue, 51% was attributable to gold, 46% to silver and the remainder to palladium and cobalt. Net earnings increased by 12% from the prior year to $410 million, while adjusted net earnings increased by 46% to $410 million, resulting in year-to-date records across revenue, net earnings and operating cash flows. These results highlight the strength of our asset base and the ability of the streaming model to translate higher commodity prices at a significant cash flow. During the quarter, we generated approximately $645 million in operating cash flow and made approximately $87 million in upfront payments related to El Domo and Marmato. We also made a quarterly dividend payment of approximately $88 million and repaid $372 million under our revolving credit facility. As a result, net debt declined from approximately $1.9 billion at the end of the second quarter to approximately $1.5 billion at the end of the third quarter, demonstrating the strength of our gas generation and our capacity to rapidly repay debt. At September 30, we had approximately $146 million in cash on hand $1.6 billion of debt outstanding under our term loan and revolving credit facility. With our revolver nearly retained, we intend to maintain term loans to preserve liquidity for potential near-term opportunities. while retaining significant flexibility to fund our existing commitments. Given the strength of our production outlook and high-margin business model, we expect to continue to reduce our net debt and return to a net cash position in the near term, while remaining well positioned to pursue additional accretive stream acquisitions. This concludes the financial summary. I'll now hand things back over to Haytham.

Thank you, Vincent. In summary, Wheaton's strong momentum continued through the third quarter, contributing to a record setting first 9 months. Year-to-date, we achieved records across productions and sales volumes, revenues earnings and operating cash flow reflecting the quality of our strength and strength part of our portfolio. Our growth pipeline delivered on multiple fronts with first [ Gulfport Kony ] and the start of production at [ Karma ] the constructional [indiscernible] Copper World FID approval at voice and the planned implementation of a coarse particle flotation circuit at Salobo, which represent just a few of the catalysts we see in our growth profile. Our balance sheet remains strong, providing the flexibility to fund all of our commitments while pursuing well-structured accretive opportunities. And as the pioneers of the stream model, we continue to believe Wheaton offers one of the most effective ways to gain exposure to gold and silver with a growing dividend and a sector-leading growth profile. With that, I would now like to open up the call for questions. Operator?

[Operator Instructions]. Our first question comes from Fahad Tariq from Jefferies.

Just on the gold guidance for the year. I think if I do the math right, it implies a pretty significant pickup in the fourth quarter. Can you maybe touch on the contributing factors to that and specifically on Salobo and what you're expecting on gold grades there?

So really, it is Salobo slow that is the main driver of the improvement in the fourth quarter. And really what we're looking at there is just getting back into kind of the bottom of the pit. We did see in the third quarter slight drop in grades at Salobo really as they were forced us due to some operational issues to move into Phase 5 of the pit, which is a little bit lower grade. And that means really the fourth quarter here, we should see quite a significant grade improvement and expect a strong Salobo. All the other assets are actually is setting up pretty well for this fourth quarter as well. So I think really, we're expecting a strong gold fourth quarter.

Okay. And then just a follow-up. Is there any expected contribution from Koné or [indiscernible] in the fourth quarter? Or is that -- is there going to be a more significant lag and that will be something more in the first quarter of next year?

We may see some very small production from both those assets in the fourth quarter, but it's not currently in our forecast. So if we do see some, it will be [indiscernible].

Our next question comes from Brian MacArthur from Raymond James.

It just has to do with the restructuring of the Salobo PPA. The $40 million gets paid in installments and you mentioned that will be up and running by 2029. But do you make any $8 million payments in that time period? Or is that all post 2029, so I can think of these as 220 million payments before '29 and then take all the 8 out after. Is that how this works?

Yes. Thanks for the question, Brian. Really, the -- when we did the deal on the core particle flotation, we actually removed those $8 million payments. So that was to do with the high-grade option. So there are now just the 2 $20 million payments, one, about 50% completion and one at completion of the CPF project.

Perfect. And then is there any option or anything if they decide to do what I would call Salobo I now as a result of this restructuring? Or do -- if that comes up, do you just go back and set a new deal?

Salobo, I mean, we'd love to see a Salobo [ 4 ] it happen, Brian, I would say. That being said, there's no current plan to move forward with that, but they're always looking for ways to continue to grow that production on. When you've got decades of reserve life, you're always trying to figure out a way to accelerate that production. So if there was -- although there's no requirement in our contract to do so, if they made it more economic for us to help, we would always something we would consider.

Our next question comes from Cosmos Chiu from CIBC.

Maybe to follow on, on the Vale. The coarse particle the construction here. The $40 million, as you mentioned, is in lieu of the $80 million that would have been paid on the high-grade proposal that's under the previous agreement. But I guess my question is, you've kind of quantified the coarse particle processing, additional 6 million tons. How does that compare to what the benefit would have been with a high grade? Is it about half? Is that why you're paying half $40 million versus what would have been paid $80 million under the high-grade proposal?

I wouldn't look at it in that way, really. I mean the high-grade payment was really almost say, like an artifact of kind of what the original deal was when we negotiated lower and when we made the changes to that, that high-grade plan is something that really has changed quite a bit, and it's really integrated into the current planning with the significant increase. So -- and really, the way that you can look at it as they're actually beating more material through, which means that you are getting significantly more metal it doesn't change, I would say, the way that you would look at it between those 2 plans. The $40 million is really was calculated based on what the capital was to build that project and the benefit that Wheaton was going to see a -- so that's really how we came up with that number. It's not a -- those 2 numbers are not directly early.

And you know what, the $40 million, the payback period of out to us, like 1.5 years. So it makes complete sense to be aligned on that and get that benefit together with Vale.

Yes, I like how -- you mentioned that it's an artifact. I remember it being signed. So that would make me an artifact too. In terms of -- it's great to see that you've maintained your long-term guidance, 1.2 million geos. But I guess my question is, that's based on a gold silver ratio of 60:1. We're not really at 60:1 at the moment. Maybe it's too early to ask. Have you thought about what ratio you could be using when you put out your new 5-year guidance? And could that change the $1.2 million?

So yes, it's a little bit early. Usually, we reassess that at the end of the year when we see how things are going early next year, but we are optimistic on the outlook for both gold and silver. And we do think silver will have a better recovery. I will say that we're fairly comfortable with the 1.2 million, but it does vary based on what that ratio is. But we do have at least another 3 or 4 different development projects in the pipeline over the next 5 to 6 years that are also kicking in, whether it's generation mining their marathon project, whether it's a [ Jervois ] project, whether it's the can [ Greyhose ] project that [ Cmax ] is putting together. Like there's a lot of additional growth that's not already in that number. So we would hope to be able to at least maintain that number going forward. But again, it all depends on where that ratio ends up.

Great. And then maybe one last question. Looking wider. We're seeing some buydowns not so much Wheaton precious metals but some of your competitors, [indiscernible] last night. Could you remind me, Haytham, if there's any potential buy-downs near term within your portfolio?

So Cosmos, that's a great question. And the reason I'll say that is because one of the things we've always resisted is having buydowns. The only time we provide buy downs is in the event of a change of control because a lot of the projects that we have actually funded the development state projects. They're always looking for ways to either build value and sell the asset or continue to grow. What we found and what we provide is only a 1/3 buydown in the event of a change of control for a limited period of time. And we don't, at this point, see anything that is going to kick in here in the next few years that's going to activate that. So we're pretty comfortable with our portfolio as it stands.

Our next question comes from Daniel Major from UBS.

First, operational question. Newmont indicated on their call expected a sharp reduction in silver production in Q4, but then also at a group level, about a 30% reduction in silver production in 2027, which essentially implies lower output from Penasquito. Can you give us a [ bar ] on how you're seeing that profile specifically at Penasquito Q4 and directionally into next year? And then the second question, just on that in terms of the sales profile, both Penasquito and Salobo have seen pretty sizable build sort of a [indiscernible] between sales and production? Is that going to unwind in Q4?

Yes. Thanks for the question, Daniel. So both of those items on Penasquito are integrated into our current plans, we are expecting to see a fairly significant decrease in silver production at Penasquito. Really, that just ties into the way the pit production is set up and into next year as well, where they're starting to feed some of those carbon-rich stockpiles in. They've got a fairly significant amount of that that's in the plan next year as they continue on with stripping in the [ Penasco ] pit. So both of those are currently integrated into the production profiles for this year and next.

And on the [ BD], we're currently sitting at about 2.6 months as a whole as a portfolio. So that's kind of the lower end of the range. As I said earlier, we do expect a slight increase going into Q4 just with the higher production coming from Salobo. So not a material increase, but a slight increase to our overall PBND balance heading into year-end.

Okay. So we shouldn't see a significant unwind yes, slight build? Okay. That's clear. And then on Antamina, yes. I mean it feels like underlying production lagged a little bit behind expectations this year. Can you give us a [indiscernible] on whether you'd expect that to benefit where you're previously thinking on 2027? And directionally, how should we be thinking about Antamina your share of sulfur into next year?

Yes. I would say for this year, in Q3, we actually saw quite a significant improvement as they began to get into some of that more [ bornite-rich ] ore. So -- and there was quite an uptick actually in Q3 on that, and we expect that to continue into Q4 here with really kind of strong production in Q4. There is a fair bit of that material that's in and around that old in-pit crusher that they're starting to take out, and that is what we're starting to see come out and that carries into certainly the -- well into next year and into the early part of '28 as well.

Okay. So directionally, on adjusting for the -- stripping out the change in ownership, you'd expect sequentially higher production from Antamina in '27 versus '26?

It's actually scheduled to be a little bit less, but it's not materially less.

Okay. So broadly similar.

Our next question comes from Derick Ma from TD Cowen.

I just want to add on a couple of questions I've heard already been asked. On Salobo, are we expecting higher grades from Q4 to flow into 2027 as well? Or how should we be thinking about the grades?

In Q4, we're certainly expecting those higher grades. For '27, it's a reasonably similar year. So I mean, we'll and we'll put that in kind of as we look into the budget for next year, but it is a reasonably similar year next year to what we saw this year overall.