Wheaton Precious Metals Corp

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2022 fourth quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad or type your question in the Q&A box of the webinar. If you would like to withdraw your question, press star 2. Thank you. I would like to remind everyone that this conference is being recorded on Friday, March 10, 2023 at 11 a.m. Eastern Time. I will now turn the conference over to Mr. Patrick Drouin, Senior Vice President of Investor Relations and Sustainability. Please go ahead.

Thank you, Operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Wheaton Precious Metals President and Chief Executive Officer, Gary Brown, Senior Vice President and Chief Financial Officer, Haytham Hodaly, Senior Vice President, Corporate Development, and Wes Carson, Vice President, Mining Operations. Please note that for those not currently on the webcast, the slide presentation accompanying this conference call is available in PDF format on the presentations page of the Wheaton Precious Metals website. I'd like to bring to your attention that some of the commentary in today's call may contain forward-looking statements, and I would direct everyone to review slide two of the presentation, which contains important cautionary notes regarding forward-looking statements. It should be noted that all figures referred to on today's call are on U.S. dollars and less otherwise noted, and in addition, reference to Wheaton or Wheaton Precious Metals on this call includes Wheaton Precious Metals Corp and or its wholly owned subsidiaries as applicable. Now I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Thank you, Patrick, and good morning, everyone. Thank you for joining us today to discuss Wheaton's fourth quarter and year end results for 2022. During 2022, we remained extremely active as we added more streams, optimized our current portfolio and made several industry leading commitments on the sustainability front. While gold held historically high levels throughout the year, Inflationary pressures had a significant impact on traditional miners, resulting in their margins being compressed. Wheaton, however, continued to deliver cash operating margins of 75% in the fourth quarter, reflecting the resilience of our business model. From a financial perspective, in the fourth quarter, Wheaton generated $236 million in revenue, $172 million in operating cash flow, and $166 million in net earnings, as Gary will discuss shortly. This solid performance contributed to our record annual dividend distribution of $237 million to shareholders. As we continue to see a healthy appetite for streaming as a source of capital for the mining industry, we are actively pursuing a number of new accretive opportunities. Furthermore, we have demonstrated our continued willingness to identify strategic opportunities both externally and within our portfolio that create value for our shareholders. To that end, in the quarter, we completed the previously announced sale of the Yaliaku Stream back to Glencore for $132 million, a continuation of our portfolio optimization efforts. The sale of Yaliaku and Kino Hill Streams contributed to the overall quality of our portfolio, where now 93% of Wheaton's production comes from assets that fall in the lowest half of the cost curve. In addition, the sale of these assets positions Wheaton with one of the strongest balance sheets in the industry. and we enter 2023 exceptionally well positioned to deliver long-term shareholder value through the significant organic growth profile that is already embedded into our portfolio, as well as through additional accretive acquisitions. We can continue to demonstrate our leadership in sustainability with sector leading scores, including a AA rating from MSCI, and a genuine number one rating in precious metals from Sustainalytics. I would now like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer, who will provide more details on our results. Gary.

Thank you, Randy, and good morning, ladies and gentlemen. The company's precious metal interests produced 148,300 gold equivalent ounces, or GEOs, in the fourth quarter of 2022. Precious Metals Corp. representing a 15% decrease relative to Q4 2021 due to the combination of a 10% decrease in sales volumes and a 6% drop in commodity prices. Of this revenue, 50% was attributable to gold, 45% silver, 3% palladium, and 2% cobalt. As at December 31st, 2022, approximately 112,000 GEOs were in PB&D, In addition to cobalt inventory amounting to 12,000 GEOs, with a combined figure of 124,000 GEOs representing approximately 2.3 months of payable production. This balance is 24,000 GEOs lower than the average over the preceding four quarters. Gross margin for the fourth quarter of 2022 decreased 20% to $121 million. Reflecting not only the 15% decrease in revenues, but also a higher proportion of sales volumes being attributed to streams with a higher unit cost, coupled with a cobalt inventory write-down. G&A expenses and donations amounted to $11 million in the fourth quarter of 2022, virtually unchanged from Q4 of 2021. During the fourth quarter of 2022, the company terminated its Yaliaku stream, resulting in a gaining on disposal of $51 million, including the YALI Accu-Disposition. Net earnings amounted to $166 million. Neutralizing for the YALI Accu-Disposition together with other anomalous items, adjusted net earnings amounted to $104 million compared to $132 million in Q4 2021, with the decrease being attributable to the lower growth margin. Basic adjusted earnings per share amounted to 23 cents compared to 29 cents per share in the prior year. Operating cash flow for the fourth quarter of 2022 amounted to $172 million, or 38 cents per share, compared to $195 million, or 43 cents per share in the prior year, representing a 12% decrease on a per share basis. Based on the company's dividend policy, the company's board has declared a dividend of 15 cents a share Payable to Shareholders of Record on April 6, 2023 During the fourth quarter of 2022, the company received $132 million in exchange for the termination of the Yaliaku stream, disbursed $60 million in dividends, invested $31 million relative to the Goose project, and $13 million relative to the Kurapamba project, highlighting that these projects are advancing, fueling Wheaton's future organic growth. Overall net cash inflows amounted to $201 million in Q4 2022, resulting in cash and cash equivalents at December 31st of $696 million. Looking at our annual results, for the year ended December 31st, 2022, production amounted to 638,000 GEOs. Revenue amounted to $1.1 billion, representing 11% decrease relative to 2021. due to the combination of lower sales volumes and commodity prices. Of this revenue, 50% was attributable to gold, 44% silver, 3% palladium, and 3% cobalt. Gross margin decreased 14% to $565 million. G&A expenses amounted to $36 million and donations amounted to $6 million with the total of $42 million being virtually unchanged from 2021. However, this was $5 million below the lower end of our original guidance, primarily due to lower professional fees and employee compensation costs. For 2023, the company expects that G&A expenses and donations will amount to $47 to $50 million, with the increase from 2022 being attributable primarily to higher marketing and due diligence costs, in addition to costs associated with the company's ATM program. During 2022, the company terminated the Keno Hill stream in exchange for $141 million of Hecla common stock. Together with the disposal of the Yaliaku stream, the total income inclusion reflected in our annual results from these two dispositions amounted to $166 million. Basic adjusted earnings per share decreased 15% to $1.12 compared to $1.32 in 2021, From a cash flow perspective, the company generated $743 million on operating cash flow, a decrease of 12%, primarily due to lower sales volumes and commodity prices. This translated into operating cash flow per share of $1.65 compared to $1.88 in 2021. In addition, the company distributed $237 million of dividends in 2022, received $132 million in proceeds from the disposal of the Yaliaco Stream, and disbursed $152 million in upfront payments relative to our portfolio of development stage projects. Overall cash increased by $470 million during 2022. The $696 million cash balance as of December 31, 2022, combined with the capacity provided by the undrawn $2 billion revolving credit facility and the strong forecast operating cash flows, positions the company very well to satisfy its funding commitments and sustain its dividend policy, while at the same time having the flexibility to consummate additional accretive precious metal purchase agreements. That concludes the financial summary. With that, I turn the call over to Wes.

Thanks, Gary. Good morning. Overall production in the fourth quarter came in lower than expected with weaker production from Solobo and Constantia, offset by higher than expected performance from Antamina. In the fourth quarter, Solobo produced 37,900 ounces of attributable gold, a decrease of approximately 21% relative to the fourth quarter of 2021 due to lower throughput and grades. Valley reported that production was lower than expected due to reduced plant availability during the quarter caused by additional planned and corrective maintenance. That being said, Valley also reported that Slobo 3-line expansion was physically completed at the end of the fourth quarter with the first line starting up during the quarter and the second line expected to start in the first quarter of 2023. Subsequent to the quarter, Wheaton and Valley agreed to amend the Slobo PMPA to adjust the expansion payment terms in order to provide increased flexibility for the ramp-up of the expansion while also maintaining an incentive for valet to maximize grade on an annual basis. During the quarter, Constantia produced 700,000 ounces of attributable silver and 10,500 ounces of attributable gold, an increase of approximately 13% and 6% respectively, relative to the fourth quarter of 2021. The increase in both silver and gold production was due to higher grades resulting from additional ore production from the Papacantia satellite deposit. Gold production was lower than expected during the quarter as a result of short-term changes in the mine plan that prioritized lower-grade stockpiles and shorter haul distances. These changes were implemented as Hud Bay was forced to ration fuel during the period of nationwide social unrest and road blockades following the change in Peru's political leadership in December 2022. These changes did, however, allow Hud Bay to continue to operate the process plant continuously through the quarter. During the fourth quarter, Antamina produced 1.1 million ounces of attributable silver, a decrease of 19% relative to the fourth quarter of 2021, primarily due to the lower grades as per the mine plan. Antamina did, however, continue to exceed expected production for 2022, driven primarily by increased productivity and better than expected mine grades. Additionally, in 2022, Antamina submitted a modification of environmental impact assessment to the Peruvian regulators to extend its viable life from 2028 to 2036. The regulatory review process is progressing as scheduled, with an approval anticipated in the second half of 2023. Wien's estimated attributable production in 2023 is forecast to be 320,000 to 350,000 ounces of gold, 20 to 22 million ounces of silver, and 22,000 to 25,000 GEOs of other metals, resulting in production of approximately 600,000 to 660,000 GEOs. For the five-year period ending in 2027, the company estimates that average production will amount to 810,000 GEOs, and for the 10-year period ending in 2032, the company estimates that the average annual production will amount to 850,000 GEOs. This includes organic growth of over 40%, with total production from our current portfolio increasing to over 900,000 GEOs by 2027. That concludes the operations review, and with that, I'll turn the call back to Randy.

Thank you, Wes. In summary, while 2022 was not without challenges, our high-quality portfolio proved to be resilient and was distinguished by several key highlights, including sector-leading five-year organic production growth of over 40%, with approximately two-thirds of that growth coming from mines that are already in operation. Accretive growth, emphasized by the addition of four new streams that will collectively provide over 65,000 gold equivalent ounces of annual production. Continued portfolio optimization efforts, enhancing, improving the quality of our asset base and contributing to one of the strongest balance sheets in the industry. Record annual dividend distribution of $237 million dollars. and lastly, continued leadership in sustainability with sector-leading ESG ratings. With that, I would like to open up the call for questions, please. Operator?

Thank you. Ladies and gentlemen, we will now conduct the question and answer session. If you would like to ask a question, please press star then the number one on your touchtone phone. If you would like to withdraw your question, press the star followed by the two. There will be a brief pause while we compile the Q&A roster. The first question comes from Brian McArthur of Raymond James. Please go ahead.

Good morning. I have a couple of questions. Can I just, on the revised Syllable 3 payment, do they still have to do a 90-day trial run to execute that like they did in the old one or is the what I call the stop that dated January 21st or January 1st next year just a hard date? Is there anything else you have to do?

No, it still has the 90-day completion test so for each of the phases they have to run at those levels or in excess of those levels for a 90-day period to qualify for that phase payment.

So in your financials, you sort of do put the full $552 million as an obligation this year. So does that imply you're reasonably comfortable they're going to get those 35 million tons with that 90-day run this year? I'll let Gary take that one.

Yeah, Brian, look. We're always trying to be conservative in the way that we frame the timing associated with the payment of those upfront payments. And so we're continuing to reflect that as potentially going out in 2023.

you know and I think it's important I mean Vale is doing their best to try and satisfy that right they have told us they're going to do their best to try and move the entire site up to those production levels so so you know I think we have to reflect that possibility in terms of as Gary said maintaining a conservative forecast I would be very happy if we had to make the whole payment this year you know but you know realistically there's a lot of work to do down there yet and you know I do think that Valet's definitely got the desire. It's a matter of there's a lot of work yet to do, so we'll see how it goes.

Great, thanks. Very clear. And then there has been talk historically about a Slobo 4. Is there anything changed? Is there anything new that happened there as a result of this agreement?

There's nothing different? Nothing has changed. You can still see Slobo 4 on their longer-term vision within the Valet production objectives. So it's still there referenced, but there's been no progress on that front.

Great, thanks. And if I could just ask one other topic, the 777 refundable deposit. I've got two questions. One, just you put some numbers in there, discounting rates and all the rest of it. Do you actually get payments over time through 2052? And the second thing is, can I just ask, are there any other Most of your contracts, I realize, are life of mine. They're long dated. But are there any other contracts here where there might be a situation where if you don't get the upfront pack, there's a true-up like this one? I guess where I'm going with it, you have a very good chart in the back that sort of shows upfront payments for your deposits and how much you've got back. But if I look at Sudbury, which maybe has 10 years left, You know, depending on what happens, you may or may not get there. Would it have a true-up thing, if I want to call it that, like the 777 one does? Or maybe you can't comment on that for confidentiality.

Yeah, I mean, you know, some of our contracts are structured in that method where there is a minimum amount, you know, focused around the deposit. You know, I will say, and all you have to do is go back and look, HUD-B did not have as much exploration success Thank you for joining us. and other, you know, the Copper World, Rosemont. We've got a lot of other discussions coming up with them. And so, you know, it is a partnership with Hub Bay and, you know, that's the way it's structured through this contract, but it is something that 2052 is a long ways away.

And just to add to that, Brian, we won't be receiving any money in between. We don't get paid until 2052, assuming that we don't come to some other arrangement with Hub Day.

Great. Thank you very much. That's very clear. I appreciate it. Yep. Thanks, Brian.

Thank you. The next question comes from Lawson Winder of Bank of America Securities. Please go ahead.

Hey, Randy, Gary, and team. Good morning. Thanks for the update here. I wanted to ask one follow-up on Solobo. So, I mean, Valet has guided to Solobo 3 achieving full capacity to Q4 24. And I was curious, based on your understanding, when they say full capacity, is that the 35 million tons capacity? Thank you. So this is Wes. So what they've got in there is that wrapping up to full production by the end of next year. Is that 36 million tons that they're getting to?

so if you remember what's in there is actually this 90 day test can be done at any time which actually allows them to operate at that level earlier on so the full year is definitely it'll take them a little bit longer to get to that and we've got baked in the same as what Valet does all the way through and it is that full production by the end of next year and then carrying on into the future we'll see them at that full capacity.

All right fantastic thanks for clearing that up and then On Rosemont Copper World, you mentioned in the release that sort of in the latter part of the guidance is where that comes in, in terms of the five-year guidance, actually, to be specific. But could you maybe just sort of clarify when more precisely you have Copper World and Rosemont coming into that five-year guidance? Like, is that end of 27 or is that early 27? Yeah.

Yeah, let's just leave it at the latter, latter, latter portion of the five-year guidance. That probably gives you enough guidance. Near the end of it. I mean, you know, as we have seen, permitting is a little bit more challenging than you would expect out of Arizona, right? And so there's so many variables that can adjust that. What we do know is HUD-Base committed to try and move that project forward as fast as they can. And so, you know, we've had to sort of try and reflect that. But we do think that... The things are lining up quite nicely to have a bit of an impact, but a very small impact on 2027.

We are staying in really close contact with HUD-Bay as they work through this pre-feasibility study that they've announced as well. And we're expecting that about mid this year. And that kind of gives you sort of a better idea as these things move through. And we'll just continue to work with HUD-Bay as we move forward.

Okay, yeah, fantastic. And then just one follow-up then on Rosemont. In terms of the discussions, I mean, both sides, you and Hud Bay have indicated that there will be some sort of discussion around what the agreement looks like and there's this potential for some sort of amendment to the agreement. From your point of view, is it looking like it could become a larger piece of the portfolio for Wheaton or a smaller piece of the portfolio?

Well, we already get 100% of all the silver and gold from the asset, and so that's not going to change with respect to over and above that. If you look at the copper world, sort of the numbers that have been put out to date, and that is, of course, subject to continued studies down there, but it looks like it's about two-thirds of what we were expecting out of the original Rosemont concept. So I think that's, you know, we've just got to sit down and hammer that out. But, you know, we are sort of waiting for a bit more clarity in terms of their path going forward. And, you know, as I said, it's a good strong relationship with Peter and the team over at Hud Bay. And so, you know, as they get a little bit more firm as to their plans going forward, that's when we'll sit down and get a little bit more firm in terms of how the contract's going to be adjusted to reflect that difference. And so, you know, Again, continue working with them as partners.

And then I guess once they have this study out later in the first half of this year, would that be kind of the firmness that you'd be looking for to sit down and sort of finalize this?

Yeah. Ideally sometime this year. They'd like the clarity so that they know what they need to do in terms of a go-forward basis. So it should be happening within this year.

Okay, fantastic. Great start to the year. Take care, guys. Thanks, Lawson.

Thank you. Once again, ladies and gentlemen, if you do have a question, please press star 1 at this time. The next question comes from Martin Pradier of Vitamartis. Please go ahead.

Hey, Martin.

Hi. Thank you for taking my question. The first question is, You mentioned that in Salobo the throughput is expected to increase 50%. But the grades are also coming down. So what is the expected increase in production or what is the difference in grades from the previous grades?

Well, and it's not a simple answer because one of the variables that comes into play is the amount of stockpiling that they do of low-grade material. And to be honest, you know, they've They've committed towards trying to strive towards maintaining higher-grade feed through the mill, but it's a function of how much low-grade they stockpile, which then itself is a function of mining capacity and how much material they can move, both waste material, low-grade stockpile material, and mill feed material. And so there's a lot of variables moving there, and it's very tough to sort of lay that out. I mean, it's one of the reasons why when we restructured the – The expansion payment, that there's a couple of triggers, both grade and total tonnage that come into play, total tonnage move that come into play in terms of determining whether they've satisfied that higher grade. Thank you very much. and so a 50% increase in throughput capacity is not going to be a 50% increase in metal production. But depending on stockpiling, it would be pretty close to 30% or 40% increase in metal production. Again, depending on their stockpiling approach. And of course, stockpiling, all that does is bring forward ounces that would have eventually been mined, right? And so in terms of total metal production, it really doesn't change a lot. It's a matter of the timing of when that metal gets delivered. There's so many variables there that it's really tough to give you sort of a clear answer, but hopefully you understand there's a lot of different issues that come in, and I think that's one of the reasons why we're very happy with the way the new expansion payment is structured is that it'll be based on yearly performance with respect to how they do in maintaining not only minimum grades through the mill, but also total materials moved at the site itself.

No, that helps, 30, 40% gives me an idea. That's sort of what I was looking for. Similar question with Pampa Kancha. I know that the deposit has higher grade and production will increase for Constancia, but how much higher grade is Pampa Kancha and what is really the expected impact that you see in terms of this higher grade coming through in 2023, 2024?

Yeah, Papa Concha, the Papa Concha gold grades are 10 times higher than what are contained in the Constantia pit. And of course, our stream is focused on getting 50% of that gold. So both both Hud Bay and ourselves profit mightily by having Papa Concha ore push through the the, you know, push through the mill. Now, unfortunately, some of the challenges that they've had with respect to fuel supply have, you know, it's complicated things. It is a farther haulage distance to bring Papa Concha in to the milling complex at the Constancia pit or right beside the Constancia pit. But, you know, they continue to work forward on that. And, you know, again, you know, both companies are very incented to try and move as much Papa Concha through as they can. But, you know, the key number there is Copper grades are also slightly higher, but gold grades are substantially higher. And so it's quite a rich ore body for both parties here.

It's important to note that that's just delayed, that metal coming in as well. So, I mean, it's not that it's got any way that it'll come in. And it's over about a five-year period that we'll see Papa Concha be mined out.

But, okay, you have a level of production today. What is the expected impact in 2023-2024 of this much higher rate coming in?

Well, we could see substantially upwards of... Now, they're not going to entirely feed the mill from papacantrazone, they just can't mine and haul it that fast and that far. and so it'll be batch treated. The guidance that HUD-BAE has come out with for 2023 has more Papa Concha towards the end of this year versus the start. I do think that might be a result of some of the challenges they had at the end of last year with respect to fuel supply and stuff and so if that does get resolved, we could see a pleasant surprise on that side if that strengthens and we lessen those restrictions. I think the key thing to keep in mind is that it's 10 times higher grade but they can't shift fully to it because they don't have the mobile fleet to be able to go 100% from Papa Concha just because of its greater haulage distance to the mill. And so there'll be batch treatment through there and I'm going to say that we should healthily see a good increase in terms of gold production from the overall constancy of I'm going to say three to four times what we've seen in times past but again it's going to come down to the capacity to get that material over to the mill and get it processed.

Okay, that's quite helpful. That gives me an idea. And in Boise's way, your production was down 66%. And you're talking about the new reed brook ore grades. And again, how does that compare with your previous grade, the open pit grades?

Well, and the challenge at Voices Bay was that there was probably no other asset that was impacted more from the pandemic and the response. In support of the local communities around the mine site, the mine was shut down for a period of time. So the underground development is quite a bit behind schedule. But the open pit is still supplying, albeit lower and lower and lower grade materials, stuff that originally wasn't part of this. And so we should see, as the underground phases in, we should see cobalt production probably three to four times higher than where we are right now coming out of the open pit. And so, you know, the whole concept is both, I think it's Reedbrook and Eastern Deeps coming on as they continue to displace this low-grade ore that's being pulled out of the remnants of the open pits, that we will see a dramatic uptick in cobalt production from that. That's probably over the next year and a half, two years.

Okay, but didn't they already start mining one of the deposits, Raidbrook?

Just very, it's development ore. So there's some development ore, it's not to the full scale of production. You know, with an underground operation like that, you need multiple working faces, and they've now got some, you know, they're down into that point, and so I don't know if you want to add more color?

Sure, yeah, I mean, it's over this year that we'll start seeing those undergrounds come online, but it's, as Randy said, it's been development ore that's come out so far, so we actually haven't seen any production ore from those undergrounds, so it is a significant ramp up over the next... Really closer to the end of this year that we'll really start seeing that come in. So it's open pit most of this year and then over the next couple of years you'll see that significant increase in the production.

It'll be a phased startup from the underground because as more working faces become developed, you'll be able to access and pull a bit more ore out of each one of those working faces. And so it's going to be a phased ramp up over the next, as I said, year and a half, two years we should... Hopefully a couple of years from now we should be entirely on underground ore, much higher grade underground ore.

But so this year is still going to be quite weak?

Yes. Yes. The majority of the ore this year will still be coming from the open pit and I will say they're scratching the surfaces to try and find it and so we are seeing lower and lower grade so it's going to be offset by some more and more ore from the underground but The open pit material, the grades are actually dropping over the course of this year.

Perfect. Thank you. That's very helpful.

Great. Thank you, Martin.

Thank you. The next question comes from John Tomasso of John Tomasso's Independent Research. Please go ahead.

Thank you. Could you update us for the Americas where you do the overwhelming portion of your business? What are the countries that might be off limits from a political risk standpoint? I presume, for example, you would never go to Cuba or Venezuela. But there are other things that might change. I don't know. For example, there's five copper projects in Argentina that look like they're very big and very prospective. and at least three of them might be streamable from the standpoint of the operator wanting to have financing. In addition to Argentina, could you comment on Ecuador and Bolivia, which have something called plurinationalism, where the indigenous have a state with their own courts and laws? Could you comment on Nicaragua and Bolivia, that very consistently vote with Russia and the United Nations. Anything else you could tell us about countries?

Sure. Well, I'm glad we're just focused on the Americas. Thanks, John. So, you know, political risk is important to us. When we make an investment into an asset, it's typically a life of mine investment. And so we have to make sure that, you know, first off, the assets that we're investing into have healthy enough operating margins because Things will change. We've brought in outside political specialists and consultants to talk to us about political risk and how to try and address that in terms of how we do valuations. And probably one of the wisest comments is the fact that politics are like pendulums. They kind of swing to the left and they swing to the right. And every country is going to go through that. So for us, the first criteria is making sure that we have assets that have good, strong operating margins so that not only is Wheaton doing well as a stakeholder in this asset, but so is the operating company and so is the country and so is the surrounding communities and everyone should be. This industry needs to sort of recognize that all stakeholders need to be benefiting from these investments and going forward. Anyone that's impacted should have a net positive effect in terms of whatever happens in these things. And if that's not the case, then I don't think that's a sustainable situation. And so it's one of the reasons why we also kick-started such a strong commitment towards helping our partners be stronger with respect to social license. The co-funding that we do with our sustainability initiatives on communities around the mine sites was a first for the streaming and royalty space. We were the first company to do it. and I'm happy and proud of the fact that just about every new streaming and royalty agreement that there is out there does now capture a commitment from whoever the actual streaming and royalty company is to try and strengthen that up and so it is something that we factor into and when I sit back and look at how our assets have done in In the face of some pretty challenging times here, just even more recently within South America, our assets have done well. And I like to think that the fact that we really try and encourage and support, not just with words, but with capital, support our partners in terms of maintaining good, strong social license, that helps us in these type of situations. The other aspect that I'd say comes into play Thank you very much. on a parent company guarantee that provides that support. There's a number of times I've had to remind potential partners that we are in the business of streaming precious metals. We don't stream political risk. We don't want to be involved in that. What we want to be is supportive but we shouldn't have any role in that space and so it's very tough for us to take on that type of risk in our own investments and so we're always exploring for ways to try and make sure that the political risk is Thank you. Thank you. you know that have have benefits have a net positive benefit or impact from from these operations and if there's stakeholders that aren't then we've got to find a way to get there and sometimes that takes a very long time and it's very it requires incredible patience to get there but in the end you have a good strong sustainable project and so you know I can start off by going down and you mentioned Venezuela and Cuba you're right we're not even we've I can't remember, you know, I will say 20 years ago I looked at something in Venezuela. I've never looked at anything in Cuba. You know, there is a spectrum of risk all the way through the entire hemisphere. And so, or, you know, within the Americas both. And so it's something that you always have to assess. I mean, the one caution that you have to have in this industry is because even if a country is politically stable Currently, it doesn't mean that it's not going to be there. So I just, again, underscore the importance of how I started off my answer here. You have to make sure that there's healthy enough margins, because sometimes the government's going to come knocking on the door and wanting a bit more of that piece of the pie. And, you know, as we've just seen in Central America, you know, without mentioning names, the asset better have enough capacity to Thank you very much.

Portfolio Editions are eight or nine. Four of them are pre-production companies. Could you just review the number of employees Wheaton has augmented by the number of outside technical consultants for us to get an idea whether you solely do pre-transaction due diligence I'm just looking at Rio2, Artemis, Gen Mining, and Adventus that are new companies that might operate for the first time. How much assistance you might offer to them?

Let's not forget Sabina on there, although it's on its way to being taken over by B2 Gold. We pride ourselves on being owners of our own decisions and that really comes down to a lot of internal technical strength. You know, we have a good strong technical team. I think we have a total of just over 40 employees right now. Just about a third of us have a technical background, including myself as a geological engineer. And so, you know, when you sit and look at that, you know, that sort of highlights what the focus is in terms of making sure that we have good Technical strength, bench strength within the company itself on a go-forward basis. It's something that I've always believed is really important because when it comes to measuring risk, having outside consultants to sign off on a report and then go off into the sunset, it just doesn't, to me, doesn't reflect what we owe to our shareholders. And so we do put a lot of pressure on that. And you're right, when you look at our recent transactions, there is... Precious Metals Corp and so we're very busy in that front. Haytham's sitting here beside me and he's got a long list of assets that he's working on. But we don't rely on outside consultants and that's not to say that we don't pull them in. There's sometimes unique aspects of a project where there's a specialization and we're not going to pay to have that expertise on site and so It's also worth noting that it's the...

Sorry John, Wes is going to add something here. Sorry John, I was just going to add in that one of the really important parts of maintaining relationships with our partners is providing that kind of technical help as well. It's a huge part of what we do when we do our annual site visits and as we maintain relationships. And that certainly has become a bigger part of that as you bring on some of these Smaller companies in there is we can really offer that assistance to them, but it goes across the entire portfolio. We have great relationships with all of our partners and then we continue to build those in as many different ways we can and that technical assistance is a huge part of it.

Yeah, I think, John, one of the things that's worth highlighting on that front, and thank you, Wes, it's a good point. When you look at that list of recent transactions, the majority of those come with either people or companies that we have done transactions with in the past. It really does come down to You know, repeat customers. And, you know, we really do put a lot of focus on trying to deliver value, not just with the upfront payment, but with material underneath. John, we do have a long list of other people here with questions.

Go do your next deal.

Thanks, John. Thanks for the call.

Thank you. The next question comes from Lord Ashburn Edison. Please go ahead.

Thank you very much. Morning, Randy, Chaps, and congratulations, if I may, on your results.

Thank you. Not at all.

Can I ask about your investments, just in terms of power shillings and pence, how they're looking for this year? You touched upon Solobo there, and that potentially being a payment due this year. And then you talked about those other pre-production companies, and it seems to me that some of those payments could be becoming due this year or next year. and I just wonder, can you give us an idea of what you've budgeted in terms of how much you're going to have to invest in streams this year or maybe a minimum and a maximum and the range it might fall in?

Sure thing, Charlie. I'm going to... Sorry, Lord. I'm going to hand you over to Gary here.

Yeah. So, I mean, we... I think disclose all of that information in both the notes to our financial statements and the MD&A in our contractual obligations and contingency note. So, you know, if you look at that note, in total we've got just over $2 billion of commitments outstanding. Thank you very much. showing more being paid earlier, but that's our best estimate now. Then we have another $765 million going out in 2024-25, and then the vast majority of the rest of it, or just over $400 million going out after 2027.

So it's important to note that those are all based on certain achievements on a go-forward basis. For instance, Salobo, we'd be very happy if they got to that level, but it's a lot of work. It strikes us that the team that is coming in, we've seen a lot of improvements from Vale in terms of and many more.

That's understood and appreciated. It's just useful to understand what you think the timing might be, but I greatly appreciate that. Thank you very much.

Great. Thanks for the call.

Thank you. The next question comes from Charlie Rotang of Berenberg. Please go ahead.

Thank you very much indeed for taking my question, and congratulations again on your results. I'd just like to ask you about Phenix, if I may, and just about, I appreciate you haven't impaired it, but do you expect, does Phenix sit within your guidance?

No, it does not. I mean, you know, we have to wait, you know, we have to wait and see how Rio 2 does on a go-forward basis in terms of getting back to the point of getting a permit to operate on a go-forward basis. And so... We're patiently waiting for Rio 2 to continue advancing those efforts. We were comfortable in our own due diligence in terms of the work that Rio 2 did on that project and so we were a bit surprised at the result but I would point to the fact that it was a challenging time in Chile and I do think that we are confident that they'll ultimately be successful. It's a matter of timing and that's one of the challenges is Until we get more clarity on the timing, it's not part.

Okay, thank you. My final question is just around what you're seeing in the market in terms of options. I appreciate you might not be able to give us loads of color, but anything you could give us would be greatly appreciated. Your previous strategy looks to have been sort of around smaller developer companies with very good projects, given that the larger companies are very strong Is that still the case, or are you finding it easier to negotiate with larger companies at this point?

I'll let Haytham add a few words to this one. He's the one carrying that charge.

Good morning, Charlie. Thank you for the question. Maybe I'll just highlight what happened in the fourth quarter. The fourth quarter, we saw a significant rise in activity, but some very small streams, some larger royalties changing hands. at what seemed to be some rather expensive valuations by some of our competitors. These expensive valuations have made every company look for royalties in their portfolio and they're hoping to sell them to try to get similar valuations. I can assure you we won't be overpaying for royalties or streams regardless of what precedent has been set. We're continuing to see a number of smaller opportunities with the majority still falling into the sub $300 million range. Primarily, as you said, development stage opportunities and the occasional small operator with a focus on streaming precious metals as a byproduct. My team is currently working through a number of due diligence process and if all goes well, we hope to be able to narrow down one or two streams on high quality assets over the next 12 months.

So, you know, a heavy focus on the single asset development companies because as we've said in times past, anyone that's got operations in this environment is actually doing relatively well in terms of operating cash flow and so it is definitely a bias towards the towards that early stage development company and trying to help them get to the point of having that operating cash flow. The streaming business model is a very, very competitive source of capital, especially when you look at how the market is supporting a lot of those junior companies.

Understood. Thank you very much. Can I just clarify, would you therefore say that you would be looking at royalties as well, or are you sticking to just streaming?

We've always looked at royalties, but not new royalties. It doesn't make any sense. New royalties, there's a lot more value created in a stream than there is in a royalty on a number of different fronts. But existing royalties, we'll always sniff at them and see if there's an opportunity there. But again, reinforcing what Haytham just said, only for accretive prices. So to be honest, we actually have a couple of royalties already in the portfolio, but it's just stuff that was already in existence that came as part of a broader acquisition. So our focus is doing streams in terms of new transactions with companies, but if there's existing royalties around, we'll always have a look at them and see if there's an opportunity to create value for our shareholders.

Yeah, especially producing royalties, Charlie. We take those very seriously because they have the ability to add to our new term cash flow.

Thank you very much for your time. Thank you for taking my questions and congratulations again.

Yes. Thank you, Charlie. I think we've got one question.

We've got one question from the webcast. Is there a notable trend towards fixed price contracts or fixed margin contracts, and what does Wheaton prefer?

So when we created the business model, the streaming business model back 20 years ago, fixed price contracts were the standard. The beauty of that is, of course, it does give us some leverage with respect to commodity prices that you don't see with royalties or with bullion holdings. The challenge with it, though, is that if we see differences at the site with respect to, and specifically what we saw was with higher commodity prices typically become higher taxation burdens, We've come to the conclusion over the last five or six years that a more sustainable model, a stronger model, is actually the fixed margin contract. I think we've seen this across the industry. It's pretty well the standard in the industry. The real reason behind that is that it does help our partners be much more sustainable, especially in high commodity price environments. because they do wind up getting a bit more of value from the metal that's being delivered into the streaming contract to help offset any additional cost that might be attached to that type of an environment. So definitely focus more on that. A very full list of questions. Thank you, everyone, but really appreciate everyone dialing in today. And I will close off here by just saying that we currently believe Wheaton is very well positioned to continue delivering value to all of our stakeholders for a number of different reasons. Firstly, by having one of the best organic growth profiles in the mining industry at 40% over the next five years, more than 40% over the next five years. Secondly, with low and predictable costs which are resilient to inflationary pressures resulting in some of the highest margins in the entire precious metal space. Thirdly, by offering our shareholders exposure to our diversified portfolio of long life Precious Metals Corp In great shape. I think it's a great time to own more Wheaton. So thanks for dialing in today, and I look forward to talking to everyone again soon. Stay safe, stay healthy, and move forward. Thanks.