VANCOUVER, British Columbia,
July 16, 2018 /PRNewswire/ --
Wheaton Precious Metals™ Corp. ("Wheaton" or the "Company")
(TSX: WPM) (NYSE: WPM) is pleased to announce that its wholly-owned
subsidiary, Wheaton Precious Metals International Ltd ("Wheaton
International") has agreed to acquire from Sibanye Gold Limited
("Sibanye-Stillwater") (JSE: SGL; NYSE:SBGL) an amount of
gold and palladium equal to a fixed percentage of production from
the Stillwater and East Boulder mines, collectively "Stillwater" (the "Precious Metals Stream").
Wheaton International will pay Sibanye-Stillwater upfront cash
consideration of US$500 million upon
closing of the Precious Metals Stream. In addition, Wheaton will
make ongoing payments equal to 18% of the spot gold price and spot
palladium price until the reduction of the advanced payment to nil,
and 22% of the spot gold price and spot palladium price thereafter.
The Precious Metals Stream is effective July
1, 2018.
TRANSACTION HIGHLIGHTS
- Adds to Wheaton's existing high-quality portfolio
- Wheaton International will receive an amount of gold equal to
100% of the Stillwater gold
production for the life of mine.
- Wheaton International will initially receive an amount of
palladium equal to 4.5% of Stillwater palladium production, decreasing to
2.25% and then 1% based on defined delivery thresholds, for the
life of mine.
- Stillwater is one of the
lowest cost platinum group metals mines globally and is located in
Montana in the United States.
- Subsequent to the closing of this acquisition, Wheaton's
estimated Proven and Probable gold reserves increase by 410
thousand ounces ("Koz") and Inferred gold resources increase by 920
Koz. And, for the first time, Wheaton will have estimated Proven
and Probable palladium reserves of 610 Koz and Inferred palladium
resources of 430 Koz.[1]
- Adds long-term production and exploration upside
potential
- For the 10 years starting in 2019, production is forecast to
average approximately 14.5 Koz of gold and 29 Koz of palladium per
year, or approximately 37 Koz of gold equivalent per
year.[2]
- For the 20 years starting in 2019, production is forecast to
average approximately 14.7 Koz of gold and 24 Koz of palladium per
year, or approximately 33 Koz of gold equivalent per
year.[2]
- Declared current reserves are sufficient to support mining
activities at Stillwater until
2041, but this could be significantly extended should inferred
resources be upgraded.[3]
- Significant exploration potential exists both regionally and at
depth below current mineral reserves and resources. Of
significance is the 12.2 kilometre undeveloped mineralized
section between the currently producing Stillwater and East
Boulder mines
- Immediate production and cash flow
- This acquisition increases Wheaton's production profile with
attributable sales starting July 1,
2018 with expected production in the second half of 2018
forecast to be approximately 5.4 thousand gold ounces and 10.4
thousand palladium ounces.
"Stillwater is another
accretive addition to Wheaton's portfolio of assets that is
expected to contribute both production and cash flow for decades to
come," said Randy Smallwood,
Wheaton's President and Chief Executive Officer. "What mainly
attracted us to this opportunity was the quality and size of the
J-M Reef deposit, coupled with the ongoing expansion at the Blitz
Project. There are over 12 kilometres of undeveloped mineralization
associated with the J-M Reef between the two currently producing
mines. With a mine life extending well into the foreseeable future,
we believe Stillwater will be one
of Wheaton's foundational assets for many years to come. Finally,
the acquisition will be funded through our current revolving credit
facility, which we are comfortable utilizing given our industry
leading cash flow."
TRANSACTION TERMS
- The Precious Metals Stream is effective July 1, 2018.
- Wheaton International will be entitled to receive from
Sibanye-Stillwater an amount of gold equal to 100% of Stillwater gold production for the life of
mine.
- Wheaton International will be entitled to an amount of
palladium equal to
- 4.5% of Stillwater palladium
production until 375 Koz delivered to Wheaton;
- Thereafter, 2.25% of Stillwater palladium production until 550 Koz
delivered to Wheaton; and,
- 1% of Stillwater palladium
production thereafter for the life of mine.
- Wheaton International will pay Sibanye-Stillwater cash
consideration of US$500 million upon
closing of the Precious Metals Stream.
- Wheaton International will make ongoing payments equal to 18%
of the spot gold price and spot palladium price until the reduction
of the advanced payment to nil, and 22% of the spot gold price and
spot palladium price thereafter.[4]
- Payable rates for gold and palladium have been fixed at 99.0%
and 99.6%, respectively.
- Gold and palladium deliveries will be the obligation of
Sibanye-Stillwater but will be guaranteed by certain
Sibanye-Stillwater subsidiaries, including Stillwater Mining
Company (the owner of Stillwater).
- The Precious Metals Stream includes a completion test on the
development of the Blitz Project, including completion of
underground development, critical surface infrastructure and
concentrator production output.
- The stream area of interest is defined as the area inclusive of
all patented and unpatented claims at the Stillwater mining operations.
- Closing of the transaction is expected to occur shortly
following announcement and is subject to the completion of certain
corporate matters and customary conditions.
ABOUT STILLWATER
Stillwater is the only US-based
mine for platinum group metals ("PGM"s) and the largest primary
producer of PGMs outside of South
Africa and the Russian
Federation. Located in Montana, US, Stillwater's operations consist of two
underground PGM mines (the Stillwater Mine and East Boulder Mine),
the Blitz Project and the Columbus metallurgical complex. The
mining assets are located in the front range of the Beartooth
Mountains with elevations exceeding 1,500 metres above mean sea
level.
The Stillwater Mine and East Boulder Mine have been in operation
since 1986 and 2002, respectively. The mines produce from the J-M
Reef, the world's highest-grade PGM deposit. Each mine has its own
milling and concentrator infrastructure on site. The Blitz Project,
part of the Stillwater mine,
started ore production in 2017 and is expected to ramp up to full
production in 2021.
The Columbus metallurgical complex is a state-of-the-art
operation that is capable of providing smelting and refining
processes for mine concentrates. The complex produces a PGM-rich
filter cake that is shipped to a third-party precious metal
refinery.
Below are Wheaton's attributable Mineral Reserves and Resources
in respect of the Stillwater
mine.
Attributable Mineral Reserves and Mineral Resources
- Stillwater, effective
as of December 31, 2017
Tonnage Grade Grade Contained Contained
Streamed
Category Metal Mt Au g/t Pd g/t Au Moz Pd Moz
Proven Gold 5.0 0.31 0.05
Probable 36.8 0.31 0.36
Proven Palladium 0.2 13.2 0.08
Probable 1.3 12.6 0.53
Total P&P Gold 41.8 0.31 0.41
Palladium 1.5 12.7 0.61
Inferred Gold 92.5 0.31 0.92
Palladium 1.0 12.9 0.43
FINANCING THE TRANSACTION
The initial upfront cash payment of US$500 million will be paid by using amounts
drawn from the Company's US$2 billion
revolving credit facility. At March 31,
2018, the Company had approximately US$116 million of cash on hand and US$663 million outstanding under the revolving
credit facility. The Company recently acquired a cobalt stream from
Vale S.A.'s Voisey's Bay mine, which was also funded using the
revolving credit facility. Net debt for the company, including the
acquisition costs of streams on Stillwater and Voisey's Bay will be
approximately $1.4 billion. With
trailing four-quarter operating cash flow of just under
$550
million[5], the Company believes it
has ample capacity to service the additional debt resulting from
this transaction, especially given the low interest rate and
flexible nature of the covenants under the revolving credit
facility (minimum net debt to total net worth and minimum interest
coverage tests).
PALLADIUM - A PRECIOUS METAL WITH A
PURPOSE[6]
Palladium is a PGM and is generally considered a precious metal
and offers significant practical application as it is considered to
be integral to reducing emissions caused by gasoline-powered
internal combustion engines.
Palladium mine supply is highly concentrated, with approximately
80% of annual supply coming from just two countries: South Africa and Russia. Disruption in
either country has potential for outsized market influence. In
addition, palladium is mined overwhelmingly as a by-product, which
results in mine supply being relatively price-inelastic (i.e. the
economics of mine supply is driven primarily by consideration of
other metals). Half of mine supply comes from nickel-copper mines,
40% comes from primary platinum mines and just under 10% comes from
primary palladium mines.
The automobile industry became the biggest end-user of PGMs in
the late-1970s. PGMs in autocatalytic converters help reduce
harmful emissions caused by internal combustion engines. Palladium
resists oxidation, high temperature corrosion and is particularly
effective in scrubbing hydrocarbon emissions. Its application by
the industry began to accelerate in the late-1990s and has in the
intervening years replaced its cousin - platinum - in
gasoline-powered vehicles. A spate of recent government
announcements from around the world regarding diesel-powered
vehicles strongly suggests that gasoline-based engines - and thus
palladium - is expected to be gaining market share at the expense
of diesel for the foreseeable future.
Fully-electric vehicles do not use PGMs; however, vehicles that
are the intermediate stage between combustion and pure battery
power (e.g. hybrids, plug-in hybrids) do use PGMs. While it is
reasonable to expect combustion-vehicles to lose market share over
the coming decades, the rise of overall vehicle sales and higher
loadings per vehicle are anticipated to maintain demand for
PGMs. Though North American and European markets are
saturated, the analyst community expects vehicle growth in
China and India to raise the overall global
total. Tightening emission targets around the world add
further support for the long-term necessity of palladium. While the
pie slice may eventually shrink, the overall pie is growing and
there will be more palladium per slice (and that's delicious).
UPDATED FIVE-YEAR PRODUCTION GUIDANCE
Wheaton is pleased to provide its updated five-year production
guidance, which now includes both palladium and cobalt production
estimates, in the table below. Given the timing of the
effectiveness of the Stillwater
and Voisey's Bay streams, palladium and cobalt production are given
as average annual production as of 2019 and 2021, respectively.
Average annual gold production is inclusive of gold from
Stillwater from 2019 to 2022 as
gold production from Stillwater in
2018 is only for half of the year. For context, on a gold
equivalent ounce ("GEO") basis, five-year average annual production
is approximately 730 thousand GEOs based on gold, silver and
palladium, or approximately 800 thousand GEOs if cobalt is included
as well.[7]
Forecast Average Annual Production
Metal Streamed Average Annual Production
2018E 2019E 2020E 2021E 2022E
Gold 385 thousand ounces / year[8]
Silver 25 Million ounces / year
Palladium 10.4 koz 27 thousand ounces / year
Cobalt 2.1 million pounds / year
ABOUT SIBANYE-STILLWATER
Stillwater was purchased by
Sibanye-Stillwater in May 2017.
Sibanye-Stillwater is the third largest producer of platinum and
palladium and features amongst the world's top gold producing
companies with operations in two main regions: South Africa and the
United States. Sibanye-Stillwater has over the years
developed several safety initiatives, including the creation and
investment in "Digimine," a joint venture between
Sibanye-Stillwater, academic institutions and other
stakeholders. This initiative prioritizes the use of digital
technology for enhanced safety applications including focus areas
of seismicity and pro-active monitoring of underground
environmental conditions. Wheaton is pleased to have the
opportunity to support Sibanye-Stillwater's initiatives through
further investment linked to Digimine, facilitating the fast
tracking of certain technology prototypes into Sibanye-Stillwater's
underground environment.
CONFERENCE CALL
A conference call will be held on July
16, 2018, starting at 11:00 am
(Eastern Time) to discuss this transaction. A presentation
on the transaction will be available on the Company's website
shortly before the conference call. To participate in the live call
please use one of the following methods:
Dial toll free from Canada or the US: 888-231-8191
Dial from outside Canada or the US: 647-427-7450
Pass code: 9391518
Live audio webcast: www.wheatonpm.com
Participants should dial in ten to fifteen minutes before the
call.
The conference call will be recorded and available until
July 23, 2018 at 11:59 pm ET. The webcast will be available for
one year. You can listen to an archive of the call by one of the
following methods:
Dial toll free from Canada or the US: 855-859-2056
Dial from outside Canada or the US: 416-849-0833
Pass code: 9391518
Archived audio webcast: www.wheatonpm.com
Mr. Neil Burns, Vice President of
Technical Services for Wheaton, is a "qualified person" as such
term is defined under National Instrument 43-101 and has reviewed
and approved the technical disclosure in this news release
including information on Mineral Reserves and Mineral
Resources.
ADVISORS AND COUNSEL
RBC Capital Markets acted as financial advisor and Cassels Brock & Blackwell LLP acted as legal
counsel to Wheaton.
End Notes
___________________________
1) Please refer to the Mineral Reserves & Mineral Resources table at the end of this
news release for full disclosure of reserves and resources associated with Stillwater
including accompanying footnotes.
2) Production estimates based upon Competent Person's Report of the Montana Platinum
Group Metal Mineral Assets for Sibanye Gold Limited, United States of America, dated
November 2017, and prepared by The Mineral Corporation. Assumptions for converting to
GEOs: Pd $990/oz and Gold $1,270/oz. Production forecast contain forward looking
information and readers are cautioned that actual outcomes may vary. Please see
"Cautionary Note Regarding Forward Looking-Statements" at the end of this news release
for material risks, assumptions, and important disclosure associated with this
information.
3) Mine life is based on recoverable reserves and resources as of December 31, 2017
and based on the mine plan provided by Sibanye-Stillwater as of June 2018.
4) Production payment is subject to further downward adjustment based upon
Sibanye-Stillwater's leverage ratios.
5) Operating cash flow based on Q2, Q3, and Q4 of 2017, and Q1 2018
6) The following sources were referenced in the discussion on palladium: Loferski,
Patricia J. "Platinum-Group Metals (Ir, Os, Pd, Pt, Rh, Ru)" Metal Prices in the
United States Through 2010. United States Geological Survey. 05-Mar-2010; Steel,
James. "PGM Outlook" Commodities, Precious Metals, HSBC Global Research. 22-Nov-2017;
Agate, Nell, Johann Steyn and Raghav Gupta-Chaudhary. "PGMs: Demand impact of LDV
diesel-engine erosion" Commodities Industry Focus, Commodities. Citi Research.
13-Oct-2017; Metals Focus. Platinum & Palladium Focus 2017. May-2017.
7) GEOs are calculated based on the following commodity prices: $1,270 per gold ounce,
$16.50 per silver ounce, $960 per palladium ounce, and $40 per cobalt pound.
8) Average annual five-year gold production is the sum of the expected average annual
production for all streamed assets over 2018-2022 except for Stillwater; as 2018 is
only a partial year of production, the average annual production for Stillwater from
2019-2022 was used in the calculation for the total average annual gold production for
2018-2022.
ATTRIBUTABLE MINERAL RESERVES & MINERAL RESOURCES FOR
STILLWATER
Effective as of December 31,
2017
Mine Category Stream Mt Au g/t Pd g/t Au Moz Pd Moz
Stillwater Proven Gold 2.6 0.31 0.03
Probable 15.1 0.31 0.15
Proven Palladium 0.1 16.0 0.05
Probable 0.5 15.7 0.27
East
Boulder Proven Gold 2.4 0.30 0.02
Probable 21.6 0.31 0.21
Proven Palladium 0.1 10.2 0.03
Probable 0.8 10.5 0.26
Total P&P Gold 41.8 0.31 0.41
Palladium 1.5 12.7 0.61
Stillwater Inferred Gold 48.9 0.27 0.42
East
Boulder 43.6 0.36 0.50
Stillwater Inferred Palladium 0.5 13.6 0.24
East
Boulder 0.5 12.2 0.19
Total Inferred Gold 92.5 0.31 0.92
Palladium 1.0 12.9 0.43
Notes on Mineral Reserves and Mineral Resources
- All Mineral Reserves and Mineral Resources have been estimated
in accordance with the 2014 Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Standards for Mineral Resources and
Mineral Reserves and National Instrument 43-101 - Standards for
Disclosure for Mineral Projects ("NI 43-101"), or the 2012
Australasian Joint Ore Reserves Committee (JORC) Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves.
- Mineral Reserves and Mineral Resources are reported above in
millions of metric tonnes ("Mt"), grams per metric tonne ("g/t")
and millions of ounces ("Moz").
- Qualified persons ("QPs"), as defined by the NI 43-101, for the
Mineral Reserve and Mineral Resource estimates are:
- Neil Burns, M.Sc., P.Geo. (Vice
President, Technical Services); and
- Ryan Ulansky, M.A.Sc., P.Eng.
(Senior Director, Engineering),
- The Mineral Resources reported in the above tables are
exclusive of Mineral Reserves.
- Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
- Mineral Reserves and Mineral Resources are reported as of
December 31, 2017 based on
information available to the Company as of the date of this
document, and therefore will not reflect updates, if any, after
such date.
- Process recoveries of palladium to a PGM concentrate average
approximately 92%. Process recoveries of gold, being a by-product,
is not measured but has been assumed to be line with
palladium.
- Mineral Reserves at Stillwater
are estimated using appropriate process and mine recovery rates,
dilution, operating costs and the following cut-offs:
- Stillwater mine - combined
platinum and palladium grade cut-offs of 10.29 g/t for Off-shaft
areas and 6.86 g/t for Farwest
- East Boulder mine - combined
platinum and palladium cut-off of 6.86 g/t
- Mineral Resources at Stillwater are estimated using appropriate
process recovery rates and the following cut-offs:
- Stillwater mine and
East Boulder mine - geologic
boundaries for Inferred Mineral Resources
- The Stillwater precious metals
purchase agreement provides that effective July 1, 2018. Sibanye-Stillwater will deliver
100% of the gold production for the life of the mine and 4.5% of
palladium production until 375,000 ounces are delivered, 2.25% of
palladium production until a further 175,000 ounces are delivered
and 1.0% of the palladium production thereafter for the life of the
mine. Attributable palladium Mineral Reserves and Mineral
Resources have been calculated based upon the 4.5% / 2.25% / 1.0%
production entitlements.
- The Stillwater mine has been
in operation since 1986 and East
Boulder mine since 2002. Individual grades for
platinum, palladium, gold and rhodium are estimated using ratios
applied to the combined platinum plus palladium grades based upon
average historic production results provided to the Company as of
the date of this document. As such, the Attributable Mineral
Resource and Mineral Reserve palladium and gold grades for the
Stillwater mines have been
estimated using the following ratios:
- Stillwater mine: Pd = (Pt +
Pd) / (1/3.51 + 1) and Au = (Pd + Pt) x 0.0153
- East Boulder mine: Pd = (Pt +
Pd) / (1/3.6 + 1) and Au = (Pd + Pt) x 0.022
- Gold is produced as a by-product metal; therefore, the economic
cut-off applied to the reporting of gold Mineral Resources and
Mineral Reserves will be influenced by changes in platinum and
palladium prices at the time.
- Full Mineral Reserve and Mineral Resource tables are available
on the Company's website, www.wheatonpm.com .
CAUTIONARY NOTE REGARDING FORWARD
LOOKING-STATEMENTS
The information contained herein contains "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of applicable Canadian securities
legislation. Forward-looking statements, which are all statements
other than statements of historical fact, include, but are not
limited to, statements with respect to:
- the payment of the upfront cash consideration of US$500 million to Sibanye-Stillwater in
connection with the Precious Metals Stream;
- the timing of delivery of gold and palladium by
Sibanye-Stillwater under the Precious Metals Stream;
- the receipt of Wheaton of gold and palladium production in
respect of Stillwater;
- the demand, uses and supply of gold and palladium;
- the construction timeline, including completion, of the Blitz
Project.
- the commencement and timing of delivery of gold and palladium
by Sibanye-Stilwater under the Precious Metals Stream;
- the construction timeline, including completion, of the mine
expansion, including the underground mines, at Voisey's Bay by
Vale;
- the commencement and timing of delivery of cobalt by Vale under
the Cobalt Stream;
- the receipt of cobalt by Wheaton of cobalt production in
respect of Voisey's Bay;
- future payments by the Company in accordance with precious
metal purchase agreements, including any acceleration of payments,
estimated throughput and exploration potential;
- projected increases to Wheaton's production and cash flow
profile;
- the expansion and exploration potential at the Salobo and
Peñasquito mines;
- projected changes to Wheaton's production mix;
- anticipated increases in total throughput;
- the estimated future production;
- the future price of commodities;
- the estimation of mineral reserves and mineral resources;
- the realization of mineral reserve estimates;
- the timing and amount of estimated future production (including
2018 and average attributable annual production over the next five
years);
- the costs of future production;
- reserve determination;
- estimated reserve conversion rates and produced but not yet
delivered ounces;
- any statements as to future dividends, the ability to fund
outstanding commitments and the ability to continue to acquire
accretive precious metal stream interests;
- confidence in the Company's business structure;
- the Company's position relating to any dispute with the CRA and
the Company's intention to defend reassessments issued by the CRA;
the impact of potential taxes, penalties and interest payable to
the CRA; possible audits for taxation years subsequent to 2015;
estimates as to amounts that may be reassessed by the CRA in
respect of taxation years subsequent to 2010; amounts that may be
payable in respect of penalties and interest; the Company's
intention to file future tax returns in a manner consistent with
previous filings; that the CRA will continue to accept the Company
posting security for amounts sought by the CRA under notices of
reassessment for the 2005-2010 taxation years or will accept
posting security for any other amounts that may be sought by the
CRA under other notices of reassessment; the length of time it
would take to resolve any dispute with the CRA or an objection to a
reassessment; and assessments of the impact and resolution of
various tax matters, including outstanding audits, proceedings with
the CRA and proceedings before the courts; and
- assessments of the impact and resolution of various legal and
tax matters, including but not limited to outstanding class
actions.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "projects", "intends", "anticipates" or
"does not anticipate", or "believes", "potential", or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of Wheaton to be materially different from those
expressed or implied by such forward-looking statements, including
but not limited to:
- that each party does not satisfy its obligations in accordance
with the terms of the Precious Metals Stream;
- Sibanye-Stillwater is unable to commence, or the timing of
delivery of gold and palladium by Sibanye-Stillwater is delayed or
deferred under the Precious Metals Stream or Wheaton International
is unable to sell its gold or palladium production delivered under
the Precious Metals Stream at acceptable prices or at all;
- the decrease in demand for palladium, the decrease in uses for
palladium or the discovery of new supplies of palladium, any or all
of which could result in a decrease to the price of palladium or a
decrease in the ability to sell palladium;
- Sibanye-Stillwater does not meet the construction timeline,
including anticipated completion of the Blitz Project;
- each party does not satisfy its obligations in accordance with
the terms of the Cobalt Stream;
- Vale does not meet the construction timeline, including
anticipated completion, of the mine expansion, including the
underground mines, at Voisey's Bay;
- Vale is unable to commence, or the timing of delivery of cobalt
by Vale is delayed or deferred under the Cobalt Stream or Wheaton
is unable to sell its cobalt production delivered under the Cobalt
Stream at acceptable prices or at all;
- the decrease in demand for cobalt, the decrease in uses for
cobalt or the discovery of new supplies of cobalt, any or all of
which could result in a decrease to the price of cobalt or a
decrease in the ability to sell cobalt;
- risks related to the satisfaction of each party's obligations
in accordance with the terms of Wheaton's precious metal purchase
agreements, including any acceleration of payments, estimated
throughput and exploration potential;
- fluctuations in the price of commodities;
- risks related to the Mining Operations including risks related
to fluctuations in the price of the primary commodities mined at
such operations, actual results of mining and exploration
activities, environmental, economic and political risks of the
jurisdictions in which the Mining Operations are located, and
changes in project parameters as plans continue to be refined;
- absence of control over the Mining Operations and having to
rely on the accuracy of the public disclosure and other information
Wheaton receives from the owners and operators of the Mining
Operations as the basis for its analyses, forecasts and assessments
relating to its own business;
- differences in the interpretation or application of tax laws
and regulations or accounting policies and rules;
- Wheaton's interpretation of, or compliance with, tax laws and
regulations or accounting policies and rules, being found to be
incorrect or the tax impact to the Company's business operations
being materially different than currently contemplated;
- any challenge by the CRA of the Company's tax filings being
successful and the potential negative impact to the Company's
previous and future tax filings;
- the Company's business or ability to enter into precious metal
purchase agreements being materially impacted as a result of any
CRA reassessment;
- any reassessment of the Company's tax filings and the
continuation or timing of any such process is outside the Company's
control;
- any requirement to pay reassessed tax, and the amount of any
tax, interest and penalties that may be payable changing due to
currency fluctuations;
- the Company not being assessed taxes on its foreign
subsidiary's income on the same basis that the Company pays taxes
on its Canadian income, if taxable in Canada;
- interest and penalties associated with a CRA reassessment
having an adverse impact on the Company's financial position;
- litigation risk associated with a challenge to the Company's
tax filings;
- credit and liquidity risks;
- indebtedness and guarantees risks;
- mine operator concentration risks;
- hedging risk;
- competition in the mining industry;
- risks related to Wheaton's acquisition strategy;
- risks related to the market price of the common shares of
Wheaton;
- equity price risks related to Wheaton's holding of long-term
investments in other exploration and mining companies;
- risks related to interest rates;
- risks related to the declaration, timing and payment of
dividends;
- the ability of Wheaton and the Mining Operations to retain key
management employees or procure the services of skilled and
experienced personnel;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Wheaton
or the Mining Operations;
- risks relating to unknown defects and impairments;
- risks relating to security over underlying assets;
- risks related to ensuring the security and safety of
information systems, including cyber security risks;
- risks related to the adequacy of internal control over
financial reporting;
- risks related to governmental regulations;
- risks related to international operations of Wheaton and the
Mining Operations;
- risks relating to exploration, development and operations at
the Mining Operations;
- risks related to the ability of the companies with which
Wheaton has precious metal purchase agreements to perform their
obligations under those precious metal purchase agreements in the
event of a material adverse effect on the results of operations,
financial condition, cash flows or business of such companies;
- risks related to environmental regulations and climate
change;
- the ability of Wheaton and the Mining Operations to obtain and
maintain necessary licenses, permits, approvals and rulings;
- the ability of Wheaton and the Mining Operations to comply with
applicable laws, regulations and permitting requirements;
- lack of suitable infrastructure and employees to support the
Mining Operations;
- uncertainty in the accuracy of mineral reserve and mineral
resource estimates;
- inability to replace and expand mineral reserves;
- risks relating to production estimates from Mining Operations,
including anticipated timing of the commencement of production by
certain Mining Operations;
- uncertainties related to title and indigenous rights with
respect to the mineral properties of the Mining Operations;
- fluctuations in the commodity prices other than silver or
gold;
- the ability of Wheaton and the Mining Operations to obtain
adequate financing;
- the ability of the Mining Operations to complete permitting,
construction, development and expansion;
- challenges related to global financial conditions;
- risks relating to future sales or the issuance of equity
securities; and
- other risks discussed in the section entitled "Description of
the Business - Risk Factors" in Wheaton's Annual Information Form
available on SEDAR at www.sedar.com, and in Wheaton's Form 40-F for
the year ended December 31, 2017 and
Form 6-K filed March 21, 2018 both on
file with the U.S. Securities and Exchange Commission in
Washington, D.C. (the
"Disclosure"). Where applicable, readers should also consider any
updates to such Disclosure that may be provided by Wheaton in its
quarterly Management's Discussion and Analysis.
Forward-looking statements are based on assumptions management
currently believes to be reasonable, including but not limited
to:
- the payment of US$500 million to
Sibanye-Stillwater and the satisfaction of each party's obligations
in accordance with the terms of the Precious Metals Stream;
- Sibanye-Stillwater is able to commence and meet its timing for
delivery of gold and palladium under the Precious Metals Stream and
Wheaton International is able to sell palladium production
delivered under the Precious Metals Stream at acceptable
prices;
- the demand and uses for palladium will not significantly
decrease and the supply of palladium will not significantly
increase;
- Sibanye-Stillwater is able to meet the construction timeline,
including anticipated completion, of the Blitz Project;
- Sibanye-Stillwater is able to commence and meet its timing for
delivery of gold and palladium under the Precious Metals Stream and
Wheaton is able to sell gold and palladium production delivered
under the Precious Metals Stream at acceptable prices;
- Vale is able to meet the construction timeline, including
anticipated completion, of the mine expansion, including the
underground mines, at Voisey's Bay;
- Vale is able to commence and meet its timing for delivery of
cobalt under the Cobalt Stream and Wheaton is able to sell cobalt
production delivered under the Cobalt Stream at acceptable
prices;
- Vale meets its obligations under the development agreement with
the Government of Newfoundland and
Labrador and the impacts and
benefits agreements with the Innu Nation and the Nunatsiavut
government;
- the demand and uses for cobalt will not significantly decrease
and the supply of cobalt will not significantly increase;
- that each party will satisfy their obligations in accordance
with the precious metal purchase agreements;
- that there will be no material adverse change in the market
price of commodities;
- that the Mining Operations will continue to operate and the
mining projects will be completed in accordance with public
statements and achieve their stated production estimates;
- that Wheaton will continue to be able to fund or obtain funding
for outstanding commitments;
- that Wheaton will be able to source and obtain accretive
precious metal stream interests;
- expectations regarding the resolution of legal and tax matters,
including the ongoing class action litigation and CRA audits
involving the Company;
- that Wheaton will be successful in challenging any reassessment
by the CRA;
- that Wheaton has properly considered the application of
Canadian tax law to its structure and operations;
- that Wheaton will continue to be permitted to post security for
amounts sought by the CRA under notices of reassessment;
- that Wheaton has filed its tax returns and paid applicable
taxes in compliance with Canadian tax law;
- that Wheaton will not change its business as a result of any
CRA reassessment;
- that Wheaton's ability to enter into new precious metal
purchase agreements will not be impacted by any CRA
reassessment;
- expectations and assumptions concerning prevailing tax laws and
the potential amount that could be reassessed as additional tax,
penalties and interest by the CRA;
- that any foreign subsidiary income, if taxable in Canada, would be subject to the same or
similar tax calculations as Wheaton's Canadian income, including
the Company's position, in respect of precious metal purchase
agreements with upfront payments paid in the form of a deposit,
that the estimates of income subject to tax is based on the cost of
precious metal acquired under such precious metal purchase
agreements being equal to the market value of such precious metal
while the deposit is outstanding, and the cash cost
thereafter;
- the estimate of the recoverable amount for any precious metal
purchase agreement with an indicator of impairment; and
- such other assumptions and factors as set out in the
Disclosure.
Although Wheaton has attempted to identify important factors
that could cause actual results, level of activity, performance or
achievements to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results, level of activity, performance or achievements not to be
as anticipated, estimated or intended. There can be no assurance
that forward-looking statements will prove to be accurate and even
if events or results described in the forward-looking statements
are realized or substantially realized, there can be no assurance
that they will have the expected consequences to, or effects on,
Wheaton. Accordingly, readers should not place undue reliance on
forward-looking statements and are cautioned that actual outcomes
may vary. The forward-looking statements included herein are for
the purpose of providing investors with information to assist them
in understanding Wheaton's expected financial and operational
performance and may not be appropriate for other purposes. Any
forward looking statement speaks only as of the date on which it is
made. Wheaton does not undertake to update any forward-looking
statements that are included or incorporated by reference herein,
except in accordance with applicable securities laws.
Non IFRS Measures
Wheaton has included, certain non-IFRS performance measures,
including operating cash flow. The Company believes that, in
addition to conventional measures prepared in accordance with IFRS,
management and certain investors use this information to evaluate
the Company's performance. Operating cash flow is based on
current market cobalt prices of approximately $40 per pound of cobalt, 2.6 million pounds of
cobalt produced annually, a payable cobalt rate of 93.3%,
production payment of 18%, and an assumed cobalt marketing fee.
Non-IFRS measures do not have any standardized meaning prescribed
by IFRS, and other companies may calculate these measures
differently. The presentation of non-IFRS measures is intended to
provide additional information and should not be considered in
isolation or as a substitute for measures of performance prepared
in accordance with IFRS. For more detailed information, please
refer to Wheaton's Management Discussion and Analysis available on
the Company's website at www.wheatonpm.com and posted on SEDAR at
www.sedar.com .
Cautionary Language Regarding Reserves And
Resources
For further information on Mineral Reserves and Mineral
Resources and on Wheaton more generally, readers should refer to
Wheaton's Annual Information Form for the year ended December 31, 2017 and other continuous disclosure
documents filed by Wheaton since January 1,
2018, available on SEDAR at www.sedar.com . Wheaton's
Mineral Reserves and Mineral Resources are subject to the
qualifications and notes set forth therein. Mineral Resources which
are not Mineral Reserves do not have demonstrated economic
viability.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred
Resources: The information contained herein has been
prepared in accordance with the requirements of the securities laws
in effect in Canada, which differ
from the requirements of United
States securities laws. The terms "mineral reserve", "proven
mineral reserve" and "probable mineral reserve" are Canadian mining
terms defined in accordance with Canadian National Instrument
43-101 - Standards of Disclosure for Mineral Projects ("NI 43-101")
and the Canadian Institute of Mining, Metallurgy and Petroleum (the
"CIM") - CIM Definition Standards on Mineral Resources and Mineral
Reserves, adopted by the CIM Council, as amended (the "CIM
Standards"). These definitions differ from the definitions in
Industry Guide 7 ("SEC Industry Guide 7") under the U.S. Securities
Act of 1933, as amended (the "U.S. Securities Act"). Under U.S.
standards, mineralization may not be classified as a "reserve"
unless the determination has been made that the mineralization
could be economically and legally produced or extracted at the time
the reserve determination is made. Also, under SEC Industry Guide 7
standards, a "final" or "bankable" feasibility study is required to
report reserves, the three-year historical average price is used in
any reserve or cash flow analysis to designate reserves and the
primary environmental analysis or report must be filed with the
appropriate governmental authority. In addition, the terms "mineral
resource", "measured mineral resource", "indicated mineral
resource" and "inferred mineral resource" are defined in and
required to be disclosed by NI 43-101; however, these terms are not
defined terms under SEC Industry Guide 7 and are normally not
permitted to be used in reports and registration statements filed
with the SEC. Investors are cautioned not to assume that any part
or all of the mineral deposits in these categories will ever be
converted into reserves. "Inferred mineral resources" have a great
amount of uncertainty as to their existence and as to their
economic and legal feasibility. It cannot be assumed that all or
any part of an inferred mineral resource will ever be upgraded to a
higher category. Under Canadian rules, estimates of inferred
mineral resources may not form the basis of feasibility or
pre-feasibility studies, except in rare cases. Investors are
cautioned not to assume that all or any part of an inferred mineral
resource exists or is economically or legally mineable. Mineral
resources that are not mineral reserves do not have demonstrated
economic viability. Disclosure of "contained ounces" in a resource
is permitted disclosure under Canadian regulations; however, the
SEC normally only permits issuers to report mineralization that
does not constitute "reserves" by SEC standards as in place tonnage
and grade without reference to unit measures. Accordingly,
information contained herein that describes Wheaton's mineral
deposits may not be comparable to similar information made public
by U.S. companies subject to reporting and disclosure requirements
under the United States federal
securities laws and the rules and regulations thereunder.
United States investors are urged
to consider closely the disclosure in Wheaton's Form 40-F, a copy
of which may be obtained from Wheaton or
from http://www.sec.gov/edgar.shtml.
Please contact:
Patrick Drouin
Senior Vice President
Investor Relations
Wheaton Precious Metals Corp.
Tel: +1-844-288-9878
Email: info@wheatonpm.com
Website: www.wheatonpm.com