Condensed Interim Consolidated Statements of Earnings
| | | Three Months Ended
March 31 |
(US dollars and shares in thousands, except per share amounts - unaudited) | Note | 2023 | 2022 |
| Sales | 6 | $ | 214,465 | $ | 307,244 |
| Cost of sales | | | | | |
| Cost of sales, excluding depletion | | $ | 51,964 | $ | 69,994 |
| Depletion | 13 | | 45,000 | | 57,402 |
| Total cost of sales | | $ | 96,964 | $ | 127,396 |
| Gross margin | | $ | 117,501 | $ | 179,848 |
| General and administrative expenses | 7 | | 10,099 | | 9,403 |
| Share based compensation | 8 | | 7,397 | | 9,902 |
| Donations and community investments | 9 | | 1,378 | | 813 |
| Earnings from operations | | $ | 98,627 | $ | 159,730 |
| Other (income) expense | 10 | | (7,562) | | 170 |
| Earnings before finance costs and income taxes | | $ | 106,189 | $ | 159,560 |
| Finance costs | 18.3 | | 1,378 | | 1,422 |
| Earnings before income taxes | | $ | 104,811 | $ | 158,138 |
| Income tax recovery (expense) | 24 | | 6,580 | | (671) |
| Net earnings | | $ | 111,391 | $ | 157,467 |
| Basic earnings per share | | $ | 0.246 | $ | 0.349 |
| Diluted earnings per share | | $ | 0.246 | $ | 0.348 |
| Weighted average number of shares outstanding | | | | | |
| Basic | 22 | | 452,370 | | 450,915 |
| Diluted | 22 | | 453,159 | | 451,953 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [2]
Condensed Interim Consolidated Statements of Comprehensive Income
| | | Three Months Ended
March 31 |
(US dollars in thousands - unaudited) | Note | 2023 | 2022 |
| Net earnings | | $ | 111,391 | $ | 157,467 |
| Other comprehensive income | | | | | |
| Items that will not be reclassified to net earnings | | | | | |
| Gain on LTIs¹ | 16 | $ | 44,654 | $ | 91 |
| Income tax recovery (expense) related to LTIs | 24 | | (3,954) | | (194) |
| Total other comprehensive income (loss) | | $ | 40,700 | $ | (103) |
| Total comprehensive income | | $ | 152,091 | $ | 157,364 |
| 1) | LTIs = long-term investments – common shares held. |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [3]
Condensed Interim Consolidated Balance Sheets
| | Note | As at
March 31 | As at
December 31 |
(US dollars in thousands - unaudited) | 2023 | 2022 |
| Assets | | | | | |
| Current assets | | | | | |
| Cash and cash equivalents | 23 | $ | 799,697 | $ | 696,089 |
| Accounts receivable | 11 | | 9,236 | | 10,187 |
| Cobalt inventory | 12 | | 6,555 | | 10,530 |
| Taxes receivable | 24 | | 3,228 | | - |
| Other | 25 | | 3,379 | | 3,287 |
| Total current assets | | $ | 822,095 | $ | 720,093 |
| Non-current assets | | | | | |
| Mineral stream interests | 13 | $ | 5,696,889 | $ | 5,707,019 |
| Early deposit mineral stream interests | 14 | | 46,842 | | 46,092 |
| Mineral royalty interest | 15 | | 6,606 | | 6,606 |
| Long-term equity investments | 16 | | 309,068 | | 256,095 |
| Refundable deposit - 777 PMPA | | | 8,232 | | 8,073 |
| Property, plant and equipment | 17 | | 3,902 | | 4,210 |
| Other | 26 | | 11,845 | | 11,718 |
| Total non-current assets | | $ | 6,083,384 | $ | 6,039,813 |
| Total assets | | $ | 6,905,479 | $ | 6,759,906 |
| Liabilities | | | | | |
| Current liabilities | | | | | |
| Accounts payable and accrued liabilities | | $ | 9,136 | $ | 12,570 |
| Dividends payable | 19.2 | | 67,910 | | - |
| Current taxes payable | 24 | | - | | 2,763 |
| Current portion of performance share units | 21.1 | | 7,642 | | 14,566 |
| Current portion of lease liabilities | 18.2 | | 828 | | 818 |
| Total current liabilities | | $ | 85,516 | $ | 30,717 |
| Non-current liabilities | | | | | |
| Performance share units | 21.1 | | 2,790 | | 6,673 |
| Lease liabilities | 18.2 | | 941 | | 1,152 |
| Deferred income taxes | 24 | | 180 | | 165 |
| Pension liability | | | 3,598 | | 3,524 |
| Total non-current liabilities | | $ | 7,509 | $ | 11,514 |
| Total liabilities | | $ | 93,025 | $ | 42,231 |
| Shareholders' equity | | | | | |
| Issued capital | 19 | $ | 3,765,954 | $ | 3,752,662 |
| Reserves | 20 | | 22,466 | | 66,547 |
| Retained earnings | | | 3,024,034 | | 2,898,466 |
| Total shareholders' equity | | $ | 6,812,454 | $ | 6,717,675 |
| Total liabilities and shareholders' equity | | $ | 6,905,479 | $ | 6,759,906 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [4]
Condensed Interim Consolidated Statements of Cash Flows
| | | Three Months Ended
March 31 |
(US dollars in thousands - unaudited) | Note | 2023 | 2022 |
| Operating activities | | | | | |
| Net earnings | | $ | 111,391 | $ | 157,467 |
| Adjustments for | | | | | |
| Depreciation and depletion | | | 45,390 | | 57,795 |
| Interest expense | 18.3 | | 17 | | 26 |
| Equity settled stock based compensation | | | 1,542 | | 1,342 |
| Performance share units - expense | 21.1 | | 5,855 | | 8,560 |
| Performance share units - paid | 21.1 | | (16,675) | | - |
| Pension expense | | | 167 | | 158 |
| Pension paid | | | (96) | | - |
| Income tax expense (recovery) | 24 | | (6,580) | | 671 |
| Loss (gain) on fair value adjustment of share purchase warrants held | 10 | | (175) | | 743 |
| Investment income recognized in net earnings | | | (7,148) | | (194) |
| Other | | | 79 | | (134) |
| Change in non-cash working capital | 23 | | (2,072) | | (15,918) |
| Cash generated from operations before income taxes and interest | | $ | 131,695 | $ | 210,516 |
| Income taxes paid | | | (3,344) | | (32) |
| Interest paid | | | (18) | | (26) |
| Interest received | | | 6,771 | | 82 |
| Cash generated from operating activities | $ | 135,104 | $ | 210,540 |
| Financing activities | | | | | |
| Share purchase options exercised | 20.2 | | 9,376 | | 5,772 |
| Lease payments | 18.2 | | (202) | | (200) |
| Cash generated from financing activities | $ | 9,174 | $ | 5,572 |
| Investing activities | | | | | |
| Mineral stream interests | 13 | $ | (31,524) | $ | (45,252) |
| Early deposit mineral stream interests | 14 | | (750) | | (750) |
| Net proceeds on disposal of mineral stream interests |
| | (29) | | - |
| Acquisition of long-term investments | 16, 23 | | (8,144) | | (20,135) |
| Dividends received |
| | - | | 112 |
| Other | | | (530) | | (36) |
| Cash used for investing activities | $ | (40,977) | $ | (66,061) |
| Effect of exchange rate changes on cash and cash equivalents | $ | 307 | $ | 67 |
| Increase in cash and cash equivalents | $ | 103,608 | $ | 150,118 |
| Cash and cash equivalents, beginning of period | | 696,089 | | 226,045 |
| Cash and cash equivalents, end of period | 23 | $ | 799,697 | $ | 376,163 |
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [5]
Condensed Interim Consolidated Statements of Shareholders’ Equity
| | | | Reserves | | | | |
| (US dollars in thousands - unaudited) | Number of Shares (000's) | Issued
Capital | Share Purchase Warrants Reserve 2 | Share Purchase Options Reserve | Restricted Share Units Reserve | LTI 1 Revaluation Reserve
(Net of Tax) | Total
Reserves | Retained Earnings | Total |
At January 1, 2022 | 450,864 | $ | 3,698,998 | $ | 83,077 | $ | 22,349 | $ | 7,196 | $ | (65,586) | $ | 47,036 | $ | 2,504,083 | $ | 6,250,117 |
Total comprehensive income | | | | | | | | | | | | | | | | | |
| Net earnings | | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 157,467 | $ | 157,467 |
OCI 1 | | | - | | - | | - | | - | | (103) | | (103) | | - | | (103) |
Total comprehensive income | | $ | - | $ | - | $ | - | $ | - | $ | (103) | $ | (103) | $ | 157,467 | $ | 157,364 |
Income tax recovery (expense) | | $ | 793 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 793 |
SBC 1 expense | | | - | | - | | 534 | | 808 | | - | | 1,342 | | - | | 1,342 |
Options 1 exercised | 329 | | 8,969 | | - | | (1,437) | | - | | - | | (1,437) | | - | | 7,532 |
RSUs 1 released | 88 | | 2,534 | | - | | - | | (2,534) | | - | | (2,534) | | - | | - |
Dividends (Note 19.2) | | | - | | - | | - | | - | | - | | - | | (67,687) | | (67,687) |
At March 31, 2022 | 451,281 | $ | 3,711,294 | $ | 83,077 | $ | 21,446 | $ | 5,470 | $ | (65,689) | $ | 44,304 | $ | 2,593,863 | $ | 6,349,461 |
Total comprehensive income | | | | | | | | | | | | | | | | | |
| Net earnings | | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 511,659 | $ | 511,659 |
OCI 1 | | | - | | - | | - | | - | | 14,642 | | 14,642 | | - | | 14,642 |
Total comprehensive income | | $ | - | $ | - | $ | - | $ | - | $ | 14,642 | $ | 14,642 | $ | 511,659 | $ | 526,301 |
Income tax recovery (expense) | | $ | 3,350 | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 3,350 |
SBC 1 expense | | | - | | - | | 1,831 | | 2,672 | | - | | 4,503 | | - | | 4,503 |
Options 1 exercised | 164 | | 4,169 | | - | | (699) | | - | | - | | (699) | | - | | 3,470 |
Dividends (Note 19.2) | 874 | | 33,849 | | - | | - | | - | | - | | - | | (203,259) | | (169,410) |
Realized loss on disposal of LTIs ¹
| | | - | | - | | - | | - | | 3,797 | | 3,797 | | (3,797) | | - |
At December 31, 2022 | 452,319 | $ | 3,752,662 | $ | 83,077 | $ | 22,578 | $ | 8,142 | $ | (47,250) | $ | 66,547 | $ | 2,898,466 | $ | 6,717,675 |
Total comprehensive income | | | | | | | | | | | | | | | | | |
| Net earnings | | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 111,391 | $ | 111,391 |
OCI 1 | | | - | | - | | - | | - | | 40,700 | | 40,700 | | - | | 40,700 |
Total comprehensive income | | $ | - | $ | - | $ | - | $ | - | $ | 40,700 | $ | 40,700 | $ | 111,391 | $ | 152,091 |
SBC 1 expense | | $ | - | $ | - | $ | 631 | $ | 911 | $ | - | $ | 1,542 | $ | - | $ | 1,542 |
Options 1 exercised | 398 | | 10,808 | | - | | (1,752) | | - | | - | | (1,752) | | - | | 9,056 |
RSUs 1 released | 59 | | 2,484 | | - | | - | | (2,484) | | - | | (2,484) | | - | | - |
Warrant expiration | | | - | | (83,077) | | - | | - | | - | | (83,077) | | 83,077 | | - |
Dividends (Note 19.2) | | | - | | - | | - | | - | | - | | - | | (67,910) | | (67,910) |
| Realized gain on disposal of LTIs ¹ (Note 20.4) | | | - | | - | | - | | - | | 990 | | 990 | | (990) | | - |
At March 31, 2023 | 452,776 | $ | 3,765,954 | $ | - | $ | 21,457 | $ | 6,569 | $ | (5,560) | $ | 22,466 | $ | 3,024,034 | $ | 6,812,454 |
1) Definitions as follows: “OCI” = Other Comprehensive Income (Loss); “SBC” = Equity Settled Stock Based Compensation; “Options” = Share Purchase Options; “RSUs” = Restricted Share Units; “LTI’s” = Long-Term Investments; “Warrants” = Share Purchase Warrants.
2) Refer to Note 20.1.
The accompanying notes form an integral part of these unaudited condensed interim consolidated financial statements.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [6]
| 1. | Description of Business and Nature of Operations |
Wheaton Precious Metals Corp. is a precious metal streaming company which generates its revenue primarily from the sale of precious metals (gold, silver and palladium) and cobalt. Wheaton Precious Metals Corp. (“Wheaton” or the “Company”), which is the ultimate parent company of its consolidated group, is incorporated and domiciled in Canada, and its principal place of business is at Suite 3500 - 1021 West Hastings Street, Vancouver, British Columbia, V6E 0C3. The Company trades on the Toronto Stock Exchange (“TSX”), the New York Stock Exchange (“NYSE”) and the London Stock Exchange (“LSE”) under the symbol WPM.
As of March 31, 2023, the Company has 28 long-term purchase agreements (three of which are early deposit agreements), with 22 different mining companies, for the purchase of precious metals and cobalt (“precious metal purchase agreements” or "PMPA") relating to 20 mining assets which are currently operating, 12 which are at various stages of development and 3 which have been placed in care and maintenance or have been closed, located in 13 countries. Pursuant to the PMPAs, Wheaton acquires metal production from the counterparties for an initial upfront payment plus an additional cash payment for each ounce or pound delivered which is either a fixed price or fixed percentage of the market price by contract, generally at or below the prevailing market price.
The condensed interim consolidated financial statements of the Company for the three months ended March 31, 2023 were authorized for issue as of May 4, 2023 in accordance with a resolution of the Board of Directors.
| 2. | Basis of Presentation and Statement of Compliance |
These unaudited condensed interim consolidated financial statements have been prepared on a historical cost basis, except for certain financial instruments which have been measured at fair value as at the relevant balance sheet date. The consolidated financial statements are presented in United States (“US”) dollars, which is the Company’s functional currency, and all values are rounded to the nearest thousand US dollars (US$ 000’s) unless otherwise noted. References to “Cdn$” refer to Canadian dollars.
These unaudited condensed interim consolidated financial statements have been prepared in accordance with IAS 34, Interim Financial Reporting (“IAS 34”) as issued by the International Accounting Standards Board. The accounting policies applied in these unaudited condensed interim consolidated financial statements are based on International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board ("IASB") and have been prepared using the same accounting policies and methods of application as disclosed in Note 3 to the audited consolidated financial statements for the year ended December 31, 2022 and were consistently applied to all the periods presented unless otherwise stated below. These unaudited condensed interim consolidated financial statements do not include all the information and note disclosures required by IFRS for annual consolidated financial statements and therefore should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2022.
The preparation of financial statements in accordance with IAS 34 requires the use of certain accounting estimates. It also requires management to exercise judgment in applying the Company’s accounting policies. The areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the financial statements, are disclosed in Note 4.
In the opinion of management, all adjustments (including normal recurring adjustments) necessary to present fairly the financial position at March 31, 2023 and the results of operations and cash flows for all periods presented have been made. The interim results are not necessarily indicative of results for a full year.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [7]
| 3. | Material Accounting Policy Information
|
| 3.1. | New Accounting Standards Effective in 2023 |
Amendment to IAS 12 - Deferred Tax related to Assets and Liabilities arising from a Single Transaction
The amendments to IAS 12 clarify that the initial recognition exemption does not apply to transactions in which equal amounts of deductible and taxable temporary differences arise on initial recognition. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. Early application of the amendments is permitted. The amendments apply to transactions that occur on or after the beginning of the earliest comparative period presented. In addition, at the beginning of the earliest comparative period the following would be recognized:
| • | a deferred tax asset to the extent that it is probable that taxable profit will be available against which the deductible temporary difference can be utilized and a deferred tax liability for all deductible and taxable temporary differences associated with right-of-use assets and lease liabilities; and |
| • | the cumulative effect of initially applying the amendments as an adjustment to the opening balance of retained earnings (or other component of equity, as appropriate) at that date. |
The implementation of this amendment did not have a material impact on the Company.
Amendments to IAS 1 and IFRS Practice Statement 2 – Disclosure of Accounting policies
The amendments require that an entity discloses its material accounting policy information, instead of its significant accounting policies. Further amendments explain how an entity can identify a material accounting policy. Examples of when an accounting policy is likely to be material are added. To support the amendment, the IASB has also developed guidance and examples to explain and demonstrate the application of the ‘four-step materiality process’ described in IFRS Practice Statement 2. The amendments are effective for annual reporting periods beginning on or after January 1, 2023. This amendment did not have a significant impact to the Company’s condensed interim consolidated financial statements.
| 3.2. | Future Changes to Accounting Policies |
The IASB has issued the following new or amended standards:
Amendment to IAS 1- Presentation of Financial statements
The amendments to IAS 1, clarify the presentation of liabilities. The classification of liabilities as current or non-current is based on contractual rights that are in existence at the end of the reporting period and is affected by expectations about whether an entity will exercise its right to defer settlement. A liability not due over the next twelve months is classified as non-current even if management intends or expects to settle the liability within twelve months. The amendment also introduces a definition of ‘settlement’ to make clear that settlement refers to the transfer of cash, equity instruments, other assets, or services to the counterparty. The amendment issued in October 2022 also clarifies how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability. Covenants to be complied with after the reporting date do not affect the classification of debt as current or non-current at the reporting date. The amendments are effective for annual reporting periods beginning on or after January 1, 2024. The implementation of this amendment is not expected to have a material impact on the Company.
| 4. | Key Sources of Estimation Uncertainty and Critical Accounting Judgments |
The preparation of the Company’s condensed interim consolidated financial statements requires management to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities and contingent liabilities at the date of the consolidated financial statements and reported amounts of revenues and expenses during the reporting period. Estimates and assumptions are continuously evaluated and are based on management’s experience and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However, actual outcomes can differ from these estimates.
Information about significant areas of estimation uncertainty and judgments made by management in preparing the condensed interim consolidated financial statements are unchanged from those disclosed in Note 4 to the audited consolidated financial statements for the year ended December 31, 2022.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [8]
| 5.1. | Capital Risk Management |
The Company manages its capital to ensure that it will be able to continue as a going concern and satisfy its outstanding funding commitments while maintaining a high degree of financial flexibility to consummate new streaming investments.
The capital structure of the Company consists of debt (Note 18) and equity attributable to common shareholders, comprising of issued capital (Note 19), accumulated reserves (Note 20) and retained earnings.
The Company is not subject to any externally imposed capital requirements with the exception of complying with the minimum tangible net worth covenant under the credit agreement governing bank debt (Note 18).
The Company is in compliance with the debt covenants at March 31, 2023, as described in Note 18.1.
| 5.2. | Categories of Financial Assets and Liabilities |
The refundable deposit on the 777 PMPA, which requires a single principal payment at maturity, is carried at amortized cost. Trade receivables from sales of cobalt and other receivables are non-interest bearing and are stated at amortized cost, which approximate fair values due to the short terms to maturity. Where necessary, the other receivables are reported net of allowances for uncollectable amounts. All other financial assets are reported at fair value. Fair value adjustments on financial assets are reflected as a component of net earnings with the exception of fair value adjustments associated with the Company’s long-term investments in common shares held. As these long-term investments are held for strategic purposes and not for trading, the Company has made a one time, irrevocable election to reflect the fair value adjustments associated with these investments as a component of OCI. Financial liabilities are reported at amortized cost using the effective interest method. The following table summarizes the classification of the Company’s financial assets and liabilities:
| | | Note | March 31 | December 31 |
(in thousands) | 2023 | 2022 |
| Financial assets | | | | | |
Financial assets mandatorily measured at FVTNE 1 | | | | | |
| Cash and cash equivalents | 23 | $ | 799,697 | $ | 696,089 |
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 6, 11 | | 1,839 | | 2,516 |
| Long-term investments - warrants held | | | 738 | | 560 |
Investments in equity instruments designated at FVTOCI 1 | | | | | |
| Long-term investments - common shares held | 16 | | 308,330 | | 255,535 |
| Financial assets measured at amortized cost | | | | | |
| Trade receivables from sales of cobalt | 11 | | 6,405 | | 6,642 |
| Refundable deposit - 777 PMPA | | | 8,232 | | 8,073 |
| Other accounts receivable | | | 992 | | 1,029 |
| Total financial assets | | $ | 1,126,233 | $ | 970,444 |
| Financial liabilities | | | | | |
| Financial liabilities at amortized cost | | | | | |
| Accounts payable and accrued liabilities | | $ | 9,136 | $ | 12,570 |
| Dividends payable | 19.2 | | 67,910 | | - |
| Pension liability | | | 3,598 | | 3,524 |
| Total financial liabilities | | $ | 80,644 | $ | 16,094 |
| 1) | FVTNE refers to Fair Value Through Net Earnings, FVTOCI refers to Fair Value Through Other Comprehensive Income |
Credit risk is the risk that the counterparty to a financial instrument will cause a financial loss for the Company by failing to discharge its obligations. To mitigate exposure to credit risk on financial assets, the Company has
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [9]
established policies to limit the concentration of credit risk, to ensure counterparties demonstrate minimum acceptable credit worthiness and to ensure liquidity of available funds.
The Company closely monitors its financial assets and does not have any significant concentration of credit risk. The Company invests surplus cash in short-term, high credit quality, money market instruments. Additionally, the outstanding accounts receivable from the sales of cobalt are supported by a $10 million letter of credit. Finally, counterparties used to sell precious metals are all large, international organizations with strong credit ratings and the balance of trade receivables on these sales in the ordinary course of business is not significant. Therefore, credit risk associated with trade receivables at March 31, 2023 is considered to be negligible.
The Company’s maximum exposure to credit risk related to its financial assets is as follows:
| | | March 31 | December 31 |
(in thousands) | Note | 2023 | 2022 |
| Cash and cash equivalents | 23 | $ | 799,697 | $ | 696,089 |
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 11 | | 1,839 | | 2,516 |
| Trade receivables from sales of cobalt | 11 | | 6,405 | | 6,642 |
| Refundable Deposit - 777 PMPA | | | 8,232 | | 8,073 |
| Other accounts receivables | 11 | | 992 | | 1,029 |
| Maximum exposure to credit risk related to financial assets | | $ | 817,165 | $ | 714,349 |
The Company has in place a rigorous planning and budgeting process to help determine the funds required to support the Company’s normal operating requirements on an ongoing basis and its expansionary plans. The Company ensures that there are sufficient committed loan facilities to meet its short-term business requirements, taking into account its anticipated cash flows from operations and its holdings of cash and cash equivalents. As at March 31, 2023, the Company had cash and cash equivalents of $800 million (December 31, 2022 - $696 million) and working capital of $737 million (December 31, 2022 - $689 million).
The Company holds equity investments of several companies (Note 16) with a combined market value at March 31, 2023 of $309 million (December 31, 2022 - $256 million). The daily exchange traded volume of these shares, including the shares underlying the warrants, is not sufficient for the Company to liquidate its position in a short period of time without potentially affecting the market value of the shares. These shares and warrants are held for strategic purposes and are considered long-term investments and therefore, as part of the Company’s planning, budgeting and liquidity analysis process, these investments are not relied upon to provide operational liquidity.
The following table summarizes the timing associated with the Company’s remaining contractual payments relating to its financial liabilities. The table reflects the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay (assuming that the Company is in compliance with all of its obligations). The table includes both interest and principal cash flows, where applicable.
| As at March 31, 2023 |
(in thousands) | 2023 | 2024 - 2025 | 2026 - 2027 | After 2027 | | Total |
| Accounts payable and accrued liabilities | $ | 9,136 | $ | | - | | $ | - | | $ | - | | $ | 9,136 |
Performance share units 1 | | - | | | 10,336 | | | 96 | | | - | | | 10,432 |
| Dividends payable | | 67,910 | | | - | | | - | | | - | | | 67,910 |
| Total | $ | 77,046 | | $ | 10,336 | | $ | 96 | | $ | - | | $ | 87,478 |
| 1) | See Note 21.1 for estimated value per PSU at maturity and anticipated performance factor at maturity. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [10]
5.5. Currency RiskThe Company undertakes certain transactions denominated in Canadian dollars, including certain operating expenses and the acquisition of strategic long-term investments. As a result, the Company is exposed to fluctuations in the value of the Canadian dollar relative to the United States dollar. The carrying amounts of the Company’s Canadian dollar denominated monetary assets and monetary liabilities at the end of the reporting period are as follows:
| | | March 31 | | December 31 |
(in thousands) | | 2023 | | 2022 |
| Monetary assets | | | | | | |
| Cash and cash equivalents | | $ | 9,890 | | $ | 311 |
| Accounts receivable | | | 439 | | | 739 |
| Long-term investments - common shares held | | | 79,062 | | | 60,443 |
| Long-term investments - warrants held | | | 738 | | | 560 |
| Other long-term assets | | | 10,950 | | | 3,308 |
| Total Canadian dollar denominated monetary assets | | $ | 101,079 | | $ | 65,361 |
| Monetary liabilities | | | | | | |
| Accounts payable and accrued liabilities | | $ | 5,603 | | $ | 8,180 |
| Performance share units | | | 8,338 | | | 16,971 |
| Lease liability | | | 1,193 | | | 1,315 |
| Pension liability | | | 3,598 | | | 3,524 |
| Total Canadian dollar denominated monetary liabilities | | $ | 18,732 | | $ | 29,990 |
The following tables detail the Company’s sensitivity to a 10% increase or decrease in the Canadian dollar relative to the United States dollar, representing the sensitivity used when reporting foreign currency risk internally to key management personnel and represents management’s assessment of the reasonably possible change in exchange rates.
| | As at March 31, 2023 |
| | Change in Canadian Dollar |
(in thousands) | 10%
Increase | 10%
Decrease |
| Increase (decrease) in net earnings | $ | 329 | $ | (329) |
| Increase (decrease) in other comprehensive income | | 7,906 | | (7,906) |
| Increase (decrease) in total comprehensive income | $ | 8,235 | $ | (8,235) |
| | As at December 31, 2022 |
| | Change in Canadian Dollar |
(in thousands) | 10%
Increase | 10%
Decrease |
| Increase (decrease) in net earnings | $ | (2,507) | $ | 2,507 |
| Increase (decrease) in other comprehensive income | | 6,044 | | (6,044) |
| Increase (decrease) in total comprehensive income | $ | 3,537 | $ | (3,537) |
The Company is exposed to interest rate risk on its outstanding borrowings and short-term investments. Presently, the Company has no outstanding borrowings, and historically all borrowings have been at floating interest rates. The Company monitors its exposure to interest rates and has not entered into any derivative contracts to manage this
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [11]
risk. During the three months ended March 31, 2023 and 2022, the weighted average effective interest rate paid by the Company on its outstanding borrowings was Nil.
During the three months ended March 31, 2023 and March 31, 2022, a fluctuation in interest rates of 100 basis points (1 percent) would not have impacted the amount of interest expensed by the Company.
The Company is exposed to equity price risk as a result of holding long-term investments in common shares of various companies. The Company does not actively trade these investments.
If equity prices had been 10% higher or lower at the respective balance sheet date, other comprehensive income for the three months ended March 31, 2023 and 2022 would have increased/decreased by approximately $30 million and $9 million respectively, as a result of changes in the fair value of common shares held.
| 5.8. | Fair Value Estimation |
The Company classifies its fair value measurements within a fair value hierarchy, which reflects the significance of the inputs used in making the measurements as defined in IFRS 13 – Fair Value Measurements (“IFRS 13”).
Level 1 - Unadjusted quoted prices at the measurement date for identical assets or liabilities in active markets.
Level 2 - Observable inputs other than quoted prices included in Level 1, such as quoted prices for similar assets and liabilities in active markets; quoted prices for identical or similar assets and liabilities in markets that are not active; or other inputs that are observable or can be corroborated by observable market data.
Level 3 - Unobservable inputs which are supported by little or no market activity.
The following table sets forth the Company’s financial assets and liabilities measured at fair value by level within the fair value hierarchy. As required by IFRS 13, assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement.
| | | March 31, 2023 |
(in thousands) | Note | Total | Level 1 | Level 2 | Level 3 |
| Cash and cash equivalents | 23 | $ | 799,697 | $ | 799,697 | $ | - | $ | - |
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 11 | | 1,839 | | - | | 1,839 | | - |
| Long-term investments - common shares held | 16 | | 308,330 | | 308,330 | | - | | - |
| Long-term investments - warrants held | 16 | | 738 | | - | | 738 | | - |
| | | $ | 1,110,604 | $ | 1,108,027 | $ | 2,577 | $ | - |
| | | December 31, 2022 |
(in thousands) | Note | Total | Level 1 | Level 2 | Level 3 |
| Cash and cash equivalents | 23 | $ | 696,089 | $ | 696,089 | $ | - | $ | - |
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 11 | | 2,516 | | - | | 2,516 | | - |
| Long-term investments - common shares held | 16 | | 255,535 | | 255,535 | | - | | - |
| Long-term investments - warrants held | 16 | | 560 | | - | | 560 | | - |
| | | $ | 954,700 | $ | 951,624 | $ | 3,076 | $ | - |
The Refundable Deposit on the 777 PMPA is carried at amortized cost. Trade accounts receivables, other accounts receivables and accounts payables and accrued liabilities are non-interest bearing and are stated at amortized cost, which approximate fair values due to the short terms to maturity. Where necessary, other receivables are reported net of allowances for uncollectable amounts.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [12]
When balances are outstanding, the Company’s bank debt (Note 18.1) is reported at amortized cost using the effective interest method. The carrying value of the bank debt approximates its fair value.
| 5.8.1. | Valuation Techniques for Level 1 Assets |
Cash and Cash Equivalents
The Company’s cash and cash equivalents are valued using quoted market prices in active markets and, as such, are classified within Level 1 of the fair value hierarchy.
Long-Term Investments in Common Shares Held
The Company’s long-term investments in common shares held are valued using quoted market prices in active markets and, as such, are classified within Level 1 of the fair value hierarchy. The fair value of the long-term investments in common shares held is calculated as the quoted market price of the common share multiplied by the quantity of shares held by the Company.
| 5.8.2. | Valuation Techniques for Level 2 Assets |
Accounts Receivable Arising from Sales of Metal Concentrates
The Company’s trade receivables and accrued liabilities from provisional concentrate sales are valued based on forward prices of gold and silver to the expected date of final settlement (Note 6). As such, these receivables and/or liabilities are classified within Level 2 of the fair value hierarchy.
Long-Term Investments in Warrants Held
The fair value of the Company’s long-term investments in warrants held that are not traded in an active market are determined using a Black-Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and expected warrant life which are supported by observable current market conditions and as such are classified within Level 2 of the fair value hierarchy. The use of reasonably possible alternative assumptions would not significantly affect the Company’s results.
| | Three Months Ended
March 31 |
(in thousands) | 2023 | 2022 |
| Sales | | | | | | |
| Gold credit sales | $ | 119,196 | 56% | $ | 145,675 | 47% |
| Silver | | | | | | |
| Silver credit sales | $ | 65,179 | 30% | $ | 113,531 | 37% |
| Concentrate sales | | 20,499 | 10% | | 20,801 | 7% |
| Total silver sales | $ | 85,678 | 40% | $ | 134,332 | 44% |
| Palladium credit sales | $ | 4,735 | 2% | $ | 9,533 | 3% |
| Cobalt sales | $ | 4,856 | 2% | $ | 17,704 | 6% |
| Total sales revenue | $ | 214,465 | 100% | $ | 307,244 | 100% |
Gold, Silver and Palladium Credit Sales
Under certain PMPAs, precious metal is acquired from the mine operator in the form of precious metal credits, which is then sold through bullion banks. Revenue from precious metal credit sales is recognized at the time of the sale of such credits, which is also the date that control of the precious metal is transferred to the customer.
The Company will occasionally enter into forward contracts in relation to precious metal deliveries that it is highly confident will occur within a given quarter. The sales price is fixed at the delivery date based on either the terms of these short-term forward sales contracts or the spot price of precious metal.
Concentrate Sales
Under certain PMPAs, gold and/or silver is acquired from the mine operator in concentrate form, which is then sold under the terms of the concentrate sales contracts to third-party smelters or traders. Where the Company acquires precious metal in concentrate form, final precious metal prices are set on a specified future quotational period (the
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [13]
“Quotational Period”) pursuant to the concentrate sales contracts with third-party smelters, typically one to three months after the shipment date, based on market prices for precious metal. The contracts, in general, provide for a provisional payment based upon provisional assays and quoted gold and silver prices. Final settlement is based upon the average applicable price for the Quotational Period applied to the actual number of precious metal ounces recovered calculated using confirmed smelter weights and settlement assays. Revenues and the associated cost of sales are recorded on a gross basis under these contracts at the time title passes to the customer, which is also the date that control of the precious metal is transferred to the customer. The Company has concluded that the adjustments relating to the final assay results for the quantity of concentrate sold are not significant and do not constrain the recognition of revenue.
Cobalt Sales
Cobalt is sold to a third-party sales agent who generally on-sells the cobalt to Wheaton approved third party customers. Revenue from the sale of cobalt is recognized once the third-party customer and sales terms have been agreed to between Wheaton and the third-party sales agent, which is also the date that control of the cobalt is transferred to the third-party sales agent. Should the sales agent retain the cobalt for their own use, revenue is recognized once the sales terms have been agreed to between Wheaton and the third-party sales agent and the product has been delivered, which is also the date that control of the cobalt is transferred to the third-party sales agent.
| 7. | General and Administrative |
| | | Three Months Ended
March 31 |
(in thousands) | | 2023 | 2022 |
| Corporate | | | | | |
| Salaries and benefits | | $ | 3,860 | $ | 4,238 |
| Depreciation | | | 288 | | 287 |
| Professional fees | | | 514 | | 493 |
| Business travel | | | 341 | | 102 |
| Director fees | | | 333 | | 321 |
| Employer health tax | | | 574 | | 317 |
| Audit and regulatory | | | 832 | | 829 |
| Insurance | | | 538 | | 507 |
| Other | | | 1,064 | | 894 |
| General and administrative - corporate | | $ | 8,344 | $ | 7,988 |
| Subsidiaries | | | | | |
| Salaries and benefits | | $ | 1,161 | $ | 1,108 |
| Depreciation | | | 103 | | 106 |
| Professional fees | | | 71 | | 93 |
| Business travel | | | 53 | | 5 |
| Director fees | | | 52 | | 50 |
| Insurance | | | 16 | | 14 |
| Other | | | 299 | | 39 |
| General and administrative - subsidiaries | | $ | 1,755 | $ | 1,415 |
| Consolidated general and administrative | | $ | 10,099 | $ | 9,403 |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [14]
| 8. | Share Based Compensation |
| | | Three Months Ended
March 31 |
(in thousands) | Note | 2023 | 2022 |
Equity settled share based compensation 1 | | | | | |
| Stock options | 20.2 | $ | 631 | $ | 534 |
| RSUs | 20.3 | | 911 | | 808 |
| Cash settled share based compensation | | | | | |
| PSUs | 21.1 | $ | 5,855 | $ | 8,560 |
| Total share based compensation | | $ | 7,397 | $ | 9,902 |
| 1) | Equity settled stock based compensation is a non-cash expense. |
| 9. | Donations and Community Investments |
| | | Three Months Ended
March 31 |
(in thousands) | | 2023 | 2022 |
Local donations and community investments 1 | | $ | 535 | $ | 498 |
Partner donations and community investments 2 | | | 843 | | 250 |
| COVID-19 and community support and response fund | | | - | | 65 |
| Total donations and community investments | | $ | 1,378 | $ | 813 |
| 1) | The Local Community Investment Program supports organizations in Vancouver and the Cayman Islands, where Wheaton’s offices are located. |
| 2) | The Partner Community Investment Program supports the communities influenced by Mining Partners' operations. |
| 10. | Other (Income) Expense |
| | | Three Months Ended
March 31 |
(in thousands) | Note | 2023 | 2022 |
| Interest income | | $ | (6,931) | $ | (82) |
Dividend income
| | | (217) | | (112) |
| Foreign exchange (gain) loss | | | (273) | | 414 |
| Net (gain) loss arising on financial assets mandatorily measured at FVTPL ¹ | | | | | |
| (Gain) loss on fair value adjustment of share purchase warrants held | | | (175) | | 743 |
| Other | | | 34 | | (793) |
| Total other (income) expense | | $ | (7,562) | $ | 170 |
| 1) | FVTPL refers to Fair Value Through Profit or Loss |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [15]
| | | March 31 | December 31 |
(in thousands) | Note | 2023 | 2022 |
| Trade receivables from provisional concentrate sales, net of fair value adjustment | 6 | $ | 1,839 | $ | 2,516 |
| Trade receivables from sales of cobalt | 6 | | 6,405 | | 6,642 |
| Other accounts receivable | | | 992 | | 1,029 |
| Total accounts receivable | | $ | 9,236 | $ | 10,187 |
The trade receivables from sales of cobalt generally have extended payment terms with outstanding amounts being supported by a $10 million letter of credit.
The Company carries its cobalt inventory, which is recorded using weighted average costing, at the lower of cost or net realizable value. A summary of the inventory on hand at March 31, 2023 and December 31, 2022 is as follows:
| | | March 31 | December 31 |
(in thousands) | | 2023 | 2022 |
| Cobalt Inventory, carried at: | | | | | |
| Cost | | $ | 1,400 | $ | - |
| Net realizable value | | | 5,155 | | 10,530 |
| Total cobalt inventory | | $ | 6,555 | $ | 10,530 |
At March 31, 2023, the Company recorded an inventory write down reversal of $1 million (December 31, 2022 – inventory write down of $2 million).
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [16]
| 13. | Mineral Stream Interests |
| | Three Months Ended March 31, 2023 |
| | Cost | Accumulated Depletion & Impairment 1 | Carrying
Amount
Mar 31, 2023 |
| (in thousands) | Balance
Jan 1, 2023 | Additions (Reductions) | Balance
Mar 31, 2023 | Balance
Jan 1, 2023 | Depletion | Balance
Mar 31, 2023 |
Gold interests | | | | | | | | | | | | | | |
| Salobo | $ | 3,059,876 | $ | - | $ | 3,059,876 | $ | (676,614) | $ | (11,884) | $ | (688,498) | $ | 2,371,378 |
Sudbury 2 | | 623,864 | | - | | 623,864 | | (340,448) | | (4,475) | | (344,923) | | 278,941 |
| Constancia | | 140,058 | | - | | 140,058 | | (44,475) | | (2,077) | | (46,552) | | 93,506 |
| San Dimas | | 220,429 | | - | | 220,429 | | (64,564) | | (2,764) | | (67,328) | | 153,101 |
Stillwater 3 | | 239,352 | | - | | 239,352 | | (23,500) | | (1,069) | | (24,569) | | 214,783 |
Other 4 | | 545,391 | | 31,448 | | 576,839 | | (51,248) | | (253) | | (51,501) | | 525,338 |
| $ | 4,828,970 | $ | 31,448 | $ | 4,860,418 | $ | (1,200,849) | $ | (22,522) | $ | (1,223,371) | $ | 3,637,047 |
Silver interests | | | | | | | | | | | | | | |
| Peñasquito | $ | 524,626 | $ | - | | 524,626 | $ | (230,952) | $ | (6,027) | $ | (236,979) | $ | 287,647 |
| Antamina | | 900,343 | | - | | 900,343 | | (354,975) | | (5,745) | | (360,720) | | 539,623 |
| Constancia | | 302,948 | | - | | 302,948 | | (110,001) | | (2,283) | | (112,284) | | 190,664 |
Other 5 | | 1,018,199 | | 62 | | 1,018,261 | | (565,103) | | (2,746) | | (567,849) | | 450,412 |
| $ | 2,746,116 | $ | 62 | $ | 2,746,178 | $ | (1,261,031) | $ | (16,801) | $ | (1,277,832) | $ | 1,468,346 |
Palladium interests | | | | | | | | | | | | | |
Stillwater 3 | $ | 263,721 | $ | - | $ | 263,721 | $ | (36,909) | $ | (1,203) | $ | (38,112) | $ | 225,609 |
Platinum interests | | | | | | | | | | | | | | |
| Marathon | $ | 9,428 | $ | 12 | $ | 9,440 | $ | - | $ | - | $ | - | $ | 9,440 |
Cobalt interests | | | | | | | | | | | | | | |
Voisey's Bay 6 | $ | 393,422 | $ | - | $ | 393,422 | $ | (35,849) | $ | (1,126) | $ | (36,975) | $ | 356,447 |
| $ | 8,241,657 | $ | 31,522 | $ | 8,273,179 | $ | (2,534,638) | $ | (41,652) | $ | (2,576,290) | $ | 5,696,889 |
| 1) | Includes cumulative impairment charges to March 31, 2023 as follows: Pascua-Lama silver interest - $338 million; and Sudbury gold interest - $120 million. |
| 2) | Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton, Totten and Victor gold interests. |
| 3) | Comprised of the Stillwater and East Boulder gold and palladium interests. |
| 4) | Comprised of the Minto, Copper World Complex, Marmato, Santo Domingo, Fenix, Blackwater, Marathon, Goose and Curipamba gold interests. |
| 5) | Comprised of the Los Filos, Zinkgruvan, Stratoni, Neves-Corvo, Minto, Aljustrel, Loma de La Plata, Pascua-Lama, Copper World Complex, Marmato, Cozamin, Blackwater and Curipamba silver interests. |
| 6) | When cobalt is delivered to the Company it is recorded as inventory until such time as it is sold and the cost of the cobalt is recorded as a cost of sale. Depletion in this table for the Voisey’s Bay cobalt interest is inclusive of depletion relating to inventory. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [17]
| | Year Ended December 31, 2022 |
| | Cost | Accumulated Depletion & Impairment 1 | Carrying
Amount
Dec 31, 2022 |
| (in thousands) | Balance
Jan 1, 2022 | Additions (Reductions) | Disposal | Balance
Dec 31, 2022 | Balance
Jan 1, 2022 | Depletion | Disposal | Impairment (Charge) Reversal | Balance
Dec 31, 2022 |
Gold interests | | | | | | | | | | | | | | | | | | | | |
| Salobo | $ | 3,059,876 | $ | - | | - | $ | 3,059,876 | $ | (621,937) | $ | (54,677) | | - | $ | - | $ | (676,614) | $ | 2,383,262 |
Sudbury 2 | | 623,864 | | - | | - | | 623,864 | | (316,695) | | (23,753) | | - | | - | | (340,448) | | 283,416 |
| Constancia | | 140,058 | | - | | - | | 140,058 | | (36,269) | | (8,206) | | - | | - | | (44,475) | | 95,583 |
| San Dimas | | 220,429 | | - | | - | | 220,429 | | (53,706) | | (10,858) | | - | | - | | (64,564) | | 155,865 |
Stillwater 3 | | 239,352 | | - | | - | | 239,352 | | (19,567) | | (3,933) | | - | | - | | (23,500) | | 215,852 |
Other 4 | | 761,334 | | 138,515 | | (354,458) | | 545,391 | | (396,542) | | (1,252) | | 348,265 | | (1,719) | | (51,248) | | 494,143 |
| $ | 5,044,913 | $ | 138,515 | $ | (354,458) | $ | 4,828,970 | $ | (1,444,716) | $ | (102,679) | $ | 348,265 | $ | (1,719) | $ | (1,200,849) | $ | 3,628,121 |
Silver interests | | | | | | | | | | | | | | | | | | | | |
| Peñasquito | $ | 524,626 | $ | - | $ | - | $ | 524,626 | $ | (202,608) | $ | (28,344) | $ | - | $ | - | $ | (230,952) | $ | 293,674 |
| Antamina | | 900,343 | | - | | - | | 900,343 | | (320,291) | | (34,684) | | - | | - | | (354,975) | | 545,368 |
| Constancia | | 302,948 | | - | | - | | 302,948 | | (97,064) | | (12,937) | | - | | - | | (110,001) | | 192,947 |
Other 5 | | 1,438,974 | | 4,519 | | (425,294) | | 1,018,199 | | (845,779) | | (36,640) | | 306,986 | | 10,330 | | (565,103) | | 453,096 |
| $ | 3,166,891 | $ | 4,519 | $ | (425,294) | $ | 2,746,116 | $ | (1,465,742) | $ | (112,605) | $ | 306,986 | $ | 10,330 | $ | (1,261,031) | $ | 1,485,085 |
Palladium interests | | | | | | | | | | | | | | | | | | |
Stillwater 3 | $ | 263,721 | $ | - | | - | $ | 263,721 | $ | (30,891) | $ | (6,018) | | - | $ | - | $ | (36,909) | $ | 226,812 |
Platinum interests | | | | | | | | | | | | | | | | | | | |
| Marathon | $ | - | $ | 9,428 | | - | $ | 9,428 | $ | - | $ | - | | - | $ | - | $ | - | $ | 9,428 |
Cobalt interests | | | | | | | | | | | | | | | | | | | | |
Voisey's Bay 6 | $ | 393,422 | $ | - | | - | $ | 393,422 | $ | (21,801) | $ | (14,048) | | - | $ | - | $ | (35,849) | $ | 357,573 |
| $ | 8,868,947 | $ | 152,462 | $ | (779,752) | $ | 8,241,657 | $ | (2,963,150) | $ | (235,350) | $ | 655,251 | $ | 8,611 | $ | (2,534,638) | $ | 5,707,019 |
| 1) | Includes cumulative impairment charges to December 31, 2022 as follows: Pascua-Lama silver interest - $338 million; and Sudbury gold interest - $120 million. |
| 2) | Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton, Totten and Victor gold interests. |
| 3) | Comprised of the Stillwater and East Boulder gold and palladium interests. |
| 4) | Comprised of the Minto, Copper World Complex, 777, Marmato, Santo Domingo, Fenix and Blackwater gold interests.As the 777 mine has been permanently closed, the 777 PMPA has been reflected as a disposition, with the carrying value transferred to a long-term receivable. |
| 5) | Comprised of the Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata, Pascua-Lama, Copper World Complex, 777, Marmato, Cozamin and Blackwater silver interests. The Keno Hill PMPA and the Yauliyacu PMPA were terminated on September 7, 2022 and December 14, 2022, respectively. As the 777 mine has been permanently closed, the 777 PMPA has been reflected as a disposition, with the carrying value transferred to a long-term receivable. |
| 6) | When cobalt is delivered to the Company it is recorded as inventory until such time as it is sold and the cost of the cobalt is recorded as a cost of sale. Depletion in this table for the Voisey’s Bay cobalt interest is inclusive of depletion relating to inventory. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [18]
The value allocated to reserves is classified as depletable upon a mining operation achieving first production and is depleted on a unit-of-production basis over the estimated recoverable proven and probable reserves at the mine. The value associated with resources and exploration potential is allocated at acquisition and is classified as non-depletable until such time as it is transferred to the depletable category, generally as a result of the conversion of resources or exploration potential into reserves.
| | March 31, 2023 | December 31, 2022 |
(in thousands) | Depletable | Non-Depletable | Total | Depletable | Non-Depletable | Total |
| Gold interests | | | | | | | | | | | | |
| Salobo | $ | 1,993,679 | $ | 377,699 | $ | 2,371,378 | $ | 1,990,789 | $ | 392,473 | $ | 2,383,262 |
Sudbury 1 | | 254,578 | | 24,363 | | 278,941 | | 239,002 | | 44,414 | | 283,416 |
| Constancia | | 87,999 | | 5,507 | | 93,506 | | 89,097 | | 6,486 | | 95,583 |
| San Dimas | | 48,695 | | 104,406 | | 153,101 | | 51,459 | | 104,406 | | 155,865 |
Stillwater 2 | | 189,982 | | 24,801 | | 214,783 | | 191,051 | | 24,801 | | 215,852 |
Other 3 | | 18,996 | | 506,342 | | 525,338 | | 19,248 | | 474,895 | | 494,143 |
| | $ | 2,593,929 | $ | 1,043,118 | $ | 3,637,047 | $ | 2,580,646 | $ | 1,047,475 | $ | 3,628,121 |
| Silver interests | | | | | | | | | | | | |
| Peñasquito | $ | 213,942 | $ | 73,705 | $ | 287,647 | $ | 219,969 | $ | 73,705 | $ | 293,674 |
| Antamina | | 192,549 | | 347,074 | | 539,623 | | 198,294 | | 347,074 | | 545,368 |
| Constancia | | 180,609 | | 10,055 | | 190,664 | | 182,171 | | 10,776 | | 192,947 |
Other 4 | | 139,830 | | 310,582 | | 450,412 | | 139,424 | | 313,672 | | 453,096 |
| | $ | 726,930 | $ | 741,416 | $ | 1,468,346 | $ | 739,858 | $ | 745,227 | $ | 1,485,085 |
| Palladium interests | | | | | | | | | | | | |
Stillwater 2 | $ | 217,516 | $ | 8,093 | $ | 225,609 | $ | 218,104 | $ | 8,708 | $ | 226,812 |
Platinum interests | | | | | | | | | | | | |
| Marathon | $ | - | $ | 9,440 | $ | 9,440 | $ | - | $ | 9,428 | $ | 9,428 |
| Cobalt interests | | | | | | | | | | | | |
| Voisey's Bay | $ | 327,085 | $ | 29,362 | $ | 356,447 | $ | 316,749 | $ | 40,824 | $ | 357,573 |
| | $ | 3,865,460 | $ | 1,831,429 | $ | 5,696,889 | $ | 3,855,357 | $ | 1,851,662 | $ | 5,707,019 |
| 1) | Comprised of the Coleman, Copper Cliff, Garson, Stobie, Creighton, Totten and Victor gold interests. |
| 2) | Comprised of the Stillwater and East Boulder gold and palladium interests. |
| 3) | Comprised of the Minto, Copper World Complex, Marmato, Santo Domingo, Fenix, Blackwater, Marathon, Goose and Curipamba gold interests. |
| 4) | Comprised of the Los Filos, Zinkgruvan, Stratoni, Neves-Corvo, Minto, Aljustrel, Loma de La Plata, Pascua-Lama, Copper World Complex, Marmato, Cozamin, Blackwater and Curipamba silver interests. |
Acquisition of Curipamba Precious Metals Purchase Agreement
On January 17, 2022, the Company entered into a PMPA (the “Curipamba PMPA”) with Adventus Mining Corporation (“Adventus”) in respect of gold and silver production from the Curipamba Project located in Ecuador (the “Curipamba Project”). Under the Curipamba PMPA, Wheaton will purchase an amount of gold equal to 50% of the payable gold production until 145,000 ounces have been delivered, thereafter dropping to 33% of payable gold production for the life of the mine and an amount of silver equal to 75% of the payable silver production until 4.6 million ounces have been delivered, thereafter dropping to 50% for the life of mine. Under the terms of the Curipamba PMPA, the Company is committed to pay Adventus total upfront cash consideration of $175.5 million, $13 million of which is available pre-construction and $500,000 of which will be paid to support certain local community development initiatives around the Curipamba Project. The initial payment of $13 million was paid on December 6, 2022. The remainder will be payable in four staged installments during construction, subject to various customary conditions being satisfied. In addition, Wheaton will make ongoing production payments for the gold and silver ounces delivered equal to 18% of the spot prices until the value of gold and silver delivered, net of the production payment, is equal to the upfront consideration of $175.5 million, at which point the production payment will increase to 22% of the spot prices.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [19]
Acquisition of Marathon Precious Metals Purchase Agreement
On January 26, 2022, the Company entered into a PMPA (the “Marathon PMPA”) with Generation Mining Limited (“Gen Mining”) in respect of gold and platinum production from the Marathon Project located in Ontario, Canada (the “Marathon Project”). Under the Marathon PMPA, Wheaton will purchase an amount of gold equal to 100% of the payable gold production until 150,000 ounces have been delivered, thereafter dropping to 67% of payable gold production for the life of the mine and an amount of platinum production equal to 22% of the payable platinum production until 120,000 ounces have been delivered, thereafter dropping to 15% for the life of mine. Under the terms of the Marathon PMPA, the Company is committed to pay Gen Mining total upfront cash consideration of $178 million (Cdn$240 million), $16 million (Cdn$20 million) of which was paid on March 31, 2022 and $15 million (Cdn$20 million) was paid on September 7, 2022. The remainder is to be paid in four staged installments during construction, subject to various customary conditions being satisfied and pre-determined completion tests. In addition, Wheaton will make ongoing production payments for the gold and platinum ounces delivered equal to 18% of the spot prices until the value of gold and platinum delivered, net of the production payment, is equal to the upfront consideration of Cdn$240 million, at which point the production payment will increase to 22% of the spot prices.
Acquisition of Goose Precious Metals Purchase Agreement
On February 8, 2022, the Company entered into a PMPA (the “Goose PMPA”) with Sabina Gold & Silver Corp. (“Sabina”) in respect of gold production from the Goose Project, part of Sabina’s Back River Gold District located in Nunavut, Canada (the “Goose Project”). Under the Goose PMPA, Wheaton was to purchase an amount of gold equal to 4.15% of the payable gold production until 130,000 ounces have been delivered, dropping to 2.15% until 200,000 ounces have been delivered, and thereafter dropping to 1.5% of the payable gold production for the life of mine. Under the terms of the Goose PMPA, the Company is committed to pay Sabina an upfront payment of $125 million in four equal installments during construction of the Goose Project, subject to customary conditions. The initial payment of $31.25 million was paid on September 28, 2022, the second installment of $31.25 million was paid on December 6, 2022, and the third installment of $31.25 million was paid on February 3, 2023.
On April 12, 2023, Sabina announced that shareholders approved the proposed acquisition by B2Gold Corp. (“B2Gold”) of all the issued and outstanding common shares of Sabina. The transaction closed April 19, 2023. Subsequent to closing, B2Gold exercised the option to acquire 33% of the stream under the Goose PMPA in exchange for a cash payment in the amount of $46 million, resulting in a gain on partial disposal of the Goose PMPA in the amount of $5 million. In connection with the exercise of the option, the Company’s attributable gold production has been modified such that the Company will purchase an amount of gold equal to 2.78% of the payable gold production until the Company has received 87,100 ounces of gold under the Goose PMPA, dropping to 1.44%, until 134,000 ounces have been delivered, and thereafter dropping to 1.0%.
In addition, Wheaton will make ongoing production payments for the gold ounces delivered equal to 18% of the spot gold price until the value of gold delivered, net of the production payment, is equal to the revised upfront consideration of $83.75 million, at which point the production payment will increase to 22% of the spot gold price.
Amendment to the Marmato PMPA
On March 21, 2022, the Company amended its PMPA with Aris Mining Corporation (“Aris Mining”) in respect of the Marmato PMPA. Under the terms of the amended agreement, Wheaton will purchase 10.5% of the gold production and 100% of the silver production from the Marmato Upper and Lower mines until 310,000 ounces of gold and 2.15 million ounces of silver have been delivered, after which the stream drops to 5.25% of the gold production and 50% of the silver production for the life of mine. Under the terms of the amended Marmato PMPA, the Company is committed to pay Aris Mining total upfront cash payments of $175 million. Of this amount, $53 million has been paid and the remaining amount is payable during the construction of the Marmato Lower Mine, subject to customary conditions.
| 14. | Early Deposit Mineral Stream Interests |
Early deposit mineral stream interests represent agreements relative to early stage development projects whereby Wheaton can choose not to proceed with the agreement once certain documentation has been received including, but not limited to, feasibility studies, environmental studies and impact assessment studies (please see Note 27 for more information). Once Wheaton has elected to proceed with the agreement, the carrying value of the stream will be transferred to Mineral Stream Interests.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [20]
The following table summarizes the early deposit mineral stream interests currently owned by the Company:
| | Mine
Owner | | | | | | | | Attributable
Production to be
Purchased | |
| Early Deposit Mineral Stream Interests | Location of
Mine | Upfront
Consideration Paid to Date 1 | Upfront
Consideration
to be Paid 1, 2 | Total
Upfront
Consideration¹ | Gold | Silver | Term of
Agreement |
Toroparu | Aris Mining | Guyana | $ | 15,500 | $ | 138,000 | $ | 153,500 | 10% | 50% | Life of Mine |
Cotabambas | Panoro | Peru | | 13,750 | | 126,250 | | 140,000 | 25% ³ | 100% ³ | Life of Mine |
Kutcho | Kutcho | Canada | | 16,852 | | 58,000 | | 74,852 | 100% | 100% | Life of Mine |
| | | | $ | 46,102 | $ | 322,250 | $ | 368,352 | | | |
| 1) | Expressed in thousands of United States dollars; excludes closing costs and capitalized interest, where applicable. |
| 2) | Please refer to Note 27 for details of when the remaining upfront consideration to be paid becomes due. |
| 3) | Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production will decrease to 16.67% of gold production and 66.67% of silver production for the life of mine. |
| 15. | Mineral Royalty Interests |
On January 5, 2021, the Company paid $3 million for an existing 2.0% net smelter return royalty interest on the first 600,000 ounces of gold mined from ore extracted from the Brewery Creek quartz mineral claims located in the Yukon Territories, Canada owned by Golden Predator Exploration Ltd., a subsidiary of Sabre Gold Mines Corp. (“Golden Predator”) and any mineral tenure derived therefrom, and a 2.75% net smelter returns royalty interest thereafter (the “Brewery Creek Royalty”). The Brewery Creek Royalty agreement provides, among other things, that Golden Predator may reduce the 2.75% net smelter returns royalty interest to 2.125%, on payment of the sum of Cdn$2 million to Wheaton.
Additionally, the Company has a 0.5% net smelter return royalty interest in the Metates properties (the “Metates Royalty”) located in Mexico from Chesapeake Gold Corp. (“Chesapeake”) for the life of mine. The carrying cost of the Metates Royalty is $3 million. The Company also has a right of first refusal on any silver streaming, royalty or any other transaction on the Metates properties.
To date, no revenue has been recognized and no depletion has been taken with respect to these royalty agreements.
| 16. | Long-Term Equity Investments |
| | March 31 | December 31 |
(in thousands) | 2023 | 2022 |
| Common shares held | $ | 308,330 | $ | 255,535 |
| Warrants held | | 738 | | 560 |
| Total long-term equity investments | $ | 309,068 | $ | 256,095 |
Common Shares Held
| | Three Months Ended March 31, 2023 |
(in thousands) | Shares
Owned
(000's) | % of
Outstanding Shares Owned | Fair Value at
Dec 31, 2022 | Cost of Additions | Proceeds of Disposition 1 | Fair Value Adjustment Gains (Losses) 2 | Fair Value at
Mar 31, 2023 | Realized Loss on Disposal |
Bear Creek | 13,264 | 8.58% | $ 7,443 | $ - | $ - | $ (680) | $ 6,763 | $ - |
Sabina | 31,095 | 5.56% | 30,535 | - | - | 16,569 | 47,104 | - |
Kutcho | 18,640 | 14.79% | 3,097 | - | - | 897 | 3,994 | - |
Hecla | 35,012 | 5.76% | 194,668 | - | - | 26,960 | 221,628 | - |
Other | | | 19,792 | 8,168 | (27) | 908 | 28,841 | (990) |
Total | | | $ 255,535 | $ 8,168 | $ (27) | $ 44,654 | $ 308,330 | $ (990) |
| 1) | Disposals during 2023 were made as a result of the acquisition of the companies to which the shares relate by unrelated third party entities. |
| 2) | Fair Value Gains (Losses) are reflected as a component of OCI. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [21]
| | Three Months Ended March 31, 2022 |
(in thousands) | Shares
Owned
(000's) | % of
Outstanding Shares Owned | Fair Value at
Dec 31, 2021 | Cost of Additions | Proceeds of Disposition | Fair Value Adjustment Gains (Losses) 1 | Fair Value at
Mar 31, 2022 | Realized Gain on Disposal |
Bear Creek | 13,264 | 10.67% | $ 12,764 | $ - | $ - | $ (1,406) | $ 11,358 | $ - |
Sabina | 28,531 | 5.41% | 13,381 | 17,200 | - | 3,895 | 34,476 | - |
Kutcho | 18,640 | 16.09% | - | 11,721 | - | (3,219) | 8,502 | - |
Other | | | 33,796 | 2,391 | - | 821 | 37,008 | - |
Total | | | $ 59,941 | $ 31,312 | $ - | $ 91 | $ 91,344 | $ - |
| 1) | Fair Value Gains (Losses) are reflected as a component of OCI. |
The Company’s long-term investments in common shares (“LTI’s”) are held for long-term strategic purposes and not for trading purposes. As such, the Company has elected to reflect any fair value adjustments, net of tax, as a component of other comprehensive income (“OCI”). The cumulative gain or loss will not be reclassified to net earnings on disposal of these long-term investments but is reclassified to retained earnings.
By holding these long-term investments, the Company is inherently exposed to various risk factors including currency risk, market price risk and liquidity risk.
| 17. | Property, Plant and Equipment |
| | March 31, 2023 |
| (in thousands) | Leasehold Improvements | Right of Use Assets - Property | Other | Total |
Cost | | | | | | | | |
| Balance - January 1, 2023 | $ | 4,004 | $ | 4,793 | $ | 4,917 | $ | 13,714 |
| Additions | | - | | - | | 83 | | 83 |
| Balance - March 31, 2023 | $ | 4,004 | $ | 4,793 | $ | 5,000 | $ | 13,797 |
Accumulated Depreciation | | | | | | | | |
| Balance - January 1, 2023 | $ | (3,168) | $ | (2,965) | $ | (3,371) | $ | (9,504) |
| Depreciation | | (79) | | (196) | | (116) | | (391) |
| Balance - March 31, 2023 | $ | (3,247) | $ | (3,161) | $ | (3,487) | $ | (9,895) |
Net book value - March 31, 2023 | $ | 757 | $ | 1,632 | $ | 1,513 | $ | 3,902 |
| | December 31, 2022 |
| (in thousands) | Leasehold Improvements | Right of Use Assets - Property | Other | Total |
Cost | | | | | | | | |
| Balance - January 1, 2022 | $ | 4,382 | $ | 4,793 | $ | 4,856 | $ | 14,031 |
| Additions | | - | | - | | 289 | | 289 |
| Disposals | | (378) | | - | | (228) | | (606) |
| Balance - December 31, 2022 | $ | 4,004 | $ | 4,793 | $ | 4,917 | $ | 13,714 |
Accumulated Depreciation | | | | | | | | |
| Balance - January 1, 2022 | $ | (3,226) | $ | (2,196) | $ | (3,100) | $ | (8,522) |
| Disposals | | 378 | | - | | 228 | | 606 |
| Depreciation | | (320) | | (769) | | (499) | | (1,588) |
| Balance - December 31, 2022 | $ | (3,168) | $ | (2,965) | $ | (3,371) | $ | (9,504) |
Net book value - December 31, 2022 | $ | 836 | $ | 1,828 | $ | 1,546 | $ | 4,210 |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [22]
| 18.1. | Sustainability-Linked Revolving Credit Facility |
The Company’s undrawn $2 billion revolving term loan (“Revolving Facility”) matures on July 18, 2027.
The Company’s Revolving Facility has financial covenants which require the Company to maintain: (i) a net debt to tangible net worth ratio of less than or equal to 0.75:1; and (ii) an interest coverage ratio of greater than or equal to 3.00:1. Only cash interest expenses are included for the purposes of calculating the interest coverage ratio. The Company is in compliance with these debt covenants as at March 31, 2023.
At the Company’s option, amounts drawn under the Revolving Facility incur interest based on the Company’s leverage ratio at either (i) the Secured Overnight Financing Rate (“SOFR”) plus 1.10% to 2.30%; or (ii) the Bank of Nova Scotia’s Base Rate plus 0.00% to 1.05%. Under both options, the interest rate shall not be less than 0%. In connection with the extension, the interest rate paid on drawn amounts will be adjusted by up to +/- 0.05% based upon the Company’s performance in three sustainability-related areas including climate change, diversity and overall performance in sustainability. During the three months ended March 31, 2023 and March 31, 2022, the stand-by fee rate was 0.20%.
The Revolving Facility, which is classified as a financial liability and reported at amortized cost using the effective interest method, can be drawn down at any time to finance acquisitions, investments or for general corporate purposes. In connection with the Revolving Facility, there is $5 million unamortized debt issue costs which have been recorded as a long-term asset under the classification Other (see Note 26).
The lease liability on the Company’s offices located in Vancouver, Canada and the Cayman Islands is as follows:
| | March 31 | December 31 |
(in thousands) | 2023 | 2022 |
| Current portion | $ | 828 | $ | 818 |
| Long-term portion | | 941 | | 1,152 |
| Total lease liabilities | $ | 1,769 | $ | 1,970 |
The maturity analysis, on an undiscounted basis, of these leases is as follows:
| | December 31 |
(in thousands) | 2022 |
| Not later than 1 year | $ | 787 |
| Later than 1 year and not later than 5 years | | 1,047 |
| Later than 5 years | | - |
| Total lease liabilities | $ | 1,834 |
A summary of the Company’s finance costs associated with the above facilities during the period is as follows:
| | | Three Months Ended
March 31 |
(in thousands) | Note | 2023 | 2022 |
| Costs related to undrawn credit facilities | 18.1 | $
| 1,316 | $ | 1,342 |
| Interest expense - lease liabilities | 18.2 | | 17 | | 26 |
| Letters of guarantee | 5.3 | | 45 | | 54 |
| Total finance costs | | $ | 1,378 | $ | 1,422 |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [23]
| | Note | March 31 |
| December 31 |
(in thousands) | 2023 |
| 2022 |
| Issued capital | | | | | |
| Share capital issued and outstanding: 452,775,834 common shares (December 31, 2022: 452,318,526 common shares) | 19.1 | $ | 3,765,954 | $ | 3,752,662 |
The Company is authorized to issue an unlimited number of common shares having no par value and an unlimited number of preference shares issuable in series. As at March 31, 2023, the Company had no preference shares outstanding.
A continuity schedule of the Company’s issued and outstanding common shares from January 1, 2022 to March 31, 2023 is presented below:
| | Number
of
Shares | Weighted
Average
Price |
| At January 1, 2022 | 450,863,952 | |
Share purchase options exercised 1 | 329,480 | Cdn$28.84 |
Restricted share units released 1 | 87,838 | Cdn$0.00 |
| At March 31, 2022 | 451,281,270 | |
Share purchase options exercised 1 | 163,649 | Cdn$28.61 |
Dividend reinvestment plan 2 | 873,607 | US$38.75 |
| At December 31, 2022 | 452,318,526 | |
Share purchase options exercised 1 | 397,636 | Cdn$31.17 |
Restricted share units released 1 | 59,672 | Cdn$0.00 |
| At March 31, 2023 | 452,775,834 | |
| 1) | The weighted average price of share purchase options exercised and restricted share units released represents the respective exercise price. |
| 2) | The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares. The weighted average price for common shares issued under the DRIP represents the volume weighted average price of the common shares on the five trading days preceding the dividend payment date, less a discount of 1% where applicable. |
At the Market Equity Program
The Company has established an at-the-market equity program (the “ATM Program”) that allows the Company to issue up to $300 million worth of common shares from treasury (“Common Shares”) to the public from time to time at the Company’s discretion and subject to regulatory requirements. The ATM Program will be effective until the date that all Common Shares available for issue under the ATM Program have been issued or the ATM Program is terminated prior to such date by the Company or the agents.
Wheaton intends that the net proceeds from the ATM Program, if any, will be available as one potential source of funding for stream acquisitions and/or other general corporate purposes including the repayment of indebtedness. As at March 31, 2023, the Company has not issued any shares under the ATM program.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [24]
| | Three Months Ended
March 31 |
(in thousands, except per share amounts) | 2023 | 2022 |
| Dividends declared per share | $ | 0.15
| $ | 0.15 |
| Average number of shares eligible for dividend | | 452,735 | | 451,254 |
| Total dividends declared | $ | 67,910 | $ | 67,688 |
| 1) | The Company has implemented a DRIP whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares. |
| 2) | As at March 31, 2023, cumulative dividends of $1,862 million have been declared by the Company. |
| | Note | March 31 | December 31 |
(in thousands) | 2023 | 2022 |
| Reserves | | | | | |
| Share purchase warrants | 20.1 | $ | - | $ | 83,077 |
| Share purchase options | 20.2 | | 21,457 | | 22,578 |
| Restricted share units | 20.3 | | 6,569 | | 8,142 |
| Long-term investment revaluation reserve, net of tax | 20.4 | | (5,560) | | (47,250) |
| Total reserves | | $ | 22,466 | $ | 66,547 |
| 20.1. | Share Purchase Warrants |
The Company’s share purchase warrants (“warrants”) are presented below:
| | Number of Warrants | Weighted Average Exercise Price | Exchange Ratio | Share Purchase Warrants Reserve |
| Warrants outstanding at December 31, 2022 | 10,000,000 | $ 43.75 | 1.00 | $ | 83,077 |
| Expired | (10,000,000) | 43.75 | 1.00 | | (83,077) |
| Warrants outstanding at March 31, 2023 | - | $ 43.75 | 1.00 | $ | - |
Each warrant entitled the holder the right to purchase one of the Company’s common shares. The warrants expired unexercised on February 28, 2023.
| 20.2. | Share Purchase Options |
The Company has established an equity settled share purchase option plan whereby the Company’s Board of Directors may, from time to time, grant options to employees or consultants. The maximum term of any share purchase option may be ten years, but generally options are granted with a term to expiry of five to seven years. The exercise price of an option is not less than the closing price on the TSX on the last trading day preceding the grant date. The vesting period of the options is determined at the discretion of the Company’s Board of Directors at the time the options are granted, but generally vest over a period of two or three years.
Each share purchase option converts into one common share of Wheaton on exercise. No amounts are paid or payable by the recipient on receipt of the option. The options do not carry rights to dividends or voting rights. Options may be exercised at any time from the date of vesting to the date of their expiry, subject to certain black-out periods.
The Company expenses the fair value of share purchase options that are expected to vest on a straight-line basis over the vesting period using the Black-Scholes option pricing model to estimate the fair value for each option at the date of grant. The Black-Scholes model was developed for use in estimating the fair value of traded options that have no vesting restrictions. The model requires the use of subjective assumptions, including expected share price volatility. Historical data has been considered in setting the assumptions. Expected volatility is determined by
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [25]
considering the trailing 30-month historic average share price volatility. The weighted average fair value of share purchase options granted and principal assumptions used in applying the Black-Scholes option pricing model are as follows:
| | Three Months Ended
March 31 |
| 2023 | 2022 |
| Black-Scholes weighted average assumptions | | |
| Grant date share price and exercise price | Cdn$59.41 | Cdn$60.00 |
| Expected dividend yield | 1.39% | 1.32% |
| Expected volatility | 30% | 35% |
| Risk-free interest rate | 3.40% | 1.72% |
| Expected option life, in years | 3.0 | 3.0 |
| Weighted average fair value per option granted | Cdn$12.89 | Cdn$13.84 |
| Number of options issued during the period | 316,580 | 283,440 |
| Total fair value of options issued (000's) | $ 2,972 | $ 3,069 |
The following table summarizes information about the options outstanding and exercisable at March 31, 2023:
| Exercise Price (Cdn$) | Exercisable
Options | Non-Exercisable
Options | Total Options
Outstanding | Weighted Average
Remaining
Contractual Life |
| $30.82 | 4,477 | - | 4,477 | 1.2 years |
| $32.59¹ | 23,335 | - | 23,335 | 2.0 years |
| $32.93 | 165,615 | - | 165,615 | 1.0 years |
| $33.22¹ | 15,680 | - | 15,680 | 1.0 years |
| $33.47 | 293,025 | - | 293,025 | 2.0 years |
| $49.86 | 161,149 | 79,873 | 241,022 | 5.0 years |
| $54.06¹ | 39,738 | 20,088 | 59,826 | 5.0 years |
| $58.56¹ | - | 63,190 | 63,190 | 7.0 years |
| $59.41 | - | 253,390 | 253,390 | 7.0 years |
| $60.00 | 74,268 | 149,246 | 223,514 | 6.0 years |
| $63.55¹ | 17,624 | 35,246 | 52,870 | 6.0 years |
| | 794,911 | 601,033 | 1,395,944 | 4.4 years |
1) US$ share purchase options converted to Cdn$ using the exchange rate of 1.3533, being the Cdn$/US$ exchange rate at March 31, 2023. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [26]
A continuity schedule of the Company’s outstanding share purchase options from January 1, 2022 to March 31, 2023 is presented below:
| | Number of
Options
Outstanding | Weighted
Average
Exercise Price |
| At January 1, 2022 | 1,705,497 | Cdn$34.40 |
| Granted (fair value - $3 million or Cdn$13.84 per option) | 283,440 | 60.00 |
| Exercised | (329,480) | 28.84 |
| At March 31, 2022 | 1,659,457 | Cdn$38.59 |
| Exercised | (163,649) | 28.61 |
| Forfeited | (17,508) | 53.73 |
| At December 31, 2022 | 1,478,300 | Cdn$41.37 |
| Granted (fair value - $3 million or Cdn$12.89 per option) | 316,580 | 59.41 |
| Exercised | (397,636) | 31.17 |
| Forfeited | (1,300) | 55.01 |
| At March 31, 2023 | 1,395,944 | Cdn$48.32 |
As it relates to share purchase options, during the three months ended March 31, 2023, the weighted average share price at the time of exercise was Cdn$63.18, as compared to Cdn$60.32 per share during the comparable period in 2022.
| 20.3. | Restricted Share Units (“RSUs”) |
The Company has established an RSU plan whereby RSUs will be issued to eligible employees or directors as determined by the Company’s Board of Directors or the Company’s Compensation Committee. RSUs give the holder the right to receive a specified number of common shares at the specified vesting date. RSUs generally vest over a period of two to three years. Compensation expense related to RSUs is recognized over the vesting period based upon the fair value of the Company’s common shares on the grant date and the awards that are expected to vest. The fair value is calculated with reference to the closing price of the Company’s common shares on the TSX on the business day prior to the date of grant.
RSU holders receive a cash payment based on the dividends paid on the Company’s common shares in the event that the holder of a vested RSU has elected to defer the release of the RSU to a future date. This cash payment is reflected as a component of net earnings under the classification Share Based Compensation.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [27]
A continuity schedule of the Company’s restricted share units outstanding from January 1, 2022 to March 31, 2023 is presented below:
| | Number of
RSUs
Outstanding | Weighted
Average
Intrinsic Value at Date Granted |
| At January 1, 2022 | 350,058 | $26.69 |
| Granted (fair value - $4 million) | 89,210 | 46.93 |
| Released | (87,838) | 28.85 |
| At March 31, 2022 | 351,430 | $31.28 |
| Granted | 2,570 | 39.39 |
| Forfeited | (3,794) | 39.95 |
| At December 31, 2022 | 350,206 | $31.25 |
| Granted (fair value - $4 million) | 92,880 | 43.27 |
| Released | (59,672) | 41.64 |
| Forfeited | (290) | 43.58 |
| At March 31, 2023 | 383,124 | $32.54 |
| 20.4. | Long-Term Investment Revaluation Reserve |
The Company’s long-term investments in common shares (Note 16) are held for long-term strategic purposes and not for trading purposes. The Company has chosen to designate these long-term investments in common shares as financial assets with fair value adjustments being recorded as a component of OCI as it believes that this provides a more meaningful presentation for long-term strategic investments, rather than reflecting changes in fair value as a component of net earnings. As some of these long-term investments are denominated in Canadian dollars, changes in their fair value is affected by both the change in share price in addition to changes in the Cdn$/US$ exchange rate.
Where the fair value of a long-term investment in common shares held exceeds its tax cost, the Company recognizes a deferred income tax liability. To the extent that the value of the long-term investment subsequently declines, the deferred income tax liability is reduced. However, where the fair value of the long-term investment decreases below the tax cost, the Company does not recognize a deferred income tax asset on the unrealized capital loss unless it is probable that the Company will generate future capital gains that will offset the loss.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [28]
A continuity schedule of the Company’s long-term investment revaluation reserve from January 1, 2022 to March 31, 2023 is presented below:
(in thousands) | | Change in Fair Value | Deferred Tax Recovery (Expense) | Total |
| At January 1, 2022 | | $ (65,475) | $ (111) | $ (65,586) |
Unrealized gain (loss) on LTIs 1 | | 91 | (194) | (103) |
| At March 31, 2022 | | $ (65,384) | $ (305) | $ (65,689) |
Unrealized gain (loss) on LTIs 1 | | 20,961 | (6,319) | 14,642 |
Reallocate reserve to retained earnings upon disposal of LTIs 1 | | 3,797 | - | 3,797 |
| At December 31, 2022 | | $ (40,626) | $ (6,624) | $ (47,250) |
Unrealized gain (loss) on LTIs 1 | | 44,654 | (3,954) | 40,700 |
Reallocate reserve to retained earnings upon disposal of LTIs 1 | | 990 | - | 990 |
| At March 31, 2023 | | $ 5,018 | $ (10,578) | $ (5,560) |
| 1) | LTIs refers to long-term investments in common shares held. |
| 21. | Share Based Compensation |
The Company’s share based compensation consists of share purchase options (Note 20.2), restricted share units (Note 20.3) and performance share units (Note 21.1). The accrued value of share purchase options and restricted share units are reflected as reserves in the shareholder’s equity section of the Company’s balance sheet while the accrued value associated with performance share units is reflected as an accrued liability.
| 21.1. | Performance Share Units (“PSUs”) |
The Company has established a Performance Share Unit Plan (“the PSU plan”) whereby PSUs will be issued to eligible employees as determined by the Company’s Board of Directors or the Company’s Compensation Committee. PSUs issued under the PSU plan entitle the holder to a cash payment at the end of a three year performance period equal to the number of PSUs granted, multiplied by a performance factor and multiplied by the fair market value of a Wheaton common share on the expiry of the performance period. The performance factor can range from 0% to 200% and is determined by comparing the Company’s total shareholder return to those achieved by various peer companies, the Philadelphia Gold and Silver Index and the price of gold and silver.
Compensation expense for the PSUs is recorded on a straight-line basis over the three year vesting period. The amount of compensation expense is adjusted at the end of each reporting period to reflect (i) the fair value of common shares; (ii) the number of PSUs anticipated to vest; and (iii) the anticipated performance factor.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [29]
A continuity schedule of the Company’s outstanding PSUs (assuming a performance factor of 100% is achieved over the performance period) and the Company’s PSU accrual from January 1, 2022 to March 31, 2023 is presented below:
(in thousands, except for number of PSUs outstanding) | Number of PSUs
Outstanding | PSU accrual liability |
| At January 1, 2022 | 513,510 | $ | 26,305 |
| Granted | 129,140 | | - |
| Accrual related to the fair value of the PSUs outstanding | - | | 8,625 |
| Foreign exchange adjustment | - | | 307 |
| Forfeited | (3,970) | | (65) |
| At March 31, 2022 | 638,680 | $ | 35,172 |
| Accrual related to the fair value of the PSUs outstanding | - | | 5,789 |
| Foreign exchange adjustment | - | | (1,177) |
| Paid | (186,730) | | (18,411) |
| Forfeited | (7,330) | | (134) |
| At December 31, 2022 | 444,620 | $ | 21,239 |
| Granted | 135,690 | | - |
| Accrual related to the fair value of the PSUs outstanding | - | | 5,855 |
| Foreign exchange adjustment | - | | 13 |
| Paid | (191,980) | | (16,675) |
| At March 31, 2023 | 388,330 | $ | 10,432 |
A summary of the PSUs outstanding at March 31, 2023 is as follows:
Year
of Grant | Year of
Maturity | Number
outstanding | Estimated Value Per PSU at Maturity | Anticipated
Performance
Factor
at Maturity | Percent of Vesting Period Complete at
Mar 31, 2023 | PSU
Liability at
Mar 31, 2023 |
| 2021 | 2024 | 126,590 | $46.18 | 192% | 68% | 7,642 |
| 2022 | 2025 | 126,050 | $45.57 | 135% | 35% | 2,694 |
| 2023 | 2026 | 135,690 | $44.88 | 101% | 2% | 96 |
| | | 388,330 | | | | $ 10,432 |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [30]
| 22. | Earnings per Share (“EPS”) and Diluted Earnings per Share (“Diluted EPS”) |
Diluted earnings per share is calculated using the treasury method which assumes that outstanding share purchase options and warrants, with exercise prices that are lower than the average market price of the Company’s common shares for the relevant period, are exercised and the proceeds are used to purchase shares of the Company at the average market price of the common shares for the relevant period.
Diluted EPS is calculated based on the following weighted average number of shares outstanding:
| | Three Months Ended
March 31 |
(in thousands) | 2023 | 2022 |
| Basic weighted average number of shares outstanding | 452,370 | 450,915 |
| Effect of dilutive securities | | |
| Share purchase options | 431 | 623 |
| Share purchase warrants | - | 63 |
| Restricted share units | 358 | 352 |
| Diluted weighted average number of shares outstanding | 453,159 | 451,953 |
The following table lists the number of share purchase options and share purchase warrants excluded from the computation of diluted earnings per share because the exercise prices exceeded the average market value of the common shares of Cdn$59.12, compared to Cdn$55.02 for the comparable period in 2022.
| | Three Months Ended
March 31 |
(in thousands) | 2023 | 2022 |
| Share purchase options | 530 | 283 |
| 23. | Supplemental Cash Flow Information |
Change in Non-Cash Working Capital
| | Three Months Ended
March 31 |
(in thousands) | 2023 | 2022 |
| Change in non-cash working capital | | | | |
| Accounts receivable | $ | 849 | $ | (14,602) |
| Cobalt inventory | | 628 | | 798 |
| Accounts payable and accrued liabilities | | (3,456) | | (2,213) |
| Other | | (93) | | 99 |
| Total change in non-cash working capital | $ | (2,072) | $ | (15,918) |
Non-Cash Transactions – Receipt of Shares as Consideration for Disposal of Long-Term Equity Investments
During the three months ended March 31, 2023, the Company received common shares valued at $0.2 million as consideration for the disposal of long-term equity investments.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [31]
Cash and Cash Equivalents
| | | March 31 | December 31 |
(in thousands) | | 2023 | 2022 |
| Cash and cash equivalents comprised of: | | | | | |
| Cash | | $ | 268,167 | $ | 170,155 |
| Cash equivalents | | | 531,530 | | 525,934 |
| Total cash and cash equivalents | | $ | 799,697 | $ | 696,089 |
Cash equivalents include short-term deposits, treasury bills, commercial paper, bankers’ depository notes and bankers’ acceptances with terms to maturity at inception of less than three months.
A summary of the Company’s income tax expense (recovery) is as follows:
Income Tax Expense (Recovery) in Net Earnings
| | | Three Months Ended
March 31 |
(in thousands) | | 2023 | 2022 |
| Current income tax expense (recovery) | | $ | (2,641) | $ | 899 |
| Deferred income tax expense (recovery) related to: | | | | | |
| Origination and reversal of temporary differences | | $ | 1,361 | $ | 6,273 |
| Write down (reversal of write down) or recognition of prior period temporary differences | | | (5,300) | | (6,501) |
| Total deferred income tax expense (recovery) | | $ | (3,939) | $ | (228) |
| Total income tax expense (recovery) recognized in net earnings | | $ | (6,580) | $ | 671 |
Income Tax Expense (Recovery) in Other Comprehensive Income
| | | | | |
| | | Three Months Ended
March 31 |
(in thousands) | | 2023 | 2022 |
| Income tax expense (recovery) related to LTIs - common shares held | | $ | 3,954 | $ | 194 |
Income Tax Expense (Recovery) in Shareholders’ Equity1
| | | Three Months Ended
March 31 |
(in thousands) | | 2023 | 2022 |
| Current income tax expense (recovery) | | $ | - | $ | 848 |
| Deferred income tax expense (recovery) related to: | | | | | |
| Origination and reversal of temporary differences | | $ | - | $ | (793) |
| Write down (reversal of write down) or recognition of prior period temporary differences | | $ | - | $ | (848) |
| Total deferred income tax expense (recovery) | | $ | - | $ | (1,641) |
| Total income tax expense (recovery) recognized in equity | | $ | - | $ | (793) |
| 1) | Income tax expense (recovery) in shareholders’ equity relate to share financing fees. Share financing fees are deducted over a five-year period for Canadian income tax purposes. For accounting purposes, share financing fees are charged directly to issued capital. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [32]
Income Tax Rate Reconciliation
The provision for income taxes differs from the amount that would be obtained by applying the statutory income tax rate to consolidated earnings before income taxes due to the following:
| | | Three Months Ended
March 31 |
(in thousands) | | 2023 | 2022 |
| Earnings before income taxes | | $ | 104,811 | $ | 158,138 |
| Canadian federal and provincial income tax rates | | | 27.00% | | 27.00% |
| Income tax expense (recovery) based on above rates | | $ | 28,299 | $ | 42,697 |
| Non-deductible portion of capital losses (non-taxable portion of capital gains) | | | - | | (1,052) |
| Non-deductible stock based compensation and other | | | 339 | | 472 |
Differences in tax rates in foreign jurisdictions 1 | | | (29,894) | | (38,879) |
| Current period unrecognized temporary differences | | | (24) | | 3,934 |
| Write down (reversal of write down) or recognition of prior period temporary differences | | | (5,300) | | (6,501) |
| Total income tax expense (recovery) recognized in net earnings | | $ | (6,580) | $ | 671 |
| 1) | During the three months ended March 31, 2023, the Company's subsidiaries generated net earnings of $111 million, as compared to $145 million during the comparable period of the prior year. |
The majority of the Company’s income generating activities is conducted by its 100% owned subsidiary, Wheaton Precious Metals International Ltd., which operates in the Cayman Islands and is not subject to income tax.
Update on Global Minimum Tax
On March 28, 2023, as part of the Canadian Federal Budget, the Canadian federal government confirmed its commitment to implement a 15% global minimum tax for fiscal years that begin on or after December 31, 2023, which would apply to the income of the Company’s non-Canadian subsidiaries.
Current Income Taxes (Payable) Receivable
The movement in current income taxes payable for the three months ended March 31, 2023 is as follows:
(in thousands) | Current Taxes Payable |
| Current taxes payable - December 31, 2022 | $ (2,763) |
| Current income tax recovery - income statement | 2,641 |
| Income taxes paid | 3,344 |
| Foreign exchange adjustments | 6 |
| Current taxes recoverable - March 31, 2023 | $ 3,228 |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [33]
Deferred Income Taxes
The recognized deferred income tax assets and liabilities are offset on the balance sheet and relate to Canada, except for the foreign withholding tax. The movement in deferred income tax assets and liabilities for the three months ended March 31, 2023 and the year ended December 31, 2022 is shown below:
| | Three Months Ended March 31, 2023 |
| | Opening Balance | Recovery (Expense) Recognized In Net Earnings | Recovery (Expense) Recognized In OCI | Recovery (Expense) Recognized In Shareholders' Equity | Closing
Balance |
Recognized deferred income tax assets and liabilities |
Deferred tax assets | | | | | | | | | | |
Non-capital loss carryforward 1 | $ | - | $ | 1,603 | $ | - | $ | - | $ | 1,603 |
| Capital loss carryforward | | 792 | | (1) | | 134 | | - | | 925 |
Other 2 | | 4,256 | | (827) | | - | | - | | 3,429 |
Deferred tax liabilities | | | | | | | | | | |
Debt financing fees 3 | | (774) | | 3 | | - | | - | | (771) |
| Unrealized gains on long-term investments | | (8,006) | | 1 | | (4,088) | | - | | (12,093) |
Mineral stream interests 4 | | 3,732 | | 3,175 | | - | | - | | 6,907 |
| Foreign withholding tax | | (165) | | (15) | | - | | - | | (180) |
Total | $ | (165) | $ | 3,939 | $ | (3,954) | $ | - | $ | (180) |
| 1) | As at March 31, 2023, the Company had recognized the tax effect on $6 million of non-capital losses against deferred tax liabilities. |
| 2) | Other includes capital assets, cobalt inventory, charitable donation carryforward, and PSU and pension liabilities. |
| 3) | Debt and share financing fees are deducted over a five-year period for Canadian income tax purposes. For accounting purposes, debt financing fees are deducted over the term of the credit facility and share financing fees are charged directly to issued capital. |
| 4) | The Company’s position, as reflected in its filed Canadian income tax returns and consistent with the terms of the PMPAs, is that the cost of the precious metal acquired under the Canadian PMPAs is equal to the market value while a deposit is outstanding (where applicable to an agreement), and the cash cost thereafter. For accounting purposes, the cost of the mineral stream interests is depleted on a unit-of-production basis as described in Note 13. |
| | Year Ended December 31, 2022 |
| | Opening Balance | Recovery (Expense) Recognized In Net Earnings | Recovery (Expense) Recognized In OCI | Recovery (Expense) Recognized In Shareholders' Equity | Closing
Balance |
Recognized deferred income tax assets and liabilities |
Deferred tax assets | | | | | | | | | | |
| Non-capital loss carryforward | $ | 6,967 | $ | (5,178) | $ | - | $ | (1,789) | $ | - |
| Capital loss carryforward | | - | | 277 | | 515 | | - | | 792 |
| Other | | 1,325 | | 2,739 | | 192 | | - | | 4,256 |
Deferred tax liabilities | | | | | | | | | | |
| Interest capitalized for accounting | | (87) | | 87 | | - | | - | | - |
| Debt and share financing fees | | (737) | | (37) | | - | | - | | (774) |
| Kutcho Convertible Note | | - | | 112 | | (112) | | - | | - |
| Unrealized gains on long-term investments | | (170) | | (728) | | (7,108) | | - | | (8,006) |
| Mineral stream interests | | (7,298) | | 11,030 | | - | | - | | 3,732 |
| Foreign withholding tax | | (100) | | (65) | | - | | - | | (165) |
Total | $ | (100) | $ | 8,237 | $ | (6,513) | $ | (1,789) | $ | (165) |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [34]
Deferred income tax assets in Canada not recognized are shown below:
| | | March 31 | December 31 |
(in thousands) | | 2023 | 2022 |
| Mineral stream interests | | $
| 3,490 | $ | 7,369 |
| Other | | | 154 | | 1,575 |
| Unrealized losses on long-term investments | | | 10,971 | | 13,069 |
| Total | | $ | 14,615 | $ | 22,013 |
| 1) | As at March 31, 2023, the Company had fully recognized the tax effect of non-capital losses. |
The composition of other current assets is shown below:
| | | March 31 | December 31 |
(in thousands) | Note | 2023 | 2022 |
| Prepaid expenses | | $ | 2,775 | $ | 2,856 |
| Other | | | 604 | | 431 |
| Total other current assets | | $ | 3,379 | $ | 3,287 |
| 26. | Other Long-Term Assets |
The composition of other long-term assets is shown below:
| | | March 31 | December 31 |
(in thousands) | Note | 2023 | 2022 |
| Intangible assets | | $ | 2,174 | $ | 2,270 |
| Debt issue costs - Revolving Facility | 18.1 | | 5,469 | | 5,757 |
| Other | | | 4,202 | | 3,691 |
| Total other long-term assets | | $ | 11,845 | $ | 11,718 |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [35]
| 27. | Commitments and Contingencies |
Mineral Stream Interests
The following table summarizes the Company’s commitments to make per-ounce cash payments for gold, silver, palladium and platinum and per pound cash payments for cobalt to which it has the contractual right pursuant to the PMPAs:
| Mineral Stream Interests | Attributable Payable Production to be Purchased | Per Unit of Measurement Cash Payment 1
| Term of
Agreement | Date of
Original
Contract |
| Gold | Silver | Palladium | Cobalt | Platinum | Gold | Silver | Palladium | Cobalt | Platinum | | |
Peñasquito | 0% | 25% | 0% | 0% | 0% | | n/a | $ | 4.43 | | n/a | | n/a | | n/a | Life of Mine | 24-Jul-07 |
Constancia | 50% | 100% | 0% | 0% | 0% | $ | 416 ² | $ | 6.14 ² | | n/a | | n/a | | n/a | Life of Mine | 8-Aug-12 |
Salobo | 75% | 0% | 0% | 0% | 0% | $ | 420 | | n/a | | n/a | | n/a | | n/a | Life of Mine | 28-Feb-13 |
Sudbury | 70% | 0% | 0% | 0% | 0% | $ | 400 | | n/a | | n/a | | n/a | | n/a | 20 years | 28-Feb-13 |
Antamina | 0% | 33.75% | 0% | 0% | 0% | | n/a | | 20% | | n/a | | n/a | | n/a | Life of Mine | 3-Nov-15 |
San Dimas | variable ³ | 0% ³ | 0% | 0% | 0% | $ | 624 | | n/a | | n/a | | n/a | | n/a | Life of Mine | 10-May-18 |
Stillwater | 100% | 0% | 4.5% ⁴ | 0% | 0% | | 18% ⁵ | | n/a | | 18% ⁵ | | n/a | | n/a | Life of Mine | 16-Jul-18 |
Voisey's Bay | 0% | 0% | 0% | 42.4% ⁶ | 0% | | n/a | | n/a | | n/a | | 18% ⁷ | | n/a | Life of Mine | 11-Jun-18 |
Marathon | 100% ⁸ | 0% | 0% | 0% | 22% ⁸ | | 18% ⁵ | | n/a | | n/a | | n/a | | 18% ⁵ | Life of Mine | 26-Jan-22 |
Other | | | | | | | | | | | | | | | | | |
| Los Filos | 0% | 100% | 0% | 0% | 0% | | n/a | $ | 4.60 | | n/a | | n/a | | n/a | 25 years | 15-Oct-04 |
| Zinkgruvan | 0% | 100% | 0% | 0% | 0% | | n/a | $ | 4.60 | | n/a | | n/a | | n/a | Life of Mine | 8-Dec-04 |
| Stratoni | 0% | 100% | 0% | 0% | 0% | | n/a | $ | 11.54 | | n/a | | n/a | | n/a | Life of Mine | 23-Apr-07 |
| Neves-Corvo | 0% | 100% | 0% | 0% | 0% | | n/a | $ | 4.42 | | n/a | | n/a | | n/a | 50 years | 5-Jun-07 |
| Aljustrel | 0% | 100% ⁹ | 0% | 0% | 0% | | n/a | | 50% | | n/a | | n/a | | n/a | 50 years | 5-Jun-07 |
| Minto | 100% ¹⁰ | 100% | 0% | 0% | 0% | | 65% ¹¹ | $ | 4.39 ¹¹ | | n/a | | n/a | | n/a | Life of Mine | 20-Nov-08 |
| Pascua-Lama | 0% | 25% | 0% | 0% | 0% | | n/a | $ | 3.90 | | n/a | | n/a | | n/a | Life of Mine | 8-Sep-09 |
| Copper World | 100% | 100% | 0% | 0% | 0% | $ | 450 | $ | 3.90 | | n/a | | n/a | | n/a | Life of Mine | 10-Feb-10 |
| Loma de La Plata | 0% | 12.5% | 0% | 0% | 0% | | n/a | $ | 4.00 | | n/a | | n/a | | n/a | Life of Mine | n/a ¹² |
| Marmato | 10.5% ¹³ | 100% ¹³ | 0% | 0% | 0% | | 18% ¹⁴ | | 18% ¹⁴ | | n/a | | n/a | | n/a | Life of Mine | 5-Nov-20 |
| Cozamin | 0% | 50% ¹⁵ | 0% | 0% | 0% | | n/a | | 10% | | n/a | | n/a | | n/a | Life of Mine | 11-Dec-20 |
| Santo Domingo | 100% ¹⁶ | 0% | 0% | 0% | 0% | | 18% ⁵ | | n/a | | n/a | | n/a | | n/a | Life of Mine | 24-Mar-21 |
| Fenix | 6% ¹⁷ | 0% | 0% | 0% | 0% | | 18% ⁵ | | n/a | | n/a | | n/a | | n/a | Life of Mine | 15-Nov-21 |
| Blackwater | 8% ¹⁸ | 50% ¹⁸ | 0% | 0% | 0% | | 35% | | 18% ⁵ | | n/a | | n/a | | n/a | Life of Mine | 13-Dec-21 |
| Curipamba | 50% ¹⁹ | 75% ¹⁹ | 0% | 0% | 0% | | 18% ⁵ | | 18% ⁵ | | n/a | | n/a | | n/a | Life of Mine | 17-Jan-22 |
| Goose | 2.78% ²⁰ | 0% | 0% | 0% | 0% | | 18% ⁵ | | n/a | | n/a | | n/a | | n/a | Life of Mine | 8-Feb-22 |
Early Deposit | | | | | | | | | | | | | | | | | |
| Toroparu | 10% | 50% | 0% | 0% | 0% | $ | 400 | $ | 3.90 | | n/a | | n/a | | n/a | Life of Mine | 11-Nov-13 |
| Cotabambas | 25% ²¹ | 100% ²¹ | 0% | 0% | 0% | $ | 450 | $ | 5.90 | | n/a | | n/a | | n/a | Life of Mine | 21-Mar-16 |
| Kutcho | 100% | 100% | 0% | 0% | 0% | | 20% | | 20% | | n/a | | n/a | | n/a | Life of Mine | 14-Dec-17 |
| 1) | The production payment is measured as either a fixed amount per unit of metal delivered, or as a percentage of the spot price of the underlying metal on the date of delivery. Contracts where the payment is a fixed amount per unit of metal delivered are subject to an annual inflationary increase, with the exception of Loma de La Plata and Sudbury. Additionally, should the prevailing market price for the applicable metal be lower than this fixed amount, the per unit cash payment will be reduced to the prevailing market price. |
| 2) | Subject to an increase to $9.90 per ounce of silver and $550 per ounce of gold after the initial 40-year term. |
| 3) | Under the terms of the San Dimas PMPA, the Company is entitled to an amount equal to 25% of the payable gold production plus an additional amount of gold equal to 25% of the payable silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine. If the average gold to silver price ratio decreases to less than 50:1 or increases to more than 90:1 for a period of 6 months or more, then the "70" shall be revised to "50" or "90", as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a period of 6 months or more in which event the "70" shall be reinstated. Currently, the fixed gold to silver exchange ratio is 70:1. |
| 4) | The Company is committed to purchase 4.5% of Stillwater palladium production until 375,000 ounces are delivered to the Company, thereafter 2.25% of Stillwater palladium production until 550,000 ounces are delivered to the Company and 1% of Stillwater palladium production thereafter for the life of mine. |
| 5) | To be increased to 22% once the market value of metal delivered to Wheaton, net of the per ounce cash payment, exceeds the initial upfront cash deposit. |
| 6) | Once the Company has received 31 million pounds of cobalt, the Company’s attributable cobalt production will be reduced to 21.2%. |
| 7) | To be increased to 22% once the market value of cobalt delivered to Wheaton, net of the per pound cash payment, exceeds the initial upfront cash deposit. Additionally, on each sale of cobalt, the Company is committed to pay a variable commission depending on the market price of cobalt. |
| 8) | Once the Company has received 150,000 ounces of gold and 120,000 ounces of platinum under the Marathon PMPA, the attributable gold and platinum production will be reduced to 67% and 15%, respectively. |
| 9) | Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine. |
| 10) | The Company is committed to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter. |
| 11) | Effective January 12, 2023, the cash payment per ounce of gold and silver delivered was at 90% of the spot price until February 28, 2023. The parties are currently in discussions in connection with a possible restructuring of the Minto PMPA and as a result, the cash payment per ounce of gold delivered will be maintained at 90% during the negotiation period, with the production payment for silver reverting to the price under the existing Minto PMPA. In the event that the parties are unable to agree to terms for the restructuring, the production payment for gold will remain as set out in the existing Minto PMPA, being 65% of spot price of gold. |
| 12) | Terms of the agreement not yet finalized. |
| 13) | Once Wheaton has received 310.000 ounces of gold and 2.15 million ounces of silver under the Marmato PMPA the Company’s attributable gold and silver production will be reduced to 5.25% and 50%, respectively. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [36]
| 14) | To be increased to 22% of the spot price once the market value of gold and silver delivered to the Company, net of the per ounce cash payment, exceeds the initial upfront cash deposit. |
| 15) | Once Wheaton has received 10 million ounces under the Cozamin PMPA, the Company’s attributable silver production will be reduced to 33% of silver production for the life of the mine. |
| 16) | Once the Company has received 285,000 ounces of gold under the Santo Domingo PMPA, the Company’s attributable gold production will be reduced to 67%. |
| 17) | Once the Company has received 90,000 ounces of gold under the Fenix PMPA, the Company attributable gold production will be reduced to 4% until 140,000 ounces have been delivered, after which the stream drops to 3.5%. |
| 18) | Once the Company has received 279,908 ounces of gold under the Blackwater gold PMPA, the attributable gold production will be reduced to 4%. Once the Company has received 17.8 million ounces of silver under the Blackwater silver PMPA, the attributable silver production will be reduced to 33%. |
| 19) | Once the Company has received 145,000 ounces of gold under the Curipamba PMPA, the attributable gold production will be reduced to 33%, and once the Company has received 4.6 million ounces of silver, the attributable silver production will be reduced to 50%. |
| 20) | During Q2-2023, B2Gold completed its acquisition of all the issued and outstanding common shares of Sabina, and in conjunction with this acquisition B2Gold exercised the option to acquire 33% of the stream under the Goose PMPA in exchange for a cash payment in the amount of $46 million, resulting in a gain on partial disposal of the Goose PMPA in the amount of $5 million. In connection with the exercise of the option, once the Company has received 87,100 ounces of gold under the Goose PMPA, the Company’s attributable gold production will be 1.44%, and once the Company has received 134,000 ounces of gold under the agreement, the Company’s attributable gold production will be reduced to 1.0% for the life of mine. |
| 21) | Once 90 million silver equivalent ounces attributable to Wheaton have been produced under the Cotabambas PMPA, the attributable production will decrease to 16.67% of gold production and 66.67% of silver production for the life of mine. |
Other Contractual Obligations and Contingencies
| | | Projected Payment Dates 1 | | | |
| (in thousands) | 2023 | 2024 - 2025 | 2026 - 2027 | After 2027 | Total |
| Payments for mineral stream interests | | | | | | | | | | | | | | |
Salobo 2 | $ | 552,000 | | $ | - | | $ | - | | $ | - | | $ | 552,000 |
| Blackwater | | 70,500 | | | 70,500 | | | - | | | - | | | 141,000 |
| Marathon | | 59,121 | | | 88,681 | | | - | | | - | | | 147,802 |
| Goose | | 31,250 | | | - | | | - | | | - | | | 31,250 |
| Marmato | | - | | | 122,000 | | | - | | | - | | | 122,000 |
| Santo Domingo | | - | | | 260,000 | | | - | | | - | | | 260,000 |
Copper World 3 | | - | | | 231,150 | | | - | | | - | | | 231,150 |
| Curipamba | | - | | | - | | | 162,500 | | | - | | | 162,500 |
| Fenix Gold | | - | | | - | | | - | | | 25,000 | | | 25,000 |
| Loma de La Plata | | - | | | - | | | - | | | 32,400 | | | 32,400 |
| Payments for early deposit mineral stream interest | | | | | | | | | | | | | | |
| Cotabambas | | 250 | | | - | | | - | | | 126,000 | | | 126,250 |
| Toroparu | | - | | | 138,000 | | | - | | | - | | | 138,000 |
| Kutcho | | - | | | - | | | -
| | | 58,000
| | | 58,000 |
Leases liabilities | | 658 | | | 1,179 | | | - | | | - | | | 1,837 |
| Total contractual obligations | $ | 713,779 | | $ | 911,510 | | $ | 162,500 | | $ | 241,400 | | $ | 2,029,189 |
| 1) | Projected payment date based on management estimate. Dates may be updated in the future as additional information is received. |
| 2) | As more fully explained below, assuming the Salobo III expansion project results in throughput being expanded beyond 35 Mtpa by January 1, 2024, the Company would expect to pay an expansion payment of $552 million. |
| 3) | Figure includes contingent transaction costs of $1 million. |
Salobo
The Salobo mine historically had a mill throughput capacity of 24 Mtpa. In October 2018, Vale’s Board of Directors approved the investment in the Salobo Expansion, which will increase the mill throughput by 50%. Vale reports the Salobo Expansion successfully commenced at the end of 2022. The project consists of two lines, both of which are already in operation, and is expected to reach full capacity in the fourth quarter of 2024.
During the quarter, Wheaton and Vale agreed to amend the Salobo PMPA (“Amended Salobo PMPA”) to adjust the expansion payment terms. If actual throughput is expanded above 32 Mtpa by January 1, 2031, then under the terms of the Amended Salobo PMPA, Wheaton will be required to make additional set payments to Vale based on the size of the expansion and the timing of completion. The set payments range from a total of $283 million if throughput is expanded beyond 32 Mtpa by January 1, 2031, to up to $552 million if throughput is expanded beyond 35 Mtpa by January 1, 2024. In addition, Wheaton will be required to make annual payments of between $5.1 million to $8.5
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [37]
million for a 10-year period following payment of the expansion payments if the Salobo mine implements a high-grade mine plan.
Blackwater
Under the terms of the Blackwater Silver PMPA, the Company is committed to pay total upfront consideration of $141 million, which is payable in four equal installments during the construction of the Blackwater project, subject to customary conditions being satisfied.
Marathon
Under the terms of the Marathon PMPA, the Company is committed to pay additional upfront cash payments of $148 million (Cdn$200 million), which is to be paid in four staged installments during construction of the Marathon project, subject to various customary conditions being satisfied.
Goose
Under the terms of the Goose PMPA, the Company is committed to pay an additional upfront cash payment of $31.25 million, which was made April 4, 2023.
On April 12, 2023, Sabina announced that shareholders approved the proposed acquisition by B2Gold Corp. (“B2Gold”) of all the issued and outstanding common shares of Sabina. The transaction closed April 19, 2023. Subsequent to closing, B2Gold exercised the option to acquire 33% of the stream under the Goose PMPA in exchange for a cash payment in the amount of $46 million, resulting in a gain on partial disposal of the Goose PMPA in the amount of $5 million.
Marmato
Under the terms of the Marmato PMPA, the Company is committed to pay Aris Mining additional upfront cash payments of $122 million, payable during the construction of the Marmato Lower Mine development portion of the Marmato mine, subject to customary conditions.
Santo Domingo
Under the terms of the Santo Domingo PMPA, the Company is committed to pay Capstone Copper Corp. (“Capstone”) additional upfront cash payments of $260 million, which is payable during the construction of the Santo Domingo project, subject to customary conditions being satisfied, including Capstone attaining sufficient financing to cover total expected capital expenditures.
Copper World Complex
The Company is committed to pay Hudbay total upfront cash payments of $230 million in two installments, with the first $50 million being advanced upon Hudbay’s receipt of permitting for the Copper World Complex and other customary conditions and the balance of $180 million being advanced once project costs incurred on the Copper World Complex exceed $98 million and certain other customary conditions. Under the Copper World Complex PMPA, the Company is permitted to elect to pay the deposit in cash or the delivery of common shares. Additionally, the Company will be entitled to certain delay payments, including where construction ceases in any material respect, or if completion is not achieved within agreed upon timelines.
Curipamba
Under the terms of the Curipamba PMPA, the Company is committed to pay additional upfront cash payments of $162.5 million, which includes $500,000 which will be paid to support certain local community development initiatives around the Curipamba Project. The payments will be payable in four staged installments during construction, subject to various customary conditions being satisfied.
Fenix
Under the terms of the Fenix PMPA, the Company is committed to pay Rio2 Limited (“Rio2”) additional upfront cash payments of $25 million, payable subject to Rio2’s receipt of its Environmental Impact Assessment for the Fenix Project, and certain other conditions.
On June 28, 2022, Rio2 provided an update on the Fenix Gold environmental assessment process. The Environmental Assessment Service (“SEA”) published the Consolidation Evaluation Report with the recommendation to reject the EIA as it has been alleged that Rio2 has not provided enough information during the evaluation process to eliminate adverse impacts over the chinchilla, guanaco, and vicuña. On July 5, 2022, Rio2 announced that the Regional Evaluation Commission has voted to not approve the EIA. On September 7, 2022, Rio2 announced that on review of the Environmental Qualification Resolution (“RCA”), Rio2 identified numerous discrepancies with factual and procedural matters in the RCA and Rio2 has filed an administrative appeal on August 31, 2022. In parallel with the administrative appeal process, Rio2 indicate that they will work closely with regional authorities to address any
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [38]
remaining concerns. On September 7, 2022, Rio2 stated that the estimated timing for obtaining EIA approval is approximately one and a half to two years.
The Company’s management has determined that no indicator of impairment existed as of the balance sheet date and will continue to monitor Rio2’s response to the Regional Evaluation Commission decision.
Loma de La Plata
Under the terms of the Loma de La Plata PMPA, the Company is committed to pay Pan American Silver Corp. (“Pan American”) total upfront cash payments of $32 million following the satisfaction of certain conditions, including Pan American receiving all necessary permits to proceed with the mine construction and the Company finalizing the definitive terms of the PMPA.
Cotabambas
Under the terms of the Cotabambas Early Deposit Agreement, the Company is committed to pay Panoro additional upfront cash payments of $126 million, including $250,000 which will be advanced once certain conditions have been met. Following the delivery of a bankable definitive feasibility study, environmental study and impact assessment, and other related documents (collectively, the "Cotabambas Feasibility Documentation"), and receipt of permits and construction commencing, the Company may then advance the remaining deposit or elect to terminate the Cotabambas Early Deposit Agreement. If the Company elects to terminate, the Company will be entitled to a return of the portion of the amounts advanced less $2 million payable upon certain triggering events occurring.
Toroparu
Under the terms of the Toroparu Early Deposit Agreement, the Company is committed to pay a subsidiary of Aris Mining an additional $138 million, payable on an installment basis to partially fund construction of the mine. Aris Mining is to deliver certain feasibility documentation. Prior to the delivery of this feasibility documentation, Wheaton may elect to (i) not proceed with the agreement or (ii) not pay the balance of the upfront consideration and reduce the gold stream percentage from 10% to 0.909% and the silver stream percentage from 50% to nil. If option (i) is chosen, Wheaton will be entitled to a return of the amounts advanced less $2 million. If Wheaton elects option (ii), Aris Mining may elect to terminate the agreement and Wheaton will be entitled to a return of the amount of the deposit already advanced less $2 million.
Kutcho
Under the terms of the Kutcho Early Deposit Agreement, the Company is committed to pay Kutcho additional upfront cash payments of $58 million, which will be advanced on an installment basis to partially fund construction of the mine once certain conditions have been satisfied.
Canada Revenue Agency – Canada Revenue Agency – 2013 to 2016 Taxation Years - Domestic Reassessments
The Company received Notices of Reassessment in 2018, 2019, and 2022 for the 2013 to 2016 taxation years in which the Canada Revenue Agency (“CRA”) is seeking to change the timing of the deduction of upfront payments with respect to the Company’s PMPAs relating to Canadian mining assets, so that the cost of precious metal acquired under these Canadian PMPAs is equal to the cash cost paid on delivery plus an amortized amount of the upfront payment determined on a units-of-production basis over the estimated recoverable reserves, and where applicable, resources and exploration potential at the respective mine (the “Domestic Reassessments”).
In total, the Company expects the Domestic Reassessments to have assessed tax, interest and other penalties of approximately $2 million.
Management believes the Company’s position, as reflected in its filed Canadian income tax returns and consistent with the terms of the PMPAs, that the cost of the precious metal acquired under the Canadian PMPAs is equal to the market value while a deposit is outstanding, and the cash cost thereafter, is correct. The Company has filed Notices of Objection and paid 50% of the disputed amounts in order to challenge the Domestic Reassessments.
Tax Contingencies
Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time, including audits and disputes.
Under the terms of the settlement with the CRA of the transfer pricing dispute relating to the 2005 to 2010 taxation years (the “CRA Settlement”), income earned outside of Canada by the Company’s foreign subsidiaries will not be subject to tax in Canada under transfer pricing rules. The CRA Settlement principles apply to all taxation years after 2010 subject to there being no material change in facts or change in law or jurisprudence. The CRA is not restricted
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [39]
under the terms of the CRA Settlement from issuing reassessments on some basis other than transfer pricing which could result in some or all of the income of the Company’s foreign subsidiaries being subject to tax in Canada.
It is not known or determinable by the Company when the currently ongoing audits by CRA of international and domestic transactions will be completed, or whether reassessments will be issued, or the basis, quantum or timing of any such potential reassessments, and it is therefore not practicable for the Company to estimate the financial effect, if any, of those ongoing audits.
From time to time there may also be proposed legislative changes to law or outstanding legal actions that may have an impact on the current or prior periods, the outcome, applicability and impact of which is also not known or determinable by the Company.
General
By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If the Company is unable to resolve any of these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that the Company’s estimate of the future resolution of any of the foregoing matters changes, the Company will recognize the effects of the change in its consolidated financial statements in the appropriate period relative to when such change occurs.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [40]
Operating Segments
The Company’s reportable operating segments, which are the components of the Company’s business where discrete financial information is available and which are evaluated on a regular basis by the Company’s Chief Executive Officer (“CEO”), who is the Company’s chief operating decision maker, for the purpose of assessing performance, are summarized in the tables below:
| Three Months Ended March 31, 2023 |
| | Sales | Cost
of Sales | Depletion | Net
Earnings | Cash Flow
From
Operations | Total
Assets |
| (in thousands) |
| Gold | | | | | | | | | | | | |
| Salobo | $ | 68,475 | $ | 15,120 | $ | 11,884 | $ | 41,471 | $ | 53,355 | $ | 2,371,378 |
Sudbury 1 | | 8,317 | | 1,747 | | 4,475 | | 2,095 | | 6,346 | | 278,941 |
| Constancia | | 12,526 | | 2,739 | | 2,077 | | 7,710 | | 9,788 | | 93,506 |
| San Dimas | | 20,279 | | 6,650 | | 2,764 | | 10,865 | | 13,629 | | 153,101 |
| Stillwater | | 3,987 | | 698 | | 1,069 | | 2,220 | | 3,288 | | 214,783 |
Other 2 | | 5,612 | | 4,081 | | 253 | | 1,278 | | 1,155 | | 525,338 |
Total gold interests | $ | 119,196 | $ | 31,035 | $ | 22,522 | $ | 65,639 | $ | 87,561 | $ | 3,637,047 |
| Silver | | | | | | | | | | | | |
| Peñasquito | $ | 33,872 | $ | 6,569 | $ | 6,027 | $ | 21,276 | $ | 27,303 | $ | 287,647 |
| Antamina | | 18,594 | | 3,707 | | 5,745 | | 9,142 | | 14,888 | | 539,623 |
| Constancia | | 8,353 | | 2,245 | | 2,283 | | 3,825 | | 6,107 | | 190,664 |
Other 3 | | 24,859 | | 6,476 | | 2,746 | | 15,637 | | 20,047 | | 450,412 |
Total silver interests | $ | 85,678 | $ | 18,997 | $ | 16,801 | $ | 49,880 | $ | 68,345 | $ | 1,468,346 |
| Palladium | | | | | | | | | | | | |
| Stillwater | $ | 4,735 | $ | 866 | $ | 1,203 | $ | 2,666 | $ | 3,870 | $ | 225,609 |
| Platinum | | | | | | | | | | | | |
| Marathon | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 9,440 |
| Cobalt | | | | | | | | | | | | |
| Voisey's Bay | $ | 4,856 | $ | 1,066 | $ | 4,474 | $ | (684) | $ | 4,485 | $ | 356,447 |
Total mineral stream interests | $ | 214,465 | $ | 51,964 | $ | 45,000 | $ | 117,501 | $ | 164,261 | $ | 5,696,889 |
| Other | | | | | | | | | | | | |
| General and administrative | | | | | | $ | (10,099) | $ | (14,052) | | |
| Share based compensation | | | | | | | (7,397) | | (16,675) | | |
| Donations and community investments | | | | | | (1,378) | | (1,408) | | |
| Finance costs | | | | | | | | (1,378) | | (1,067) | | |
| Other | | | | | | | | 7,562 | | 7,389 | | |
| Income tax | | | | | | | | 6,580 | | (3,344) | | |
Total other | | | | | | | $ | (6,110) | $ | (29,157) | $ | 1,208,590 |
| Consolidated | | | | | | | $ | 111,391 | $ | 135,104 | $ | 6,905,479 |
| 1) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. |
| 2) | Where a gold interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value and is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the gold interest has been summarized under Other gold interests. Other gold interests are comprised of the operating Minto and Marmato gold interests as well as the non-operating 777, Copper World Complex, Santo Domingo, Fenix, Blackwater, Marathon, Curipamba and Goose gold interests. On June 22, 2022, Hudbay announced that mining activities at 777 have concluded and closure activities have commenced. |
| 3) | Where a silver interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value and is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the silver interest has been summarized under Other silver interests. Other silver interests are comprised of the operating Los Filos, Zinkgruvan, Neves-Corvo, Aljustrel, Minto, Cozamin and Marmato silver interests and the non-operating 777, Loma de La Plata, Stratoni, Pascua-Lama, Copper World Complex, Blackwater and Curipamba silver interests. On June 22, 2022, Hudbay announced that mining activities at 777 have concluded and closure activities have commenced. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [41]
| Three Months Ended March 31, 2022 |
| | Sales | Cost
of Sales | Depletion | Net
Earnings | Cash Flow
From
Operations | Total
Assets |
| (in thousands) |
| Gold | | | | | | | | | | | | |
| Salobo | $ | 79,564 | $ | 17,696 | $ | 14,184 | $ | 47,684 | $ | 61,869 | $ | 2,423,755 |
Sudbury 1 | | 6,909 | | 1,485 | | 4,054 | | 1,370 | | 5,425 | | 303,115 |
| Constancia | | 19,641 | | 4,325 | | 2,845 | | 12,471 | | 15,482 | | 100,944 |
| San Dimas | | 18,846 | | 6,225 | | 2,613 | | 10,008 | | 12,621 | | 164,110 |
| Stillwater | | 4,918 | | 864 | | 1,128 | | 2,926 | | 4,054 | | 218,657 |
Other 2 | | 15,797 | | 6,538 | | 211 | | 9,048 | | 8,822 | | 404,729 |
Total gold interests | $ | 145,675 | $ | 37,133 | $ | 25,035 | $ | 83,507 | $ | 108,273 | $ | 3,615,310 |
| Silver | | | | | | | | | | | | |
| Peñasquito | $ | 52,727 | $ | 9,539 | $ | 7,801 | $ | 35,387 | $ | 43,188 | $ | 314,217 |
| Antamina | | 35,359 | | 7,251 | | 10,361 | | 17,747 | | 27,759 | | 569,691 |
| Constancia | | 15,513 | | 3,914 | | 4,073 | | 7,526 | | 11,913 | | 201,811 |
Other 3 | | 30,733 | | 7,610 | | 4,326 | | 18,797 | | 23,874 | | 589,875 |
Total silver interests | $ | 134,332 | $ | 28,314 | $ | 26,561 | $ | 79,457 | $ | 106,734 | $ | 1,675,594 |
| Palladium | | | | | | | | | | | | |
| Stillwater | $ | 9,533 | $ | 1,603 | $ | 1,627 | $ | 6,303 | $ | 7,930 | $ | 231,203 |
| Platinum | | | | | | | | | | | | |
| Marathon | $ | - | $ | - | $ | - | $ | - | $ | - | $ | 4,820 |
| Cobalt | | | | | | | | | | | | |
| Voisey's Bay | $ | 17,704 | $ | 2,944 | $ | 4,179 | $ | 10,581 | $ | 3,263 | $ | 367,957 |
| Total mineral stream interests | $ | 307,244 | $ | 69,994 | $ | 57,402 | $ | 179,848 | $ | 226,200 | $ | 5,894,884 |
| Other | | | | | | | | | | | | |
| General and administrative | | | | | | $ | (9,403) | $ | (15,128) | | |
| Share based compensation | | | | | | | (9,902) | | - | | |
| Donations and community investments | | | | | | (813) | | (430) | | |
| Finance costs | | | | | | | | (1,422) | | (1,077) | | |
| Other | | | | | | | | (170) | | 1,007 | | |
| Income tax | | | | | | | | (671) | | (32) | | |
Total other | | | | | | | $ | (22,381) | $ | (15,660) | $ | 575,149 |
| Consolidated | | | | | | | $ | 157,467 | $ | 210,540 | $ | 6,470,033 |
| 1) | Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. |
| 2) | Where a gold interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value and is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the gold interest has been summarized under Other gold interests. Other gold interests are comprised of the operating 777, Minto and Marmato gold interests as well as the non-operating Copper World Complex gold interest. On June 22, 2022, Hudbay announced that mining activities at 777 have concluded and closure activities have commenced. |
| 3) | Where a silver interest represents less than 10% of the Company’s sales, gross margin or aggregate asset book value and is not evaluated on a regular basis by the Company’s CEO for the purpose of assessing performance, the silver interest has been summarized under Other silver interests. Other silver interests are comprised of the operating Los Filos, Zinkgruvan, Aljustrel, Neves-Corvo, Minto, 777, Marmato and Cozamin silver interests, the non-operating Loma de La Plata, Stratoni, Copper World Complex and Pascua-Lama silver interests and the previously owned Keno Hill and Yauliyacu silver interests. On June 22, 2022, Hudbay announced that mining activities at 777 have concluded and closure activities have commenced. On September 7, 2022, the Keno Hill stream was terminated in exchange for $141 million of Hecla common stock. On December 14, 2022 the Company terminated the Yauliyacu PMPA in exchange for a cash payment of $132 million. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [42]
Geographical Areas
The Company’s geographical information, which is based on the location of the mining operations to which the mineral stream interests relate, are summarized in the tables below:
| | Sales | | | Carrying Amount at
March 31, 2023 |
(in thousands) | Three Months Ended
Mar 31, 2023 | Gold
Interests | Silver
Interests | Palladium
Interests | Platinum
Interests | Cobalt
Interests | Total |
North America | | | | | | | | | | | | | | | |
| Canada | $ | 18,573 | 9% | $ | 694,836 | $ | 458 | $ | - | $ | 9,440 | $ | 356,447 | $ | 1,061,181 |
| United States | | 8,722 | 4% | | 214,784 | | 566 | | 225,609 | | - | | - | | 440,959 |
| Mexico | | 57,637 | 27% | | 153,098 | | 415,087 | | - | | - | | - | | 568,185 |
Europe | | | | | | | | | | | | | | | |
| Greece | | - | 0% | | - | | - | | - | | - | | - | | - |
| Portugal | | 8,545 | 4% | | - | | 18,187 | | - | | - | | - | | 18,187 |
| Sweden | | 11,954 | 6% | | - | | 28,579 | | - | | - | | - | | 28,579 |
South America | | | | | | | | | | | | | | | |
Argentina/Chile 1 | | - | 0% | | - | | 253,514 | | - | | - | | - | | 253,514 |
| Argentina | | - | 0% | | - | | 10,889 | | - | | - | | - | | 10,889 |
| Chile | | - | 0% | | 56,537 | | - | | - | | - | | - | | 56,537 |
| Brazil | | 68,475 | 31% | | 2,371,379 | | - | | - | | - | | - | | 2,371,379 |
| Peru | | 39,474 | 18% | | 93,507 | | 730,281 | | - | | - | | - | | 823,788 |
| Ecuador | | - | 0% | | 10,328 | | 3,726 | | - | | - | | - | | 14,054 |
| Colombia | | 1,085 | 1% | | 42,578 | | 7,059 | | - | | - | | - | | 49,637 |
Consolidated | $ | 214,465 | 100% | $ | 3,637,047 | $ | 1,468,346 | $ | 225,609 | $ | 9,440 | $ | 356,447 | $ | 5,696,889 |
| 1) | Includes the Pascua-Lama project, which straddles the border of Argentina and Chile. |
| | Sales | | Carrying Amount at
March 31, 2022 |
| (in thousands) | Three Months Ended
Mar 31, 2022 | Gold
Interests | Silver
Interests | Palladium
Interests | Platinum
Interests | Cobalt
Interests |
| Total
|
North America | | | | | | | | | | | | | | | |
| Canada | $ | 43,054 | 14% | $ | 622,106 | $ | 28,111 | $ | - | $ | 4,820 | $ | 367,957 | $ | 1,022,994 |
| United States | | 14,452 | 5% | | 218,657 | | 566 | | 231,203 | | - | | - | | 450,426 |
| Mexico | | 76,858 | 25% | | 164,108 | | 451,667 | | - | | - | | - | | 615,775 |
Europe | | | | | | | | | | | | | | | |
| Greece | | 3,353 | 1% | | - | | - | | - | | - | | - | | - |
| Portugal | | 8,457 | 3% | | - | | 18,768 | | - | | - | | - | | 18,768 |
| Sweden | | 8,990 | 3% | | - | | 30,775 | | - | | - | | - | | 30,775 |
South America | | | | | | | | | | | | | | | |
Argentina/Chile 1 | | - | 0% | | - | | 253,514 | | - | | - | | - | | 253,514 |
| Argentina | | - | 0% | | - | | 10,889 | | - | | - | | - | | 10,889 |
| Chile | | - | 0% | | 56,385 | | - | | - | | - | | - | | 56,385 |
| Brazil | | 79,564 | 26% | | 2,423,754 | | - | | - | | - | | - | | 2,423,754 |
| Peru | | 71,573 | 23% | | 100,945 | | 873,848 | | - | | - | | - | | 974,793 |
| Ecuador | | - | 0% | | 485 | | 175 | | - | | - | | - | | 660 |
| Colombia | | 943 | 0% | | 28,870 | | 7,281 | | - | | - | | - | | 36,151 |
Consolidated | $ | 307,244 | 100% | $ | 3,615,310 | $ | 1,675,594 | $ | 231,203 | $ | 4,820 | $ | 367,957 | $ | 5,894,884 |
| 1) | Includes the Pascua-Lama project, which straddles the border of Argentina and Chile. |
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [43]
Declaration of Dividend
Under the Company’s dividend policy, the quarterly dividend per common share is targeted to equal approximately 30% of the average cash flow generated by operating activities in the previous four quarters divided by the Company’s then outstanding common shares, all rounded to the nearest cent. To minimize volatility in quarterly dividends, the Company has set a minimum quarterly dividend for the duration of 2023 equal to the dividend per common share declared in the prior quarter, which was $0.15 per share. The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors.
On May 4, 2023, the Board of Directors declared a dividend in the amount of $0.15 per common share, with this dividend being payable to shareholders of record on May 19, 2023 and is expected to be distributed on or about June 2, 2023. The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares based on the Average Market Price, as defined in the DRIP.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [44]
CORPORATE
INFORMATION
CANADA – HEAD OFFICE
WHEATON PRECIOUS METALS CORP.
Suite 3500
1021 West Hastings Street
Vancouver, BC V6E 0C3
Canada
T: 1 604 684 9648
F: 1 604 684 3123
CAYMAN ISLANDS OFFICE
Wheaton Precious Metals International Ltd.
Suite 300, 94 Solaris Avenue
Camana Bay
P.O. Box 1791 GT, Grand Cayman
Cayman Islands KY1-1109
STOCK EXCHANGE LISTING
Toronto Stock Exchange: WPM
New York Stock Exchange: WPM
London Stock Exchange: LSE
DIRECTORS
GEORGE BRACK, Chairman
JOHN BROUGH
JAIMIE DONOVAN
PETER GILLIN
CHANTAL GOSSELIN
GLENN IVES
CHARLES JEANNES
EDUARDO LUNA
MARILYN SCHONBERNER
RANDY SMALLWOOD
OFFICERS
RANDY SMALLWOOD
President & Chief Executive Officer
CURT BERNARDI
Senior Vice President,
Legal & Corporate Secretary
GARY BROWN
Senior Vice President
& Chief Financial Officer
PATRICK DROUIN
Senior Vice President,
Sustainability & Investor Relations
HAYTHAM HODALY
Senior Vice President,
Corporate Development
TRANSFER AGENT
TSX Trust Company
1600 – 1066 West Hastings Street
Vancouver, BC V6E 3X1
Toll-free in Canada and the United States:
1 800 387 0825
Outside of Canada and the United States:
1 416 682 3860
E: shareholderinquiries@tmx.com
AUDITORS
Deloitte LLP
Vancouver, BC
INVESTOR RELATIONS
PATRICK DROUIN
Senior Vice President,
Sustainability & Investor Relations
T: 1 604 684 9648
TF: 1 844 288 9878
E: info@wheatonpm.com
Wheaton Precious Metals is a trademark of Wheaton Precious Metals Corp. in Canada, the United States and certain other jurisdictions.
WHEATON PRECIOUS METALS 2023 FIRST QUARTER REPORT - FINANCIAL STATEMENTS [45]
