Wheaton Precious earns US$197 million in Q3

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Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) said that despite inflationary pressures, the company has managed to maintain strong cash operating margins in the third quarter of 2022.

Wheaton President and CEO Randy Smallwood said cash margins of over 75% year to date highlight the strength of the company’s streaming business model.

Wheaton Precious Metals is a leading precious metals streaming company. Unlike traditional mining companies, Wheaton makes upfront payments and in return it purchases a fixed percentage of the future silver and/or gold production from a mine at a predetermined price. It can then sell the metal in the open market. In many cases, these agreements are for the life of the mine.

The company has streaming agreements covering 21 operating mines and 13 development stage projects. These include Vale’s Salobo mine in Brazil, Glencore AG’s Antamina mine in Peru and Newmont Corp’s [NGT-TSX, NEM-NYSE] Penasquito mine in Mexico.

Average annual production for the 10-year period ending December 31, 2031, is expected to be approximately 850,000 GEOs (gold equivalent ounces).

“Despite some recent challenges, we are pleased with the improvements we have seen over the third quarter in our diverse portfolio of high-quality assets, which is forecast to deliver significant organic growth over the next fives years and sustained precious metals production for decades to come,’’ Smallwood said.

Highlights from the company’s third quarter results include US$219 million in revenue and US$154 million in operating cash flow. Revenue in the third quarter of 2022 was down 19% from the year earlier period due primarily to a 12% decrease in the average realized gold equivalent price, and a 7.0% decrease in the number of GEOs sold.

The company also reported US$196.4 million in net earnings and US$94 million in adjusted net earnings in the quarter.

As of September 30, 2022, the company had US$495 million in cash and no debt.

Revenue was US$829 million in the nine months ended September 30, 2022, representing a 10% decrease from the comparable period of the previous year due primarily to a 5.0% decrease in the number of gold equivalent ounces sold, a 6.0% decrease in the average realized gold equivalent price.

During the quarter, the company said it completed the previously disclosed termination of the Keno Hill precious metal purchase agreement for US$141 million, resulting in an impairment reversal of US$10 million and a gain on disposition of $US104 million.

On November 3, 2022, Wheaton shares closed at $45.13 and currently trade in a 52-week range of $65.45 and $39.05. The company has declared its fourth quarterly cash dividend of US$0.15 per common share, payable to holders of Wheaton common shares as of the close of business on November 21, 2022.

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