VANCOUVER, British Columbia,
Feb. 21, 2019 /PRNewswire/ --
TSX: WPM
NYSE: WPM
Wheaton Precious Metals™ Corp. ("Wheaton" or the "Company") is
pleased to announce that 2018 estimated production exceeded
guidance as detailed in the table below and provide production
guidance for 2019 and the estimated average annual attributable
production over the five year period ending with 2023. Wheaton will
provide full production and financial details with the release of
its 2018 fourth quarter and full year results on Wednesday, March 20, 2019.
Attributable
Production and Forecast
|
Metal
|
2018
Forecast
|
2018
Actual1
|
2019
Forecast
|
Forecast
annual average
(2019-2023)
|
Gold
Ounces
|
355,000
|
373,239
|
365,000
|
|
Silver Ounces
('000s)
|
22,500
|
24,474
|
24,500
|
|
Palladium
Ounces
|
10,400
|
14,686
|
22,000
|
|
Gold Equivalent
Ounces2
|
645,000
|
688,120
|
690,000
|
750,000
|
Sales
|
Metal
|
2018
Actual
|
Gold
Ounces
|
349,168
|
Silver Ounces
('000s)
|
21,733
|
Palladium
Ounces
|
8,717
|
Gold Equivalent
Ounces 2
|
625,271
|
"Our portfolio once again delivered a very strong performance in
2018 with production significantly exceeding our expectations for
all precious metals," said Randy
Smallwood, Wheaton's President and Chief Executive Officer.
"The strong operational results cap an exceptionally successful
year in which Wheaton strengthened its existing portfolio, added
two new streams from top-tier mines and settled our longstanding
tax dispute, creating a foundation for future growth. With the tax
dispute behind us, we look forward to our company once again being
valued solely based on the virtues of our diverse portfolio of
high-quality assets which continue to deliver strong margins and
the highest operating cash flow amongst our peers."
2018 Production Results
In 2018, production exceeded
guidance primarily as a result of stronger than expected production
from the Salobo and Stillwater
mines partially offset by weaker than expected production from
Peñasquito.
2019 and Long-Term Production Forecast
Wheaton's
estimated attributable precious metals production in 2019 is
forecast to be approximately 365,000 ounces of gold, 24.5 million
ounces of silver and 22,000 ounces of palladium, resulting in gold
equivalent production2 of approximately 690,000
ounces. For the five year period ending in 2023, the Company
estimates that average, annual gold equivalent production will
amount to 750,000 ounces.
In 2019, forecast silver production growth from Peñasquito is
expected to be partially offset by the change in the San Dimas
stream from silver to gold as well as the cessation, in 2018, of
production from assets with fixed terms. Gold production in 2019 is
expected to be slightly below 2018 as a result of lower grades at
Salobo due to mine sequencing (most pronounced in the first quarter
of 2019) being partially offset by increased attributable gold
production from the San Dimas mine. At Constancia, Hudbay Minerals
Inc. ("Hudbay") expects to begin mining the Pampacancha satellite
deposit later in 2019, which has significantly higher precious
metals grades than what is currently being mined; however, given
the lack of a definitive schedule at this point, forecast gold
production in 2019 does not include any contribution from the
Pampacancha deposit3. Palladium production is expected
to increase in 2019 as the Company has its first full year of
production from the Stillwater
stream, which was acquired in July of 2018.
Average production over the next five years is expected to
increase primarily due to continued production growth from
Peñasquito, Constancia and Stillwater as well as the commencement of the
Voisey's Bay stream in 2021. At Peñasquito, grades are expected to
increase and the addition of the pyrite leach plant should improve
recoveries. At Constancia, production from the Pampacancha deposit
is included in Wheaton's five year production
average. Palladium and gold production from Stillwater is expected to increase with the
continued ramp up of the Blitz project which is expected to reach
full capacity in 2021. In addition, effective January 1, 2021, Wheaton will be entitled to
receive from Vale an amount of cobalt equal to 42.4% of the
Voisey's Bay mine cobalt production. And lastly, Wheaton does not
include any production from Barrick Gold Corp.'s Pascua-Lama
project or Hudbay's Rosemont
project in its estimated average five-year production
guidance4.
Tax Dispute Settlement impact on Fourth Quarter and Year End
2018 Results
As a reminder, on December 13, 2018, Wheaton announced that it had
reached a settlement with the Canada Revenue Agency ("CRA") which
provides for a final resolution of Wheaton's tax appeal in
connection with the reassessment of the 2005 to 2010 taxation
years. The terms of the settlement provide that foreign income on
earnings generated by Wheaton's wholly-owned foreign subsidiaries
will not be subject to tax in Canada5. In addition, the
settlement provided for Wheaton to increase fees for the services
rendered to its foreign subsidiaries by, first, including the
third-party costs incurred by Wheaton directly associated with
raising capital that was used to fund investments made by its
foreign subsidiaries in precious metals purchase agreements and
secondly, increasing the markup on costs incurred by the parent
company that are charged to the foreign subsidiaries, including
attributable capital-raising costs, from 20% to 30%.
The application of the settlement, after applying non-capital
losses otherwise available, will result in no additional cash taxes
for the 2005 to 2010 taxation years. The application of the
principles of the settlement to the 2011 to 2017 taxation years is
expected to result in cash taxes payable of approximately
$5 million. The net result is a cash
outlay for all past taxation years of approximately $10 million, including ancillary interest.
From an accounting perspective, share issue costs reduce share
capital rather than being deducted as an expense in the Statement
of Earnings. Accordingly, the tax benefit related to these costs,
which are deducted for tax purposes over a 5-year period, is also
recognized in share capital. As a result, in recognizing the
tax benefit of the non-capital losses utilized to offset the
additional taxable income arising from the settlement, a
significant component of which relate to share issue costs, we
anticipate recording a deferred tax expense of approximately
$15 million in the Statement of
Earnings with an offsetting deferred tax recovery reflected
directly in the Statement of Shareholders' Equity.
As we've previously indicated, the impact of the settlement will
be reflected in the company's financial results for the three
months and year ended December 31,
2018. The total impact of the settlement on Wheaton's fourth
quarter 2018 after-tax earnings, including current and deferred
taxes, ancillary interest and associated legal expenses is
estimated to be $30 million, of which
approximately $15 million would
relate to a deferred tax expense.
End Notes
1 Ounces produced
represent the quantity of silver, gold and palladium contained in
concentrate or doré prior to smelting or refining deductions.
Production figures and average payable rates are based on
information provided by the operators of the mining operations to
which the silver, gold or palladium interests relate or management
estimates in those situations where other information is not
available. Certain production figures may be updated in
future periods as additional information is received.
2 Gold equivalent ounces for 2018 actual production
and sales are calculated by converting silver to a gold equivalent
by using the ratio of the average price of silver to the average
price of gold and by converting palladium to a gold equivalent by
using the average price of palladium to the average price of gold,
with all figures being as per the London Bullion Metal Exchange
during 2018. Gold equivalent production forecasts for 2018, 2019
and the five-year average are based on the following commodity
price assumptions: $1,300 / ounce
gold, $16 / ounce silver,
$1,350 / ounce palladium, and
$21 / pound of cobalt.
3 As per Wheaton's precious metals purchase
agreement with Hudbay, Wheaton is entitled to a delay payment
payable in gold ounces from Hudbay as a result of the delay in
mining the Pampacancha zone. The gold ounces delivered to Wheaton
are included in the Company's production guidance.
4 In preparing the long-term production forecast,
Wheaton has considered the impact of Vale's recently announced
approval of the Salobo III copper project, a brownfield expansion,
which if completed as proposed, would increase processing
throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up
(the "Salobo Expansion"). However, readers are cautioned that Vale
has not finalized its mine plan and as such, Wheaton has not
included any production growth as a result of the Salobo
Expansion.
5 The application of the settlement to years after
2010 (including the 2011 to 2015 taxation years which are currently
under audit) is limited to transfer pricing and will be subject to
there being no material change in facts or change in law or
jurisprudence.
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:
- anticipated increases in total throughput;
- the estimated future production, including projected increases
to Wheaton's production;
- the future price of commodities;
- the timing and amount of estimated future production (including
2019 and average attributable annual production over the next five
years);
- the costs of future production;
- 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 estimation of the cash taxes payable in respect
of the 2005 to 2010 taxation years as a result of the settlement of
the CRA dispute; the Company's assessment of the impact of the
settlement of the CRA dispute for years subsequent to 2010;
possible audits for taxation years subsequent to 2015; and
assessments of the impact and resolution of various tax matters,
including outstanding audits; 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:
- fluctuations in the price of commodities;
- risks related to the mining operations from which Wheaton
purchases precious metals or cobalt (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;
- 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 in estimating cash taxes payable in respect of the 2005
to 2010 taxation years and assessing the impact of the settlement
with the CRA for years subsequent to 2010, including whether there
will be any material change in the Company's facts or change in law
or jurisprudence;
- 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;
- litigation risk associated with a challenge to the Company's
tax filings;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Wheaton
or 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; 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., together with
Wheaton's subsequent financial statements and related management's
discussion and analysis available on SEDAR and filed on Form 6-K
(the "Disclosure").
Forward-looking statements are based on assumptions management
currently believes to be reasonable, including but not limited
to:
- 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;
- that Wheaton's estimation of cash taxes payable in respect of
the 2005 to 2010 taxation years as a result of the settlement of
the CRA dispute and the Company's assessment of the impact of the
settlement of the CRA dispute for years subsequent to 2010 are
accurate, including the Company's assessment that there will be no
material change in the Company's facts or change in law or
jurisprudence for years subsequent to 2010;
- expectations regarding the resolution of legal and tax matters,
including the ongoing class action litigation; 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.
Contact: Patrick Drouin, Senior
Vice President, Investor Relations, Wheaton Precious Metals Corp.,
Tel: +1-844-288-9878, Email: info@wheatonpm.com, Website:
www.wheatonpm.com