Wheaton Precious Metals (“Wheaton”) is the world’s
premier precious metals streaming company with the
highest-quality portfolio of long-life, low-cost assets. Its
business model offers investors commodity price leverage
and exploration upside but with a much lower risk profile
than a traditional mining company. Wheaton delivers
amongst the highest cash operating margins in the mining
industry, allowing it to pay a competitive dividend and
continue to grow through accretive acquisitions. As a
result, Wheaton has consistently outperformed gold
and silver, as well as other mining investments. Wheaton
creates sustainable value through streaming.
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RANDY SMALLWOOD,
President & CEO
LETTER FROM
THE PRESIDENT & CEO
Dear Shareholders,
This past year marked a special milestone for Wheaton
as we celebrated our 15th anniversary. Few could have
guessed what would become of our modest company
in 2004, with a single asset and a novel business model
we called “streaming.” Today, Wheaton has 29 streams
globally, and there is not a Chief Financial Officer in the
mining industry that doesn’t consider streaming as an
option for raising capital, a perpetual need for mining
companies everywhere. Our company has evolved
considerably over the past 15 years, but at Wheaton,
we have always remained true to our core mandate—to
create superior value for our shareholders, partners and
the community.
We entered 2019 with the strongest foundation to date,
supported by one of the best portfolios of precious
metals assets in the industry and confidence in the
sustainability of our business model. The settlement
reached with the Canada Revenue Agency in late 2018
reaffirmed the strength of our business model and
corporate structure, providing us and our shareholders
with tax confidence.
Wheaton’s share price appreciated
~55% relative to 2018.
approximately 55%
relative to 2018, a
reflection of the value
we believe is merited for
the quality of our assets.
We also recognize the
significance of operating
responsibly to ensure
the sustainability of our
business. In 2019, we made
several commitments to integrate
internationally recognized frameworks
and best practices into our operations.
In addition, we increased the percentage
of net income allocated to the partner
corporate social responsibility (“CSR”)
program, allowing us to expand on the
success of the program and further support
our partners’ social license to operate.
RESULTS & OPERATIONS
For the eighth consecutive year, we exceeded guidance
with over 700 thousand gold equivalent ounces
produced. During 2019, Wheaton produced over 400
thousand ounces of gold, 22.5 million ounces of silver
and 22 thousand ounces of palladium. Our exposure to
gold continues to increase with gold production and
sales setting yet another record for the company, and
now representing over 60% of total revenue.
Having a solid, sustainable foundation also allowed us to
fully benefit from robust precious metals prices. In 2019,
precious metal prices increased substantially across the
board, which resulted in over $500 million in operating
cash flow and more than $160 million in dividends to
our shareholders. Wheaton’s share price appreciated
The strength of our diversified portfolio was evident
when outperformances from our gold operations,
led by Salobo, more than offset the impact of
deferred silver production from Peñasquito, which
faced temporary shutdowns due to illegal blockades.
WHEATON PRECIOUS METALS | 2019 ANNUAL REPORT
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This impacted more than a full quarter of production
from one of Wheaton’s key assets. Now that Peñasquito
is back in full operation, we look forward to a stronger
year as Newmont implements its “Full Potential”
continuous improvement program to drive productivity
improvements, and the mine benefits from higher grade
through 2021. Meanwhile, the Salobo III mine expansion
continues to progress in line with Vale’s schedule and
once completed, Vale anticipates it will result in a 50%
increase in throughput capacity when fully ramped up.
Our exposure to gold continues
to increase with gold production
and sales setting yet another
record for the company.
Our most recent acquisition, the Stillwater and East
Boulder mines (“Stillwater mines”), performed in line
with expectations for its first full year of production,
with both gold and palladium meeting company
estimates. This acquisition was Wheaton’s first foray
into platinum group metals, and palladium prices
significantly outperformed our forecast since making
the acquisition in the third quarter of 2018. The Stillwater
mines are one of the world’s lowest cost platinum group
metals producers and have substantial potential for
future expansions. In particular, the Blitz and Fill the Mill
projects are expected to be key growth drivers and
should result in more metal being delivered to Wheaton
in the coming years.
ESG & SUSTAINABILITY
The investment community is increasingly integrating
environmental, social and governance (“ESG”) risks into
their evaluation process, highlighting the importance
of delivering shareholder value while minimizing our
impacts. Wheaton has been a sustainability leader in
the precious metals streaming space, undertaking a
broad range of initiatives and significantly increasing
disclosure around ESG risk management. By addressing
and minimizing exposure to ESG-related risks and issues,
Wheaton has set the stage for long-term sustainability.
During 2019, Wheaton was the first streaming company
to join the United Nations (“UN”) Global Compact,
II
WHEATON PRECIOUS METALS | 2019 ANNUAL REPORT
the world’s largest corporate sustainability initiative.
As part of this commitment we are working to
align our operations and strategy with the UN’s 10
universally accepted principles in the areas of human
rights, labour, environment and anti-corruption,
and to supporting broader initiatives including the
Sustainable Development Goals. This commitment
meant developing a Partner/Supplier Code of Conduct
that will help ensure we are working with companies
and organizations who share our view on operating
responsibly. We also endorsed the World Gold Council’s
Responsible Gold Mining Principles, which addresses
key ESG issues specific to the gold mining sector.
Additionally, we doubled the capacity of our Partner
CSR program and advanced 14 projects with four
partners. These particular projects focus on health,
education, community engagement and entrepreneurial
opportunities in the regions where our partners operate,
including Brazil, Peru and Mexico. At Wheaton, we are
committed to working with our partners on an ongoing
basis to deliver sustainable benefits in the regions and
local communities where we do business.
Wheaton has been a sustainability
leader in the precious metals
streaming space.
CORPORATE DEVELOPMENT
Our company takes a strategic and disciplined approach
to utilizing operating cash flow. We will only look to
deploy capital for acquisitions that are accretive to our
shareholders. Over two-thirds of Wheaton’s production
comes from assets that fall in the lowest cost quartile
and we continue to focus on acquiring precious metals
streams that complement this high-quality portfolio.
One of the key advantages of the streaming model is
that we benefit from high margins and steady cash
flow, giving us the natural capacity to take on future
large-scale opportunities while continuing to create
value for our shareholders. In 2019, we looked at several
potential opportunities, but none met our stringent
quality criteria. However, we continue to assess new
opportunities, and we are encouraged by the quality
of potential deals we see on the horizon.
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2020-03-16 3:41 PM
Our portfolio is unparalleled
in the industry and offers our
shareholders exposure to some of
the best mines in the world.
OUTLOOK
Wheaton’s current portfolio of assets includes 20
operating mines and nine development stage projects.
These assets have over 30 years of mine life based on
reserves and a healthy resource base with significant
potential for organic growth. Our portfolio is unparalleled
in the industry and offers our shareholders exposure to
some of the best mines in the world. As a result, our
organic growth profile is strong over the next five
years, with average production expected to increase,
primarily due to continued growth at Peñasquito,
Constancia and Stillwater.
I am truly proud of the company we have built together
over the past 15 years. Our value-creating business
model, commitment to operating responsibly and focus
on high-quality assets provides investors with the best
vehicle for investing in precious metals.
To our shareholders, partners, Board of Directors, and
employees: thank you once again for your continued
trust and confidence. We look forward to updating
you on our progress throughout the year.
RANDY SMALLWOOD,
President & CEO
March 11, 2020
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WHEATON PRECIOUS METALS | 2019 ANNUAL REPORT III
FINANCIALS
MANAGEMENT’S DISCUSSION AND ANALYSIS
FINANCIAL STATEMENTS
2
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Management’s Discussion and Analysis of Results of Operations and Financial Condition for the Year Ended
December 31, 2019
This Management’s Discussion and Analysis (“MD&A”) should be read in conjunction with Wheaton Precious Metals
Corp.’s (“Wheaton” or the “Company”) consolidated financial statements for the year ended December 31, 2019 and
related notes thereto which have been prepared in accordance with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards Board (“IASB”). Reference to Wheaton or the Company
includes the Company’s wholly-owned subsidiaries. This MD&A contains “forward-looking” statements that are subject
to risk factors set out in the cautionary note contained on page 57 of this MD&A as well as throughout this document.
All figures are presented in United States dollars unless otherwise noted. This MD&A has been prepared as of March
11, 2020.
Table of Contents
Operational Overview ...................................................................................................................................................... 4
Highlights ......................................................................................................................................................................... 5
Outlook ............................................................................................................................................................................ 6
Mineral Stream Interests .................................................................................................................................................. 7
Mineral Royalty Interest ................................................................................................................................................... 9
Long-Term Equity Investments ...................................................................................................................................... 10
Investment in Associate ................................................................................................................................................. 11
Convertible Notes Receivable ........................................................................................................................................ 12
Summarized Financial Results ...................................................................................................................................... 14
Summary of Ounces Produced ...................................................................................................................................... 15
Summary of Ounces Sold .............................................................................................................................................. 16
Quarterly Financial Review ............................................................................................................................................ 17
Results of Operations and Operational Review ............................................................................................................. 18
Liquidity and Capital Resources..................................................................................................................................... 28
Contractual Obligations and Contingencies ................................................................................................................... 31
Share Capital ................................................................................................................................................................. 34
Financial Instruments ..................................................................................................................................................... 35
Risks and Uncertainties ................................................................................................................................................. 35
Critical Accounting Estimates ........................................................................................................................................ 42
New Accounting Standards Effective in 2019 ................................................................................................................ 44
Non-IFRS Measures ...................................................................................................................................................... 45
Subsequent Events ........................................................................................................................................................ 49
Controls and Procedures ............................................................................................................................................... 49
Attributable Reserves and Resources ............................................................................................................................ 51
Cautionary Note Regarding Forward-Looking Statements ............................................................................................. 57
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [2]
Overview
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). The Company is listed on the New York Stock Exchange (“NYSE”)
and the Toronto Stock Exchange (“TSX”) and trades under the symbol WPM.
The Company has entered into 23 long-term purchase agreements (three of which are early deposit agreements), with
17 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, 9 which are at various stages of development
and 1 which has been placed in care and maintenance, located in 11 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 fixed by contract, generally at or below the prevailing market price.
Attributable metal production as referred to in this MD&A and financial statements is the metal production to which
Wheaton is entitled pursuant to the various PMPAs. During the year ended December 31, 2019, the per ounce price
paid by the Company for the metals acquired under the agreements averaged $5.02 for silver, $421 for gold and $273
for palladium. The primary drivers of the Company’s financial results are the volume of metal production at the various
mines to which the PMPAs relate and the price realized by Wheaton upon the sale of the metals received.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [3]
Operational Overview
Ounces produced
Gold
Silver
Palladium
Gold equivalent 2
Silver equivalent 2
Ounces sold
Gold
Silver
Palladium
Gold equivalent 2
Silver equivalent 2
Change in PBND 3
Gold
Silver
Palladium
Per ounce metrics
Sales price
Gold
Silver
Palladium
Cash costs 4
Gold 4
Silver 4
Palladium 4
Cash operating margin 5
Gold 5
Silver 5
Palladium 5
Total revenue
Gold revenue
Silver revenue
Palladium revenue
Net earnings
Per share
Adjusted net earnings 6
Per share 6
Operating cash flows
Per share 7
Dividends paid ⁸
Per share
Q4 2019
Q4 2018
Change
2019
2018 Change
107,225
5,962
6,057
186,892
15,185
107,160
5,499
5,869
180,936
14,701
0.1 % 406,675
8.4 %
22,562
3.2 % 21,993
3.3 % 707,195
3.3 %
57,460
383,974
24,474
14,686
700,446
56,911
5.9 %
(7.8)%
49.8 %
1.0 %
1.0 %
89,223
4,684
5,312
152,389
12,382
102,813
4,400
5,049
162,205
13,179
(13.2)% 389,086
17,703
6.5 %
5.2 % 20,681
(6.1)% 628,447
(6.1)%
51,061
349,168
21,733
8,717
625,701
50,838
11.4 %
(18.5)%
137.2 %
0.4 %
0.4 %
13,291
408
709
(513)
169
611
(13,804) (847)
(239) 1,362
(98) (411)
15,464 16,311
(644) (2,006)
5,282 5,693
$
$
$
$
$
$
1,483 $
17.36 $
1,804 $
1,229
14.66
1,137
20.7 % $
18.4 % $
58.7 % $
1,391 $
16.29 $
1,542 $
1,264
15.81
1,060
10.0 %
3.0 %
45.5 %
426 $
5.13 $
321 $
409
4.66
205
4.2 % $
10.1 % $
56.6 % $
421 $
5.02 $
273 $
409
4.67
190
2.9 %
7.5 %
43.7 %
81,296 $
820
1,057 $
$
10.00
12.23 $
$
$
932
1,483 $
$ 223,222 $ 196,591
$ 132,342 $ 126,343
$
64,510
$ 9,584 $ 5,738
6,828
$
$
0.02
36,745
$
0.08
$
$ 131,867 $ 108,461
0.24
39,959
0.09
77,524 $
0.17
$
77,953 $
$
0.17
0.29
$
40,252 $
$
0.09
$
$
$
970 $
11.27 $
1,269 $
855
28.9 % $
11.14
22.3 % $
870
59.1 % $
13.5 % $ 861,332 $ 794,012
4.7 % $ 541,045 $ 441,193
26.0 % $ 288,401 $ 343,579
67.0 % $ 31,886 $ 9,240
1,035 % $ 86,138 $ 427,115
750.0 % $ 0.19
0.96
112.1 % $ 251,993 $ 213,782
0.48
0.56
110.5 % $
21.6 % $ 501,620 $ 477,413
20.8 % $
1.08
1.12
0.7 % $ 160,656 $ 159,619
0.36
0.36
0.0 % $
$
$
$
$
13.5 %
1.2 %
45.8 %
8.5 %
22.6 %
(16.1)%
245.1 %
(79.8)%
(80.2)%
17.9 %
17.2 %
5.1 %
3.7 %
0.6 %
0.0 %
1) All amounts in thousands except gold and palladium ounces produced and sold, per ounce amounts and per share amounts.
2) Please refer to the tables on the bottom of pages 18, 19, 21 and 22 for further information on the methodology of converting production and sales volumes to gold-equivalent
ounces ("GEOs") and silver-equivalent ounces ("SEOs").
3) Represents the increase (decrease) in payable ounces produced but not delivered (“PBND”) relative to the various mines that the Company derives precious metal from.
Payable ounces PBND will be recognized in future sales as they are delivered to the Company under the terms of their contracts. Payable ounces PBND to Wheaton is
expected to average approximately two to three months of annualized production for both gold and palladium and two months for silver but may vary from quarter to quarter
due to a number of factors, including mine ramp-up and the timing of shipments.1
4) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
5) Refer to discussion on non-IFRS measure (iv) on page 48 of this MD&A.
6) Refer to discussion on non-IFRS measure (i) on page 46 of this MD&A.
7) Refer to discussion on non-IFRS measure (ii) on page 47 of this MD&A.
8) Dividends declared in the referenced calendar quarter, relative to the financial results of the prior quarter.
1 Statements made in this section contain forward-looking information with respect to forecast ounces produced but not yet delivered
and readers are cautioned that actual outcomes may vary. Please see “Cautionary Note Regarding Forward-Looking Statements”
for material risks, assumptions and important disclosure associated with this information.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [4]
Highlights
Operations
• Relative to the comparable three-month period of the prior year:
o Wheaton generated $132 million in operating cash flow in the fourth quarter of 2019, representing a 22%
increase relative to the comparable quarter of the prior year and leading to a reduction in net debt of $91
million.
o
o
o
the increase in attributable silver production was primarily due to higher grades at Peñasquito.
the increase in attributable palladium production was a result of higher throughput at Stillwater.
the increase in adjusted net earnings was primarily due to higher margins resulting from increased
realized prices for gold, silver and palladium sales of 21%, 19% and 59%, respectively.
• Relative to the comparable twelve-month period of the prior year:
o Wheaton generated $502 million in operating cash flow during 2019, representing a 5% increase relative
to the comparable period of the prior year and leading to a reduction in net debt of $418 million.
o
o
o
o
o
the increase in attributable gold production, which represented a record for the Company, was primarily
due to the commencement of the San Dimas gold stream effective May 10, 2018, and the Stillwater
precious metals stream effective July 1, 2018, as well as higher production at Sudbury, partially offset by
decreased production at Minto which was placed into care and maintenance from October 2018 to
October 2019.
the increase in attributable palladium production was a result of the acquisition of the Stillwater palladium
stream effective July 1, 2018.
the decrease in attributable silver production was primarily due to the termination of the San Dimas silver
purchase agreement effective May 10, 2018.
the decrease in net earnings during the year was a result of a non-cash impairment charge in the amount
of $166 million relative to the Company’s Voisey’s Bay PMPA, while during the prior year the Company
terminated the previously owned San Dimas silver purchase agreement, resulting in a gain on disposal of
$246 million.
the increase in adjusted net earnings was primarily due to higher margins resulting from increased
realized prices for gold, silver and palladium sales of 10%, 3% and 45%, respectively.
• During the fourth quarter ended December 31, 2019, the Company declared dividends in the amount of $40
million. On March 11, 2020, the Board of Directors declared a dividend in the amount of $0.10 per common
share representing an increase of 11% relative to the comparable period in 2019.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [5]
Outlook1
Wheaton’s estimated attributable production in 2020 is forecast to be between 685,000 and 725,000 gold equivalent
ounces2 comprised of 390,000 to 410,000 gold ounces, 22.0 to 23.5 million silver ounces, and 23,000 to 24,500
palladium ounces. For the five-year period ending in 2024, the Company estimates that average annual gold equivalent
production will amount to 750,000 ounces2. As a reminder, Wheaton does not include any production from Barrick’s
Pascua-Lama project or Hudbay’s Rosemont project in its estimated average five-year production guidance.
From a liquidity perspective, the $104 million of cash and cash equivalents as at December 31, 2019 combined with
the liquidity provided by the available credit under the $2 billion revolving term loan (“Revolving Facility”) and ongoing
operating cash flows positions the Company well to fund all outstanding commitments and known contingencies as
well as providing flexibility to acquire additional accretive mineral stream interests.
1 Statements made in this section contain forward-looking information with respect to forecast production, funding outstanding
commitments and continuing to acquire accretive mineral stream interests and readers are cautioned that actual outcomes may
vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important
disclosure associated with this information.
2 Commodity price assumptions for the forecasts of gold equivalent production for 2020 and the five-year average to 2024, are
$1,500 / ounce gold, $18 / ounce silver, $2,000 / ounce palladium, and $16 / pound of cobalt.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [6]
Mineral Stream Interests1
The following table summarizes the mineral stream interests currently owned by the Company:
Mineral Stream
Interests
Gold
Salobo
Sudbury ⁵
Constancia
San Dimas
Stillwater ⁸
Other
Minto
Rosemont
777 ¹⁰
Silver
Peñasquito
Antamina
Constancia
Other
Los Filos
Zinkgruvan
Yauliyacu
Stratoni
Neves-Corvo
Aljustrel
Keno Hill
Minto
Pascua-Lama
Rosemont
777 ¹⁰
Navidad
Palladium
Stillwater ⁸
Cobalt
Voisey's Bay
Total
Mine
Owner ¹ Location¹
Attributable
Production
Per Ounce
Production
Payment 2,3
Total Upfront
Payment ³
Cash Flow
Generated to
Date ³
Ounces
Received to
Date ³
Q4-2019
PBND 3, 4
Vale
Vale
Hudbay
FM
Sibanye
PERE
Hudbay
Hudbay
BRA
CAN
PER
MEX
USA
CAN
USA
CAN
75%
70%
50% ⁶
variable ⁷
100%
$404 $ 3,059,360 $ 1,011,604 1,155,018 64,144
$400
$400
$600
variable
171,080 196,487 18,761 20 years
66,335 607
58,078
49,300
66,629 3,403
19,770 17,944 5,080
469,605 6,631
623,572
135,000
220,000
237,880
439,442
LOM
LOM
LOM
453,082
100% ⁹
100%
50%
variable
$450
$416
$ 4,715,254 $ 1,762,914 1,972,018
98,626
Term ¹
LOM
Date of
Original
Contract
28-Feb-13
28-Feb-13
8-Aug-12
10-May-18
16-Jul-18
LOM
LOM
LOM
20-Nov-08
10-Feb-10
8-Aug-12
LOM
LOM
LOM
24-Jul-07
3-Nov-15
8-Aug-12
Newmont MEX
PER
Glencore
PER
Hudbay
25%
33.75% ¹¹
100%
variable
$5.90
$4.91 $ 485,000
900,000
294,900
1,103,708
$ 880,276
52,358 1,734
322,431 24,631 1,195
105,461 10,093 88
85,972 1,529
1,216,371
Equinox¹² MEX
SWE
PER
GRC
PRT
PRT
CAN
CAN
Lundin
Glencore
Eldorado
Lundin
Almina
Alexco
PERE
Barrick CHL/ARG
Hudbay
Hudbay
PAAS
USA
CAN
ARG
100%
100%
100% ¹³
100%
100%
100% ¹⁴
25%
100%
25%
100%
100%
12.5%
$4.39
$4.39
$8.89
$9.31
$4.30
variable
variable
$4.22
$3.90
$3.90
$6.14
$4.00
25 years
LOM
LOM
LOM
50 years
50 years
LOM
LOM
LOM
LOM
LOM
LOM
15-Oct-04
8-Dec-04
23-Mar-06
23-Apr-07
5-Jun-07
5-Jun-07
2-Oct-08
20-Nov-08
8-Sep-09
10-Feb-10
8-Aug-12
n/a ¹⁵
$ 2,783,608
$ 2,524,539 173,054 4,546
Sibanye
USA
4.5% ¹⁶
variable $ 262,120 $ 33,815
29,398 4,872
LOM
16-Jul-18
Vale
CAN
42.4% ¹⁷
variable $ 390,000
$ - -
-
LOM
11-Jun-18
$ 8,150,982
$ 4,321,268
1) Abbreviations as follows: FM = First Majestic Silver Corp; PERE = Pembridge Resources plc; PAAS = Pan American Silver Corp; BRA = Brazil; CAN = Canada; CHL =
Chile, PER = Peru; MEX = Mexico; USA = United States; SWE = Sweden; GRC = Greece; PRT = Portugal; ARG = Argentina; and LOM = Life of Mine.
2) The per ounce production payment is either a fixed price per ounce purchased, subject to an annual inflationary adjustment with the exception of Sudbury and Loma de La
Plata, or a percentage of the spot price of the applicable metal for each ounce of the applicable metal delivered. Please refer to the section entitled “Contractual Obligations
and Contingencies – Mineral Stream Interests” on page 31 of this MD&A for more information.
3) All figures in thousands except gold and palladium ounces received to date, gold and palladium ounces produced but not yet delivered (“PBND”) and per ounce amounts.
The total upfront consideration excludes closing costs and capitalized interest, where applicable. Please refer to the section entitled “Other Contractual Obligations and
Contingencies” on page 32 of this MD&A for details of when the remaining upfront consideration to be paid becomes due.
4) Payable gold, silver and palladium ounces PBND are based on management estimates. These figures may be updated in future periods as additional information is received.
5) Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests. As of
December 31, 2019, the Company has received approximately $171 million of operating cash flows relative to the Sudbury PMPA. Should the market value of gold delivered
to Wheaton through the 20 year term of the contract, net of the per ounce cash payment, be lower than the initial $670 million refundable deposit, the Company will be
entitled to a refund of the difference at the conclusion of the term.
6) Gold recoveries will be set at 55% for the Constancia deposit and 70% for the Pampacancha deposit until 265,000 ounces of gold have been delivered to the Company.
Should Hudbay fail to achieve a minimum level of throughput at the Pampacancha deposit during 2018, 2019 and 2020, Wheaton will be entitled to an additional 8,020
ounces of gold in each of 2019, 2020 and 2021, of which 8,020 ounces of gold was received during 2019.
7) 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.
8) Comprised of the Stillwater and East Boulder gold and palladium interests.
9) The Company is entitled to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.
10) As of December 31, 2019, the Company has received approximately $292 million of operating cash flows relative to the 777 PMPA. Should the market value of gold and
silver delivered to Wheaton through the initial 40 year term of the contract, net of the per ounce cash payment, be lower than the initial $455 million upfront consideration, the
Company will be entitled to a refund of the difference at the conclusion of the 40 year term.
11) Once Wheaton has received 140 million ounces of silver under the Antamina PMPA, the Company’s attributable silver production to be purchased will be reduced to 22.5%.
12) On March 10, 2020, Leagold Mining Corporation (“Leagold”) and Equinox Gold Corp. (“Equinox”) completed their previously announced plan of arrangement pursuant to
which Equinox has acquired all of the issued and outstanding shares of Leagold.
13) Glencore will deliver a per annum amount to Wheaton equal to the first 1.5 million ounces of payable silver produced at Yauliyacu and 50% of any excess.
14) Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.
15) Wheaton and PAAS have not yet finalized the definitive terms of the agreement.
16) Once the Company has received 375,000 ounces of palladium under the Stillwater agreement, the Company’s attributable palladium production to be purchased will be
reduced to 2.25%, and once the Company has received 550,000 ounces of palladium under the agreement, the Company’s attributable palladium production to be
purchased will be reduced to 1.00%.
17) Once the Company has received 31 million pounds of cobalt under the Voisey’s Bay agreement, the Company’s attributable cobalt production to be purchased will be
reduced to 21.2%.
1 Statements made in this section contain forward-looking information including the timing and amount of estimated future production
and readers are cautioned that actual outcomes may vary. Please see “Cautionary Note Regarding Forward-Looking Statements” for
material risks, assumptions and important disclosure associated with this information.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [7]
Updates Relative to the Mineral Stream Interests
Salobo – Mill Throughput Expansion
The Salobo mine currently has a mill throughput capacity of 24 million tonnes per annum (“Mtpa”). As per Vale S.A.’s
(“Vale”) third quarter 2018 report, in October 2018 Vale’s Board of Directors approved the investment in the Salobo III
mine expansion (the “Salobo Expansion”). The Salobo Expansion is proposed to include a third concentrator line and
will use Salobo’s existing infrastructure. Vale anticipates that the Salobo Expansion, which is scheduled to start up in
the first half of 2022, will result in an increase of throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up.
Minto – Ownership Change
The Minto mine, which was placed into care and maintenance as of October 2018, was sold by Capstone Mining Corp.
to Pembridge Resources plc (“Pembridge”) effective June 3, 2019. According to Pembridge’s news release dated
October 16, 2019, milling operations at Minto recommenced on October 10, 2019. Pembridge states that the mill will
operate on a 2-weeks-on, 2-weeks-off schedule until sufficient development has been achieved underground to enable
a higher monthly processing capacity.
In conjunction with the resumption of mining activity at Minto, the Company has amended the Minto PMPA such that the
cash payment per ounce of gold delivered will be 75% of the spot price of gold for each ounce of gold delivered under
the Minto PMPA. This amended pricing will end on the earlier of (i) 14 months after the first delivery is due; or (ii) once
11,000 ounces of gold have been delivered to the Company.
Peñasquito – Illegal Blockade
On September 15, 2019, Newmont Mining Corporation (“Newmont”) announced that the dialogue sponsored by the
government of Mexico to resolve issues with a trucking contractor and the San Juan de Cedros community (one of
Peñasquito’s 25 neighboring communities) had been suspended and that an illegal blockade had resumed. On
October 22, 2019, Newmont announced that they were starting up production at Peñasquito following the lifting of the
illegal blockade on October 8.
On December 13, 2019, Newmont announced that the Peñasquito mine and the San Juan de Cedros community had
mutually agreed to an infrastructure solution securing sustainable water availability for the community’s domestic and
agricultural uses. Newmont states that the 30-year water agreement, which was developed and signed under the
auspices of the Dialogue Table sponsored by Mexico’s Federal Department of the Interior and representatives of the
state government of Zacatecas, represents a significant milestone and an important step in the ongoing negotiations
between the parties.
Constancia – Pampacancha Update
As per Hudbay Minerals Inc.’s (“Hudbay”) news release dated February 18, 2020, Hudbay secured the surface rights
for the Pampacancha deposit and expects to begin mining ore from the satellite deposit in late 2020.
Rosemont – Updates
As per Hudbay’s MD&A for the year ended December 31, 2019, in July 2019, the U.S. District Court for the District of
Arizona (“Court”) issued a ruling in two of the lawsuits challenging the U.S. Forest Service’s issuance of the Final
Record of Decision (“FROD”) for the Rosemont project in Arizona. Hudbay notes that the Court ruled to vacate and
remand the FROD thereby delaying the expected start of construction of Rosemont. Hudbay further reported that in
December of 2019, Hudbay and the U.S. Department of Justice each filed a notice of appeal in respect of the Court’s
decision to the U.S. Ninth Circuit Court of Appeals. Hudbay reports that on February 10, 2020, the Court issued a
ruling in the third lawsuit challenging the U.S. Forest Service's issuance of the FROD for the Rosemont mine. In this
lawsuit, the plaintiffs challenged the Biological Opinion that was issued by the U.S. Fish and Wildlife Service and relied
on by the U.S. Forest Service as part of the permitting process. The Court ruled to remand certain aspects of the U.S.
Fish and Wildlife Service's analysis and findings related to the Biological Opinion back to the agencies for further
review. Hudbay has indicated that it believes remanding these issues is unnecessary as the federal agencies’
research and studies concluded that the potential impacts to endangered species would comply with the regulations.
Hudbay has also indicated that it is reviewing the decision and will continue following the direction of the government
agencies through the permitting process.
As per Hudbay’s annual financial statements for the year ended December 31, 2019, in April 2019, Hudbay entered
into an agreement with United Copper & Moly LLC (“UCM”) to purchase UCM’s remaining 7.95% interest in the
Rosemont project and to terminate all of UCM’s remaining earn-in and offtake rights. This acquisition provides Hudbay
with 100% ownership of the Rosemont project.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [8]
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. Once Wheaton has elected to
proceed with the agreement, the carrying value of the stream will be transferred to Mineral Stream Interests.
The following table summarizes the early deposit mineral stream interests currently owned by the Company:
Attributable
Production to be
Purchased
Early Deposit
Mineral Stream
Interests
Toroparu
Cotabambas
Kutcho
Mine
Owner
Gold X
Panoro
Kutcho
Location
of
Mine
Guyana $
Peru
Canada
Upfront
Consideration
Paid to Date 1
Upfront
Consideration
to be Paid 1, 2
15,500 $
8,500
7,000
138,000 $
131,500
58,000
Total
Upfront
Consideration¹ Gold
153,500
140,000
65,000
10%
25% ³
100% ⁴
Term of
Agreement
Date of
Original
Contract
Silver
50% Life of Mine 11-Nov-13
100% ³ Life of Mine
21-Mar-16
100% ⁴ Life of Mine 14-Dec-17
$
31,000 $
327,500 $
358,500
1) Expressed in thousands of United States dollars; excludes closing costs and capitalized interest, where applicable.
2) Please refer to the section entitled “Other Contractual Obligations and Contingencies” on page 32 of this MD&A 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 to be purchased will decrease to 16.67% of gold production
and 66.67% of silver production for the life of mine.
4) Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, the stream will decrease to 66.67% of gold and silver production for the life of
mine.
Toroparu - Development Update
Gold X Mining Corp. (“Gold X”, previously Sandspring Resources Ltd.), announced results from a Preliminary
Economic Assessment (“PEA”) of its Toroparu Gold Project in Guyana (“Toroparu”) in a news release dated June 4,
2019, and subsequently filed the PEA on July 23, 2019. As per the PEA, Toroparu has been re‐scoped to include the
Sona Hill satellite deposit, modification of the processing strategy to start with gold‐only production from a Carbon‐in‐
Leach circuit for the initial ten years, and an expansion in year 11 to add flotation processing capacity. In connection
with Wheaton’s Toroparu Early Deposit Agreement, Wheaton may elect to pay Gold X an additional upfront payment,
payable on an installment basis to partially fund construction of the mine, in return for 10% of the gold and 50% of the
silver for the life of the mine. Gold X has indicated that it has estimated revised, lower potential upfront payments from
Wheaton as a result of the revised scope of the project, however such revised payments have not been approved by
Wheaton.
Mineral Royalty Interest
On August 7, 2014, the Company purchased a 1.5% net smelter return royalty interest (the “Royalty”) in the Metates
properties located in Mexico from Chesapeake Gold Corp. (“Chesapeake”) for the life of mine. Under the terms of the
agreement, the Company paid total upfront cash consideration of $9 million. In accordance with the terms of the
agreement, on August 7, 2019, Chesapeake exercised its option to re-acquire two-thirds of the Royalty, or 1%, for $9
million. As a result, the Company’s Royalty has been reduced to 0.5%. The Company has reflected the transaction as
a disposal of two-thirds of its original investment, resulting in a gain on disposal of $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 this royalty agreement.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [9]
Long-Term Equity Investments
The Company will, from time to time, invest in securities of companies for strategic purposes including, but not limited
to, exploration and mining companies. The Company held the following investments as at December 31, 2019:
Common Shares Held
Fair Value Adjustment Gains
(Losses) Included in OCI
Realized Gain
(Loss) on Disposal
(in thousands, except shares owned)
Percentage of
Outstanding
Shares
Owned
Shares
Owned
Fair Value at
Dec 31, 2019
Three Months
Ended
Dec 31, 2019
Year
Ended
Dec 31, 2019
Year
Ended
Dec 31, 2019
Bear Creek
Sabina
First Majestic
Other
Total
13,264,305
12.84%
$ 27,983 $ 8,151
$ 17,871 $ -
11,700,000
20,239,590
3.95%
9.73%
17,296
248,137
16,341
2,100
64,160
2,037
6,747
130,346
6,972
-
521
(7,803)
$ 309,757
$ 76,448
$ 161,936
$ (7,282)
(in thousands)
Bear Creek
Sabina
Arizona Mining
First Majestic
Other
Total
Fair Value Adjustment Gains
(Losses) Included in OCI
Realized Gain
on Disposal
Fair Value at
Dec 31, 2018
Three Months
Ended
Dec 31, 2018
Year
Ended
Dec 31, 2018
Year
Ended
Dec 31, 2018
$ 10,112
$ (3,516)
$ (11,247)
$ -
10,549
(297)
(10,622)
-
-
-
20,153
34,061
123,187
4,392
(27,813)
-
20,905
(4,252)
(10,456)
-
$ 164,753
$ (3,673)
$ (39,985)
$ 34,061
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.
While long-term investments in warrants are also held for long-term strategic purposes, they meet the definition of a
derivative and therefore are classified as financial assets with fair value adjustments being recorded as a component of
net earnings under the classification Other (Income) Expense. Warrants that do not have a quoted market price are
valued using a Black-Scholes option pricing model.
By holding these long-term investments, the Company is inherently exposed to various risk factors including currency
risk, market price risk and liquidity risk.
Acquisitions of Long-Term Equity Investments
On May 10, 2018, the San Dimas silver purchase agreement (the “San Dimas SPA”) was terminated and concurrently the
Company entered into the new San Dimas PMPA. In connection with the termination of the San Dimas SPA, the
Company received 20,914,590 First Majestic common shares with a fair value of $151 million.
On April 25, 2018, the Company made a strategic investment of $1 million by participating in a private placement
undertaken by Tradewind Markets, Inc. ("Tradewind"), a financial technology company that uses blockchain to speed
up and streamline digital gold and silver trading.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [10]
On July 17, 2018, the Company acquired 7,093,392 common shares of Adventus Zinc Corporation ("Adventus") in a
private placement transaction, for total consideration of Cdn$6 million, representing 9.99% of Adventus’ issued and
outstanding common shares. Concurrently, the Company paid an additional Cdn$1 million to acquire a right of first refusal
on any new streaming or royalty transactions on precious metals on the Adventus existing properties in Ecuador and a
right of first offer on any subsequently acquired properties in Ecuador (the “Adventus ROFR”).
On May 17, 2019, the Company acquired an additional 1,371,711 common shares of Adventus in a private placement
transaction for total consideration of Cdn$1 million, thus maintaining the Company’s ownership position.
The shares of Tradewind and Adventus have been classified as part of the Other long-term equity investments in this
MD&A, while the Adventus ROFR has been classified as a component of Other non-current assets on the Company’s
balance sheet.
Disposal of Long-Term Equity Investments
On August 10, 2018, South32 Limited announced that it had completed its acquisition of all the issued and outstanding
common shares of Arizona Mining Inc. (“Arizona Mining”), which resulted in a disposition of the Company’s investment
in Arizona Mining for total proceeds of $48 million (Cdn$62 million), and a realized gain of $34 million.
During the year ended December 31, 2019, the Company disposed of 675,000 shares of First Majestic reducing its
ownership position to under 10% of the issued and outstanding common shares. The Company received total
proceeds of $5 million and realized a gain on disposal of $0.5 million.
During the year ended December 31, 2019 the Company disposed of several investments which had been classified
as “Other” long-term equity investments as they were no longer considered to have strategic value. The Company
received total proceeds of $13 million and realized a loss on disposal of $8 million.
Investment in Associate
Kutcho Copper Corp.
On June 6, 2019, the Company acquired 1 million common shares and warrants to acquire an additional 1 million
common shares of Kutcho Copper Corp. (“Kutcho”) for Cdn$0.2 million, resulting in the Company owning 7,153,846
common shares and warrants to acquire an additional 4,076,923 common shares of Kutcho. Additionally, the Company
holds a Cdn$20 million subordinated secured convertible term debt loan agreement bearing interest at 10% per annum
with Kutcho (the “Kutcho Convertible Note”).
As at December 31, 2019, Kutcho had 68,247,628 shares issued and outstanding, resulting in Wheaton owning
approximately 10% of Kutcho on a non-diluted basis. However, as the convertible instruments described above are
currently exercisable, on a fully diluted basis, Wheaton has the potential to own approximately 29% of Kutcho (37% on a
non-fully diluted basis). As a result of the potential ownership position, the Company has concluded that it has significant
influence over Kutcho and as such, the investment in Kutcho is considered an Investment in Associate which is
accounted for using the equity method. The Company records its share of Kutcho's profit or loss based on Wheaton’s
ownership interest in Kutcho on a non-diluted basis.
Indicator of Impairment
Since the original investment in Kutcho on December 14, 2017, the value of Kutcho’s shares have had a significant
decline in value. This decline in value was determined to be an indicator of impairment relative to the Company’s
investment in Kutcho.
During the year, the Company recorded an impairment charge of $1.6 million to its recoverable amount of $1 million.
The recoverable amount, which represents Kutcho’s fair value less cost of disposal (“FVLCD”), was calculated as the
quoted market price of the common share multiplied by the quantity of shares held by the Company, and as such is
classified within Level 1 of the fair value hierarchy.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [11]
A continuity schedule of the Kutcho Investment in Associate from January 1, 2018 to December 31, 2019 is presented
below:
(in thousands)
At January 1, 2018
Share of losses
At December 31, 2018
Amount invested
Share of losses
Impairment
At December 31, 2019
Investment in
Associate
$ 2,994
(432)
$ 2,562
133
(164)
(1,649)
$ 882
Convertible Notes Receivable
Kutcho Copper Corp.
Effective December 14, 2017, in connection with the Kutcho Early Deposit Agreement, the Company advanced to Kutcho
$16 million (Cdn$20 million) and received the Kutcho Convertible Note. The Kutcho Convertible Note, which has a seven
year term to maturity, carries interest at 10% per annum, compounded and payable semi-annually. Kutcho elected to
defer the first three interest payments until December 31, 2019 and, as per an amendment entered into on November 27,
2019, can defer this interest in addition to the fourth interest payment for an additional period not to exceed 4 years. The
deferred interest carries interest at 15% per annum, compounded semi-annually. As part of the November 27, 2019
amendment, Wheaton forfeited its option to convert the outstanding deferred interest into common shares of Kutcho.
At any time prior to the maturity date, the Company has the right to convert all or any part of the outstanding amount of
the Kutcho Convertible Note, excluding outstanding deferred interest, into common shares of Kutcho at Cdn$0.8125 per
share. Kutcho has the right to repay the Kutcho Convertible Note early, subject to the applicable pre-payment cash
penalties as follows:
•
•
•
25% of the outstanding amount if pre-paid on or after 24 months until 36 months;
20% of the outstanding amount if pre-paid on or after 36 months until 60 months; and
15% of the outstanding amount if pre-paid on or after 60 months until maturity.
Gold X Mining Corp.
Effective December 24, 2019, in connection with the Toroparu Early Deposit Agreement, the Company advanced $10
million to Gold X as part of a $20 million 10% secured convertible debenture private placement offering completed by
Gold X (the “Gold X Convertible Note”). The Gold X Convertible Note, which has a three-year term to maturity, carries
interest at 10% per annum, compounded semi-annually and payable annually. Gold X has the option to defer the interest
payments until December 4, 2022, being the maturity date. Wheaton can, at its option, convert the deferred interest into
common shares of Gold X.
At any time prior to the maturity date, the Company has the right to convert all or any part of the outstanding amount of
the Gold X Convertible Note, converted into Canadian dollars using the exchange rate published by the Bank of Canada
on the business day prior to the conversion, into common shares of Gold X at Cdn$3.20 per share.
Funds raised under the Gold X 10% secured convertible debenture private placement are intended to be used to exercise
Gold X’s option to acquire a 100% interest in certain of Gold X’s joint venture Toroparu project properties.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [12]
Convertible Notes Receivable Valuation Summary
The Kutcho Convertible Note and the Gold X Convertible Note are revalued quarterly by discounting the stream of
future interest and principal payments at the rate of interest prevailing at the balance sheet date for instruments of
similar term and risk, and adding this value to the value of the convertibility feature which is estimated using a Black-
Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and
expected remaining life of the respective notes.
A summary of the fair value of these convertible instruments and the fair value changes recognized as a component of
the Company’s net earnings during the three months and years ended December 31, 2019 and 2018 is presented
below:
(in thousands)
Kutcho Convertible Note
Gold X Convertible Note
Total convertible notes
(in thousands)
Kutcho Convertible Note
Fair Value Adjustment Gain (Loss)
Included in Net Earnings
Three Months
Ended
Dec 31, 2019
$ (385)
19
$ (366)
Year
Ended
Dec 31, 2019
$ (1,062)
19
$ (1,043)
Fair Value at
Dec 31, 2019
$ 11,837
10,019
$ 21,856
Fair Value Adjustment Gain (Loss)
Included in Net Earnings
Three Months
Ended
Dec 31, 2018
$ (661)
Year
Ended
Dec 31, 2018
$ (2,878)
Fair Value at
Dec 31, 2018
$ 12,899
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [13]
Summarized Financial Results
Attributable precious metal production
Gold
Silver (000’s)
Palladium
GEOs 1
SEOs (000’s) 1
Precious metal sales
Gold
Silver (000’s)
Palladium
GEOs 1
SEOs (000’s) 1
Average realized price ($'s per ounce)
Gold
Silver
Palladium
Average cash cost ($'s per ounce) 2
Gold
Silver
Palladium
Average depletion ($'s per ounce) 2
Gold
Silver
Palladium
Total revenue ($000's)
Net earnings ($000's)
Earnings per share
Basic
Diluted
Adjusted net earnings 3 ($000's)
Adjusted earnings per share 3
Basic
Diluted
Cash flow from operations ($000's)
Dividends
Dividends paid ($000's)
Dividends paid per share
Total assets ($000's)
Total non-current financial liabilities ($000’s)
Total other liabilities ($000’s)
Shareholders' equity ($000's)
Shares outstanding
Dec 31, 2019
Dec 31, 2018
Dec 31, 2017
406,675
22,562
21,993
707,195
57,460
389,086
17,703
20,681
628,447
51,061
383,974
24,474
14,686
700,446
56,911
349,168
21,733
8,717
625,701
50,838
366,470
28,290
-
714,654
58,066
337,205
24,644
-
640,524
52,043
1,391 $
16.29 $
1,542 $
421 $
5.02 $
273 $
408 $
4.99 $
470 $
1,264 $
15.81 $
1,060
409 $
4.67 $
190
419 $
4.69 $
463
1,257
17.01
n.a.
395
4.49
n.a.
417
4.94
n.a.
861,332 $
794,012 $
843,215
86,138 $
427,115 $
57,703
0.19 $
0.19 $
0.96 $
0.96 $
0.13
0.13
251,993 $
213,782 $
128,703
0.56 $
0.56 $
0.48 $
0.48 $
0.63
0.63
501,620 $
477,413 $
538,809
160,656 $
0.36 $
159,619 $
0.36 $
145,848
0.33
6,278,007 $
6,470,046 $
5,683,313
882,901 $
1,269,178 $
69,186 $
28,952 $
771,430
12,219
5,325,920 $
5,171,916 $
4,899,664
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
447,771,433
444,336,361
442,724,309
1) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
2) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
3) Refer to discussion on non-IFRS measure (i) on page 46 of this MD&A.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [14]
Summary of Ounces Produced
Gold ounces produced ²
Salobo
Sudbury 3
Constancia
San Dimas 4
Stillwater 5
Other
Minto 6
777
Total Other
Q4 2019
Q3 2019
Q2 2019
Q1 2019
Q4 2018
Q3 2018
Q2 2018
Q1 2018
74,716
6,639
4,757
11,352
3,585
67,056 60,846
73,615
9,360 11,374
6,082
5,172
4,533 4,826
11,239 11,496 10,290
3,675 3,137
3,238
76,995
6,646
4,266
10,092
3,472
67,466
64,896
72,423
6,476 3,511
6,510
3,281 3,315
3,634
5,726 -
10,642
6,376 - -
2,189
3,987
- - -
4,788 4,445
4,278
1,441
4,248
2,546
4,124
2,554
4,982
2,707
5,645
6,176
4,278
4,788 4,445
5,689
6,670
7,536
8,352
Total gold ounces produced
107,225
103,624
100,908 94,918
107,160
106,255
90,485
80,074
Silver ounces produced 2
San Dimas 4
Peñasquito
Antamina
Constancia
Other
-
1,895
1,342
632
- - -
702 1,594
1,334 1,176
552 635
2,026
1,223
686
- -
1,050
1,455
1,406
1,225
682
695
607 1,606
1,267 1,450
1,394 1,304
552 598
Los Filos
Zinkgruvan
Yauliyacu
Stratoni
Minto 6
Neves-Corvo
Aljustrel
Lagunas Norte 7
Pierina 7
Veladero 7
777
33
37 38
55
630 631 479
724
358
627 528
620
147 131 172 143
- - -
18
431
385
392 498
322 470
240
325
- - -
-
- - -
-
- - -
-
93 95
62
81
33 29
29 21
453 565
530
608
233
597 719 550
149 165 211 137
25
8
30 35
509
458 421 405
475 514 138 -
- - - 217
- - - 107
- - - 265
113 136 152 146
Total Other
2,093
2,147
2,274 2,251
2,124
2,446
2,157
2,456
Total silver ounces produced
5,962
6,082
4,862 5,656
5,499
5,584
5,977 7,414
Palladium ounces produced ²
Stillwater
6,057
5,471
5,736 4,729
5,869
8,817 - -
GEOs produced 8
SEOs produced 8
Average payable rate 2
Gold
Silver
Palladium
186,892
184,160
166,700 169,443
180,936
184,139
164,043 171,328
15,185
14,963
13,544 13,767
14,701 14,961
13,329 13,920
95.6%
85.4%
99.4%
95.1%
85.1%
83.5%
95.3%
83.4%
87.6%
95.6%
83.0%
98.5%
95.5%
83.1%
96.4%
95.4%
83.5%
94.6%
94.9%
86.8%
n.a.
94.7%
89.7%
n.a.
1) All figures in thousands except gold and palladium ounces produced.
2) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures and average
payable rates are based on information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those
situations where other information is not available. Certain production figures may be updated in future periods as additional information is received.
3) Comprised of the Coleman, Copper Cliff, Garson, Creighton and Totten gold interests.
4) Pursuant to the San Dimas SPA with Primero, the Company acquired 100% of the payable silver produced at San Dimas up to 6 million ounces annually, and 50% of any
excess for the life of the mine. The San Dimas SPA was terminated on May 10, 2018 and concurrently the Company entered into the new San Dimas PMPA.
5) Comprised of the Stillwater and East Boulder gold and palladium interests.
6) The Minto mine was placed into care and maintenance from October 2018 to October 2019.
7) In accordance with the Pascua-Lama PMPA, all deliveries from Lagunas Norte, Pierina and Veladero ceased effective March 31, 2018.
8) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [15]
Summary of Ounces Sold
Gold ounces sold
Salobo
Sudbury 2
Constancia
San Dimas 3
Stillwater 4
Other
Minto 5
777
Total Other
Q4 2019
Q3 2019
Q2 2019
Q1 2019
Q4 2018 Q3 2018
Q2 2018 Q1 2018
63,064 57,715
8,309
7,600
4,409
4,742
84,160
58,137
4,061
7,394
5,108
5,512
11,499 11,374 10,284 11,510
2,856
3,314 3,301
2,925
75,351 65,139
2,560
4,864
3,645
2,980
8,453 9,771
3,473
70,734
54,645
4,400 5,186
2,172
3,247
3,738 -
2,075 - -
- - 765
5,294
4,160
4,672
3,307
3,614
2,674 796
4,353 5,921
2,284 1,763
3,812 5,132
4,160
4,672
6,059
6,921
7,027 6,717
6,096
6,895
Total gold ounces sold
89,223
94,766
90,077
115,020
102,813
89,242
87,140
69,973
Silver ounces sold
San Dimas 3
Peñasquito
Antamina
Constancia
Other
Los Filos
Zinkgruvan
Yauliyacu
Stratoni
Minto 5
Neves-Corvo
Aljustrel
Lagunas Norte 6
Pierina 6
Veladero 6
777
1,070 1,372
- - - - - -
1,547 1,227
1,233 912
1,164 901 1,241
1,268
1,300 1,333
1,255
1,227
1,422 1,413
1,059 1,186
629 567 410 574
735
672 521 478
44 26
26
459 337
473
561
574 542
120 126 240
- - 2
240 234 178 169
154
243 194
226 302 - -
121 139 216
65 236
- - - - - 1
- - - - - -
54 88
- - - - - 2 104 161
70 153
62
35 52
38 15 27
297 391
543 326
232
15 317 697 521 360
80
78 125 171 148
30 22 -
265
381
99 129 163
86 108
28 (1)
Total Other
1,517 1,671 1,665
1,140
1,570 1,877
1,523 1,757
Total silver ounces sold
4,684
4,484 4,241
4,294
4,400 5,018
5,972
6,343
Palladium ounces sold
Stillwater
GEOs sold 7
SEOs sold 7
Cumulative payable gold ounces
PBND 8
Cumulative payable silver ounces
PBND 8
Cumulative payable palladium
ounces PBND 8
5,312
4,907
5,273
5,189
5,049
3,668 - -
152,389
155,049
147,755
173,255 162,205 154,815
160,627
148,055
12,382
12,598 12,005
14,077 13,179 12,579 13,051 12,029
98,626
85,335 81,535
75,236
99,474
99,987
88,547
89,839
4,546
4,138
3,403
3,585
3,184 3,015
3,375 4,126
4,872
4,163
4,504
4,754
5,282 4,671 - -
1) All figures in thousands except gold and palladium ounces sold.
2) Comprised of the Coleman, Copper Cliff, Garson, Creighton and Totten gold interests.
3) Pursuant to the San Dimas SPA with Primero, the Company acquired 100% of the payable silver produced at San Dimas up to 6 million ounces annually, and 50% of any
excess for the life of the mine. The San Dimas SPA was terminated on May 10, 2018 and concurrently the Company entered into the new San Dimas PMPA.
4) Comprised of the Stillwater and East Boulder gold and palladium interests.
5) The Minto mine was placed into care and maintenance from October 2018 to October 2019.
6) In accordance with the Pascua-Lama PMPA, all deliveries from Lagunas Norte, Pierina and Veladero ceased effective March 31, 2018.
7) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
8) Payable gold, silver and palladium ounces PBND are based on management estimates. These figures may be updated in future periods as additional information is received.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [16]
Quarterly Financial Review 1
xxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxxx
Gold ounces sold
Realized price 2
Gold sales
Silver ounces sold
Realized price 2
Silver sales
Palladium ounces sold
Realized price 2
Palladium sales
Total sales
Cash cost 2, 3
Gold
Silver
Palladium
Depletion 2
Gold
Silver
Palladium
Net earnings (loss)
Per share
Basic
Diluted
Adjusted net earnings 4
Per share
Basic
Diluted
Cash flow from operations
Per share 5
Basic
Diluted
Dividends declared
Per share
Total assets
Total liabilities
Q4 2019
Q3 2019
Q2 2019
Q1 2019
Q4 2018
Q3 2018
Q2 2018
Q1 2018
89,223
94,766
90,077
115,020
102,813
89,242
87,140
69,973
1,483 $
1,471 $
1,320 $
1,308 $
1,229 $
1,210 $
1,305 $
1,330
132,342 $
139,433 $
118,870 $
150,399 $
126,343 $
108,012 $
113,753 $
93,086
4,684
4,484
4,241
4,294
4,400
5,018
5,972
17.36 $
17.09 $
14.93 $
15.64 $
14.66 $
14.80 $
16.52 $
6,343
16.73
81,296 $
76,631 $
63,313 $
67,162 $
64,510 $
74,255 $
98,647 $
106,166
5,312
4,907
5,273
5,189
5,049
3,668
1,804 $
1,535 $
1,381 $
1,443 $
1,137 $
955 $
-
n.a $
9,584 $
7,531 $
7,283 $
7,488 $
5,738 $
3,502 $
- $
-
n.a
-
223,222 $
223,595 $
189,466 $
225,049 $
196,591 $
185,769 $
212,400 $
199,252
426 $
424 $
420 $
5.13 $
5.16 $
5.14 $
321 $
271 $
247 $
417 $
417 $
420 $
5.12 $
4.81 $
4.97 $
470 $
470 $
470 $
417 $
4.64 $
254 $
385 $
5.05 $
470 $
409 $
4.66 $
205 $
421 $
5.06 $
463 $
418 $
5.04 $
169 $
426 $
4.97 $
462 $
407 $
4.54 $
n.a $
411 $
4.47 $
n.a $
399
4.49
n.a
418
4.42
n.a
77,524 $
75,960 $
(124,694) $
57,349 $
6,828 $
34,021 $
318,142 $
68,123
0.17 $
0.17 $
0.17 $
(0.28) $
0.17 $
(0.28) $
0.13 $
0.13 $
0.02 $
0.02 $
0.08 $
0.08 $
0.72 $
0.72 $
0.15
0.15
77,953 $
72,692 $
44,808 $
56,540 $
36,745 $
35,132 $
72,340 $
69,563
0.17 $
0.17 $
0.16 $
0.16 $
0.10 $
0.10 $
0.13 $
0.13 $
0.08 $
0.08 $
0.08 $
0.08 $
0.16 $
0.16 $
0.16
0.16
131,867 $
142,300 $
109,258 $
118,194 $
108,461 $
108,413 $
135,200 $
125,340
0.29 $
0.29 $
0.32 $
0.32 $
0.25 $
0.24 $
0.27 $
0.27 $
0.24 $
0.24 $
0.24 $
0.24 $
0.31 $
0.30 $
0.28
0.28
40,252 $
40,197 $
40,133 $
40,074 $
39,959 $
39,921 $
39,888 $
39,851
0.09 $
0.09 $
0.09 $
0.09 $
0.09 $
0.09 $
0.09 $
0.09
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$ 6,278,007 $ 6,258,859 $ 6,240,823 $ 6,478,700 $ 6,470,046 $ 6,586,018 $ 6,216,112 $ 5,637,727
$
952,087 $ 1,057,415 $ 1,128,877 $ 1,252,752 $ 1,298,130 $ 1,398,830 $
981,497 $
712,188
Total shareholders' equity
$ 5,325,920 $ 5,201,444 $ 5,111,946 $ 5,225,948 $ 5,171,916 $ 5,187,188 $ 5,234,615 $ 4,925,539
1) All figures in thousands except gold and palladium ounces produced and sold, per ounce amounts and per share amounts.
2) Expressed as US$ per ounce.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Refer to discussion on non-IFRS measure (i) on page 46 of this MD&A.
5) Refer to discussion on non-IFRS measure (ii) on page 47 of this MD&A.
Changes in sales, net earnings and cash flow from operations from quarter to quarter are affected primarily by
fluctuations in production at the mines, the timing of shipments, changes in the price of commodities, the
commencement of operations of mines under construction, as well as acquisitions of PMPAs and any related capital
raising activities.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [17]
Results of Operations and Operational Review
The operating results of the Company’s reportable operating segments are summarized in the tables and commentary
below.
Ounces
Produced²
Ounces
Sold
Average
Realized
Price
($'s Per
Ounce)
Average
Cash Cost
($'s Per
Ounce)3
Average
Depletion
($'s Per
Ounce)
Sales
Net
Earnings
Cash Flow
From
Operations
Total
Assets
Three Months Ended December 31, 2019
74,716
58,137 $
1,484 $
404 $
383 $
86,252 $
40,488 $
55,963 $ 2,605,257
6,639
7,394
4,757
5,108
11,352
11,499
3,585
6,176
2,925
4,160
1,481
1,484
1,484
1,484
1,481
400
404
606
268
420
819
361
310
519
462
10,952
7,578
17,059
4,339
6,162
1,936
3,670
6,531
2,038
2,492
8,342
5,345
7,962
3,556
4,413
344,043
110,406
194,367
229,994
13,168
107,225
89,223 $
1,483 $
426 $
417 $ 132,342 $
57,155 $
85,581 $ 3,497,235
1,895
1,342
1,227
632
672
2,093
1,517
1,268 $
17.33 $
4.21 $
3.06 $
21,974 $
12,752 $
16,636 $
374,702
17.33
17.33
17.41
3.46
5.96
6.90
8.73
7.50
2.86
21,262
11,641
26,419
6,308
2,598
11,619
16,730
6,348
13,578
668,810
228,187
487,693
5,962
4,684 $
17.36 $
5.13 $
5.12 $
81,296 $
33,277 $
53,292 $ 1,759,392
6,057
5,312 $
1,804 $
321 $
470 $
9,584 $
5,381 $
7,877 $
249,969
Gold
Salobo
Sudbury 4
Constancia
San Dimas
Stillwater
Other 5
Silver
Peñasquito
Antamina
Constancia
Other 6
Palladium
Stillwater
Cobalt
Voisey's Bay
-
- $
n.a. $
n.a. $
n.a. $
- $
- $
- $
227,510
Operating results
Other
General and administrative
Finance costs
Other
Income tax
Total other
$ 223,222 $
95,813 $ 146,750 $ 5,734,106
$
(11,695) $
(5,709)
(9,607)
(435)
3,448
(9,537)
409
(46)
$
(18,289) $
(14,883) $
543,901
$
77,524 $ 131,867 $ 6,278,007
1) All figures in thousands except gold and palladium ounces produced and sold and per ounce amounts.
2) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests.
5) Comprised of the operating 777 and Minto gold interests in addition to the non-operating Rosemont gold interest. The Minto mine was placed into care and maintenance from
October 2018 to October 2019.
6) Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto and 777 silver interests as well as the non-operating Keno Hill, Loma de
La Plata, Pascua-Lama and Rosemont silver interests. The Minto mine was placed into care and maintenance from October 2018 to October 2019.
On a GEO and SEO basis, results for the Company for the three months ended December 31, 2019 were as follows:
Gold equivalent basis 5
Silver equivalent basis 5
Ounces
Produced 1, 2
186,892
15,185
Ounces
Sold 2
152,389
12,382
Three Months Ended December 31, 2019
Average
Realized
Price
($'s Per
Ounce)
Average
Cash Cost
($'s Per
Ounce) 3
Cash
Operating
Margin
($'s Per
Ounce) 4
Average
Depletion
($'s Per
Ounce)
Gross
Margin
($'s Per
Ounce)
$ 1,465
$ 18.03
$ 418
$ 5.15
$ 1,047
$ 12.88
$ 418
$ 5.14
$ 629
$ 7.74
1) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
2) Silver ounces produced and sold in thousands.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Refer to discussion on non-IFRS measure (iv) on page 48 of this MD&A.
5) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [18]
Ounces
Produced²
Ounces
Sold
Average
Realized
Price
($'s Per
Ounce)
Average
Cash Cost
($'s Per
Ounce)3
Average
Depletion
($'s Per
Ounce)
Sales
Net
Earnings
Cash Flow
From
Operations
Total
Assets
Three Months Ended December 31, 2018
76,995
75,351 $
1,228 $
400 $
386 $
92,496 $
33,258 $
62,356 $ 2,706,060
6,646
4,266
10,092
3,472
5,689
4,864
3,645
8,453
3,473
7,027
1,231
1,225
1,241
1,232
1,228
400
400
600
220
381
795
374
558
528
337
5,988
4,467
10,486
4,278
8,628
175
1,645
694
1,680
3,585
4,043
3,008
5,414
3,513
5,771
366,463
117,547
208,195
236,432
21,359
107,160 102,813 $
1,229 $
409 $
421 $ 126,343 $
41,037 $
84,105 $ 3,656,056
1,455
1,225
695
1,300
629
2,124
1,570
901 $
14.66 $
4.17 $
2.96 $
13,211 $
6,791 $
9,454 $
388,722
14.57
14.49
14.81
2.92
5.90
5.89
8.70
7.14
2.41
18,945
9,116
23,238
3,832
913
10,214
14,898
5,405
13,415
710,077
246,231
502,638
5,499
4,400 $
14.66 $
4.66 $
5.06 $
64,510 $
21,750 $
43,172 $ 1,847,668
5,869
5,049 $
1,137 $
205 $
463 $
5,738 $
2,363 $
4,703 $
259,693
Gold
Salobo
Sudbury 4
Constancia
San Dimas
Stillwater
Other 5
Silver
Peñasquito
Antamina
Constancia
Other 6
Palladium
Stillwater
Cobalt
Voisey's Bay
-
- $
n.a. $
n.a. $
n.a. $
- $
- $
- $
393,422
Operating results
Other
General and administrative
Finance costs
Other
Income tax
Total other
$ 196,591 $
65,150 $ 131,980 $ 6,156,839
$
(21,143) $
(6,168)
(13,836)
(4,670)
(18,673)
(17,445)
210
(116)
$
(58,322) $
(23,519) $
313,207
$
6,828 $ 108,461 $ 6,470,046
1) All figures in thousands except gold and palladium ounces produced and sold and per ounce amounts.
2) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests.
5) Comprised of the operating Minto and 777 gold interests in addition to the non-operating Rosemont gold interest. The Minto mine was placed into care and maintenance from
October 2018 to October 2019.
6) Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Minto, Neves-Corvo and 777 silver interests as well as the non-operating Keno Hill, Aljustrel, Loma de
La Plata, Pascua-Lama and Rosemont silver interests. The Minto mine was placed into care and maintenance from October 2018 to October 2019.
On a GEO and SEO basis, results for the Company for the three months ended December 31, 2018 were as follows:
Gold equivalent basis 5
Silver equivalent basis 5
Ounces
Produced 1, 2
180,936
14,701
Ounces
Sold 2
162,205
13,179
Three Months Ended December 31, 2018
Average
Realized
Price
($'s Per
Ounce)
$ 1,212
$ 14.92
Average
Cash Cost
($'s Per
Ounce) 3
$ 392
$ 4.83
Cash
Operating
Margin
($'s Per
Ounce) 4
$ 820
$ 10.09
Average
Depletion
($'s Per
Ounce)
$ 418
$ 5.15
Gross
Margin
($'s Per
Ounce)
$ 402
$ 4.94
1) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
2) Silver ounces produced and sold in thousands.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Refer to discussion on non-IFRS measure (iv) on page 48 of this MD&A.
5) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [19]
Gold Production
For the three months ended December 31, 2019, attributable gold production was 107,200 ounces, virtually
unchanged relative to the comparable period in 2018, with the mine specific changes period over period being as
follows:
•
•
•
•
1,300 ounce (12%) increase related to the gold stream relative to the San Dimas mine, primarily due to higher
throughput and grades;
500 ounce (12%) increase related to the gold stream relative to the Constancia mine reflecting the additional
2,005 ounces of gold received by the Company as compensation for the mining of the Pampacancha deposit
having been delayed beyond 2018, partially offset by lower grades; and
500 ounce (9%) increase related to gold production from the Other mines which was primarily due to the
resumption of production at the Minto mine during October 2019; partially offset by
2,300 ounce (3%) decrease related to the gold stream relative to the Salobo mine.
Silver Production
For the three months ended December 31, 2019, attributable silver production was 6.0 million ounces relative to 5.5
million ounces for the comparable period in 2018, with the 0.5 million ounce increase being primarily due to the
following:
•
440,000 ounce (30%) increase related to the silver stream relative to the Peñasquito mine, primarily the result
of a significant increase in grades, partially offset by lower tonnage, with current period throughput being
negatively impacted by an illegal blockade which began September 15, 2019 and ended October 22, 2019
(see page 8 of this MD&A for more information).
Palladium Production
For the three months ended December 31, 2019, attributable palladium production was 6,100 ounces relative to 5,900
ounces for the comparable period in 2018, with the 200 ounce (3%) increase being attributable to higher throughput.
Net Earnings
For the three months ended December 31, 2019, net earnings was $78 million relative to $7 million for the comparable
period in 2018, with the $71 million increase being primarily attributable to the following factors:
Net earnings for the three months ended December 31, 2018
Variance in gross margin
Variance in revenue due to:
Payable gold production
Payable silver production
Payable palladium production
Changes in PBND
Prices realized per ounce sold
Total increase to revenue
Variance in cost of sales due to:
Sales volume
Sales mix differences
Cash cost per ounce
Depletion per ounce
Total decrease to cost of sales
Total increase to gross margin
Other variances
General and administrative expenses (see page 26)
Other income / expense (see page 26)
Finance costs (see page 27)
Income taxes (see page 27)
Total increase in net earnings
Net earnings for the three months ended December 31, 2019
$
$
$
$
$
$
$
$
6,828
265
7,675
410
(20,581)
38,862
26,631
8,335
(4,827)
(2,475)
2,999
4,032
30,663
9,448
4,235
4,229
22,121
70,696
77,524
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [20]
Average
Realized
Price
($'s Per
Ounce)
Average
Cash
Cost
($'s Per
Ounce)3
Average
Depletion
($'s Per
Ounce)
Ounces
Produced²
Ounces
Sold
Sales
Gross
Margin
Impairment
Charges 4
Net
Earnings
Cash Flow
From
Operations
Total
Assets
Year Ended December 31, 2019
276,233 263,076 $ 1,389 $
404 $
383 $ 365,448 $ 158,363 $
- $ 158,363 $ 259,166 $ 2,605,257
19,288 19,771
33,455 27,364
1,397
1,397
1,400
1,396
19,687 21,812 1,372
13,635 12,396
44,377 44,667
400
402
604
250
401
819
361
310
519
376
38,234
27,613
62,528
17,303
29,919 12,992
4,868
12,527
21,706
7,776
-
-
-
-
-
4,868
12,527
21,706
7,776
12,992
27,385
19,668
35,534
14,209
21,561
344,043
110,406
194,367
229,994
13,168
406,675 389,086 $ 1,391 $
421 $
408 $ 541,045 $ 218,232 $
- $ 218,232 $ 377,523 $ 3,497,235
6,217 4,577 $ 16.30 $
4.21 $
3.06 $ 74,578 $ 41,291 $
5,075 4,727
2,505 2,406
8,765 5,993
16.15
16.17
16.45
3.24
5.93
6.68
8.73
7.50
2.50
76,328
38,895
98,600
19,739
6,593
43,581
22,562 17,703 $ 16.29 $
5.02 $
4.99 $ 288,401 $ 111,204 $
-
-
- $
19,739
41,291 $ 55,310 $ 374,702
668,810
228,187
487,693
- $ 111,204 $ 196,463 $ 1,759,392
61,007
24,637
55,509
43,581
6,593
-
Gold
Salobo
Sudbury 5
Constancia
San Dimas
Stillwater
Other 6
Silver
Peñasquito
Antamina
Constancia
Other 7
Palladium
Stillwater
21,993 20,681 $ 1,542 $
273 $
470 $ 31,886 $ 16,511 $
- $
16,511 $ 26,230 $ 249,969
Cobalt
Voisey's Bay
-
- $
n.a. $
n.a. $
n.a. $
- $
- $ (165,912) $ (165,912) $
- $ 227,510
Operating results
Other
General and administrative
Finance costs
Other
Income tax
Total other
$ 861,332 $ 345,947 $ (165,912) $ 180,035 $ 600,216 $ 5,734,106
$
(54,507) $ (46,292)
(44,733)
(2,191)
(48,730)
274
9,066
(5,380)
$
(93,897) $ (98,596) $ 543,901
$
86,138 $ 501,620 $ 6,278,007
1) All figures in thousands except gold and palladium ounces produced and sold and per ounce amounts.
2) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Please refer to page 25 of this MD&A for more information.
5) Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests.
6) Comprised of the operating 777 and Minto gold interests in addition to the non-operating Rosemont gold interest. The Minto mine was placed into care and maintenance from
October 2018 to October 2019.
7) Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto and 777 silver interests as well as the non-operating Keno Hill, Loma de
La Plata, Pascua-Lama and Rosemont silver interests. The Minto mine was placed into care and maintenance from October 2018 to October 2019.
On a GEO and SEO basis, results for the Company for the year ended December 31, 2019 were as follows:
Gold equivalent basis 5
Silver equivalent basis 5
Ounces
Produced 1, 2
707,195
57,460
Ounces
Sold 2
628,447
51,061
Year Ended December 31, 2019
Average
Realized
Price
($'s Per
Ounce)
Average
Cash Cost
($'s Per
Ounce) 3
Cash
Operating
Margin
($'s Per
Ounce) 4
Average
Depletion
($'s Per
Ounce)
Gross
Margin
($'s Per
Ounce)
$ 1,371
$ 16.87
$ 411
$ 5.06
$ 960
$ 11.81
$ 409
$ 5.03
$ 551
$ 6.78
1) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
2) Silver ounces produced and sold in thousands.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Refer to discussion on non-IFRS measure (iv) on page 48 of this MD&A.
5) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [21]
Ounces
Produced²
Ounces
Sold
Average
Realized
Price
($'s Per
Ounce)
Average
Cash Cost
($'s Per
Ounce)3
Average
Depletion
($'s Per
Ounce)
Sales
Net
Earnings
Cash Flow
From
Operations
Total
Assets
Year Ended December 31, 2018
281,780 265,869 $
23,143
14,496
26,460
9,848
28,247
17,010
12,044
21,962
5,548
26,735
1,266 $
1,281
1,267
1,227
1,222
1,270
400 $
400
400
600
219
388
386 $ 336,474 $
795
374
557
527
391
21,785
15,259
26,943
6,777
33,955
127,455 $
1,456
5,937
1,532
2,637
13,129
230,126 $ 2,706,060
366,463
117,547
208,195
236,432
21,359
14,959
10,441
13,766
5,562
22,162
383,974 349,168 $
1,264 $
409 $
419 $ 441,193 $
152,146 $
297,016 $ 3,656,056
2,213
5,222
5,329
2,527
9,183
2,442 $
4,916
5,468
2,180
6,727
16.62 $
15.80
15.80
15.63
15.58
4.32 $
4.17
3.16
5.90
5.98
1.46 $
2.96
8.70
7.14
3.08
40,594 $
77,691
86,408
34,082
104,804
26,470 $
42,662
21,582
5,647
43,873
30,045 $
57,190
69,143
21,219
64,645
-
388,722
710,077
246,231
502,638
24,474
21,733 $
15.81 $
4.67 $
4.69 $ 343,579 $
140,234 $
242,242 $ 1,847,668
14,686
8,717 $
1,060 $
190
463 $
9,240 $
3,551 $
7,584 $
259,693
Gold
Salobo
Sudbury 4
Constancia
San Dimas
Stillwater
Other 5
Silver
San Dimas 6
Peñasquito
Antamina
Constancia
Other 7
Palladium
Stillwater
Cobalt
Voisey's Bay
-
- $
n.a. $
n.a. $
n.a. $
- $
- $
- $
393,422
Operating results
Other
General and administrative
Finance costs
Gain on disposal of San Dimas SPA
Other
Income tax
Total other
$ 794,012 $
295,931 $
546,842 $ 6,156,839
$
(51,650) $
(29,564)
(41,187)
245,715
(5,826)
(15,868)
(40,363)
-
1,458
(960)
$
131,184 $
(69,429) $
313,207
$
427,115 $
477,413 $ 6,470,046
1) All figures in thousands except gold and palladium ounces produced and sold and per ounce amounts.
2) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests in addition to the non-operating Stobie and Victor gold interests.
5) Comprised of the operating Minto and 777 gold interests in addition to the non-operating Rosemont gold interest. The Minto mine was placed into care and maintenance from
October 2018 to October 2019.
6) Pursuant to the San Dimas SPA, the Company acquired 100% of the payable silver produced at San Dimas up to 6 million ounces annually, and 50% of any excess for the life
of the mine. On May 10, 2018, the Company terminated the San Dimas SPA and concurrently entered into the new San Dimas PMPA.
7) Comprised of the operating Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Minto, Neves-Corvo, Lagunas Norte, Pierina, Veladero and 777 silver interests as well as the non-
operating Keno Hill, Aljustrel, Navidad, Pascua-Lama and Rosemont silver interests. In accordance with the Pascua-Lama PMPA, all deliveries from Lagunas Norte, Pierina
and Veladero ceased effective March 31, 2018. Additionally, the Minto mine was placed into care and maintenance from October 2018 to October 2019.
On a GEO and SEO basis, results for the Company for the year ended December 31, 2018 were as follows:
Gold equivalent basis 5
Silver equivalent basis 5
Ounces
Produced 1, 2
700,446
56,911
Ounces
Sold 2
625,701
50,838
Year Ended December 31, 2018
Average
Realized
Price
($'s Per
Ounce)
Average
Cash Cost
($'s Per
Ounce) 3
Cash
Operating
Margin
($'s Per
Ounce) 4
Average
Depletion
($'s Per
Ounce)
Gross
Margin
($'s Per
Ounce)
$ 1,269
$ 15.62
$ 393
$ 4.83
$ 876
$ 10.79
$ 403
$ 4.96
$ 473
$ 5.83
1) Ounces produced represent the quantity of gold, silver and palladium contained in concentrate or doré prior to smelting or refining deductions. Production figures are based on
information provided by the operators of the mining operations to which the mineral stream interests relate or management estimates in those situations where other
information is not available. Certain production figures may be updated in future periods as additional information is received.
2) Silver ounces produced and sold in thousands.
3) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
4) Refer to discussion on non-IFRS measure (iv) on page 48 of this MD&A.
5) GEOs and SEOs, which are provided to assist the reader, are based on the following commodity price assumptions: $1,300 per ounce gold; $16.00 per ounce silver; and
$1,350 per ounce palladium, consistent with those used in estimating the Company's production guidance for 2019. Previously, GEOs and SEOs were calculated by
referencing the average LBMA price during the period. This revised methodology of calculating GEOs and SEOs has been applied to all periods presented.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [22]
Gold Production
For the year ended December 31, 2019, attributable gold production was 406,700 ounces, relative to 384,000 ounces
for the comparable period in 2018, with the 22,700 ounce increase being primarily attributable to the following factors:
•
•
•
•
•
•
17,900 ounce (68%) increase related to the gold stream relative to the San Dimas mine, primarily due to the
commencement of the gold stream on May 10, 2018;
10,300 ounce (45%) increase related to the gold stream relative to the Sudbury mines, with production during
the first half of 2018 being adversely impacted by the temporary shutdown of the Coleman mine;
4,800 ounce (33%) increase related to the gold stream relative to the Constancia mine, primarily due to the
additional 8,020 ounces of gold received by the Company as compensation for the mining of the
Pampacancha deposit having been delayed beyond 2018, partially offset by lower grades; and
3,800 ounce (38%) increase related to the gold stream relative to the Stillwater mines, primarily due to the
acquisition of the Stillwater PMPA effective July 1, 2018; partially offset by
8,600 ounce (30%) decrease related to gold production at the Other mines, primarily due to the Minto mine
being placed into care and maintenance from October 2018 until October 2019; and
5,500 ounce (2%) decrease related to the gold stream relative to the Salobo mine, primarily due to lower
throughput, partially offset by higher grades.
Silver Production
For the year ended December 31, 2019, attributable silver production was 22.6 million ounces, relative to 24.5 million
ounces for the comparable period in 2018, with the 1.9 million ounce decrease being primarily attributable to the
following factors:
•
•
•
•
2,214,000 ounce (100%) decrease related to the termination of the previously owned San Dimas SPA
effective May 10, 2018;
418,000 ounce (5%) decrease related to silver production from the Other mines, due primarily to the
cessation of all deliveries effective March 31, 2018 from the Lagunas Norte, Veladero, and Pierina mines in
accordance with the Pascua-Lama PMPA, partially offset by increased production at the Aljustrel mine which
resumed attributable production during Q2 2018; and
255,000 ounce (5%) decrease related to the silver stream relative to the Antamina mine, which was primarily
due to lower grades; partially offset by
996,000 ounce (19%) increase related to the silver stream relative to the Peñasquito mine, primarily due to
higher grades, partially offset by lower throughput with current period throughput being negatively impacted
by illegal blockades which ran from April 29, 2019 to June 17, 2019 and from September 15, 2019 to October
22, 2019 (see page 8 of this MD&A for more information).
Palladium Production
For the year ended December 31, 2019, attributable palladium production was 22,000 ounces, relative to 14,700
ounces for the comparable period in 2018, with the 7,300 ounce (50%) increase being attributable to the acquisition of
the Stillwater PMPA effective July 1, 2018.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [23]
Net Earnings
For the year ended December 31, 2019, net earnings was $86 million relative to $427 million for the comparable
period in 2018, with the $341 million decrease being primarily attributable to the following factors:
Net earnings for the year ended December 31, 2018
Variance in gross margin
Variance in revenue due to:
Payable gold production
Payable silver production
Payable palladium production
Changes in PBND
Prices realized per ounce sold
Total increase to revenue
Variance in cost of sales due to:
Sales volume
Sales mix differences
Cash cost per ounce
Depletion per ounce
Total increase to cost of sales
Total increase to gross margin
Other variances
General and administrative expenses (see page 26)
Impairment charge - Voisey's Bay cobalt stream - current period
Gain on disposal - San Dimas silver stream - prior period
Other income / expense (see page 26)
Finance costs (see page 27)
Income taxes (see page 27)
Total decrease in net earnings
Net earnings for the year ended December 31, 2019
$
427,115
$
$
$
$
$
$
$
28,746
(32,465)
6,647
(3,514)
67,906
67,320
(3,150)
(20,100)
(7,018)
12,964
(17,304)
50,016
(2,857)
(165,912)
(245,715)
6,100
(7,543)
24,934
(340,977)
86,138
Impairment of Mineral Stream Interests
Management considers each PMPA to be a separate cash generating unit (“CGU”), which is the lowest level for which
cash inflows are largely independent of those of other assets. At the end of each reporting period, the Company assesses
each PMPA to determine whether any indication of impairment or impairment reversal exists. If such an indication exists,
the recoverable amount of the PMPA is estimated in order to determine the extent of the impairment (if any). The
recoverable amount of each PMPA is the higher of fair value less cost of disposal (“FVLCD”) and value in use (“VIU”). In
determining the recoverable amounts of each of the Company’s CGU’s, the Company uses the FVLCD as this will
generally be greater than or equal to the VIU.
To determine the FVLCD that could be received from each PMPA in an arm’s length transaction at the measurement
date, the Company estimates a range of potential values using the net asset value (“NAV”) methodology and the net
present value (“NPV”) methodology (as described below), and then selects a value within this range which is the most
representative of the estimated recoverable amount of the stream.
NAV is estimated by using an appropriate discount rate to calculate the present value of the expected future cash flows
associated with each mineral category. The values are adjusted for each mineral category dependent on the likelihood of
conversion from resources to reserves. A market multiple is applied to the NAV computed in order to assess the
estimated fair value. Precious metal companies typically trade at a market capitalization that is based on a multiple of
their underlying NAV, with this market multiple being generally understood to take account of a variety of additional value
and risk factors such as the ability to find and produce more metal than what is currently included in the life of mine plan,
the benefit of precious metal price optionality, the potential remaining mine life and adjustments for relative mine and
country risk. Consequently, a market participant would generally apply a NAV multiple when estimating the fair value of a
precious metal interest.
NPV is estimated by using a nominal discount rate to calculate the present value of expected future cash flows.
The expected future cash flows are management’s best estimates of expected future revenues and costs. Under each
valuation methodology, expected future revenues reflect an estimate of future payable production for each mine at which
the Company has a PMPA based on detailed life of mine plans received from each of the mine operators. Expected
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [24]
future revenues also reflect management’s estimated long-term metal prices. Estimated future cash costs are generally
fixed based on the terms of each PMPA, as disclosed in the Contractual Obligations and Contingencies section of this
MD&A.
If the carrying amount of the PMPA exceeds its recoverable amount, the PMPA is considered impaired and an
impairment charge is reflected as a component of net earnings so as to reduce the carrying amount to its recoverable
value. A previously recognized impairment charge is reversed only if there has been an indicator of a potential impairment
reversal and the resulting assessment of the PMPA’s recoverable amount exceeds its carrying value. If this is the case,
the carrying amount of the PMPA is increased to its recoverable amount. The increased amount cannot exceed the
carrying amount that would have been determined, net of depletion, had no impairment charge been recognized for the
PMPA in prior years. Such reversal is reflected as a component of net earnings.
Based on the Company’s analysis, the following PMPA was determined to be impaired:
(in thousands)
Cobalt interests
Voisey's Bay
Total impairment charges
Three Months Ended
December 31
Years Ended
December 31
2019
2018
2019
2018
$
$
- $
- $
- $
165,912 $
- $
165,912 $
-
-
Voisey’s Bay - Indicator of Impairment
On June 11, 2018, the Company entered into an agreement (the “Voisey’s Bay PMPA”) to acquire from Vale an
amount of cobalt equal to 42.4% of the cobalt production from its Voisey’s Bay mine, located in Canada, until the
delivery of 31 million pounds of cobalt and 21.2% of cobalt production thereafter for the life of mine for a total upfront
cash payment of $390 million. Concurrently, Vale also entered into a streaming agreement with Cobalt 27 Capital
Corp. (“Cobalt 27”) on the Voisey’s Bay mine with similar terms and conditions to the Voisey’s Bay PMPA.
On June 18, 2019, Cobalt 27 announced that it had entered into an agreement with Pala Investments Limited (“Pala”)
whereby Pala would acquire 100% of Cobalt 27’s issued and outstanding common shares. The estimated implied price
paid by Pala for Cobalt 27’s streaming agreement on the Voisey’s Bay mine was significantly lower than the original
upfront cash payment paid by Cobalt 27 to Vale at the time their agreement was entered into. The implied purchase
price paid by Pala to acquire Cobalt 27’s Voisey’s Bay stream was determined to be an indicator of impairment relative
to the Company’s Voisey’s Bay PMPA.
The Voisey’s Bay PMPA had a carrying value at June 30, 2019 of $393 million. Management estimated that the
recoverable amount at June 30, 2019 under the Voisey’s Bay PMPA was $227 million, representing its FVLCD and
resulting in an impairment charge of $166 million. The recoverable amount related to the Voisey’s Bay PMPA was
estimated using an average discount rate of 7% and the market price of cobalt of $14.83 per pound. As this valuation
technique requires the use of estimates and assumptions such as commodity prices, discount rates, recoverable
pounds of cobalt and operating performance, it is classified within Level 3 of the fair value hierarchy.
During the six months ended December 31, 2019, there were no further indications of impairment or any indications of
impairment reversal that resulted in a reassessment of the recoverable value of the Voisey’s Bay PMPA.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [25]
General and Administrative
(in thousands)
Salaries and benefits
Salaries and benefits, excluding PSUs
PSUs
Total salaries and benefits
Depreciation
Donations
Professional fees
Other
Three Months Ended
December 31
Years Ended
December 31
2019
2018
2019
2018
2,830
6,103
17,174
$ 3,076 $ 4,073 $ 13,840 $ 14,397
9,517
$ 5,906 $ 10,176 $ 31,014 $ 23,914
1,057
2,610
8,559
10,078
1,903
2,946
2,496
10,457
494
874
594
2,396
294
799
5,990
2,496
General and administrative before equity settled stock
based compensation
$ 10,264 $ 19,755 $ 48,816 $ 46,218
Equity settled stock based compensation (a non-cash
expense)
1,431
1,388
5,691
5,432
Total general and administrative
$ 11,695 $ 21,143 $ 54,507 $ 51,650
For the three months ended December 31, 2019, general and administrative expenses decreased by $9 million
relative to the comparable period in the previous year with the decrease being primarily the result of differences in
accrued costs associated with the Company’s performance share units (“PSUs”) coupled with professional fees
incurred during the fourth quarter of 2018 associated with the CRA Settlement, which is discussed on page 27 of this
MD&A.
Other (Income) Expense
(in thousands)
Interest income
Dividend income
Guarantee fees - Primero Revolving Credit
Facility
Fees for contract amendments and
reconciliations
Share of losses of associate
Impairment loss - investment in associate
Foreign exchange loss (gain)
(Gain) loss on fair value adjustment of share
purchase warrants held
(Gain) loss on fair value adjustment of
convertible notes receivable
Gain on disposal of mineral royalty interest
Interest and penalties related to CRA Settlement
Other
Three Months Ended
December 31
Years Ended
December 31
2019
$ (131)
-
2018
$ (198)
(20)
2019
$ (816)
(59)
2018
$ (750)
(78)
-
-
53
-
258
10
366
-
20
(141)
-
-
59
-
(298)
-
(858)
-
164
1,649
1,028
(248)
432
-
(144)
1
16
124
661
-
4,317
148
1,043
(2,929)
(225)
(145)
2,878
-
4,317
153
Total other (income) expense
$ 435
$ 4,670
$ (274)
$ 5,826
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [26]
Finance Costs
Three Months Ended
December 31
Years Ended
December 31
(in thousands)
Average principal outstanding during period
Average effective interest rate during period
Total interest costs incurred during period
Costs related to undrawn credit facilities
Interest expense - lease liabilities
Letter of guarantee
2019
$ 929,666
2018
$ 1,335,922
2019
$ 1,099,846
2018
$ 1,005,222
3.62%
$ 8,418
1,137
52
-
3.83%
$ 12,784
635
-
417
4.07%
$ 44,767
3,834
175
(46)
3.57%
$ 35,839
3,707
-
1,641
Total finance costs
$ 9,607
$ 13,836
$ 48,730
$ 41,187
Income Tax Expense (Recovery)
(in thousands)
Current income tax expense related to foreign
Three Months Ended
December 31
Years Ended
December 31
2019
2018
2019
2018
jurisdictions
$ (51)
$ 11 $ 73 $ 86
Deferred income tax expense (recovery) related to:
Origination and reversal of temporary
differences
Write down (reversal of write down) or
recognition of prior period temporary
differences
Total deferred income tax expense (recovery)
Total income tax recovery from operations
Income tax expense related to CRA Settlement
Current income tax expense related to CRA
1,666
(1,624)
$ 7,311 $ 841
(5,134)
$ (3,468)
(48)
$ (1,672)
(16,521)
$ (9,210)
(5,393)
$ (4,552)
$ (3,519)
$ (1,661)
$ (9,137)
$ (4,466)
Settlement
$ 71 $ 4,020 $ 71 $ 4,020
Reversal of previously recognized non-capital
losses
Income tax expense offset by previously
unrecognized non-capital losses recognized
through Equity
Total income tax expense related to CRA
Settlement 1
Income tax expense (recovery) recognized in net
-
-
3,848
12,466
-
-
3,848
12,466
$ 71
$ 20,334 $ 71
$ 20,334
earnings
$ (3,448)
$ 18,673 $ (9,066)
$ 15,868
1) The figures for 2018 are net of an $18 million tax benefit relating to non-capital losses and other deductions recognized through net earnings.
Settlement of the Canada Revenue Agency International Tax Dispute - 2018
On December 13, 2018, the Company reached a settlement with the Canada Revenue Agency (the “CRA”) which
provided for a final resolution of the Company’s tax appeal in connection with the reassessment of the 2005 to 2010
taxation years under transfer pricing rules related to the income generated by the Company’s foreign subsidiaries
outside of Canada (the “CRA Settlement”).
Under the terms of the CRA Settlement, income earned outside of Canada by the Company’s foreign subsidiaries will
not be subject to income tax in Canada. The CRA Settlement principles also apply to all taxation years after 2010
subject to there being no material change in facts or change in law or jurisprudence.
After the application of non-capital losses, for the 2005 to 2017 taxation years, the Company accrued in the results for
the year ended December 31, 2018 cash taxes of $4 million (Cdn$5.5 million) as well as interest and other penalties of
$4.3 million (Cdn$5.9 million). Interest and other penalties are reflected in the line item Other (Income) Expense on the
Statement of Earnings.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [27]
A significant component of the non-capital losses that have been applied to offset the additional taxable income arising
from the CRA Settlement relate to share issue costs. As share issue costs, which are deducted for tax purposes over a
5-year period, reduce share capital for accounting purposes rather than being deducted as an expense in the
Statement of Earnings, the tax benefit related to these costs are also recognized in share capital. As such, the
Company recorded an income tax expense of $12 million in the Statement of Earnings with an offsetting income tax
recovery reflected directly in the Statement of Shareholders’ Equity for the year ended December 31, 2018.
The 2012 to 2015 taxation years remain under audit for international transactions and the 2016 to 2019 taxation years
remain open to audit.
Liquidity and Capital Resources1
As at December 31, 2019, the Company had cash and cash equivalents of $104 million (December 31, 2018 - $76
million) and debt outstanding under its $2 billion revolving term loan (the "Revolving Facility") of $875 million
(December 31, 2018 - $1,264 million), resulting in a net debt position of $771 million (December 31, 2018 - $1,188
million).2
A summary of the Company’s cash flow activity is as follows:
Three Months Ended December 31, 2019
Cash Flows From Operating Activities
During the three months ended December 31, 2019, the Company generated operating cash flows of $132 million
compared with $108 million during the comparable period of 2018, with the increase being attributable to the following:
Operating cash inflow for the three months ended December 31, 2018
Variance attributable to revenue (see page 20):
Increase in ARᵃ relative to sales
Total increase to cash inflows attributable to sales
Variance attributable to cost of sales, excluding depletion:
Sales volume
Sales mix differences
Cost per ounce
Decrease in APᵃ relative to cost of sales
Total increase to cash outflows attributable to cost of sales
Total increase to net cash inflows attributable to gross margin
Other variances:
General and administrative
Finance costs
Income taxes
Other
Total increase to net cash inflows
Operating cash inflow for the three months ended December 31, 2019
a) AR = accounts receivable; AP = accounts payable.
$
$
$
$
$
$
$
$
108,461
26,631
(330)
26,301
4,179
(1,869)
(2,475)
(11,366)
(11,531)
14,770
459
7,908
70
199
23,406
131,867
Finance Costs Variance
As more fully detailed on page 27 of this MD&A, the decrease to cash outflows relative to finance costs during the
period was due to a combination of lower average outstanding principal balance resulting from repayments made
during 2019 under the Company’s Revolving Facility coupled with the timing of when interest payments are due during
the period.
Cash Flows From Financing Activities
During the three months ended December 31, 2019, the Company had net cash outflows from financing activities of
$169 million, which was primarily the result of repayments under the Company’s Revolving Facility in the amount of
$139 million and dividend payments totaling $34 million, partially offset by proceeds relative to the exercise of stock
options in the amount of $4 million. During the three months ended December 31, 2018, the Company had net cash
outflows from financing activities of $151 million which was primarily the result of repayments under the Company’s
Revolving Facility in the amount of $117 million and dividend payments of $34 million.
1 Statements made in this section contain forward-looking information with respect to funding outstanding commitments and
continuing to acquire accretive mineral stream interests and readers are cautioned that actual outcomes may vary. Please see
“Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure associated with
this information.
2 As explained in non-IFRS measure (v) on page 48 of this MD&A, net debt equals bank debt less cash and cash equivalents.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [28]
Cash Flows From Investing Activities
During the three months ended December 31, 2019, the Company had net cash outflows from investing activities of
$10 million, which was primarily the result of the advance of $10 million to Gold X in exchange for the Gold X
Convertible Note (see page 12 of this MD&A). During the three months ended December 31, 2018, the Company had
net cash outflows from investing activities of $1 million.
Year Ended December 31, 2019
Cash Flows From Operating Activities
During the year ended December 31, 2019, the Company generated operating cash flows of $502 million compared
with $477 million during the comparable period of 2018, with the increase being attributable to the following:
Operating cash inflow for the year ended December 31, 2018
Variance attributable to revenue (see page 24):
Increase in ARᵃ relative to sales
Total increase to cash inflows attributable to sales
Variance attributable to cost of sales, excluding depletion:
Sales volume
Sales mix differences
Cost per ounce
Increase in APᵃ relative to cost of sales
Total increase to cash outflows attributable to cost of sales
Total increase to net cash inflows attributable to gross margin
Other variances:
General and administrative
Finance costs
Income taxes
Other
Total increase to net cash inflows
Operating cash inflow for the year ended December 31, 2019
a) AR = accounts receivable; AP = accounts payable.
$
$
$
$
$
$
$
$
477,413
67,320
(3,085)
64,235
214
(5,960)
(7,018)
1,903
(10,861)
53,374
(16,728)
(4,370)
(4,420)
(3,649)
24,207
501,620
General and Administrative Variance
The increase to cash outflows relative to general and administrative expenses during the year was primarily a result of
the payment of previously accrued professional fee invoices associated with the CRA Settlement in the amount of $5
million and the payment relative to the Company’s performance share units (“PSUs”) in the amount of $9 million.
During 2018, the PSUs which matured did not result in any payment being owed.
Finance Costs Variance
As more fully detailed on page 27 of this MD&A, the increase to cash outflows relative to finance costs during the year
was due to a combination of higher market rates of interest coupled with a higher average outstanding principal
balance resulting from advances during 2018 in the amount of $373 million and $452 million taken under the
Company’s Revolving Facility which were used to partially fund the Voisey’s Bay cobalt stream and the Stillwater gold
and palladium stream, respectively, partially offset by the timing of when interest payments are due during the period
and the cancellation of the letters of guarantee. The Company uses excess cash to pay down the Revolving Facility,
and during 2019, the Company repaid $390 million under the Revolving Facility.
Income Taxes Variance
As more fully detailed on page 27 of this MD&A, the increase to cash outflows relative to income taxes was primarily
the result of payments relative to the CRA Settlement.
Cash Flows From Financing Activities
During the year ended December 31, 2019, the Company had net cash outflows from financing activities of $484
million, which was primarily the result of repayments under the Company’s Revolving Facility in the amount of $390
million and dividend payments totaling $130 million, partially offset by proceeds relative to the exercise of stock options
in the amount of $37 million. During the year ended December 31, 2018, the Company had net cash inflows from
financing activities of $361 million, which was primarily the result of advances in the amount of $373 million and $452
million taken under the Company’s Revolving Facility which were used to partially fund the Voisey’s Bay cobalt stream
and the Stillwater gold and palladium stream, respectively, with these cash inflows being partially offset by repayments
under the Company’s Revolving Facility in the amount of $331 million and dividend payments totaling $133 million.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [29]
Cash Flows From Investing Activities
During the year ended December 31, 2019, the Company had net cash inflows from investing activities of $11 million,
which was primarily the result of $18 million received relating to proceeds on disposal of long-term equity investments
(see page 11 of this MD&A) and $9 million received from the sale of the Metates mineral royalty interest (see page 9 of
this MD&A), partially offset by the advance of $10 million to Gold X in exchange for the Gold X Convertible Note (see
page 12 of this MD&A) and a $2 million payment to Panoro in connection with the Cotabambas Early Deposit
Agreement. During the year ended December 31, 2018, the Company had net cash outflows from investing activities
of $861 million, which was primarily the result of (i) a payment to Sibanye-Stillwater in the amount of $500 million in
connection with the Stillwater gold and palladium stream; (ii) a payment to Vale in the amount of $390 million in
connection with the Voisey’s Bay cobalt stream; (iii) a $220 million payment to First Majestic in connection with the
San Dimas PMPA; (iv) payments totaling $7 million to Kutcho in connection with the Kutcho Early Deposit Agreement;
(v) payments totaling $2 million to Panoro in connection with the Cotabambas Early Deposit Agreement; and (vi)
payments totaling $7 million related to closing costs relative to the various streaming transactions concluded during
2018, with these cash outflows being partially offset by a $220 million payment received from First Majestic as partial
consideration for the termination of the San Dimas SPA, a $10 million payment received from Goldcorp Inc.
(“Goldcorp”) as consideration for the termination of the guarantee provided by Goldcorp with respect to the delivery by
Primero Mining Corp. of all silver produced and owing to the Company until 2029 (the “Goldcorp Guarantee”) and
proceeds of disposition relative to the Company’s investment in Arizona Mining in the amount of $48 million (see page
11 of this MD&A).
Conclusion
In the opinion of management, the $104 million of cash and cash equivalents as at December 31, 2019, combined with
the liquidity provided by the available credit under the $2 billion Revolving Facility and ongoing operating cash flows
positions the Company well to fund all outstanding commitments, as detailed on pages 31 and 32 of this MD&A, in
addition to known contingencies as well as providing flexibility to acquire additional accretive mineral stream interests.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [30]
Contractual Obligations and Contingencies1
Mineral Stream Interests
The following table summarizes the Company’s commitments to make per-ounce cash payments for gold, silver and
palladium and per pound cash payments for cobalt to which it has the contractual right pursuant to the PMPAs:
Attributable Payable Production to be
Purchased
Per Unit of Measurement Cash Payment 1, 2
Mineral Stream Interests
Peñasquito
Constancia
Salobo
Sudbury
Antamina
San Dimas
Stillwater
Voisey's Bay
Other
Gold
0%
50% ³
75%
70%
0%
variable ⁶
100%
0%
Silver Palladium Cobalt
25%
100%
0%
0%
33.75%
0% ⁶
0%
0%
0%
0%
0%
0%
0%
0%
4.5% ⁷
0%
0% $
0% $
0% $
0%
0% $
0%
0% 42.4% ⁹
Gold
$
n/a
404 ⁴ $
408
400
n/a
606
Silver
4.26
5.96 ⁴
n/a
n/a
variable ⁵
n/a
n/a
n/a
variable ⁸
n/a
Los Filos
Zinkgruvan
Yauliyacu
Stratoni
Neves-Corvo
Aljustrel
Minto
Keno Hill
Pascua-Lama
Rosemont
Loma de La Plata
777
Early Deposit
Toroparu
Cotabambas
Kutcho
0%
0%
0%
0%
0%
0%
100%
100%
100% ¹¹
100%
100%
100% ¹⁴
100% ¹⁶ 100%
0%
0%
100%
0%
50%
25%
25%
100%
12.5%
100%
10%
25% ²⁰
100% ²¹
50%
100% ²⁰
100% ²¹
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0% $
0%
0% $
4.43
$
n/a
4.43
$
n/a
8.89 ¹²
$
n/a
9.33 ¹³
$
n/a
$
4.30
n/a
variable ¹⁵
n/a
variable ¹⁷ $
4.27
variable ¹⁸
n/a
3.90
$
n/a
3.90
$
450
4.00
n/a
$
6.20 ⁴
420 ⁴ $
0% $
0% $
0%
400
450
3.90
$
5.90
$
variable ²²
variable ²²
Palladium
n/a
n/a
n/a
n/a
n/a
n/a
variable ⁸
Cobalt
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
variable ¹⁰
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Date of
Original
Term of
Contract
Agreement
24-Jul-07
Life of Mine
Life of Mine
8-Aug-12
Life of Mine 28-Feb-13
20 years 28-Feb-13
Life of Mine
3-Nov-15
Life of Mine 10-May-18
16-Jul-18
Life of Mine
11-Jun-18
Life of Mine
15-Oct-04
25 years
Life of Mine
8-Dec-04
Life of Mine 23-Mar-06
23-Apr-07
Life of Mine
5-Jun-07
50 years
5-Jun-07
50 years
Life of Mine 20-Nov-08
2-Oct-08
Life of Mine
8-Sep-09
Life of Mine
Life of Mine 10-Feb-10
Life of Mine
Life of Mine
8-Aug-12
n/a ¹⁹
Life of Mine 11-Nov-13
Life of Mine 21-Mar-16
Life of Mine 14-Dec-17
1) Subject to an annual inflationary adjustment with the exception of Loma de La Plata and Sudbury.
2) All amounts are measured on a per ounce basis with the exception of cobalt which is measured on a per pound basis. Should the prevailing market price for the applicable
metal be lower than this amount, the per ounce or per pound cash payment will be reduced to the prevailing market price, with the exception of Yauliyacu where the per
ounce cash payment will not be reduced below $4.35 per ounce, subject to an annual inflationary factor.
3) Gold recoveries will be set at 55% for the Constancia deposit and 70% for the Pampacancha deposit until 265,000 ounces of gold have been delivered to the Company.
4) Subject to an increase to $9.90 per ounce of silver and $550 per ounce of gold after the initial 40-year term.
5) The Company is committed to pay Glencore 20% of the spot price of silver for each ounce of silver delivered under the Antamina PMPA.
6) 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.
7) 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.
8) The Company is committed to pay Sibanye 18% of the spot price of gold and palladium for each ounce of gold and palladium delivered under the Stillwater PMPA until the
market value of gold and palladium delivered to Wheaton, net of the per ounce cash payment, exceeds the initial upfront cash deposit, and 22% of the spot price thereafter.
9) Once the Company has received 31 million pounds of cobalt, the Company’s attributable cobalt production to be purchased will be reduced to 21.2%.
10) The Company is committed to pay Vale 18% of the spot price of cobalt per pound of cobalt delivered under the agreement until the market value of cobalt delivered to
Wheaton, net of the per pound cash payment, exceeds the initial upfront cash deposit, and 22% of the spot price thereafter.
11) The Company is committed to purchase from Glencore an amount equal to 100% of the first 1.5 million ounces of payable silver produced at Yauliyacu per annum and 50%
of any excess.
12) Should the market price of silver exceed $20 per ounce, in addition to the $8.89 per ounce, the Company is committed to pay Glencore an additional amount for each ounce
of silver delivered equal to 50% of the excess, to a maximum of $10 per ounce, such that when the market price of silver is $40 or above, the Company will pay Glencore
$18.89 per ounce of silver delivered.
13) In October 2015, in order to incentivize additional exploration and potentially extend the limited remaining mine life of Stratoni, Wheaton and Eldorado Gold agreed to modify
the Stratoni PMPA. The primary modification is to increase the production price per ounce of silver delivered to Wheaton over the current fixed price by one of the following
amounts: (i) $2.50 per ounce of silver delivered if 10,000 meters of drilling is completed outside of the existing ore body and within Wheaton’s defined area of interest
(“Expansion Drilling”); (ii) $5.00 per ounce of silver delivered if 20,000 meters of Expansion Drilling is completed; and (iii) $7.00 per ounce of silver delivered if 30,000 meters
of Expansion Drilling is completed. Drilling in all three cases must be completed by December 31, 2020, in order for the agreed upon increase in production price to be
initiated. The figures in the above table reflect the fact that Eldorado completed 20,000 meters of Expansion Drilling in June 2019.
14) Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.
15) In respect of the Aljustrel PMPA, the Company is committed to pay Almina 50% of the amount received under the respective concentrate sales contracts.
16) The Company is committed to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.
17) The Company has amended the Minto PMPA such that the per ounce cash payment per ounce of gold delivered will be 75% of the spot price of gold for each ounce of gold
delivered under the Minto PMPA. This amended pricing will end on the earlier of (i) 14 months after the first delivery is due; or (ii) once 11,000 ounces of gold have been
delivered to the Company. Once this amended pricing ends, the per ounce cash payment per ounce of gold delivered will be $325, subject to an increase in periods where
the market price of copper is lower than $2.50 per pound.
18) The production payment related to the Keno Hill silver interest is a function of the silver head grade and silver spot price in the month in which the silver is produced.
19) Terms of the agreement not yet finalized.
20) Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production to be purchased will decrease to 16.67% of gold production
and 66.67% of silver production for the life of mine.
21) Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, attributable production to be purchased will decrease to 66.67% of gold and
silver production for the life of mine.
22) The Company is committed to pay Kutcho 20% of the spot price of gold and silver for each ounce of gold and silver delivered under the Kutcho Early Deposit Agreement.
1 Statements made in this section contain forward-looking information and readers are cautioned that actual outcomes may vary.
Please see “Cautionary Note Regarding Forward-Looking Statements” for material risks, assumptions and important disclosure
associated with this information.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [31]
Other Contractual Obligations and Contingencies
(in thousands)
2020
2021 - 2023
2024 - 2025
After 2025
Sub-Total
Other
Commitments
Total
Obligations With Scheduled Payment Dates
Bank debt 1
Interest 2
Payments for mineral
stream interests 3
Rosemont 4
Loma de La Plata
Payments for early
deposit mineral
stream interest
Toroparu
Cotabambas
Kutcho
Non-revolving credit
facility 5
Leases liabilities
Total contractual
obligations
$
-
25,363
$
-
68,061
$ 874,500
5,877
$
-
-
$ 874,500
99,301
$
- $
-
874,500
99,301
-
-
-
-
-
1,500
-
564
865
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
231,150
231,150
32,400
32,400
-
5,500
-
138,000
126,000
58,000
138,000
131,500
58,000
564
4,684
2,675
1,144
-
-
564
4,684
-
-
$
28,292 $
74,736 $ 881,521 $
- $ 984,549 $
585,550 $ 1,570,099
1) At December 31, 2019, the Company had $875 million drawn and outstanding on the Revolving Facility.
2) As the applicable interest rates are floating in nature, the interest charges are estimated based on market-based forward interest rate curves at the end of the reporting period
combined with the assumption that the principal balance outstanding at December 31, 2019 does not change until the debt maturity date.
3) Does not reflect the contingent payment due related to the Salobo gold purchase agreement (see the Salobo section on the following page).
4) Includes contingent transaction costs of $1 million.
5) Represents the maximum amount available to Kutcho under the Cdn$1.3 million non-revolving credit facility (see the Kutcho section on the following page).
Rosemont
Effective February 8, 2019, the Company amended the Rosemont PMPA. In connection with the amended Rosemont
PMPA, 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 Rosemont project and other customary
conditions and the balance of $180 million being advanced once project costs incurred on the Rosemont project
exceed $98 million. Under the amendment, the Company is now permitted to elect to pay the deposit in cash or the
delivery of common shares and Hudbay has provided a corporate guarantee. 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.
Loma de La Plata
In connection with the Loma de La Plata PMPA, the Company is committed to pay Pan American Silver Corp.
(“PAAS”) total upfront cash payments of $32 million following the satisfaction of certain conditions, including PAAS
receiving all necessary permits to proceed with the mine construction.
Toroparu
In connection with the Toroparu Early Deposit Agreement, the Company is committed to pay Gold X an additional
$138 million, payable on an installment basis to partially fund construction of the mine. Following the delivery of certain
feasibility documentation or after December 31, 2020 if the feasibility documentation has not been delivered to
Wheaton by such date, Wheaton may elect not to proceed with the agreement or 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 Wheaton elects to terminate, Wheaton will be entitled to a return of the amounts advanced less $2 million
which is non-refundable on the occurrence of certain events. If Wheaton elects to reduce the streams, Gold X 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 which is non-refundable. Gold X has filed a Preliminary Economic Assessment defining the
re-scoping of the Toroparu project, including a revised operating plan. Please see the section entitled Toroparu -
Development Update on page 9 of this MD&A for more information.
Cotabambas
In connection with the Cotabambas Early Deposit Agreement, the Company is committed to pay Panoro a total cash
consideration of $140 million, of which $9 million has been paid to date. Once certain conditions have been met, the
Company will advance an additional $5 million to Panoro, spread over up to five years. 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
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [32]
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.
Kutcho
In connection with the Kutcho Early Deposit Agreement, the Company is committed to pay Kutcho a total cash
consideration of $65 million, of which $7 million has been paid to date. The remaining $58 million will be advanced on
an installment basis to partially fund construction of the mine once certain conditions have been satisfied.
The Company will be required to make an additional payment to Kutcho, of up to $20 million, if processing throughput
is increased to 4,500 tonnes per day or more within 5 years of attaining commercial production.
Non-revolving credit facility
On November 25, 2019, the Company entered into a non-revolving term loan with Kutcho, under which Kutcho can
draw up to a maximum of $1 million (Cdn$1.3 million), of which $0.4 million (Cdn$0.6 million) has been drawn as at
December 31, 2019. The credit facility, which matures on December 31, 2020, carries interest at 15% per annum,
compounded monthly.
Salobo
The Salobo mine currently has a mill throughput capacity of 24 Mtpa. In October 2018, Vale’s Board of Directors
approved the investment in the Salobo Expansion, which is proposed to include a third concentrator line and will use
Salobo’s existing infrastructure. Vale anticipates that the Salobo Expansion, which is scheduled to start up in the first
half of 2022 with a ramp-up of 15 months, will result in an increase of throughput capacity from 24 Mtpa to 36 Mtpa
once fully ramped up.
If actual throughput is expanded above 28 Mtpa, then under the terms of the Salobo PMPA, Wheaton will be required
to make an additional set payment to Vale based on the size of the expansion, the timing of completion and the grade
of the material processed. The set payment ranges from $113 million if throughput is expanded beyond 28 Mtpa by
January 1, 2036 up to $953 million if throughput is expanded beyond 40 Mtpa by January 1, 2021. Assuming the
Salobo III expansion project achieves 12 Mtpa of additional processing capacity (bringing total processing capacity at
Salobo to 36 Mtpa) by the end of 2023, the Company would expect to pay an estimated expansion payment of
between $550 million to $670 million. The actual amount and timing of any expansion payment may significantly differ
from this estimate depending on the size, timing and processed grade of any expansion.
Taxes - Canada Revenue Agency – 2013-2015 Taxation Years - Domestic Reassessments 1
The Company has received Notices of Reassessment for the 2013 to 2015 taxation years in which the 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 Domestic Reassessments assessed tax, interest and other penalties of $7
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 challenge the Domestic Reassessments. The 2016 to 2019
taxation years remain open to a domestic audit.
If CRA were to apply the methodology in the Domestic Reassessments to taxation years subsequent to 2015, the
Company estimates that losses would arise that could be carried back to reduce tax and interest relating to the
Domestic Reassessments to approximately $2 million.
U.S. Shareholder Class Action
During July 2015, after the Company disclosed that the CRA was proposing that they would issue notices of
reassessment for federal and provincial tax, transfer pricing penalties, interest and other penalties for the 2005-2010
taxation years (the “Reassessments”), two putative securities class action lawsuits were filed against the Company in
the U.S. District Court for the Central District of California in connection with the proposal (the “Complaints”).
1 The assessment by management of the expected impact of the Domestic Reassessments on the Company is “forward-looking
information”. Statements in respect of the impact of the Domestic Reassessments are based on the expectation that the Company
will be successful in challenging the Domestic Reassessments. Statements in respect of the Domestic Reassessments and
estimates of any future taxes that the CRA may assert are payable are subject to known and unknown risks including that the
Company’s interpretation of, or compliance with, tax laws, is found to be incorrect. Please see “Cautionary Note Regarding Forward-
Looking Statements” in the MD&A for material risks, assumptions and important disclosure associated with this information.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [33]
On October 19, 2015, the Complaints were consolidated into one action, In re Silver Wheaton Securities Litigation, as
against the Company, Randy Smallwood, President & Chief Executive Officer, Gary Brown, Senior Vice President &
Chief Financial Officer and Peter Barnes, former Chief Executive Officer (together the “Initial Defendants”) and a lead
plaintiff (the “Plaintiff”) was selected. The Plaintiff filed a consolidated amended complaint in December 2015, which
focuses on the Reassessments and asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act of
1934 (“Exchange Act”).
On March 27, 2018, the court granted Plaintiff’s motion for leave to file a Second Amended Complaint, which alleges
that Initial Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts
about the Company’s business, operations, prospects and performance in violation of Sections 10(b) and 20(a) of the
Exchange Act, and adds a claim under Section 10(b) against our auditors (together with the “Initial Defendants, the
“Defendants”).
On February 11, 2020, the parties to the Second Amended Complaint filed a stipulation of settlement with the court
that, if approved by the court, will settle the lawsuit for $41.5 million, without admission of liability by any of the
Defendants. The settlement will be fully funded by the Company’s insurance carriers and the other Defendants. The
Company will not be required to pay any portion of the settlement.
Canadian Shareholder Class Action
By Notice of Action dated August 10, 2016 (as amended September 2, 2016), proposed representative plaintiff Suzan
Poirier commenced proceedings pursuant to the Class Proceedings Act (Ontario) in the Ontario Superior Court of
Justice against Wheaton Precious Metals Corp., Randy Smallwood, President and Chief Executive Officer and Gary
Brown, Senior Vice President & Chief Financial Officer. The statement of claim filed alleges, among other things,
misrepresentation pursuant to primary and secondary market civil liability provisions under the Securities Act (Ontario),
common law negligence and negligent misrepresentation. The claim focuses on the Reassessments. The statement of
claim purports to be brought on behalf of persons who (i) acquired Wheaton common shares in Wheaton’s March 2015
public offering, and (ii) acquired Wheaton common shares in the secondary market, other than in the United States,
during an alleged class period of August 14, 2013 to July 6, 2015 inclusive.
The Company believes that the allegations are without merit and intends to vigorously defend against this matter. No
amounts have been recorded for potential liability arising from this claim as no value has been specified in the
statement of claim and the Company cannot reasonably predict the outcome.
Please see “Cautionary Note Regarding Forward-Looking Statements” in the MD&A for material risks, assumptions
and important disclosure associated with outstanding litigation.
Other
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, disputes and the matters disclosed in the Income Tax Expense (Recovery) section
on page 27 of this MD&A. 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
management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of
the changes in its consolidated financial statements in the appropriate period relative to when such changes occur.
Share Capital
During the year ended December 31, 2019, a total of 2,039,735 share purchase options were exercised at a weighted
average exercise price of Cdn$25.79 per option, resulting in total cash proceeds to the Company in the amount of $39
million, of which $2 million was received on January 2, 2020. During the year ended December 31, 2018, a total of
46,800 share purchase options were exercised at a weighted average exercise price of Cdn$24.28 per option,
resulting in total cash proceeds to the Company of $1 million.
During the year ended December 31, 2019, the Company released 133,670 RSUs, as compared to 104,178 RSUs
during the comparable period of the previous year.
As of March 11, 2020, there were 447,771,433 outstanding common shares, 2,394,490 share purchase options,
366,323 restricted share units and 10,000,000 share purchase warrants.
At the Market Equity Program
Wheaton intends to initiate an at-the-market equity program (the “ATM Program”) that would allow 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 prevailing market price or other prices through the Toronto Stock Exchange, the New York Stock Exchange or any
other marketplace on which the Common Shares are listed, quoted or otherwise trade. The volume and timing of
distributions under the ATM Program, if any, will be determined at the Company’s sole discretion, subject to applicable
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [34]
regulatory limitations. The ATM Program remains subject to negotiation of definitive agreements with the Canadian
and U.S. agents, filing of the prospectus supplement with the Canadian securities regulators and U.S. Securities and
Exchange Commission (the “SEC”) respectively and receipt of all regulatory approvals, which conditions are
anticipated to be satisfied in April. 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. Details of the ATM Program will be provided upon filing of a prospectus supplement
with the Canadian securities regulators and the SEC in early April. Sales of common shares through the ATM
Program will be made pursuant to the terms of an equity distribution agreement.
Financial Instruments
The Company owns equity interests in several companies as long-term investments (see page 10 of this MD&A) in
addition to the Kutcho Convertible Note and the Gold X Convertible Note (see page 12 of this MD&A) and therefore is
inherently exposed to various risk factors including currency risk, market price risk and liquidity risk.
In order to mitigate the effect of short-term volatility in gold, silver and palladium prices, the Company will occasionally
enter into forward contracts in relation to gold, silver and palladium deliveries that it is highly confident will occur within
a given quarter. The Company does not hedge its long-term exposure to commodity prices. Other than these very
short-term forward contracts, the Company has not used derivative financial instruments to manage the risks
associated with its operations and therefore, in the normal course of business, it is inherently exposed to currency,
interest rate and commodity price fluctuations. No forward contracts were outstanding at December 31, 2019.
Risks and Uncertainties
The primary risk factors affecting the Company are set forth below. For discussion of additional risk factors, please
refer to the Company’s Annual Information Form, which is available on the Company’s website, www.wheatonpm.com,
and on SEDAR, www.sedar.com, or is available upon request from the Company.
Commodity Prices and Commodity Markets
The price of the common shares and the Company’s financial results may be significantly and adversely affected by a
decline in the price of precious metals and cobalt. The price of precious metals and cobalt fluctuates widely, especially
in recent years, and is affected by numerous factors beyond the Company’s control, including, but not limited to, the
sale or purchase of precious metals by various central banks and financial institutions, interest rates, exchange rates,
inflation or deflation, fluctuation in the value of the United States dollar and foreign currencies, global and regional
supply and demand, and the political and economic conditions of major precious metals and cobalt producing
countries throughout the world. The precious metals and cobalt markets tend to be cyclical, and a general downturn
could result in a significant decrease in the Company’s revenue. Any such price decline may have a material adverse
effect on the Company.
The profitability of Wheaton’s interests under the PMPAs is directly related to the market price of precious metals and
cobalt. The Company’s revenue is sensitive to changes in the price of precious metals and cobalt and the overall
condition of the precious metal and cobalt mining industry and markets, as it derives all of its of revenue from precious
metals and cobalt streams. If Wheaton is unable to sell precious metals or cobalt production as a result of a reduction
in, or an absence of, demand for precious metals or cobalt, there could be a significant decrease in the Company’s
revenue which may have a material adverse effect on the Company or result in the Company not generating positive
cash flow or earnings.
In the event that the prevailing market price of precious metals and cobalt is at or below the price at which the
Company can purchase such commodities pursuant to the terms of the PMPAs associated with its precious metals
and cobalt interests, the Company will not generate positive cash flow or earnings.
The “Mining Operations” consist of the San Dimas mine, the Zinkgruvan mine, the Yauliyacu mine, the Stratoni mine,
the Los Filos mine, the Peñasquito mine, the Keno Hill mines, the Neves-Corvo mine, the Minto mine, the Pascua-
Lama project, the Aljustrel mine, the 777 mine, the Salobo mine, the Sudbury mines, the Constancia mine, the
Antamina mine, the Stillwater mines, the Voisey’s Bay mine, the Rosemont project, the Loma de La Plata project, the
Toroparu project, the Cotabambas project and the Kutcho project. Precious metals and cobalt are by-product metals at
all of the Mining Operations, other than silver at the Keno Hill mines, silver at the Loma de La Plata zone of the
Navidad project, gold at the Toroparu project and palladium at the Stillwater mines, and therefore, the economic cut-off
applied to the reporting of precious metals and cobalt reserves and resources will be influenced by changes in the
commodity prices of other metals at the mines.
Risks Relating to the Mining Operations
To the extent that they relate to the production of precious metals or cobalt from, or the continued operation of, the
Mining Operations, the Company will be subject to the risk factors applicable to the operators of such mines or
projects, as more fully described in the Company’s Annual Information Form.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [35]
No Control Over Mining Operations
The Company has agreed to purchase a certain percentage of the gold, silver, palladium and/or cobalt produced by
the Mining Operations. The Company is not directly involved in the ownership or operation of mines and has no
contractual rights relating to the operation of the Mining Operations. The owners and operators will generally have the
power to determine the manner in which the relevant properties subject to the asset portfolio are exploited, including
decisions to expand, advance, continue, reduce, suspend or discontinue production from a property and decisions
about the marketing of products extracted from the property. The interests of the Company and the operators of the
relevant properties may not always be aligned. As a result, the cash flows of the Company are dependent upon the
activities of third parties which creates the risk that at any time those third parties may: (i) have business interests or
targets that are inconsistent with those of the Company, (ii) take action contrary to the Company’s policies or
objectives, (iii) be unable or unwilling to fulfill their obligations under their agreements with the Company, or (iv)
experience financial, operational or other difficulties, including insolvency, which could limit or suspend a third party’s
ability to perform its obligations under the PMPAs. At any time, any of the operators of the Mining Operations may
decide to suspend or discontinue operations, including if the costs to operate the mine, or observe the obligations of
the PMPA, exceed the revenues from operations. Except in limited circumstances, the Company will not be entitled to
any material compensation if such operations do not meet their forecasted precious metals or cobalt production targets
in any specified period or if the operations shut down, suspend or discontinue on a temporary or permanent basis.
There can be no assurance that the precious metals or cobalt production from such properties will ultimately meet
forecasts or targets. In addition, payments from production generally flow through the operator and there is a risk of
delay and additional expense in receiving such revenues. The PMPA payments are calculated by the operators based
on reported production and calculations of the Company’s payments are subject to, and dependent upon, the
adequacy and accuracy of the operators’ production and accounting functions. Failure to receive payments under the
PMPAs to which the Company is entitled may have a material adverse effect on the Company. In addition, the
Company must rely on the accuracy and timeliness of the public disclosure and other information it receives from the
owners and operators of the Mining Operations, and uses such information, including production estimates, in its
analyses, forecasts and assessments relating to its own business. If the information provided by such third parties to
the Company contains material inaccuracies or omissions, the Company’s ability to accurately forecast or achieve its
stated objectives may be materially impaired.
Taxes
A significant portion of the Company’s operating profit is derived from its subsidiaries, including Wheaton Precious
Metals International Ltd. which is incorporated and operated in the Cayman Islands and historically, Silverstone
Resources (Barbados) Corp., which was incorporated and operated in Barbados, such that the Company’s profits are
subject to low income tax.
The introduction of new tax laws, regulations or rules, or changes to, or differing interpretation of, or application of, or
court decisions in respect of, existing tax laws, regulations or rules in Canada, the Cayman Islands, Barbados,
Luxembourg, the Netherlands or any of the countries in which the Company’s subsidiaries or the Mining Operations
are located, or to which deliveries of precious metals, precious metals credits or cobalt are made, could result in an
increase in the Company’s taxes, or other governmental charges, duties or impositions. No assurance can be given
that new tax laws, regulations or rules will not be enacted or that existing tax laws, regulations or rules will not be
changed, interpreted, applied or decided upon in a manner which could result in the Company’s profits being subject to
additional taxation or which could otherwise have a material adverse effect on the Company or the price of the
common shares.
Due to the size, complexity and nature of the Company’s operations, various tax matters are outstanding from time to
time, including audits and disputes. If we are unable to resolve any of these matters favourably, there may be a
material adverse effect on the Company (please refer to the section entitled Taxes - Canada Revenue Agency – 2013-
2015 Taxation Year Domestic Reassessments on page 33 of this MD&A for more information).
The CRA Settlement principles relative to the 2005 to 2010 taxation years (please see page 27 of this MD&A for more
information) also apply to taxation years after 2010, including the 2012 to 2015 taxation years which are currently
under audit, and on a go forward basis, subject to there being no material change in facts or change in law or
jurisprudence. From time to time there may be proposed legislative changes or outstanding legal actions that may
have an impact on applicable law or jurisprudence, the outcome, applicability and impact of which is not known or
determinable by the Company but which may have a material adverse effect on the Company or the price of the
Common Shares.
Credit and Liquidity Risk
The Company is exposed to counterparty risks and liquidity risks including, but not limited to: (i) through the
companies with which the Company has PMPAs which may experience financial, operational or other difficulties,
including insolvency, which could limit or suspend those companies’ ability to perform their obligations under those
PMPAs; (ii) through the companies with which the Company has advanced funds in exchange for convertible notes
receivable; (iii) through financial institutions that hold the Company’s cash and cash equivalents; (iv) through
companies that have payables to the Company, including concentrate customers; (v) through the Company’s
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [36]
insurance providers; and (vi) through the Company’s lenders. The Company is also exposed to liquidity risks in
meeting its operating expenditure requirements in instances where cash positions are unable to be maintained or
appropriate financing is unavailable. These factors may impact the ability of the Company to obtain loans and other
credit facilities in the future and, if obtained, on terms favourable to the Company. If these risks materialize, the
Company’s operations could be adversely impacted and the trading price of the common shares could be adversely
affected.
In the event that a counterparty with which the Company has a PMPA were to experience financial, operational or
other difficulties (such as Vale in connection with the Brumadinho Incident as discussed on page 37 of this MD&A or a
counterparty that is unable to favourably resolve the application of new or existing tax laws, regulations or rules or any
tax audits or disputes), then that counterparty may (i) be unable to deliver some or all of the precious metals or cobalt
due under the applicable PMPA with that counterparty; (ii) otherwise default in its obligations under that PMPA; (iii)
cease operations at one or more mines that are the subject of that PMPA; or (iv) become insolvent. As a result, any of
these or other adverse financial or operational consequences on a counterparty may also have a material adverse
effect on Wheaton’s business, financial condition, results of operation and cash flows. In addition, there is no
assurance that Wheaton will be successful in enforcing its rights under any security or guarantees provided to
Wheaton.
See also “Risks Relating to the Company – Security Over Underlying Assets” and “Risks Relating to the Company –
Mine Operator Concentration Risk”, “Risks Relating to the Company – Indebtedness and Guarantees Risk”, as well as
“Risks Relating to the Mining Operations – International Operations”, and “Risks Relating to the Mining Operations –
Exploration, Development, Operating, Expansion and Improvements Risks” in the Company’s Annual Information Form.
San Dimas - Mexican Tax Update
In February 2016, Primero Mining Corp. ("Primero") announced that its Mexican subsidiary, Primero Empresa Minera
S.A. de C.V. ("PEM"), received a legal claim from the Mexican tax authorities, Servicio de Administración Tributaria
(“SAT”), seeking to nullify the Advance Pricing Agreement issued by SAT in 2012 (“2012 APA”). The 2012 APA
confirmed PEM’s ability to pay taxes in Mexico on the sale of silver on actual prices realized by its Mexican subsidiary
in connection with silver sales under the San Dimas SPA for the tax years 2010 through 2014.
As disclosed by First Majestic in their MD&A for the period ended December 31, 2019, during 2019, as part of the
ongoing annual audits of PEM’s tax returns, the SAT issued reassessments for the 2010 to 2012 tax years in the
amount of $260.9 million inclusive of interest, inflation, and penalties. The key items relate to the view that PEM should
pay taxes based on the market price of silver and denial of the deductibility of interest expense and service fees in
Mexico. First Majestic also indicates that since they continue to defend the APA in the Mexican legal proceeding, the
APA remains valid and First Majestic will vigorously dispute any reassessment that has been or may be issued in the
future on a basis that assesses taxes on PEM’s historical silver revenues that is inconsistent with the APA. First
Majestic indicates that if the SAT is successful in retroactively nullifying the APA and issuing reassessments, it would
likely have a material adverse effect on First Majestic’s results of operations, financial condition and cash flows. PEM
would have rights of appeal in connection with any reassessments. First Majestic states that they continue to believe
Primero’s filings were appropriate and continue to believe its tax filing position based upon the APA is correct.
However, they note that should PEM ultimately be required to pay tax on its silver revenues based on market prices
without any mitigating adjustments, the incremental income tax for the years 2010-2018 would be approximately
$188.3 million, before interest or penalties.
First Majestic has indicated in their MD&A for the period ended December 31, 2019 that while it continues to
vigorously defend the validity of the APA and its transfer pricing position, it is also engaging in dialogue with the SAT
seeking to resolve matters and bring tax certainty through a negotiated solution. To the extent that First Majestic is not
able to defend the validity of the 2012 APA or the SAT determines that the appropriate price to tax sales under the
former San Dimas SPA or the new San Dimas PMPA is significantly different from the actual realized prices
thereunder, it may have an adverse impact on First Majestic’s business, financial condition or results of operations. If
the Company was unable to purchase any further gold under the San Dimas PMPA, it may have a material adverse
effect on Wheaton’s business, financial condition, results of operation and cash flows. In addition, should this occur,
there is no assurance that Wheaton would be successful in enforcing its rights under the security interest granted by
First Majestic or its other remedies under the San Dimas PMPA.
Vale - Brumadinho Incident
On January 25, 2019, Vale’s mining operations in Brumadinho, Minas Gerais, Brazil experienced a significant breach
and failure of a retaining dam around the tailings disposal area (the “Brumadinho Incident”). Vale has reported that its
potential legal liabilities resulting from the Brumadinho Incident are significant and that they cannot estimate the total
amount. While the Brumadinho Incident did not occur at any mine that is the subject of the Company’s PMPAs, the
consequences of the Brumadinho Incident for Vale may have an impact on the Company’s business, financial
condition and results of operations.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [37]
Mine Operator Concentration Risk
Precious metals and cobalt purchases under certain of Wheaton’s PMPAs are subject to mine operator concentration
risk, including as follows:
•
•
•
The counterparty obligations under the Salobo, Sudbury and Voisey’s Bay PMPAs are guaranteed by the
parent company Vale. Total revenues relative to Vale during the year ended December 31, 2019 were 47% of
the Company’s total revenue;
The counterparty obligations under the Antamina PMPA and the Yauliyacu PMPA (which is included as part
of Other silver interests) are guaranteed by the parent company Glencore and its subsidiary. Total revenues
relative to Glencore during the year ended December 31, 2019 were 12% of the Company’s total revenue;
and
The counterparty obligations under the Constancia PMPA and the 777 PMPA (which is included as part of
Other gold and silver interests) are guaranteed by the parent company Hudbay. Total revenues relative to
Hudbay during the year ended December 31, 2019 were 11% of the Company’s total revenue.
Should any of these mine operators become unable or unwilling to fulfill their obligations under their agreements with
Wheaton, or should any of the risk factors identified by Wheaton materialize in respect of the mine operators or the
Mining Operations, there could be a material adverse impact on Wheaton, including, but not limited to, Wheaton’s
revenue, net income and cash flows from operations.
In particular, total revenues relative to PMPAs with Vale were 47% and 45% of the Company’s total revenue for the
years ended December 31, 2019 and December 31, 2018, respectively; operating cash flows from the PMPAs with Vale
represented approximately 57% and 51% of the Company’s operating cash flows for the years ended December 31,
2019 and December 31, 2018, respectively; and as at December 31, 2019, the PMPAs with Vale proven and probable
precious metal and cobalt reserves represented approximately 49% of the Company’s total proven and probable GEO
reserves, measured and indicated precious metals and cobalt resources represented approximately 14% of the
Company’s GEO measured and indicated precious metals and cobalt resources and inferred precious metals and cobalt
resources represented approximately 13% of the Company’s total inferred GEO resources (as described in the
Attributable Reserves and Resources section of the Company’s MD&A). If Wheaton was unable to purchase any further
precious metals or cobalt under the PMPAs with Vale, Wheaton’s reserves and resources would be significantly reduced
and Wheaton’s forecasted gold equivalent production for 2020 and average five year forecasted gold equivalent
production for 2020-2024 would be lowered by 43% and 41%, respectively, leading to a corresponding reduction to its
revenue, net earnings and cash flows.
Vale – Xikrin Community
Vale has reported that associations representing the indigenous community of Xikrin do Cateté brought a public civil
action against Vale, the Federal Environmental Agency (IBAMA) and the Federal Indigenous Agency (FUNAI), seeking
the suspension of the environmental permitting process of Salobo mine. Vale has reported that the associations contend
that FUNAI and IBAMA have failed to conduct the appropriate studies regarding the affected indigenous communities
during the environmental permitting process and contends that Vale’s operations would be contaminating the water of
the Itacaiúnas River and consequently that the indigenous groups affected by this mine have not provided the required
consent. Vale notes that the plaintiffs also requested a monthly payment of R$2 million for each association until the
defendants conclude the studies. Vale reports that applicable law provides for mandatory consultation with the
indigenous communities located within ten kilometers of the mine, and these indigenous communities are located more
than 22 kilometers away from the mine. Vale noted that in October 2017 the court denied plaintiffs’ request for an
injunction suspending the Salobo mine and that in February 2019, Vale, IBAMA, and the environmental agency Instituto
Chico Mendes de Conservação da Biodiversidade (ICMBio) filed a joint answer in court, rebutting the plaintiffs’ claims,
and reaffirming the legality of the environmental permitting process of Salobo mine and the fulfillment of all conditions
imposed by relevant authorities. Vale noted that in March 2019, the Federal Prosecution Service (MPF) presented an
opinion for the suspension of the activities in the Salobo mine. A decision by the federal court is pending.
See also “Risks Relating to the Company – Credit and Liquidity Risk”, “Risks Relating to the Company – Security Over
Underlying Assets” and “Risks Relating to the Company – Indebtedness and Guarantees Risk”, as well as “Risks
Relating to the Mining Operations – International Operations”, “Risks Relating to the Mining Operations – Exploration,
Development, Operating Expansion and Improvements Risks” and “Risks Relating to the Mining Operations – Land Title
and Indigenous Peoples” in the Company’s Annual Information Form.
Indebtedness and Guarantees Risk
As of December 31, 2019, the Company had $875 million drawn under the Revolving Facility. As a result of this
indebtedness, the Company is required to use a portion of its cash flow to service principal and interest on the debt,
which will limit the cash flow available for other business opportunities. The Company’s ability to make scheduled
payments of the principal of, to pay interest on, or to refinance indebtedness depends on its future performance, which
is subject to economic, financial, competitive and other factors beyond its control. The Company may not continue to
generate cash flow in the future sufficient to service debt and make necessary capital expenditures. If the Company is
unable to generate such cash flow, it may be required to adopt one or more alternatives, such as reducing or
eliminating dividends, restructuring debt or obtaining additional equity capital on terms that may be onerous or highly
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [38]
dilutive. The Company’s ability to refinance indebtedness will depend on the capital markets and its financial condition
at such time. The Company may not be able to engage in any of these activities or engage in these activities on
desirable terms, which could result in a default on its debt obligations.
The terms of our Revolving Facility require the Company to satisfy various affirmative and negative covenants and to
meet certain financial ratios and tests. These covenants limit, among other things, the Company’s ability to incur
further indebtedness if doing so would cause it to fail to meet certain financial covenants, create certain liens on assets
or engage in certain types of transactions. The Company can provide no assurances that in the future, it will not be
limited in its ability to respond to changes in its business or competitive activities or be restricted in its ability to engage
in mergers, acquisitions or dispositions of assets. Furthermore, a failure to comply with these covenants, including a
failure to meet the financial tests or ratios, would likely result in an event of default under the Revolving Facility and
would allow the lenders to accelerate the debt, which could materially and adversely affect the Company’s business,
financial condition and results of operations and its ability to meet its payment obligations under debt, and the price of
the common shares.
In addition, each subsidiary of the Company has guaranteed the obligations of the Company under the Revolving
Facility. While the Revolving Facility is unsecured, as guarantors, any or all of Wheaton’s subsidiaries can be called
upon by lenders for the repayment of the obligations under the Revolving Facility if Wheaton were to default.
Hedging Risk
The Company has a policy that permits hedging its foreign exchange and interest rate exposures to reduce the risks
associated with currency and interest rate fluctuations. The Company also has adopted a policy to allow the forward
sale of forecast precious metals deliveries provided that such sales shall not extend beyond the end of a financial
quarter of the Company.
Hedging involves certain inherent risks including: (a) credit risk - the risk that the creditworthiness of a counterparty
may adversely affect its ability to perform its payment and other obligations under its agreement with the Company or
adversely affect the financial and other terms the counterparty is able to offer the Company; (b) market liquidity risk –
the risk that the Company has entered into a hedging position that cannot be closed out quickly, by either liquidating
such hedging instrument or by establishing an offsetting position; and (c) unrealized fair value adjustment risk – the
risk that, in respect of certain hedging products, an adverse change in market prices for commodities, currencies or
interest rates will result in the Company incurring losses in respect of such hedging products as a result of the hedging
products being out of the money on their settlement dates.
There is no assurance that a hedging program designed to reduce the risks associated with foreign
exchange/currency, interest rate or commodity fluctuations will be successful. Although hedging may protect the
Company from adverse changes in foreign exchange/currency, interest rate or commodity fluctuations, it may also
prevent the Company from fully benefitting from positive changes.
Competition
The Company competes with other companies for PMPAs and similar transactions. Some of these companies may
possess greater financial and technical resources than the Company. Such competition may result in the Company
being unable to enter into desirable PMPAs or similar transactions, to recruit or retain qualified employees or to
acquire the capital necessary to fund its PMPAs. Existing or future competition in the mining industry could materially
adversely affect the Company’s prospects for entering into additional PMPAs in the future.
Litigation Claims and Proceedings
The Company is from time to time involved in various claims, legal proceedings and disputes arising in the ordinary
course of business. If the Company is unable to resolve these disputes favorably, it may have a material adverse
effect on the Company. The Company is currently the subject of litigation in securities class action complaints in the
United States (see “U.S. Shareholder Class Action” on page 33 of this MD&A) and in Canada (see “Canadian
Shareholder Class Action” on page 34 of this MD&A).
Securities litigation, including current proceedings against the Company as well as potential future proceedings, could
result in substantial costs and damages and divert the Company’s management’s attention and resources. Any
decision resulting from any such litigation that is adverse to the Company could have a negative impact on the
Company’s financial position.
Security Over Underlying Assets
There is no guarantee that the Company will be able to effectively enforce any guarantees, indemnities or other
security interests it may have. Should a bankruptcy or other similar event related to a mining operator occur that
precludes a party from performing its obligations under the PMPA, the Company would have to enforce its security
interest. In the event that the mining operator has insufficient assets to pay its liabilities, it is possible that other
liabilities will be satisfied prior to the liabilities owed to the Company. In addition, bankruptcy or other similar
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [39]
proceedings are often a complex and lengthy process, the outcome of which may be uncertain and could result in a
material adverse effect on the Company.
In addition, because many of the Mining Operations are owned and operated by foreign affiliates, the Company’s
security interests may be subject to enforcement and insolvency laws of foreign jurisdictions that differ significantly
from those in North America, and the Company’s security interests may not be enforceable as anticipated. Further,
there can be no assurance that any judgments obtained in Canadian courts will be enforceable in any of those
jurisdictions outside of Canada. If the Company is unable to enforce its security interests, there may be a material
adverse effect on the Company.
Acquisition Strategy
As part of the Company’s business strategy, it has sought and will continue to seek new exploration, development and
mining opportunities in the resource industry. In pursuit of such opportunities, the Company may fail to select
appropriate acquisition candidates or negotiate acceptable arrangements, including arrangements to finance
acquisitions or integrate the acquired businesses and their personnel into the Company. The Company cannot assure
that it can complete any acquisition or business arrangement that it pursues, or is pursuing, on favourable terms, or
that any acquisitions or business arrangements completed will ultimately benefit the Company.
In the event that the Company chooses to raise debt capital to finance any acquisition, the Company’s leverage will be
increased. In addition, if the Company chooses to complete an equity financing to finance any acquisition,
shareholders may suffer dilution.
In addition, the introduction of new tax laws or regulations or accounting rules or policies or rating agency policies, or
changes to, or differing interpretations of, or application of, existing tax laws or regulations or accounting rules or
policies or rating agency policies, could make PMPAs less attractive to counterparties. Such changes could adversely
affect the Company's ability to enter into new PMPAs.
Market Price of the Common Shares
The Common Shares are listed and posted for trading on the TSX and on the NYSE. An investment in the Company’s
securities is highly speculative and the price of the Common Shares has fluctuated significantly in the past. During the
year ended December 31, 2019, the trading price of the Company’s common shares on the NYSE has ranged from a
low of $18.54 per share to a high of $30.90 per share and on the TSX has ranged from a low of Cdn$24.75 per share
to a high of Cdn$40.95 per share. The market price of the Company’s common shares may increase or decrease in
response to a number of events and factors, including any future offerings of the Common Shares pursuant to any
offering or otherwise, and other factors set out in the Company’s Annual Information Form and the factors listed under
the heading “Cautionary Note Regarding Forward-Looking Statements.”
In addition, the global stock markets and prices for streaming and mining company shares have experienced volatility
that often has been unrelated to the operating performance or prospects of such companies. These market and
industry fluctuations may adversely affect the market price of the Company’s common shares, regardless of the
Company’s operating performance. The variables which are not directly related to the Company’s success and are,
therefore, not within the Company’s control, include other developments that affect the market for streaming and
mining company shares, macroeconomic developments globally, the breadth of the public market for the Company’s
common shares and the attractiveness of alternative investments and particular industries. The effect of these and
other factors on the market price of the Company’s common shares on the exchanges on which they trade has
historically made the Company’s common share price volatile and suggests that the Company’s common share price
will continue to be volatile in the future.
It is not uncommon for securities class actions to be brought against publicly listed companies following periods of
volatility or significant decline in the market price of their securities. The Company is currently the subject of litigation in
securities class action complaints in the United States (see “U.S. Shareholder Class Action” on page 33 of this MD&A)
and in Canada (see “Canadian Shareholder Class Action” on page 34 of this MD&A).
Equity Price Risk
The Company is exposed to equity price risk as a result of holding long-term equity investments in other companies
including, but not limited to, exploration and mining companies. Just as investing in the Company is inherent with risks
such as those set out in this MD&A, by investing in these other companies, the Company is exposed to the risks
associated with owning equity securities and those risks inherent in the investee companies. The Company does not
actively trade these investments.
Interest Rate Risk
The Company is exposed to interest rate risk on its outstanding borrowings and short-term investments. Presently, all
of the Company’s outstanding borrowings are at floating interest rates. The Company monitors its exposure to interest
rates and has not entered into any derivative contracts to manage this risk. During the year ended December 31,
2019, the weighted average effective interest rate paid by the Company on its outstanding borrowings was 4.07%
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [40]
(2018 – 3.57%). During the years ended December 31, 2019 and December 31, 2018, a fluctuation in interest rates of
100 basis points (1 percent) would have impacted the amount of interest expensed by approximately $11 million and
$10 million, respectively.
Dividend Policy
The declaration, timing, amount and payment of dividends are at the discretion of the Board of Directors and will
depend upon the Company’s future earnings, cash flows, acquisition capital requirements and financial condition, and
other relevant factors. There can be no assurance that the Company will continue to declare a dividend on a quarterly,
annual or other basis.
Dependence Upon Key Management Personnel
The Company and its subsidiaries have an aggregate of 39 employees and are therefore dependent upon the services
of a small number of employees. The Company is also dependent on the services of a small number of key executives
who are highly skilled and experienced. The loss of these persons or the Company’s inability to attract and retain
additional highly skilled employees, including executives, may adversely affect its business and future operations.
Impact of Epidemics
All of Wheaton’s PMPAs are subject to the risk of emerging infectious diseases or the threat of outbreaks of viruses or
other contagions or epidemic diseases, including COVID-19, through the mining operations to which the mineral
stream interests relate. In addition, Wheaton’s own operations are exposed to infectious disease risks. Accordingly,
any outbreak or threat of an outbreak of a virus or other contagions or epidemic disease could have a material adverse
effect on Wheaton, its business, results from operations and financial condition.
Activist Shareholders
Publicly-traded companies are often subject to demands or publicity campaigns from activist shareholders advocating
for changes to corporate governance practices, such as executive compensation practices, social issues, or for certain
corporate actions or reorganizations. There can be no assurance that the Company will not be subject to any such
campaign, including proxy contests, media campaigns or other activities. Responding to challenges from activist
shareholders can be costly and time consuming and may have an adverse effect on the Company’s reputation. In
addition, responding to such campaigns would likely divert the attention and resources of the Company’s management
and Board, which could have an adverse effect on the Company’s business and results of operations. Even if the
Company were to undertake changes or actions in response to activism, activist shareholders may continue to
promote or attempt to effect further changes, and may attempt to acquire control of the Company. If shareholder
activists are ultimately elected to the Board, this could adversely affect the Company’s business and future operations.
This type of activism can also create uncertainty about the Company’s future strategic direction, resulting in loss of
future business opportunities, which could adversely affect the Company’s business, future operations, profitability and
the Company’s ability to attract and retain qualified personnel.
Reputation Damage
Reputational damage can be the result of the actual or perceived occurrence of any number of events, and could
include any negative publicity, whether true or not. While the Company does not ultimately have direct control over
how it is perceived by others, reputational loss could have a material adverse impact on the Company’s financial
performance, financial condition, cash flows and growth prospects.
Unknown Defects and Impairments
A defect in a streaming transaction and/or a PMPA may arise to defeat or impair the claim of the Company to such
streaming transaction, which may have a material adverse effect on the Company. It is possible that material changes
could occur that may adversely affect management’s estimate of the recoverable amount for any PMPA. Any
impairment estimates, which are based on applicable key assumptions and sensitivity analysis, are based on
management’s best knowledge of the amounts, events or actions at such time, and the actual future outcomes may
differ from any estimates that are provided by the Company. Any impairment charges on the Company’s carrying value
of the PMPAs could have a material adverse effect on the Company.
Information Systems and Cyber Security
Wheaton’s information systems, and those of its counterparties under the PMPAs, third-party service providers and
vendors, are vulnerable to an increasing threat of continually evolving cyber security risks. Unauthorized parties may
attempt to gain access to these systems or the Company’s information through fraud or other means of deceiving the
Company’s counterparties under its PMPAs, third-party service providers or vendors.
Wheaton’s operations depend, in part, on how well Wheaton and its suppliers, as well as counterparties under the
PMPAs, protect networks, equipment, information technology (“IT”) systems and software against damage from a
number of threats. Wheaton has entered into agreements with third parties for hardware, software,
telecommunications and other services in connection with its operations. The Company’s operations and Mining
Operations also depend on the timely maintenance, upgrade and replacement of networks, equipment, IT systems and
software, as well as pre-emptive expenses to mitigate the risks of failures. Any of these and other events could result
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [41]
in information system failures, delays and/or increases in capital expenses. The failure of information systems or a
component of information systems could, depending on the nature of any such failure, adversely impact the
Company’s reputation and results of operations.
Although to date the Company has not experienced any known material losses relating to cyber-attacks or other data /
information security breaches, there can be no assurance that Wheaton will not incur such losses in the future. The
Company’s risk and exposure to these matters cannot be fully mitigated because of, among other things, the evolving
nature of these threats. As a result, cyber security and the continued development and enhancement of controls,
processes and practices designed to protect systems, computers, software, data and networks from attack, damage or
unauthorized access remain a priority.
Any future significant compromise or breach of the Company’s data / information security, whether external or internal,
or misuse of data or information, could result in additional significant costs, lost sales, fines and lawsuits, and damage
to the Company’s reputation. In addition, as the regulatory environment related to data / information security, data
collection and use, and privacy becomes increasingly rigorous, with new and constantly changing requirements
applicable to Wheaton’s business and counterparties to the PMPAs, compliance with those requirements could also
result in additional costs. As cyber threats continue to evolve, the Company or its counterparties may be required to
expend additional resources to continue to modify or enhance protective measures or to investigate and remediate any
security vulnerabilities.
Critical Accounting Estimates
The preparation of financial statements in conformity with IFRS requires management to make estimates and
assumptions that affect the reported amount of assets and liabilities and disclosure of contingent liabilities at the
balance sheet date, and the reported amounts of revenues and expenditures during the reporting period. The following
discussion provides details of the critical accounting estimates made in preparing the financial statements. For
additional information, Note 3 of the Company’s consolidated financial statements describes all of the significant
accounting policies while Note 4 describes the significant areas of estimation uncertainty and judgments made by
management in preparing the consolidated financial statements.
Mineral Stream Interests
Attributable Reserve, Resource and Exploration Potential Estimates
Mineral stream interests are significant assets of the Company, with a carrying value of $5.8 billion at December 31,
2019. This amount represents the capitalized expenditures related to the acquisition of the mineral stream interests, net of
accumulated depletion and accumulated impairment charges, if any. The Company estimates the reserves, resources
and exploration potential relating to each agreement. Reserves are estimates of the amount of metals contained in ore
that can be economically and legally extracted from the mining properties in respect of which the Company has PMPAs.
Resources are estimates of the amount of metals contained in mineralized material for which there is a reasonable
prospect for economic extraction from the mining properties in respect of which the Company has PMPAs. Exploration
potential represents an estimate of additional reserves and resources which may be discovered through the mine
operator’s exploration program. The Company adjusts its estimates of reserves, resources (where applicable) and
exploration potential (where applicable) to reflect the Company’s percentage entitlement to metals produced from such
mines. The Company compiles its estimates of its reserves and resources based on information supplied by appropriately
qualified persons relating to the geological data on the size, density and grade of the ore body, and require complex
geological and geostatistical judgments to interpret the data. The estimation of recoverable reserves and resources is
based upon factors such as estimates of foreign exchange rates, commodity prices, future capital requirements, and
production costs along with geological assumptions and judgments made in estimating the size and grade of the ore
body. The Company estimates exploration potential based on assumptions surrounding the ore body continuity which
requires judgement as to future success of any exploration programs undertaken by the mine operator. Changes in the
reserve estimates, resource estimates or exploration potential estimates may impact upon the carrying value of the
Company’s mineral stream interests and depletion charges.
Depletion
As described above, the cost of these mineral stream interests are separately allocated to reserves, resources and
exploration potential. The value allocated to reserves is classified as depletable and is depleted on a unit-of-production
basis over the estimated recoverable proven and probable reserves at the mine corresponding to the specific agreement.
The value associated with resources and exploration potential is the value beyond proven and probable reserves at
acquisition and is classified as non-depletable until such time as it is transferred to the depletable category as a result of
the conversion of resources and/or exploration potential into reserves. To make this allocation, the Company estimates
the recoverable reserves, resources and exploration potential at each mining operation. These calculations require the
use of estimates and assumptions, including the amount of contained metals, recovery rates and payable rates. Changes
to these assumptions may impact the estimated recoverable reserves, resources or exploration potential which could
directly impact the depletion rates used. Changes to depletion rates are accounted for prospectively.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [42]
Impairment of Assets
As more fully described in the Impairment of Mineral Stream Interests section on page 24 of this MD&A, the Company
assesses each PMPA at the end of every reporting period to determine whether any indication of impairment or
impairment reversal exists. If such an indication exists, the recoverable amount of the PMPA is estimated in order to
determine the extent of the impairment or impairment reversal (if any). The calculation of the recoverable amount requires
the use of estimates and assumptions such as long-term commodity prices, discount rates, recoverable ounces of
attributable metals, and operating performance.
The price of precious metals and cobalt has been extremely volatile over the past several years. The Company monitors
spot and forward metal prices and if necessary re-evaluates the long-term metal price assumptions used for impairment
testing. Should price levels decline or increase in the future, either for an extended period of time or due to known macro
economic changes, the Company may need to re-evaluate the long-term metal price assumptions used for impairment
testing. A significant decrease in long-term metal price assumptions may be an indication of potential impairment, while a
significant increase in long-term metal price assumptions may be an indication of potential impairment reversal. Should
the Company conclude that it has an indication of impairment or impairment reversal at any balance sheet date, the
Company is required to perform an impairment assessment.
Valuation of Stock Based Compensation
The Company has various forms of stock based compensation, including share purchase options, restricted share units
(“RSUs”) and performance share units (“PSUs”). The calculation of the fair value of share purchase options, RSUs and
PSUs issued requires the use of estimates as more fully described below.
The Company recognizes a stock based compensation expense for all share purchase options and RSUs awarded to
employees, officers and directors based on the fair values of the share purchase options and RSUs at the date of grant.
The fair values of share purchase options and RSUs at the date of grant are expensed over the vesting periods of the
share purchase options and RSUs, respectively, with a corresponding increase to equity. The fair value of share
purchase options is determined using the Black-Scholes option pricing model with market related inputs as of the date of
grant. Share purchase options with graded vesting schedules are accounted for as separate grants with different vesting
periods and fair values. The fair value of RSUs is the market value of the underlying shares at the date of grant. At the
end of each reporting period, the Company re-assesses its estimates of the number of awards that are expected to vest
and recognizes the impact of any revisions to this estimate in the consolidated statement of earnings.
The Company recognizes a stock based compensation expense for PSUs which are awarded to eligible employees and
are settled in cash. The related expense is based on the value of the anticipated settlement and multiplier for current
performance at the end of the associated performance periods. This estimated expense is reflected as a component of
net earnings over the vesting period of the PSUs with the related obligation recorded as a liability on the balance sheet.
The amount of compensation expense is adjusted at the end of each reporting period to reflect the fair market value of
common shares and the number of PSUs anticipated to vest based on the anticipated performance factor.
Valuation of Convertible Notes Receivable
The Kutcho Convertible Note and the Gold X Convertible Note are measured at fair value for financial reporting purposes.
As the convertible notes are not traded in an active market, their fair value is estimated by discounting the stream of
future interest and principal payments at the rate of interest prevailing at the balance sheet date for instruments of similar
term and risk (the market interest rate), and adding this value to the value of the convertibility feature which is estimated
using a Black-Scholes model based on assumptions including risk free interest rate, expected dividend yield, expected
volatility and expected remaining life of the respective convertible note. Any resulting change in fair value is reflected on
the Consolidated Statement of Earnings under the classification Other (Income) Expense.
Relative to the Kutcho Convertible Note, management estimates that the market interest rate on similar borrowings
without the conversion feature was approximately 21% and has used an implied volatility of 30% in valuing the
convertibility feature.
Relative to the Gold X Convertible Note, management estimates that the market interest rate on similar borrowings
without the conversion feature was approximately 12% and has used an implied volatility of 30% in valuing the
convertibility feature.
Holding all other variables constant, a fluctuation in interest rates of 1% and a fluctuation in the implied volatility used
of 5% would have impacted the valuation as below:
(in thousands)
Kutcho Convertible Note
Gold X Convertible Note
As at December 31, 2019
Change in interest rate
Increase
1%
Decrease
1%
Change in volatility
Increase
5%
Decrease
5%
$
(515) $
(262)
542 $
270
72 $
191
(41)
(172)
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [43]
Minto Derivative Liability
In October 2017, in order to incentivize Capstone to extend the Minto mine life, the Company agreed to amend the
Minto PMPA. The primary modification is to increase the production payment per ounce of gold delivered to Wheaton
over the current fixed price in periods where the market price of copper is lower than $2.50 per pound. As this pricing
mechanism meets the definition of a derivative, it is reflected at fair value for financial reporting purposes. At
December 31, 2019 and December 31, 2018, the Company estimated the fair value of this derivative liability to be
$NIL.
Revenue Recognition
Revenue relating to the sale of precious metals is recognized when control of the precious metal is transferred to the
customer in an amount that reflects the consideration the Company expects to receive in exchange for those products.
In determining whether the Company has satisfied a performance obligation, it considers the indicators of the transfer
of control, which include, but are not limited to, whether: the Company has a present right to payment; the customer
has legal title to the asset; the Company has transferred physical possession of the asset to the customer; and the
customer has the significant risks and rewards of ownership of the asset.
Under certain PMPAs, precious metal is acquired from the mine operator in the form of gold, silver or palladium
credits, which is then sold through a network of third party brokers or dealers. 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. No forward contracts were outstanding at
December 31, 2019 or December 31, 2018. 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 the precious metal.
Under certain PMPAs, precious metal 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
metals in concentrate form, final precious metal prices are set on a specified future quotational period (the “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 metals. The contracts, in general, provide for a provisional
payment based upon provisional assays and quoted precious metal 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 buyer, 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 and the retroactive pricing adjustment for the Quotational Period are
not significant and do not constrain the recognition of revenue.
At December 31, 2019, the Company had outstanding provisionally priced sales of $8 million (December 31, 2018 - $7
million) where the quotational period pricing was estimated based on the forward price for silver (December 31, 2018 -
gold and silver). These sales consisted of 0.5 million ounces of silver (December 31, 2018 - 500 ounces of gold and
0.4 million ounces of silver) which had a fair value gain adjustment of approximately $0.5 million (December 31, 2018 -
$0.5 million) associated with the embedded derivative. For each one cent per ounce increase or decrease in the
realized silver price, revenue would increase or decrease by approximately $4,600 (December 31, 2018 - for each one
dollar per ounce increase or decrease in the realized gold price, revenue would increase or decrease by approximately
$500 and for each one cent per ounce increase or decrease in the realized silver price, revenue would increase or
decrease by approximately $4,500).
New Accounting Standards Effective in 2019
IFRS 16 – Leases:
General Impact of Application of IFRS 16 - Leases
On January 1, 2019, the Company adopted IFRS 16 – Leases, which supersedes IAS 17 – Leases ("IAS 17"). IFRS
16 removes the distinction between operating leases and finance leases and instead has all leases accounted for as a
finance lease which requires the recognition of a right-of-use asset and a lease liability on the Consolidated Balance
Sheet at the lease commencement for all leases. Additionally, IFRS 16 requires the Company to recognize
depreciation expense relative to the right-of-use assets and interest expense relative to the lease liability in the
Consolidated Statement of Earnings.
The Company determined that it had two leases which are subject to the provisions of IFRS 16, specifically related to
its offices in Vancouver, Canada and the Cayman Islands. As a result, at January 1, 2019, the Company recognized
an additional $5 million of right-of-use assets on its balance sheet with an offsetting $5 million of lease liabilities.
The Company has applied the new standard on a modified retrospective basis with no restatement of the prior periods.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [44]
A reconciliation of the lease commitment relative to these two leases as reported on the financial statements for the
year ended December 31, 2018 and the lease liability which has been reflected on the balance sheet effective January
1, 2019 is as follows:
(in thousands)
Total lease commitment as disclosed at December 31, 2018
Extension option reasonably certain to be exercised 1
Less: Discounting using the incremental borrowing rate 2
Lease liability as at January 1, 2019
Lease liability is comprised of:
Current portion
Long-term portion
$
$
$
3,785
1,530
(636)
4,679
637
4,042
Lease liability as at January 1, 2019
1) The Company's office lease in the Cayman Islands contains two optional extension periods. Upon applying IFRS 16, the Company concluded it was reasonably certain to
4,679
$
exercise the first extension period. The second extension period, which covers a term of 5 years, was not included in the calculation of the lease liability.
2) The future cash outflows were discounted using the Company's estimated incremental borrowing rate ranging from 3.9764% to 4.3340%.
Accounting Policy – The Company as the Lessee
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to use an identified asset for a period of time in exchange for
consideration.
The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease agreements
in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and
leases of low value assets. For these leases, the Company recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date discounted by using the rate implicit in the lease. If this rate cannot be readily determined,
the Company uses its incremental borrowing rate.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
The Company re-measures the lease liability (and makes a corresponding adjustment to the related right-of-use asset)
whenever the lease term has changed or there is a change in the assessment of exercise of a purchase option, in
which case the lease liability is re-measured by discounting the revised lease payments using a revised discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability and any initial direct
costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
IFRIC 23 – Uncertainty over Income Tax Treatments:
On January 1, 2019, the Company adopted IFRIC 23 – Uncertainty over Income Tax Treatments. IFRIC 23 provides
guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is
uncertainty over income tax treatments. The adoption of this guidance did not have a material impact on the
Company’s Consolidated Statement of Earnings.
Future Changes in Accounting Policies
The International Accounting Standards Board ("IASB") has issued the following new or amended standards:
Standards required to be applied for periods beginning on or after January 1, 2020:
• Amendment to IFRS 3 - Business Combinations - The amendments to IFRS 3 clarify the definition of a
business and includes an optional concentration test to determine whether an acquired set of activities and
assets is a business. The amendments are effective for business combinations and asset acquisitions
occurring on or after January 1, 2020. The Company will apply these amendments to future acquisition
transactions.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [45]
Non-IFRS Measures
Wheaton has included, throughout this document, certain non-IFRS performance measures, including (i) adjusted net
earnings and adjusted net earnings per share; (ii) operating cash flow per share (basic and diluted); (iii) average cash
costs of gold, silver and palladium on a per ounce basis; and (iv) cash operating margin.
i.
Adjusted net earnings and adjusted net earnings per share are calculated by removing the effects of the non-
cash impairment charges, non-cash fair value (gains) losses, non-cash share of losses of associates, the
impact of the CRA Settlement and other one-time (income) expenses. 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.
The following table provides a reconciliation of adjusted net earnings and adjusted net earnings per share
(basic and diluted).
Three Months Ended
December 31
Years Ended
December 31
(in thousands, except for per share amounts)
2019
2018
2019
2018
Net earnings
$
77,524
$
6,828 $ 86,138
$
427,115
Add back (deduct):
Impairment loss
Gain on disposal of San Dimas SPA
Share in losses of associate
(Gain) loss on fair value adjustment of
share purchase warrants held
(Gain) loss on fair value adjustment of
convertible notes receivable
Gain on disposal of mineral royalty
interest
Fees for contract amendments and
reconciliations
Costs associated with the CRA
Settlement
Income tax expense related to CRA
Settlement
Interest and penalties
Professional fees
-
-
53
10
-
-
59
167,561
-
164
-
(245,715)
432
1
16
124
366
661
1,043
2,878
-
-
-
(2,929)
-
-
-
(248)
-
-
-
20,334
4,317
4,545
-
-
-
20,334
4,317
4,545
Adjusted net earnings
$
77,953 $ 36,745 $ 251,993 $
213,782
Divided by:
Basic weighted average number of
shares outstanding
Diluted weighted average number of
shares outstanding
Equals:
447,475
444,057
446,021
443,407
448,426
444,429
446,930
443,862
Adjusted earnings per share - basic
Adjusted earnings per share - diluted
$
$
$
0.17
0.17 $
0.08 $
0.08 $
$
0.56
0.56 $
0.48
0.48
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [46]
ii.
Operating cash flow per share (basic and diluted) is calculated by dividing cash generated by operating
activities by the weighted average number of shares outstanding (basic and diluted). The Company presents
operating cash flow per share as management and certain investors use this information to evaluate the
Company’s performance in comparison to other companies in the precious metal mining industry who present
results on a similar basis.
The following table provides a reconciliation of operating cash flow per share (basic and diluted).
(in thousands, except for per share amounts)
2019
2018
2019
2018
Cash generated by operating activities
$ 131,867 $ 108,461 $ 501,620 $ 477,413
Three Months Ended
December 31
Years Ended
December 31
Divided by:
Basic weighted average number of
shares outstanding
Diluted weighted average number of
shares outstanding
Equals:
447,475
444,057
446,021
443,407
448,426
444,429
446,930
443,862
Operating cash flow per share - basic
Operating cash flow per share - diluted
$
$
$
0.29
0.29 $
0.24 $
0.24 $
$
1.12
1.12 $
1.08
1.08
iii.
Average cash cost of gold, silver and palladium on a per ounce basis is calculated by dividing the total cost of
sales, less depletion, by the ounces sold. In the precious metal mining industry, this is a common
performance measure but does not have any standardized meaning prescribed by IFRS. In addition to
conventional measures prepared in accordance with IFRS, management and certain investors use this
information to evaluate the Company’s performance and ability to generate cash flow.
The following table provides a calculation of average cash cost of gold, silver and palladium on a per ounce
basis.
Three Months Ended
December 31
Years Ended
December 31
(in thousands, except for gold and palladium ounces sold and
per ounce amounts)
2019
2018
2019
2018
Cost of sales
Less: depletion
Cash cost of sales
Cash cost of sales is comprised of:
Total cash cost of gold sold
Total cash cost of silver sold
Total cash cost of palladium sold
$ 127,409 $ 131,441 $
(67,843)
(63,646)
515,385 $
(256,826)
498,081
(252,287)
$
63,763 $
63,598 $
258,559 $
245,794
$
38,008 $
24,048
1,707
42,054 $
20,508
1,036
163,997 $
88,906
5,656
142,728
101,410
1,656
Total cash cost of sales
$
63,763 $
63,598 $
258,559 $
245,794
Divided by:
Total gold ounces sold
Total silver ounces sold
Total palladium ounces sold
Equals:
89,223 102,813
4,400
4,684
5,049
5,312
389,086
17,703
20,681
349,168
21,733
8,717
Average cash cost of gold (per ounce)
Average cash cost of silver (per ounce)
Average cash cost of palladium (per ounce)
$
$
$
426 $
5.13 $
321 $
409 $
4.66 $
205 $
421 $
5.02 $
273 $
409
4.67
190
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [47]
iv.
Cash operating margin is calculated by subtracting the average cash cost of gold, silver and palladium on a
per ounce basis from the average realized selling price of gold, silver and palladium on a per ounce basis.
The Company presents cash operating margin as management and certain investors use this information to
evaluate the Company’s performance in comparison to other companies in the precious metal mining industry
who present results on a similar basis as well as to evaluate the Company’s ability to generate cash flow.
The following table provides a reconciliation of cash operating margin.
(in thousands, except for gold and palladium ounces sold and per
ounce amounts)
Total sales:
Gold
Silver
Palladium
Divided by:
Total gold ounces sold
Total silver ounces sold
Total palladium ounces sold
Equals:
Three Months Ended
December 31
Years Ended
December 31
2019
2018
2019
2018
$ 132,342 $ 126,343 $
$ 81,296 $ 64,510 $
$ 9,584 $ 5,738 $
541,045 $
288,401 $
31,886 $
441,193
343,579
9,240
89,223 102,813
4,684 4,400
5,312 5,049
389,086
17,703
20,681
349,168
21,733
8,717
Average realized price of gold (per ounce)
Average realized price of silver (per ounce)
Average realized price of palladium (per ounce)
$ 1,483 $ 1,229 $
$ 17.36 $ 14.66 $
$ 1,804 $ 1,137 $
Less:
Average cash cost of gold 1 (per ounce)
Average cash cost of silver 1 (per ounce)
Average cash cost of palladium 1 (per ounce)
$
$
$
(426) $
(5.13) $
(321) $
(409) $
(4.66) $
(205) $
Equals:
Cash operating margin per gold ounce sold
As a percentage of realized price of gold
Cash operating margin per silver ounce sold
As a percentage of realized price of silver
Cash operating margin per palladium ounce sold
As a percentage of realized price of palladium
71%
$ 1,057 $
820 $
67%
$ 12.23 $ 10.00 $
68%
932 $
82%
$ 1,483 $
82%
70%
1,391 $
16.29 $
1,542 $
(421) $
(5.02) $
(273) $
970 $
70%
11.27 $
69%
1,269 $
82%
1,264
15.81
1,060
(409)
(4.67)
(190)
855
68%
11.14
70%
870
82%
1) Refer to discussion on non-IFRS measure (iii) on page 47 of this MD&A.
v.
Net debt is calculated by subtracting cash and cash equivalents from the outstanding bank debt under the
Revolving Facility. The Company presents net debt as management and certain investors use this
information to evaluate the Company’s liquidity and financial position.
The following table provides a calculation of the Company’s net debt.
(US dollars in thousands)
Bank debt
Less: cash and cash equivalents
Net debt
As at
December 31
As at
December 31
2019
874,500 $
(103,986)
2018
1,264,000
(75,767)
770,514 $
1,188,233
$
$
These non-IFRS measures do not have any standardized meaning prescribed by IFRS, and other companies may
calculate these measures differently. The presentation of these non-IFRS measures is intended to provide additional
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [48]
information and should not be considered in isolation or as a substitute for measures of performance prepared in
accordance with IFRS.
Subsequent Events
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 of $0.10 per common share for the duration of 2020. The declaration,
timing, amount and payment of future dividends remain at the discretion of the Board of Directors.
On March 11, 2020, the Board of Directors declared a dividend in the amount of $0.10 per common share, with this
dividend being payable to shareholders of record on March 26, 2020 and is expected to be distributed on or about
April 9, 2020. The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect
to have dividends reinvested directly into additional Wheaton common shares at a discount of 1% of the Average
Market Price, as defined in the DRIP.
Controls and Procedures
Disclosure Controls and Procedures
Wheaton’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, has evaluated
the design and effectiveness of Wheaton’s disclosure controls and procedures, as defined in the rules of the U.S.
Securities and Exchange Commission and Canadian Securities Administrators, as of December 31, 2019. Based on
that evaluation, the Company’s Chief Executive Officer and Chief Financial Officer have concluded that Wheaton’s
disclosure controls and procedures were effective as of December 31, 2019.
Internal Control Over Financial Reporting
The Company’s management, with the participation of its Chief Executive Officer and Chief Financial Officer, are
responsible for establishing and maintaining adequate internal control over financial reporting. Under the supervision
of the Chief Financial Officer, the Company’s internal control over financial reporting is a process designed to provide
reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for
external purposes in accordance with IFRS. The Company’s controls include policies and procedures that:
•
•
•
pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions
and dispositions of the assets of the Company;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with IFRS, and that receipts and expenditures of the Company are being made
only in accordance with authorizations of the Company’s management and directors; and,
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or
disposition of the Company’s assets that could have a material effect on the annual financial statements or
interim financial statements.
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, has evaluated the
effectiveness of the Company’s internal control over financial reporting using the framework and criteria established in
Internal Control – Integrated Framework (2013), issued by the Committee of Sponsoring Organizations of the
Treadway Commission. Based on this evaluation, management has concluded that the internal control over financial
reporting was effective at as of December 31, 2019.
There have been no changes in the Company’s internal control over financial reporting during the year ended
December 31, 2019 that would materially affect, or is reasonably likely to materially affect, the Company’s internal
control over financial reporting.
Limitation of Controls and Procedures
The Company’s management, including its Chief Executive Officer and Chief Financial Officer, believe that any
disclosure controls and procedures or internal control over financial reporting, no matter how well conceived and
operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met.
Further, the design of a control system must reflect the fact that there are resource constraints, and the benefits of
controls must be considered relative to their costs. Because of the inherent limitations in all control systems, they
cannot provide absolute assurance that all control issues and instances of fraud, if any, within the Company have been
prevented or detected. These inherent limitations include the realities that judgments in decision-making can be faulty,
and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the
individual acts of some persons, by collusion of two or more people, or by unauthorized override of the controls. The
design of any system of controls also is based in part upon certain assumptions about the likelihood of future events,
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [49]
and there can be no assurance that any design will succeed in achieving its stated goals under all potential future
conditions. Accordingly, because of the inherent limitations in a cost effective control system, misstatements due to
error or fraud may occur and not be detected.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [50]
Attributable Reserves and Resources
The following tables set forth the estimated Mineral Reserves and Mineral Resources (metals attributable to Wheaton
only) for the mines relating to which the Company has PMPAs, adjusted where applicable to reflect the Company’s
percentage entitlement to such metals, as of December 31, 2019, unless otherwise noted. The tables are 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. The most current Mineral Reserves and Mineral Resources will be available on the Company’s
website.
Attributable Proven and Probable Reserves (1,2,3,8,25)
As of December 31, 2019 unless otherwise noted (6)
Proven
Probable
Proven & Probable
Tonnage Grade Contained Tonnage Grade Contained Tonnage Grade Contained
Moz
Moz
Moz
g/t
Mt
g/t
Mt
Mt
g/t
Gold
Salobo (75%) (10)
Sudbury (70%) (11)
Constancia (50%)
Stillwater (12,13)
San Dimas (25%) (14)
777 (50%)
Minto
Toroparu (10%) (15,16)
Kutcho (16,17)
Metates Royalty (18)
Total Gold
Silver
Peñasquito (25%) (10)
Antamina (33.75%) (11,19)
Copper
Copper-Zinc
Constancia
Neves-Corvo
Copper
Zinc
Zinkgruvan
Zinc
Copper
Yauliyacu (20)
San Dimas (25%) (14)
Los Filos
Aljustrel (23)
Stratoni
777
Minto
Keno Hill (25%)
Underground
Rosemont (21)
Kutcho (16,17)
Metates Royalty (18)
Total Silver
Palladium
Stillwater (4.5%) (12,13)
Total Palladium
Cobalt
Voisey's Bay (42.4%) (11,22)
Total Cobalt
237.1
12.8
227.1
6.4
0.4
1.1
0.4
3.0
-
1.4
0.30
0.52
0.06
0.46
4.09
1.77
0.25
1.10
-
0.70
2.30
0.21
0.43
0.10
0.05
0.06
0.003
0.10
-
0.03
3.30
624.3
20.3
39.8
41.9
0.9
0.7
2.0
9.7
10.4
4.1
0.32
0.44
0.06
0.47
3.34
2.03
0.67
0.98
0.37
0.45
6.42
0.29
0.08
0.63
0.10
0.05
0.04
0.31
0.12
0.06
8.10
861.3
33.0
266.9
48.3
1.4
1.8
2.4
12.7
10.4
5.5
0.32
0.47
0.06
0.47
3.56
1.87
0.60
1.00
0.37
0.52
8.73
0.50
0.51
0.73
0.16
0.11
0.05
0.41
0.12
0.09
11.40
27.4
38.1
33.6
83.0
31.6
84.2
110.4
33.2
117.8
50.0
25.7
454.2
4.6
4.2
4.9
2.5
1.7
0.4
26.2
8.7
-
2.2
0.4
-
408.6
-
1.4
6.0
14.0
3.0
36.0
75.0
84.0
32.0
109.0
323.5
3.5
54.1
-
26.4
3.4
-
5.0
-
17.2
0.2
13.4
4.8
0.14
9.6
11.5
43.6
5.3
10.1
13.3
2.6
6.0
4.2
3.0
15.2
-
1.8
0.05
-
66.2
-
0.8
226.9
0.09
0.09
14.6
14.6
36.1
33.1
79.5
23.3
25.5
5.9
0.2
7.4
0.9
78.1
6.7
0.8
1.4
2.0
0.3
108.0
10.4
4.1
8.1
13.1
3.3
32.0
62.0
81.0
40.0
120.0
303.2
10.2
51.7
154.0
21.6
6.0
804.5
3.0
34.6
13.1
1.3
13.5
6.6
0.13
9.4
13.9
8.5
24.0
50.8
15.4
0.3
28.5
9.2
25.5
11.2
3.8
1.0
0.4
7.6
10.4
11.6
1.7
317.6
0.57
0.57
18.1
18.1
86.1
58.7
533.7
27.9
29.7
10.8
2.7
9.1
1.4
104.2
15.5
0.8
3.6
2.4
0.3
516.6
10.4
5.5
6.9
13.5
3.0
32.7
63.8
82.4
32.6
117.9
309.3
8.5
53.1
154.0
24.6
5.6
804.5
4.6
34.6
14.2
1.5
13.5
11.4
0.13
19.1
25.5
52.1
29.3
60.9
28.6
2.9
34.5
13.5
28.5
26.4
3.8
2.8
0.4
7.6
76.7
11.6
2.5
544.4
0.66
0.66
32.7
32.7
Process
Recovery % (7)
68%
77%
61%
69%
95%
59%
77%
89%
41%
91%
85%
71%
71%
70%
24%
30%
83%
70%
83%
94%
10%
110%
80%
48%
78%
96%
76%
46%
66%
92%
84%
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [51]
Attributable Measured & Indicated Resources (1,2,3,4,5,9,25)
As of December 31, 2019 unless otherwise noted (6)
Tonnage
Mt
Measured
Grade
g/t
Contained Tonnage
Mt
Moz
Indicated
Measured & Indicated
Grade Contained Tonnage
Mt
Moz
g/t
Grade Contained
Moz
g/t
Gold
Salobo (75%) (10)
Sudbury (70%) (11)
Constancia (50%)
777 (50%)
Minto
Toroparu (10%) (15,16)
Cotabambas (25%) (16,24)
Kutcho (16,17)
Total Gold
Silver
Peñasquito (25%) (10)
Antamina (33.75%) (11,19)
Copper
Copper-Zinc
Constancia
Neves-Corvo
Copper
Zinc
Zinkgruvan
Zinc
Copper
Yauliyacu (20)
Los Filos
Aljustrel (23)
Stratoni
777
Minto
Rosemont (21)
Pascua-Lama (25%)
Keno Hill (25%)
Underground
Elsa Tailings
Loma de La Plata (12.5%)
Toroparu (50%) (15,16)
Cotabambas (16,24)
Kutcho (16,17)
Total Silver
Cobalt
Voisey's Bay (42.4%) (11,22)
Total Cobalt
0.9
0.8
90.4
-
3.3
1.2
-
-
0.42
0.90
0.04
-
0.40
0.93
-
-
0.01
0.02
0.12
-
0.04
0.03
-
-
0.23
144.2
8.5
93.3
0.2
9.0
9.0
29.3
6.7
0.31
0.51
0.04
1.79
0.57
0.87
0.23
0.62
1.44
0.14
0.13
0.01
0.17
0.25
0.22
0.13
2.48
145.1
9.3
183.7
0.2
12.4
10.2
29.3
6.7
0.31
0.54
0.04
1.79
0.53
0.87
0.23
0.62
1.45
0.16
0.25
0.01
0.21
0.29
0.22
0.13
2.71
9.3
26.7
8.0
76.0
24.6
60.0
85.3
24.8
68.0
30.7
9.8
180.8
5.5
6.9
2.7
2.0
5.3
88.5
7.0
-
-
3.3
112.2
10.7
-
-
-
21.9
-
-
7.0
21.0
2.4
49.0
63.4
65.4
34.8
115.0
5.3
55.8
-
-
3.4
3.9
57.2
-
-
-
1.1
-
-
-
-
6.9
6.6
13.7
8.6
14.2
5.7
2.2
19.5
15.2
12.6
-
-
0.4
14.1
19.7
-
-
-
0.8
-
-
148.2
-
-
105.3
44.9
186.5
29.5
36.1
8.1
0.3
8.6
133.7
10.0
0.1
0.4
9.0
358.0
97.9
0.7
0.6
3.6
98.5
117.1
6.7
8.0
18.0
2.3
50.1
56.6
70.9
35.7
132.0
8.1
52.1
186.0
29.6
5.0
2.7
52.2
455.8
119.0
169.0
0.7
2.7
27.3
1.4
0.05
27.1
26.0
13.5
47.5
65.7
18.4
0.3
36.7
35.0
16.7
0.8
0.4
1.5
31.5
164.4
10.5
2.4
19.8
2.3
10.3
5.9
596.6
1.6
1.6
136.0
54.7
367.3
35.0
43.1
10.8
2.2
13.9
222.2
17.0
0.1
0.4
12.4
470.2
108.6
0.7
0.6
3.6
120.4
117.1
6.7
7.8
18.5
2.3
49.9
57.7
69.5
34.9
125.6
7.0
53.6
186.0
29.6
4.6
3.0
52.7
455.8
119.0
169.0
0.8
2.7
27.3
1.4
0.05
34.0
32.6
27.3
56.2
79.8
24.1
2.5
56.2
50.2
29.3
0.8
0.4
1.8
45.6
184.1
10.5
2.4
19.8
3.1
10.3
5.9
744.7
1.6
1.6
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [52]
Attributable Inferred Resources (1,2,3,4,5,9,25)
As of December 31, 2019 unless otherwise noted (6)
Inferred
Tonnage
Mt
Grade
g/t
Contained
Moz
Gold
Salobo (75%) (10)
Sudbury (70%) (11)
Constancia (50%)
Stillwater (12,13)
San Dimas (25%) (14)
777 (50%)
Minto
Cotabambas (25%) (16,24)
Toroparu (10%) (15,16)
Kutcho (16,17)
Metates Royalty (18)
Total Gold
Silver
Peñasquito (25%) (10)
Antamina (33.75%) (11,19)
Copper
Copper-Zinc
Constancia
Neves-Corvo
Copper
Zinc
Yauliyacu (20)
Zinkgruvan
Zinc
Copper
San Dimas (25%) (14)
Stratoni
777
Minto
Los Filos
Rosemont (21)
Pascua-Lama (25%)
Aljustrel (23)
Keno Hill (25%)
Underground
Loma de La Plata (12.5%)
Cotabambas (16,24)
Toroparu (50%) (15,16)
Kutcho (16,17)
Metates Royalty (18)
Total Silver
Palladium
Stillwater (4.5%) (12,13)
Total Palladium
Cobalt
Voisey's Bay (42.4%) (11,22)
Total Cobalt
132.1
5.0
30.4
86.1
1.4
0.2
6.1
151.3
12.9
10.7
0.3
48.4
232.7
106.3
60.8
12.9
3.8
13.8
19.8
0.3
1.4
1.6
0.4
6.1
98.2
68.7
3.8
14.0
0.4
0.2
605.3
58.7
10.7
0.3
0.29
0.54
0.08
0.45
3.60
3.09
0.51
0.17
0.76
0.26
0.39
26.0
9.0
16.0
2.7
34.8
62.0
251.0
82.0
31.0
341.3
169.0
40.4
4.9
6.1
1.7
17.8
48.4
454.6
76.0
2.3
0.1
21.5
9.5
0.9
12.8
4.0
0.11
1.22
0.09
0.08
1.24
0.17
0.02
0.10
0.84
0.32
0.09
0.003
4.16
40.4
67.3
54.7
5.2
14.5
7.6
111.4
52.2
0.3
15.7
8.5
0.5
1.0
19.4
3.7
2.2
21.8
6.1
0.4
45.4
0.1
7.4
0.1
485.7
0.35
0.35
9.3
9.3
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [53]
Notes on Mineral Reserves & Mineral Resources:
1.
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.
2. Mineral Reserves and Mineral Resources are reported above in millions of metric tonnes (“Mt”), grams per metric tonne (“g/t”) for gold, silver and
palladium, percent (“%”) for cobalt, millions of ounces (“Moz”) for gold, silver and palladium and millions of pounds (“Mlbs”) for cobalt.
3. Qualified persons (“QPs”), as defined by the NI 43-101, for the technical information contained in this document (including the Mineral Reserve and
Mineral Resource estimates) are:
a.
b.
Neil Burns, M.Sc., P.Geo. (Vice President, Technical Services); and
Ryan Ulansky, M.A.Sc., P.Eng. (Senior Director, Engineering),
both employees of the Company (the “Company’s QPs”).
4.
The Mineral Resources reported in the above tables are exclusive of Mineral Reserves. The San Dimas mine, Minto mine, Neves-Corvo mine,
Zinkgruvan mine, Stratoni mine, Stillwater mines, Keno Hill project and Toroparu project (gold only) report Mineral Resources inclusive of Mineral
Reserves. The Company’s QPs have made the exclusive Mineral Resource estimates for these mines based on average mine recoveries and
dilution.
5. Mineral Resources which are not Mineral Reserves do not have demonstrated economic viability.
6. Other than as detailed below, Mineral Reserves and Mineral Resources are reported as of December 31, 2019 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.
a. Mineral Resources and Mineral Reserves for the 777, Constancia, Minto and San Dimas mines are reported as of December 31, 2018.
b. Mineral Resources for Aljustrel’s Estaçao project are reported as of December 31, 2007.
c. Mineral Resources for the Cotabambas project are reported as of June 20, 2013.
d. Mineral Resources for Keno Hill’s Elsa Tailings project are reported as of April 22, 2010, Bellekeno mine Indicated Mineral Resources as
of September 30, 2013, Mineral Resources for the Lucky Queen, Flame & Moth and Onek projects as of March 29, 2017 and
Bermingham projects as of March 28, 2019. Mineral Reserves are reported as of March 28, 2019.
e. Mineral Resources for the Kutcho project are reported as of February 22, 2019 and Mineral Reserves are reported as of June 15, 2017.
f.
Mineral Resources for the Loma de La Plata project are reported as of May 20, 2009.
g. Mineral Resources and Mineral Reserves for the Los Filos mine are reported as of October 31, 2018.
h. Mineral Resources and Mineral Reserves for the Neves-Corvo and Zinkgruvan mines are reported as of June 30, 2019.
i.
j.
Mineral Resources and Mineral Reserves for the Metates royalty are reported as of April 29, 2016.
Mineral Resources and Mineral Reserves for the Rosemont project are reported as of March 30, 2017.
k. Mineral Resources and Mineral Reserves for the Stratoni mine are reported as of September 30, 2019.
l.
Mineral Resources for the Toroparu project are reported as of September 20, 2018 and Mineral Reserves are reported as of March 31,
2013.
7.
Process recoveries are the average percentage of gold, silver, palladium or cobalt in a saleable product (doré or concentrate) recovered from
mined ore at the applicable site process plants as reported by the operators.
8. Mineral Reserves are estimated using appropriate process and mine recovery rates, dilution, operating costs and the following commodity prices:
a.
b.
c.
d.
e.
Aljustrel mine – 3.75% zinc cut-off for the Moinho and Feitais mines.
Antamina mine - $3.08 per pound copper, $1.08 per pound zinc, $8.70 per pound molybdenum and $17.39 per ounce silver.
Constancia mine - $1,260 per ounce gold, $18.00 per ounce silver, $3.00 per pound copper and $11.00 per pound molybdenum.
Keno Hill project - $1,300 per ounce gold, $18.50 per ounce silver, $1.00 per pound lead and $1.15 per pound zinc.
Kutcho project – 1.5% copper cut-off for the Main deposit and 1.0% copper cut-off for the Esso deposit, both assuming $2.75 per pound
copper, $1.10 per pound zinc, $1,250 per ounce gold and $17.00 per ounce silver.
f.
Los Filos mine - $1,200 per ounce gold and $4.39 per ounce silver.
g. Metates royalty – 0.34 grams per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $19.20 per ounce silver.
h. Minto mine – 1.2% copper cut-off assuming $300 per ounce gold, $3.90 per ounce silver and $2.50 per pound copper.
i.
j.
k.
Neves-Corvo mine – 1.4% copper cut-off for the copper Mineral Reserves and 5.4% zinc equivalent cut-off for the zinc Mineral Reserves,
both assuming $2.75 per pound copper, $1.00 per pound lead and zinc.
Peñasquito mine - $1,200 per ounce gold, $16.00 per ounce silver, $0.95 per pound lead and $1.20 per pound zinc.
Rosemont project - $6.00 per ton NSR cut-off assuming $18.00 per ounce silver, $3.15 per pound copper and $11.00 per pound
molybdenum.
l.
Salobo mine – 0.253% copper equivalent cut-off assuming $1,290 per ounce gold and $3.18 per pound copper.
m. San Dimas mine – 220 grams per tonne silver equivalent cut-off for longhole and 230 grams per tonne silver equivalent cut-off for cut and
n.
o.
p.
q.
fill assuming $1,250 per ounce gold and $17.00 per ounce silver.
Stillwater mines - combined platinum and palladium cut-off of 6.8 g/t.
Stratoni mine – 13.5% zinc equivalent cut-off assuming $11.42 per ounce silver, $0.91 per pound lead and $1.09 per pound zinc.
Sudbury mines - $1,290 per ounce gold, $8.16 per pound nickel, $3.18 per pound copper, $1,100 per ounce platinum, $1,000 per ounce
palladium and $22.68 per pound cobalt.
Toroparu project – 0.38 grams per tonne gold cut-off assuming $1,070 per ounce gold for fresh rock and 0.35 grams per tonne gold cut-off
assuming $970 per ounce gold for saprolite.
r.
Voisey’s Bay mines:
i. Ovoid and SE Extension Mineral Reserves – Cdn $20.56 per tonne assuming $6.80 per pound nickel, $3.08 per pound copper and
$29.48 per pound cobalt.
ii. Reid Brook Mineral Reserves - $275.00 per tonne assuming $9.71 per pound nickel, $3.40 per pound copper and $11.52 per pound
cobalt.
iii. Eastern Deeps Mineral Reserves - $225.00 per tonne assuming $6.35 per pound nickel, $2.81 per pound copper and $18.14 per
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [54]
pound cobalt.
s.
t.
Yauliyacu mine - $17.39 per ounce silver, $3.08 per pound copper, and $1.08 per pound zinc.
Zinkgruvan mine – 5.4% zinc equivalent cut-off for the zinc Mineral Reserve and 1.4% copper cut-off for the copper Mineral Reserve, both
assuming $2.75 per pound copper and $1.00 per pound lead and zinc.
u.
777 mine – $1,283 per ounce gold, $17.50 per ounce silver, $3.10 per pound copper and $1.24 per pound zinc.
9. Mineral Resources are estimated using appropriate recovery rates and the following commodity prices:
a.
b.
c.
d.
Aljustrel mine – 3.75% zinc cut-off for Feitais and Moinho mines and 4.0% zinc cut-off for the Estação project.
Antamina mine - $3.30 per pound copper, $1.23 per pound zinc, $10.00 per pound molybdenum and $19.95 per ounce silver.
Constancia mine – $1,260 per ounce gold, $18.00 per ounce silver, $3.00 per pound copper and $11.00 per pound molybdenum.
Cotabambas project – 0.2% copper equivalent cut-off assuming $1,350 per ounce gold, $23.00 per ounce silver, $3.20 per pound copper
and $12.50 per pound molybdenum.
e.
Keno Hill mines:
i. Bellekeno mine – Cdn $185 per tonne NSR cut-off assuming $22.50 per ounce silver, $0.85 per pound lead and $0.95 per pound
zinc.
ii. Lucky Queen and Flame and Moth – Cdn $185 per tonne NSR cut-off assuming $1,300 per ounce gold, $20.00 per ounce silver,
$0.94 per pound lead and $1.00 per pound zinc.
iii. Onek - Cdn $185 per tonne NSR cut-off assuming $1,250 per ounce gold, $20.00 per ounce silver, $0.90 per pound lead and $0.95
per pound zinc.
iv. Bermingham - Cdn $185 per tonne NSR cut-off assuming $20.00 per ounce silver, $0.95 per pound lead, $1.00 per pound zinc and
$1,300 per ounce gold.
v. Elsa Tailings project – 50 grams per tonne silver cut-off assuming $17.00 per ounce silver and $1,000 per ounce gold.
Kutcho project – 1.2% copper equivalent cut-off assuming $3.00 per pound copper, $1.25 per pound zinc, $1,350 per ounce gold and
$17.00 per ounce silver.
Loma de La Plata project – 50 grams per tonne silver equivalent cut-off assuming $12.50 per ounce silver and $0.50 per pound lead.
Los Filos mine - $1,400 per ounce gold and $4.39 per ounce silver.
Metates royalty – 0.34 grams per tonne gold equivalent cut-off assuming $1,200 per ounce gold and $19.20 per ounce silver.
Minto mine – 0.5% copper cut-off for Open Pit and 1.0% copper cut-off for Underground.
Neves-Corvo mine – 1.0% copper cut-off for the copper Mineral Resource and 4.5% zinc cut-off for the zinc Mineral Resource, both
assuming $2.75 per pound copper and $1.00 per pound lead and zinc.
f.
g.
h.
i.
j.
k.
l.
Pascua-Lama project – $1,500 per ounce gold, $18.75 per ounce silver and $3.50 per pound copper.
m. Peñasquito mine - $1,400 per ounce gold, $20.00 per ounce silver, $1.15 per pound lead and $1.45 per pound zinc.
n.
o.
p.
q.
r.
s.
t.
u.
v.
w.
Rosemont project – $5.70 per ton NSR cut-off assuming $18.00 per ounce silver, $3.15 per pound copper and $11.00 per pound
molybdenum.
Salobo mine – 0.253% copper equivalent cut-off assuming $1,290 per ounce gold and $3.18 per pound copper.
San Dimas mine – 210 grams per tonne silver equivalent cut-off assuming $1,300 per ounce gold and $17.50 per ounce silver.
Stillwater mines – geologic boundaries for Inferred Mineral Resources at both the Stillwater mine and East Boulder mine.
Stratoni mine – Geologically constrained to massive sulfide contacts.
Sudbury mines - $1,290 per ounce gold, $8.16 per pound nickel, $3.18 per pound copper, $1,100 per ounce platinum, $1,000 per ounce
palladium and $22.68 per pound cobalt.
Toroparu project – 0.30 grams per tonne gold cut-off assuming $1,350 per ounce gold and $3.00 per pound copper.
Voisey’s Bay mines:
i. Reid Brook Mineral Resources - $275.00 per tonne assuming $9.71 per pound nickel, $3.40 per pound copper and $11.52 per
pound cobalt.
ii. Discovery Hill Mineral Resources - $24.81 per tonne assuming $9.53 per pound nickel, $3.13 per pound copper and $12.50 per
pound cobalt.
Yauliyacu mine – $19.95 per ounce silver, $3.30 per pound copper, and $1.23 per pound zinc.
Zinkgruvan mine – 4.5% zinc equivalent cut-off for the zinc Mineral Resource and 1.0% copper cut-off for the copper Mineral Resource,
both assuming $2.75 per pound copper and $1.00 per pound lead and zinc.
x.
777 mine – $1,283 per ounce gold, $17.50 per ounce silver, $3.10 per pound copper and $1.24 per pound zinc.
10. The scientific and technical information in these tables regarding the Peñasquito mine was sourced by the Company from the following filed
documents:
a.
Peñasquito – Newmont’s December 31, 2019 Resources and Reserves report
(https://s2.q4cdn.com/575378270/files/doc_news/2020/updated/Newmont-Reports-2019-Reserves-and-Resources_Final.pdf).
The Company QP’s have approved this partner disclosed scientific and technical information in respect of the Peñasquito mine, as well as, the
Company’s Mineral Resource and Mineral Reserve estimates for the Salobo mine.
11. The Company’s attributable Mineral Resources and Mineral Reserves for the Antamina silver interest, Sudbury gold interest and Voisey’s Bay
cobalt interest, have been constrained to the production expected for the various contracts.
12. 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 mines 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 mines. Attributable palladium Mineral Reserves and
Mineral Resources have been calculated based upon the 4.5% / 2.25% / 1.0% production entitlements.
13. The Stillwater mine has been in operation since 1986 and the 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
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [55]
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:
a.
b.
Stillwater mine: Pd = (Pt + Pd) / (1/3.5 + 1) and Au = (Pd + Pt) x 0.0238
East Boulder mine: Pd = (Pt + Pd) / (1/3.6 + 1) and Au = (Pd + Pt) x 0.0323
14. 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.
15. The Company’s agreement with Gold X Mining Corp is an Early Deposit agreement, whereby the Company will be entitled to purchase 10% of the
gold production and 50% of the silver production from the Toroparu project for the life of mine.
16. The Company has the option in the Early Deposit agreements, to terminate the agreement following the delivery of a feasibility study or if feasibility
study has not been delivered within a required time frame.
17. The Company’s agreement with Kutcho Copper is an Early Deposit agreement, whereby the Company will be entitled to purchase 100% of the
gold and silver production from the Kutcho project until 51,000 ounces of gold and 5.6 million ounces of silver have been delivered, after which
both streams will decrease to 66.67% for the remaining life of mine.
18. On August 7, 2019, Chesapeake Gold Corp (Chesapeake) exercised their option to re-acquire two-thirds of the Royalty (1%), reducing the
Company’s net smelter return royalty to 0.5%.
19. The Antamina silver purchase agreement in respect to the Antamina mine (November 3, 2015) provides that Glencore will deliver 33.75% of the
silver production until 140 million ounces are delivered and 22.5% of silver production thereafter, for a 50 year term that can be extended in
increments of 10 years at the Company’s discretion. Attributable reserves and resources have been calculated on the 33.75% / 22.5% basis.
20. The Yauliyacu mine silver purchase agreement provides that Glencore will deliver to the Company a per annum amount equal to the first 1.5
million ounces of payable silver produced at the Yauliyacu mine and 50% of any excess for the life of the mine.
21. The Rosemont mine Mineral Resources and Mineral Reserves do not include the Oxide material.
22. The Voisey’s Bay cobalt purchase agreement provides that effective January 1, 2021, Vale will deliver 42.4% of the cobalt production until 31
million pounds are delivered to the Company and 21.2% of cobalt production thereafter, for the life of the mine. Attributable reserves and
resources have been calculated on the 42.4% / 21.2% basis.
23. The Company only has the rights to silver contained in concentrates containing less than 15% copper at the Aljustrel mine.
24. The Company’s agreement with Panoro is an Early Deposit agreement, whereby the Company will be entitled to purchase 100% of the silver
production and 25% of the gold production from the Cotabambas project until 90 million silver equivalent ounces have been delivered, at which
point the stream will drop to 66.67% of silver production and 16.67% of gold production for the life of mine.
25. Precious metals and cobalt are by-product metals at all of the Mining Operations, other than silver at the Keno Hill mines and the Loma de La
Plata zone of the Navidad project, gold at the Toroparu project and palladium at the Stillwater mines and therefore, the economic cut off applied to
the reporting of precious metals and cobalt reserves and resources will be influenced by changes in the commodity prices of other metals at the
mines.
Statements made in this section contain forward-looking information. Please see “Cautionary Note Regarding Forward-Looking Statements” for material
risks, assumptions and important disclosure associated with this information.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [56]
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:
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the future price of commodities;
the estimation of future production from Mining Operations (including in the estimation of production, mill
throughput, grades, recoveries and exploration potential);
the estimation of mineral reserves and mineral resources (including the estimation of reserve conversion
rates) and the realization of such estimations);
the commencement, timing and achievement of construction, expansion or improvement projects by
Wheaton’s PMPA counterparties at Mining Operations;
the ability of Wheaton’s PMPA counterparties to comply with the terms of a PMPA (including as a result of
the business, mining operations and performance of Wheaton’s PMPA counterparties) and the potential
impacts of such on Wheaton;
the costs of future production;
the estimation of 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 PMPAs, future
payments by the Company in accordance with PMPAs, including any acceleration of payments;
projected increases to Wheaton's production and cash flow profile;
projected changes to Wheaton’s production mix;
the ability of Wheaton’s PMPA counterparties to comply with the terms of any other obligations under
agreements with the Company;
the ability to sell precious metals and cobalt production;
confidence in the Company’s business structure;
the Company's assessment of taxes payable and the impact of the CRA Settlement for years subsequent
to 2010;
possible audits for taxation years subsequent to 2015;
the Company’s assessment of the impact of any tax reassessments;
the Company’s intention to file future tax returns in a manner consistent with the CRA Settlement; and
assessments of the impact and resolution of various legal and tax matters, including but not limited to
outstanding class actions and audits.
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:
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fluctuations in the price of commodities (including Wheaton’s ability to sell its precious metals or cobalt
production at acceptable prices or at all);
risks related to the Mining Operations (including fluctuations in the price of the primary or other
commodities mined at such operations, regulatory, political and other risks of the jurisdictions in which the
Mining Operations are located, actual results of mining, risks association with exploration, development,
operating, expansion and improvement at the Mining Operations, environmental and economic risks of the
Mining Operations, and changes in project parameters as Mining Operations plans continue to be refined);
risks related to the uncertainty in the accuracy of mineral reserve and mineral resource estimation;
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;
risks related to the satisfaction of each party’s obligations in accordance with the terms of the Company’s
PMPAs, including the ability of the companies with which the Company has PMPAs to perform their
obligations under those PMPAs in the event of a material adverse effect on the results of operations,
financial condition, cash flows or business of such companies, any acceleration of payments, estimated
throughput and exploration potential;
risks relating to production estimates from Mining Operations, including anticipated timing of the
commencement of production by certain Mining Operations;
• Wheaton’s interpretation of, or compliance with, or application of, 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;
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [57]
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any challenge or reassessment 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;
risks in assessing the impact of the CRA Settlement for years subsequent to 2010 (including whether there
will be any material change in the Company's facts or change in law or jurisprudence);
credit and liquidity risks;
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indebtedness and guarantees risks;
hedging risk;
competition in the streaming industry risk;
risks related to claims and legal proceedings against Wheaton or the Mining Operations;
risks relating to security over underlying assets;
risks related to governmental regulations;
risks related to international operations of Wheaton and the Mining Operations;
risks relating to exploration, development, operating, expansions and improvements at the Mining
Operations;
risks related to environmental regulations, climate change and epidemics;
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;
inability to replace and expand mineral reserves, including anticipated timing of the commencement of
production by certain Mining Operations (including increases in production, estimated grades and
recoveries);
uncertainties related to title and indigenous rights with respect to the mineral properties of the Mining
Operations;
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 related to Wheaton’s acquisition strategy;
risks related to the market price of the common shares of Wheaton (the “Common Shares”);
equity price risks related to Wheaton’s holding of long-term investments in other 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;
risks relating to activist shareholders;
risks relating to reputational damage;
risks relating to unknown defects and impairments;
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 fluctuations in commodity prices of metals produced from the Mining Operations other than
precious metals or cobalt;
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, 2018 and Form 6-K filed March 20, 2019 both on file with the U.S. Securities
and Exchange Commission in Washington, D.C. (the “Disclosure”).
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Forward-looking statements are based on assumptions management currently believes to be reasonable, including but
not limited to:
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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 the mineral reserves and mineral resource estimates from Mining Operations (including reserve
conversion rates) are accurate;
that each party will satisfy their obligations in accordance with the PMPAs;
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 PMPAs;
that any outbreak or threat of an outbreak of a virus or other contagions or epidemic disease will be
adequately responded to locally, nationally, regionally and internationally;
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [58]
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that expectations regarding the resolution of legal and tax matters will be achieved (including ongoing class
action litigation and CRA audits involving the Company);
that Wheaton has properly considered the application of Canadian tax law to its structure and operations;
that Wheaton has filed its tax returns and paid applicable taxes in compliance with Canadian tax law;
that Wheaton's application of the CRA Settlement for years subsequent to 2010 is accurate (including the
Company's assessment that there will be no material change in the Company's facts or change in law or
jurisprudence for years subsequent to 2010);
the estimate of the recoverable amount for any PMPA 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.
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, 2019 and other continuous disclosure
documents filed by Wheaton since January 1, 2020, 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.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [59]
Management’s Responsibility for Financial Reporting
The accompanying consolidated financial statements of Wheaton Precious Metals Corp. (“Wheaton”) were prepared
by management, which is responsible for the integrity and fairness of the information presented, including the many
amounts that must of necessity be based on estimates and judgments. These consolidated financial statements were
prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board. Financial information appearing throughout our Management’s Discussion and Analysis
(“MD&A”) is consistent with these consolidated financial statements.
In discharging our responsibility for the integrity and fairness of the consolidated financial statements and for the
accounting systems from which they are derived, we maintain and rely on a comprehensive system of internal
controls designed to ensure that transactions are authorized, assets are safeguarded and proper records are
maintained. These controls include business planning; delegation of authority; careful selection and hiring of staff;
accountability for performance within appropriate and well-defined areas of responsibility; and the communication of
policies and guidelines of business conduct throughout the company.
The Board of Directors oversees management’s responsibilities for financial reporting through the Audit Committee,
which is composed entirely of directors who are neither officers nor employees of Wheaton. The Audit Committee
reviews Wheaton’s interim and annual consolidated financial statements and MD&A and recommends them for
approval by the Board of Directors. Other key responsibilities of the Audit Committee include monitoring Wheaton’s
system of internal controls, monitoring its compliance with legal and regulatory requirements, selecting the external
auditors and reviewing the qualifications, independence and performance of the external auditors.
Deloitte LLP, Independent Registered Public Accounting Firm, appointed by the shareholders of Wheaton upon the
recommendation of the Audit Committee and Board, have performed an independent audit of the consolidated
financial statements and their report follows. The auditors have full and unrestricted access to the Audit Committee to
discuss their audit and related findings.
/s/ Randy Smallwood
Randy Smallwood
/s/ Gary Brown
Gary Brown
President & Chief Executive Officer
Senior Vice President & Chief Financial Officer
March 11, 2020
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [60]
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Wheaton Precious Metals Corp.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Wheaton Precious Metals Corp. and subsidiaries
(the “Company”), as of December 31, 2019 and 2018, the related consolidated statements of earnings,
comprehensive income, cash flows and shareholders’ equity for each of the two years in the period ended December
31, 2019, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial
statements present fairly, in all material respects, the financial position of the Company as of December 31, 2019 and
2018, and its financial performance and its cash flows for each of the two years in the period ended December 31,
2019 in conformity with International Financial Reporting Standards as issued by the International Accounting
Standards Board.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2019, based on criteria
established in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations
of the Treadway Commission and our report dated March 11, 2020 expressed an unqualified opinion on the
Company’s internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an
opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with
the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial statements are free of material
misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of
material misstatement of the financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the financial statements.
We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial
statements that was communicated or required to be communicated to the audit committee and that (1) relates to
accounts or disclosures that are material to the financial statements and (2) involved our especially challenging,
subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion
on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below,
providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Impairment of Mineral Stream Interests – Refer to Notes 3 and 11 to the Financial Statements
Critical Audit Matter Description
The Company considers each precious metals purchase agreement (“PMPA”) to be a separate cash generating unit
(“CGU”). At the end of each reporting period, the Company assesses each PMPA to determine whether any indication
of impairment exists. If such an indication exists, the recoverable amount of the PMPA is estimated in order to
determine the extent of the impairment. During the year, the Company concluded that there was an indicator of
impairment relative to the Company’s Voisey’s Bay PMPA due to the implied purchase price paid by Pala Investments
Limited to acquire Cobalt 27’s Voisey’s Bay stream. The calculation of the recoverable amount requires the use of
estimates and assumptions relating to commodity prices, discount rates and recoverable pounds of cobalt.
Given the significant judgments management made related to the market price of cobalt, discount rates and the
recoverable pounds of cobalt, auditing these estimates and inputs required a high degree of subjectivity in applying
audit procedures and in evaluating the results of those procedures. This resulted in an increased extent of audit
effort, including the involvement of fair value specialists.
How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the market price of cobalt, discount rates, and recoverable pounds of cobalt used in
calculating the recoverable amount included the following, among others:
• Evaluated the effectiveness of controls over management’s assessment of market price of cobalt, discount rates
and recoverable pounds of cobalt.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [61]
• Evaluated management’s ability to accurately forecast future recoverable pounds of cobalt by:
•
Assessing the methodology used in management’s estimate of future cobalt production
• Comparing management’s forecast of future recoverable pounds of cobalt production to previous
forecasts,
•
Assessed the reasonableness of the inputs by comparing the estimated recoverable amount using a discounted
cash flow approach to an estimate of the recoverable amount using a market approach based on a recent
transaction.
• With the assistance of fair value specialists:
• Evaluated the reasonableness of the discount rates by testing the source information underlying the
determination of the discount rates and the mathematical accuracy of the calculation,
• Developing a range of independent estimates and comparing those to the discount rate selected by
management and,
• Evaluated the market prices of cobalt by comparing management’s prices to third party prices for cobalt.
/s/ Deloitte LLP
Chartered Professional Accountants
Vancouver, Canada
March 11, 2020
We have served as the Company's auditor since 2004.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [62]
Management’s Report on Internal Control Over Financial Reporting
Management of Wheaton Precious Metals Corp. (“Wheaton”) is responsible for establishing and maintaining
adequate internal control over financial reporting. Internal control over financial reporting is a process designed by, or
under the supervision of the Chief Executive Officer and the Chief Financial Officer and effected by the Board of
Directors, management and other personnel to provide reasonable assurance regarding the reliability of financial
reporting and the preparation of financial statements for external purposes in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. It includes those policies
and procedures that:
i.
ii.
iii.
pertain to the maintenance of records that accurately and fairly reflect, in reasonable detail, the transactions
related to Wheaton’s assets;
provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with IFRS, and Wheaton receipts and expenditures are made only in accordance
with authorizations of management and Wheaton’s directors; and
provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or
disposition of Wheaton’s assets that could have a material effect on Wheaton’s financial statements.
Due to its inherent limitations, internal control over financial reporting may not prevent or detect misstatements on a
timely basis. Also, projections of any evaluation of the effectiveness of internal control over financial reporting to
future periods are subject to the risk that the controls may become inadequate because of changes in conditions, or
that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of Wheaton’s internal control over financial reporting as of December 31,
2019, based on the criteria set forth in Internal Control — Integrated Framework (2013) issued by the Committee of
Sponsoring Organizations of the Treadway Commission (COSO). Based on this assessment, management has
concluded that, as of December 31, 2019, Wheaton’s internal control over financial reporting was effective.
The effectiveness of Wheaton’s internal control over financial reporting, as of December 31, 2019, has been audited
by Deloitte LLP, Independent Registered Public Accounting Firm, who also audited the Company’s consolidated
financial statements as of and for the year ended December 31, 2019, as stated in their report.
/s/ Randy Smallwood
/s/ Gary Brown
Randy Smallwood
Gary Brown
President & Chief Executive Officer
Senior Vice President & Chief Financial Officer
March 11, 2020
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [63]
Report of Independent Registered Public Accounting Firm
To the Shareholders and the Board of Directors of Wheaton Precious Metals Corp.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Wheaton Precious Metals Corp. and subsidiaries (the
“Company”) as of December 31, 2019, based on criteria established in Internal Control—Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion,
the Company maintained, in all material respects, effective internal control over financial reporting as of December
31, 2019, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United
States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2019, of the
Company and our report dated March 11, 2020, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for
its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the
Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered
with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal
securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was
maintained in all material respects. Our audit included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating
effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of financial statements for external purposes in
accordance with generally accepted accounting principles. A company’s internal control over financial reporting
includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail,
accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance
with generally accepted accounting principles, and that receipts and expenditures of the company are being made
only in accordance with authorizations of management and directors of the company; and (3) provide reasonable
assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s
assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.
Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become
inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may
deteriorate.
/s/ Deloitte LLP
Chartered Professional Accountants
Vancouver, Canada
March 11, 2020
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [64]
Consolidated Statements of Earnings
(US dollars and shares in thousands, except per share amounts)
Sales
Cost of sales
Cost of sales, excluding depletion
Depletion
Total cost of sales
Gross margin
General and administrative expenses
Impairment of mineral stream interests
Earnings from operations
Gain on disposal of mineral stream interest
Other (income) expense
Earnings before finance costs and income taxes
Finance costs
Earnings before income taxes
Income tax recovery (expense)
Net earnings
Basic earnings per share
Diluted earnings per share
Weighted average number of shares outstanding
Basic
Diluted
Years Ended December 31
Note
2019
2018
6 $
861,332 $
794,012
$
258,559 $
256,826
245,794
252,287
10
$
515,385 $
498,081
$
345,947 $
54,507
165,912
$
125,528 $
-
(274)
7
11
10
8
$
$
18.4
24
125,802 $
48,730
77,072 $
9,066
295,931
51,650
-
244,281
(245,715)
5,826
484,170
41,187
442,983
(15,868)
$
86,138 $
427,115
$ 0.19 $
$ 0.19 $
0.96
0.96
22
22
446,021
446,930
443,407
443,862
The accompanying notes form an integral part of these consolidated financial statements.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [65]
Consolidated Statements of Comprehensive Income
(US dollars in thousands)
Net earnings
Other comprehensive income
Items that will not be reclassified to net earnings
Gain (loss) on LTIs¹
Income tax recovery (expense) related to LTIs¹
Total other comprehensive income (loss)
Total comprehensive income
1) LTIs = long-term investments – common shares held.
Years Ended December 31
Note
2019
2018
$
86,138 $
427,115
16 $
24
161,936 $
(9,623)
(39,985)
(2,662)
$
152,313 $
(42,647)
$
238,451 $
384,468
The accompanying notes form an integral part of these consolidated financial statements.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [66]
Consolidated Balance Sheets
(US dollars in thousands)
Assets
Current assets
Cash and cash equivalents
Accounts receivable
Current taxes receivable
Other
Total current assets
Non-current assets
Mineral stream interests
Early deposit mineral stream interests
Mineral royalty interest
Long-term equity investments
Investment in associates
Convertible notes receivable
Property, plant and equipment
Other
Total non-current assets
Total assets
Liabilities
Current liabilities
Accounts payable and accrued liabilities
Current taxes payable
Current portion of performance share units
Current portion of lease liabilities
Other
Total current liabilities
Non-current liabilities
Bank debt
Lease liabilities
Deferred income taxes
Performance share units
Pension liability
Total non-current liabilities
Total liabilities
Shareholders' equity
Issued capital
Reserves
Retained earnings
Total shareholders' equity
As at
December 31
2019
As at
December 31
2018
Note
$
103,986 $
7,138
124
43,504
9
25
75,767
2,186
210
1,541
$
154,752 $
79,704
10 $ 5,734,106 $ 6,156,839
30,241
12
9,107
13
164,753
16
2,562
14
12,899
15
3,626
17
10,315
26
31,741
3,036
309,757
882
21,856
7,311
14,566
$ 6,123,255 $ 6,390,342
$ 6,278,007 $ 6,470,046
$
11,794 $
24
21.1
18.3
29
-
10,668
724
41,514
19,883
3,361
5,578
-
19
$
64,700 $
28,841
18.1 $
18.3
24
21.1
28
$
$
874,500 $ 1,264,000
-
111
5,178
-
3,528
148
8,401
810
887,387 $ 1,269,289
952,087 $ 1,298,130
19 $ 3,599,203 $ 3,516,437
7,893
20
1,647,586
160,701
1,566,016
$ 5,325,920 $ 5,171,916
$ 6,278,007 $ 6,470,046
Total liabilities and shareholders' equity
/s/ Randy Smallwood
Randy Smallwood
Director
/s/ John Brough
John Brough
Director
The accompanying notes form an integral part of these consolidated financial statements.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [67]
Consolidated Statements of Cash Flows
(US dollars in thousands)
Operating activities
Net earnings
Adjustments for
Depreciation and depletion
Gain on disposal of mineral stream interest
Gain on disposal of mineral royalty interest
Impairment charges
Interest expense
Equity settled stock based compensation
Performance share units
Pension expense
Income tax expense (recovery)
Loss on fair value adjustment of share purchase warrants held
Share in losses of associate
Fair value (gain) loss on convertible note receivable
Investment income recognized in net earnings
Other
Change in non-cash working capital
Cash generated from operations before income taxes and interest
Income taxes paid
Interest paid
Interest received
Years Ended December 31
Note
2019
2018
$
86,138 $
427,115
10
13
11, 14
18.4
21.1
28
24
8, 16
14
15
23
$
258,730
-
(2,929)
167,561
44,942
5,691
7,834
810
(9,066)
16
164
1,043
(875)
20
(11,837)
548,242 $
(5,380)
(42,059)
817
253,343
(245,715)
-
-
35,839
5,432
9,517
-
15,868
124
432
2,878
(829)
(46)
8,964
512,922
(960)
(35,373)
824
Cash generated from operating activities
$
501,620 $
477,413
Financing activities
Bank debt repaid
Bank debt drawn
Credit facility extension fees
Share purchase options exercised
Lease payments
Dividends paid
18.1 $
18.1
18.1
20.2
18.3
19.2, 23
(389,500) $
-
(1,106)
37,038
(637)
(129,986)
(330,500)
824,500
(1,205)
1,027
-
(132,915)
Cash (used for) generated from financing activities
$
(484,191) $
360,907
Investing activities
Mineral stream interests
Early deposit mineral stream interests
Proceeds on disposal of mineral royalty interest
Net proceeds on disposal of mineral stream interests
Acquisition of long-term investments
Acquisition of convertible note receivable
Investment in associate
Proceeds on disposal of long-term investments
Investment in subscription rights
Dividend income received
Other
Cash generated from (used for) investing activities
Effect of exchange rate changes on cash and cash equivalents
Increase (decrease) in cash and cash equivalents
Cash and cash equivalents, beginning of year
Cash and cash equivalents, end of year
10 $
12
13
10, 23
16, 23
15
14
16
26
(183) $
(1,500)
9,000
-
(909)
(10,000)
(133)
17,824
(1,524)
59
(2,004)
(1,116,955)
(8,709)
-
226,000
(5,863)
-
-
47,734
-
80
(3,613)
$
$
$
10,630 $
(861,326)
160 $
252
28,219 $
75,767
(22,754)
98,521
$
103,986 $
75,767
The accompanying notes form an integral part of these consolidated financial statements.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [68]
Consolidated Statements of Shareholders’ Equity
Reserves
(US dollars in thousands)
Number
of
Shares
(000's)
Share
Purchase
Warrants
Reserve
Share
Purchase
Options
Reserve
Restricted
Share Units
Reserve
LTI 1
Revaluation
Reserve
(Net of Tax)
Issued
Capital
Total
Reserves
Retained
Earnings
Total
At January 1, 2018
442,724 $ 3,472,029 $ 83,077 $ 28,799 $
5,178 $ (40,047) $ 77,007 $ 1,350,628 $ 4,899,664
Total comprehensive income (loss)
Net earnings
OCI 1
Total comprehensive income (loss)
Income tax recovery (expense)
SBC 1 expense
Options 1 exercised
RSUs 1 released
$
$
$
- $
-
- $
14,389 $
-
1,076
2,239
47
104
Dividends (Note 19.2)
1,461
26,704
Realized gain on disposal of LTIs¹
(Note 16)
-
- $
-
- $
- $
-
-
-
-
-
- $
-
- $
- $
2,401
(198)
-
-
-
- $
- $
- $ 427,115 $ 427,115
-
(42,647)
(42,647)
- (42,647)
- $ (42,647) $ (42,647) $ 427,115 $ 384,468
- $
- $
14,389
- $
3,031
-
(2,239)
- $
-
-
5,432
(198)
-
(2,239)
-
-
-
5,432
878
-
-
-
-
(159,619)
(132,915)
-
(29,462)
(29,462)
29,462
-
At December 31, 2018
444,336 $ 3,516,437 $ 83,077 $ 31,002 $
5,970 $ (112,156) $
7,893 $ 1,647,586 $ 5,171,916
Total comprehensive income
Net earnings
OCI 1
Total comprehensive income
Income tax recovery (expense)
SBC 1 expense
Options 1 exercised
RSUs 1 released
Dividends (Note 19.2)
$
$
$
- $
-
- $
376 $
-
2,040
48,939
134
2,782
1,261
30,669
Realized loss on disposal of LTIs ¹
(Note 16)
-
- $
-
- $
- $
-
-
-
-
-
- $
-
- $
- $
- $
- $
- $
86,138 $
86,138
-
152,313 152,313
- 152,313
- $ 152,313 $ 152,313 $
86,138 $ 238,451
- $
2,474
3,217
(9,466)
-
-
-
-
(2,782)
-
-
- $
-
- $
5,691
-
(9,466)
-
(2,782)
- $
-
376
5,691
-
39,473
-
-
-
-
(160,656)
(129,987)
7,052
7,052
(7,052)
-
At December 31, 2019
1) Definitions as follows: “OCI” = Other Comprehensive Income (Loss); “SBC” = Equity Settled Stock Based Compensation; “Options” = Share Purchase Options; “RSUs” =
447,771 $ 3,599,203 $ 83,077 $ 24,010 $
47,209 $ 160,701 $ 1,566,016 $ 5,325,920
6,405 $
Restricted Share Units; “LTI’s” = Long-Term Investments; “Warrants” = Share Purchase Warrants.
The accompanying notes form an integral part of these consolidated financial statements.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [69]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
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). 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”) and the New York Stock
Exchange (“NYSE”) under the symbol WPM.
The Company has entered into 23 long-term purchase agreements (three of which are early deposit agreements),
with 17 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, 9 which are at various stages of
development and 1 which has been placed in care and maintenance, located in 11 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 fixed by contract, generally at or below the prevailing market
price.
The consolidated financial statements of the Company for the year ended December 31, 2019 were authorized for
issue as of March 11, 2020 in accordance with a resolution of the Board of Directors.
2.
Basis of Presentation and Statement of Compliance
These consolidated financial statements have been prepared in accordance with International Financial Reporting
Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) on a historical cost basis,
except for financial assets which are not held for the purpose of collecting contractual cash flows on specified dates
and derivative assets and derivative liabilities 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 expressed in thousands unless otherwise noted. References to
“Cdn$” refer to Canadian dollars.
The preparation of financial statements in accordance with IFRS 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.
3.
Significant Accounting Policies
3.1. New Accounting Standards Effective in 2019
IFRS 16 – Leases:
General Impact of Application of IFRS 16 - Leases
On January 1, 2019, the Company adopted IFRS 16 – Leases (“IFRS16”), which supersedes IAS 17 – Leases ("IAS
17"). IFRS 16 removes the distinction between operating leases and finance leases and instead has all leases
accounted for as a finance lease which requires the recognition of a right-of-use asset and a lease liability on the
Consolidated Balance Sheet at the lease commencement for all leases. Additionally, IFRS 16 requires the Company
to recognize depreciation expense relative to the right-of-use assets and interest expense relative to the lease liability
in the Consolidated Statement of Earnings.
The Company determined that it had two leases which are subject to the provisions of IFRS 16, specifically related to
its offices in Vancouver, Canada and the Cayman Islands. As a result, at January 1, 2019, the Company recognized
an additional $5 million of right-of-use assets on its balance sheet with an offsetting $5 million of lease liabilities.
The Company has applied the new standard on a modified retrospective basis with no restatement of the prior
periods.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [70]
A reconciliation of the lease commitment relative to these two leases as reported on the financial statements for the
year ended December 31, 2018 and the lease liability which has been reflected on the balance sheet effective
January 1, 2019 is as follows:
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
Total lease commitment as disclosed at December 31, 2018
Extension option reasonably certain to be exercised 1
Less: Discounting using the incremental borrowing rate 2
Lease liability as at January 1, 2019
Lease liability is comprised of:
Current portion
Long-term portion
$
$
$
3,785
1,530
(636)
4,679
637
4,042
4,679
Lease liability as at January 1, 2019
1) The Company's office lease in the Cayman Islands contains two optional extension periods. Upon applying IFRS 16, the Company concluded it was reasonably certain to
$
exercise the first extension period. The second extension period, which covers a term of 5 years, was not included in the calculation of the lease liability.
2) The future cash outflows were discounted using the Company's estimated incremental borrowing rate ranging from 3.9764% to 4.3340%.
IFRIC 23 – Uncertainty over Income Tax Treatments:
On January 1, 2019, the Company adopted IFRIC 23 – Uncertainty over Income Tax Treatments. IFRIC 23 provides
guidance on the accounting for current and deferred tax liabilities and assets in circumstances in which there is
uncertainty over income tax treatments. The adoption of this guidance did not have a material impact on the
Company’s Consolidated Statement of Earnings.
3.2. Principles of Consolidation
The consolidated financial statements include the accounts of the Company and its 100% owned subsidiaries Wheaton
Precious Metals International Ltd., Silver Wheaton Luxembourg S.a.r.l. and Wheaton Precious Metals (Cayman) Co.
Subsidiaries are fully consolidated from the date on which the Company obtains a controlling interest. Control is defined
as an investor’s power over an investee with exposure, or rights, to variable returns from the investee and the ability to
affect the investor’s returns through its power over the investee. Subsidiaries are included in the consolidated financial
results of the Company from the effective date of acquisition up to the effective date of disposition or loss of control.
The financial statements of the subsidiaries are prepared for the same reporting period as the parent company, using
consistent accounting policies. Balances, transactions, income and expenses between the Company and its subsidiaries
are eliminated on consolidation.
3.3. Cash and Cash Equivalents
Cash and cash equivalents include cash and highly liquid money market investments including short-term deposits,
treasury bills, commercial paper, bankers’ depository notes and bankers’ acceptances with terms to maturity of less than
three months.
3.4. Revenue Recognition
Revenue relating to the sale of precious metals is recognized when control of the precious metal is transferred to the
customer in an amount that reflects the consideration the Company expects to receive in exchange for those
products. In determining whether the Company has satisfied a performance obligation, it considers the indicators of
the transfer of control, which include, but are not limited to, whether: the Company has a present right to payment; the
customer has legal title to the asset; the Company has transferred physical possession of the asset to the customer;
and the customer has the significant risks and rewards of ownership of the asset.
Under certain PMPAs, precious metal is acquired from the mine operator in the form of gold, silver or palladium
credits, which is then sold through a network of third party brokers or dealers. 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. No forward contracts were outstanding at
December 31, 2019 or December 31, 2018. 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 the precious metal.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [71]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Under certain PMPAs, precious metal 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 metals in concentrate form, final precious metal prices are set on a specified future quotational period (the
“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 metals. The contracts, in general, provide for a
provisional payment based upon provisional assays and quoted precious metal 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 buyer, 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 and the retroactive pricing adjustment for the
Quotational Period are not significant and do not constrain the recognition of revenue.
3.5. Financial Instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions
of the instrument.
Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at
fair value through net earnings) are added to or deducted from the fair value of the financial assets or financial liabilities,
as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
financial liabilities at fair value through net earnings are recognized immediately in net earnings.
3.6. Financial Assets
Financial assets are subsequently measured at either amortized cost or fair value, depending on the classification of the
financial assets.
Financial Assets at Fair Value Through Other Comprehensive Income (“FVTOCI”)
The Company’s long-term investments in common shares held are for long-term strategic purposes and not for trading.
Upon the adoption of IFRS 9, Financial Instruments (“IFRS 9”), the Company made an irrevocable election to designate
these long-term investments in common shares held as FVTOCI as it believes that this provides a more meaningful
presentation for long-term strategic investments, rather than reflecting changes in fair value in net earnings.
Long-term investments in common shares held are initially measured at fair value. Subsequently, they are measured at
fair value with gains and losses arising from changes in fair value recognized as a component of other comprehensive
income (“OCI”) and accumulated in the long-term investment revaluation reserve. 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.
Dividends on these long-term investments in common shares held are recognized as a component of net earnings in the
period they are received under the classification Other (Income) Expense.
Financial Assets at Fair Value Through Net Earnings (“FVTNE”)
Cash and cash equivalents are stated at FVTNE.
Warrants held by the Company for long-term investment purposes are classified as FVTNE. These warrants are
measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement
recognized as a component of net earnings under the classification Other (Income) Expense.
Convertible notes receivable (Note 15) are classified as FVTNE and are measured at fair value at the end of each
reporting period by discounting the stream of future interest and principal payments at the rate of interest prevailing at
the balance sheet date for instruments of similar term and risk (the market interest rate), and adding this value to the
value of the convertibility feature which is estimated using a Black-Scholes model based on assumptions including risk
free interest rate, expected dividend yield, expected volatility and expected remaining life of the respective convertible
notes receivable. The resulting gains or losses (if any) arising on remeasurement is recognized as a component of net
earnings under the classification Other (Income) Expense.
As discussed in Note 3.4, the Company’s provisionally priced sales contain an embedded derivative that is reflected at
fair value at the end of each reporting period. Fair value gains and losses related to the embedded derivative are
included in revenue in the period they occur.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [72]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Financial Assets at Amortized Cost
The non-revolving term loan, which requires regularly scheduled payments of interest and principal, is carried at
amortized cost. 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 non-revolving term loan and other receivables are
reported net of allowances for uncollectable amounts.
Foreign Exchange Gains and Losses
The fair value of financial assets denominated in a foreign currency is determined in that foreign currency and translated
at the spot rate at the end of each reporting period. The foreign exchange component forms part of its fair value gain or
loss. Therefore,
•
•
•
For financial assets that are classified as FVTNE, the foreign exchange component is recognized as a
component of net earnings;
For financial assets that are classified as FVTOCI, the foreign exchange component is recognized as a
component of OCI; and
For financial assets that are denominated in a foreign currency and are measured at amortized cost at the end
of each reporting period, the foreign exchange gains and losses are determined based on the amortized cost of
the instruments and are recognized as a component of net earnings.
Derecognition of Financial Assets
The Company derecognizes a financial asset only when the contractual rights to cash flows from the asset expire, or
when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another
entity. If the Company neither transfers nor retains substantially all the risks and rewards of ownership and continues to
control the transferred asset, the Company recognizes its retained interest in the asset and an associated liability for
amounts it may have to pay. If the Company retains substantially all the risks and rewards of ownership of a transferred
financial asset, the Company continues to recognize the financial asset and also recognizes a collateralized borrowing
for the proceeds received.
On derecognition of a financial asset that is classified as FVTOCI, the cumulative gain or loss (net of tax) previously
accumulated in the long-term investment revaluation reserve is not reclassified to net earnings, but is reclassified to
retained earnings.
3.7. Financial Liabilities and Equity Instruments
Debt and equity instruments issued by the Company are classified as either financial liabilities or as equity in accordance
with the substance of the contractual arrangements and the definition of a financial liability and equity instrument. All
financial liabilities are subsequently measured at amortized cost using the effective interest method or at FVTNE,
depending on the classification of the instrument.
Equity Instruments
An equity instrument is a contract that evidences a residual interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are recognized at the proceeds received less direct issue costs
(net of any current or deferred income tax recovery attributable to such costs).
Share Purchase Warrants Issued
Share purchase warrants issued with an exercise price denominated in the Company’s functional currency (US dollars)
are considered equity instruments with the consideration received reflected within shareholders’ equity under the
classification of share purchase warrants reserve. Upon exercise, the original consideration is reallocated from share
purchase warrants reserve to issued share capital along with the associated exercise price.
Bank Debt
Bank debt is initially measured at fair value, net of transaction costs, and is subsequently measured at amortized cost
using the effective interest method. The effective interest method is a method of calculating the amortized cost of a
financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that
exactly discounts estimated future cash payments through the expected life of the financial liability, or (where
appropriate) a shorter period, to the net carrying amount on initial recognition.
Other Financial Liabilities
Accounts payable and accrued liabilities are stated at amortized cost, which approximate fair values due to the short
terms to maturity.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [73]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Foreign Exchange Gains and Losses
The fair value of financial liabilities denominated in a foreign currency is determined in that foreign currency and
translated at the spot rate at the end of each reporting period. Therefore,
•
•
For financial liabilities that are denominated in a foreign currency and are measured at amortized cost at the
end of each reporting period, the foreign exchange gains and losses are determined based on the amortized
cost of the instruments and are recognized as a component of net earnings; and
For financial liabilities that are classified as FVTNE, the foreign exchange component forms part of the fair
value gains or losses and is recognized as a component of net earnings.
Derecognition of Financial Liabilities
The Company derecognizes financial liabilities when the Company’s obligations are discharged, cancelled or they
expire. The difference between the carrying amount of the financial liability derecognized and the consideration paid and
payable, including any non-cash assets transferred or liabilities assumed, is recognized as a component of net earnings.
3.8. Mineral Stream Interests
Agreements for which settlement is called for in gold, silver, palladium or cobalt, the amount of which is based on
production at the mines, are stated at cost less accumulated depletion and accumulated impairment charges, if any.
The cost of the asset is comprised of its purchase price, any closing costs directly attributable to acquiring the asset,
and, for qualifying assets, borrowing costs. The purchase price is the aggregate cash amount paid and the fair value of
any other non-cash consideration given to acquire the asset.
Depletion
The cost of these mineral stream interests is separately allocated to reserves, resources and exploration potential.
The value allocated to reserves is classified as depletable and is depleted on a unit-of-production basis over the
estimated recoverable proven and probable reserves at the mine corresponding to the specific agreement. The value
associated with resources and exploration potential is the value beyond proven and probable reserves at acquisition
and is classified as non-depletable until such time as it is transferred to the depletable category as a result of the
conversion of resources and/or exploration potential into reserves.
Asset Impairment
Management considers each PMPA to be a separate cash generating unit (“CGU”), which is the lowest level for which
cash inflows are largely independent of those of other assets. At the end of each reporting period, the Company
assesses each PMPA to determine whether any indication of impairment exists. If such an indication exists, the
recoverable amount of the PMPA is estimated in order to determine the extent of the impairment (if any). The
recoverable amount of each PMPA is the higher of fair value less cost of disposal (“FVLCD”) and value in use (“VIU”). In
determining the recoverable amounts of each of the Company’s CGU’s, the Company uses the FVLCD as this will
generally be greater than or equal to the VIU.
To determine the FVLCD that could be received from each PMPA in an arm’s length transaction at the measurement
date, the Company estimates a range of potential values using the net asset value (“NAV”) methodology and the net
present value (“NPV”) methodology (as described below), and then selects a value within this range which is the most
representative of the estimated recoverable amount of the stream.
NAV is estimated by using an appropriate discount rate to calculate the present value of the expected future cash flows
associated with each mineral category. The values are adjusted for each mineral category dependent on the likelihood
of conversion from resources to reserves. A market multiple is applied to the NAV computed in order to assess the
estimated fair value. Precious metal companies typically trade at a market capitalization that is based on a multiple of
their underlying NAV, with this market multiple being generally understood to take account of a variety of additional value
and risk factors such as the ability to find and produce more metal than what is currently included in the life of mine plan,
the benefit of precious metal price optionality, the potential remaining mine life and adjustments for relative mine and
country risk. Consequently, a market participant would generally apply a NAV multiple when estimating the fair value of
a precious metal interest.
NPV is estimated by using a nominal discount rate to calculate the present value of expected future cash flows.
The expected future cash flows are management’s best estimates of expected future revenues and costs. Under each
valuation methodology, expected future revenues reflect an estimate of future payable production for each mine at which
the Company has a PMPA based on detailed life of mine plans received from each of the partners. Expected future
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [74]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
revenues also reflect management’s estimated long-term metal prices. Estimated future cash costs are generally fixed
based on the terms of each PMPA as disclosed in Note 29.
If the carrying amount of the PMPA exceeds its recoverable amount, the PMPA is considered impaired and an
impairment charge is reflected as a component of net earnings so as to reduce the carrying amount to its recoverable
value. A previously recognized impairment charge is reversed only if there has been an indicator of a potential
impairment reversal and the resulting assessment of the PMPA’s recoverable amount exceeds its carrying value. If this
is the case, the carrying amount of the PMPA is increased to its recoverable amount. The increased amount cannot
exceed the carrying amount that would have been determined, net of depletion, had no impairment charge been
recognized for the PMPA in prior years. Such reversal is reflected as a component of net earnings.
3.9. Investments in Associates
Investments over which the Company exercises significant influence and that the Company does not control or jointly
control are associates. Investments in associates are accounted for using the equity method, except when classified as
held for sale.
The equity method involves recording the initial investment at cost and subsequently adjusting the carrying value of the
investment for the Company’s proportionate share of the profit or loss, other comprehensive income or loss and any
other changes in the associate’s net assets such as dividends.
The Company’s proportionate share of the associate’s profit or loss and other comprehensive income or loss is based
on its most recent publicly available financial statements. Adjustments are made to align any inconsistencies between
the Company’s accounting policies and the associate’s policies before applying the equity method. Adjustments are also
made to account for depreciable assets based on their fair values at the acquisition date of the investment and for any
impairment losses recognized by the associate.
If the Company’s share of the associate’s losses equals or exceeds the Company’s investment in the associate,
recognition of further losses is discontinued. After the Company’s interest is reduced to zero, additional losses will be
provided for and a liability recognized only to the extent that the Company has incurred legal or constructive obligations
to provide additional funding or make payments on behalf of the associate. If the associate subsequently reports profits,
the Company resumes recognizing the Company’s share of those profits only after the Company’s share of the profits
equals the Company’s share of losses not recognized.
At each balance sheet date, management considers whether there is objective evidence of impairment in associates. If
there is such evidence, management determines the amount of impairment to record, if any, in relation to the associate.
3.10. Borrowing and Debt Issue Costs
Borrowing costs allocable to qualifying assets, which are assets that necessarily take a substantial period of preparation
for their intended use, are capitalized and included in the carrying amounts of the related assets until such time as the
assets are substantially ready for their intended use. Borrowing costs that do not relate to the acquisition or construction
of qualifying assets are reflected as a component of net earnings under the classification Finance Costs, as incurred.
Debt issue costs on non-revolving facilities are treated as an adjustment to the carrying amount of the original liability
and are amortized over the life of the new or modified liability. Debt issue costs on revolving facilities are recorded as an
asset under the classification Other long-term assets and are amortized over the life of the new or modified credit facility.
3.11. Stock Based Payment Transactions
The Company recognizes a stock based compensation expense for all share purchase options and restricted share
units (“RSUs”) awarded to employees, officers and directors based on the fair values of the share purchase options and
RSUs at the date of grant. The fair values of share purchase options and RSUs at the date of grant are expensed over
the vesting periods of the share purchase options and RSUs, respectively, with a corresponding increase to equity. The
fair value of share purchase options is determined using the Black-Scholes option pricing model with market related
inputs as of the date of grant. Share purchase options with graded vesting schedules are accounted for as separate
grants with different vesting periods and fair values. The fair value of RSUs is the market value of the underlying shares
at the date of grant. At the end of each reporting period, the Company re-assesses its estimates of the number of
awards that are expected to vest and recognizes the impact of any revisions to this estimate in the consolidated
statement of earnings.
The Company recognizes a stock based compensation expense for performance share units (“PSUs”) which are
awarded to eligible employees and are settled in cash. Compensation expense for the PSUs is recorded on a straight-
line basis over the three year vesting period. This estimated expense is reflected as a component of net earnings over
the vesting period of the PSUs with the related obligation recorded as a liability on the balance sheet. The amount of
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [75]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
compensation expense is adjusted at the end of each reporting period to reflect (i) the fair market value of common
shares; (ii) the number of PSUs anticipated to vest; and (iii) the anticipated performance factor.
3.12. Income Taxes
Income tax expense comprises current and deferred income tax. Current and deferred income taxes are recognized
as a component of net earnings except to the extent that it relates to items recognized directly in equity or as a
component of OCI.
Current income tax is the expected tax payable on the taxable income for the year, using tax rates enacted or
substantively enacted at the end of the reporting period, and any adjustment to tax payable in respect of previous
years.
Deferred income tax is recognized using the liability method on temporary differences arising between the tax bases
of assets and liabilities and their carrying amounts in the consolidated financial statements. Deferred income tax
assets and liabilities are measured using tax rates and laws that have been enacted or substantively enacted at the
end of the reporting period and which are expected to apply when the related deferred income tax assets are realized
or the deferred income tax liabilities are settled.
Deferred income tax liabilities are generally recognized for all taxable temporary differences. Deferred income tax
assets are generally recognized for all deductible temporary differences and the carry forward of unused tax losses
and tax credits to the extent that it is probable that sufficient future taxable income, including income arising from
reversing taxable temporary differences and tax planning opportunities, will be available against which those
deductible temporary differences and the carry forward of unused tax losses and tax credits can be utilized.
Deferred income tax liabilities are recognized for taxable temporary differences arising on investments in subsidiaries
except where the reversal of the temporary difference can be controlled and it is probable that the difference will not
reverse in the foreseeable future. Deferred income tax assets arising from deductible temporary differences
associated with such investments are only recognized to the extent that it is probable that there will be sufficient
taxable income against which to utilize the benefits of the temporary differences and they are expected to reverse in
the foreseeable future.
The carrying amount of deferred income tax assets are reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable income, including income arising from reversing taxable
temporary differences and tax planning opportunities, will be available to allow all or part of the deferred income tax
assets to be recovered.
Deferred income tax assets and liabilities are not recognized for temporary differences arising from the initial
recognition (other than in a business combination) of assets and liabilities in a transaction which does not affect either
the accounting income or the taxable income. In addition, deferred income tax liabilities are not recognized if the
temporary difference arises from the initial recognition of goodwill.
3.13. Earnings Per Share
Earnings per share calculations are based on the weighted average number of common shares and common share
equivalents issued and outstanding during the year. Diluted earnings per share is calculated using the treasury
method which requires the calculation of diluted earnings per share by assuming that outstanding share purchase
options and warrants with an exercise price that exceeds the average market price of the common shares for the
period are exercised, and the proceeds are used to repurchase shares of the Company at the average market price
of the common shares for the period.
3.14. Foreign Currency Translation
The functional currency is the currency of the primary economic environment in which an entity operates. The
consolidated financial statements are presented in US dollars, which is the functional currency of the Company and its
subsidiaries. Foreign currency monetary assets and liabilities are translated into US dollars at the exchange rates
prevailing at the balance sheet date. Non-monetary assets denominated in foreign currencies are translated using the
rate of exchange at the transaction date. Foreign currency transactions are translated at the rate of exchange prevailing
on the transaction dates. Foreign exchange gains and losses are included in the determination of net earnings except for
the foreign exchange gains and losses on the Company’s long-term investments in common shares held which are
reflected as a component of OCI and accumulated in a separate component of the investments revaluation reserve
which is a component of shareholders’ equity. Once the foreign exchange gains or losses on these long-term
investments in common shares held are realized as a result of a disposal, the accumulated foreign exchange gain or
loss is reallocated from the investments reserve to retained earnings.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [76]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
3.15. Leasing
The Company as the Lessee
At inception of a contract, the Company assesses whether the contract is, or contains, a lease. A contract is, or
contains, a lease if the contract conveys the right to use an identified asset for a period of time in exchange for
consideration.
The Company recognizes a right-of-use asset and a corresponding lease liability with respect to all lease agreements
in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and
leases of low value assets. For these leases, the Company recognizes the lease payments as an operating expense
on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time
pattern in which economic benefits from the leased asset are consumed.
The lease liability is initially measured at the present value of the lease payments that are not paid at the
commencement date discounted by using the rate implicit in the lease. If this rate cannot be readily determined,
the Company uses its incremental borrowing rate.
The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease
liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments
made.
The Company re-measures the lease liability (and makes a corresponding adjustment to the related right-of-use
asset) whenever the lease term has changed or there is a change in the assessment of exercise of a purchase
option, in which case the lease liability is re-measured by discounting the revised lease payments using a revised
discount rate.
The right-of-use assets comprise the initial measurement of the corresponding lease liability and any initial direct
costs. They are subsequently measured at cost less accumulated depreciation and impairment losses, if any.
3.16. Property, plant and equipment
Property, plant and equipment are measured at cost less accumulated depreciation. The cost includes the original
purchase price of the asset and the costs attributable to bringing the asset to its working condition for its intended
use. Depreciation is based on cost and is calculated on a straight-line basis over the estimated economic life of the
asset. The right of use asset discussed in Note 3.15 and the leasehold improvements are depreciated over the life of
the lease term. Other assets, which include computer software, computer equipment, office furniture and office
equipment, are depreciated over their estimated economic life, which ranges from 3 to 10 years.
3.17. Provisions
Provisions are recognized when the Company has a present obligation (legal or constructive) as a result of a past event,
it is probable that the Company will be required to settle the obligation, and a reliable estimate can be made of the
amount required to settle the obligation.
The amount recognized as a provision is the best estimate of the consideration required to settle the present obligation
at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a
provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present
value of those cash flows.
When some or all of the economic benefits required to settle a provision are expected to be recovered from a third party,
a receivable is recognized as an asset if it is virtually certain that reimbursement will be received and the amount of the
receivable can be measured reliably.
3.18. Post-Employment Benefit Costs
The Company provides a Supplemental Employee Retirement Plan (“SERP) to all qualified employees. The SERP is an
unregistered and unfunded defined contribution plan under which the Company makes a fixed notional contribution to an
account maintained by the Company. Any benefits under the SERP have a vesting period of five years from the first date
of employment. The notional contributions are recognized as employee benefit expense in earnings in the periods during
which services are rendered by employees.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [77]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
3.19. Future Changes to Accounting Policies
The IASB has issued the following new or amended standards:
Standards required to be applied for periods beginning on or after January 1, 2020:
• Amendment to IFRS 3 - Business Combinations - The amendments to IFRS 3 clarify the definition of a
business and includes an optional concentration test to determine whether an acquired set of activities and
assets is a business. The amendments are effective for business combinations and asset acquisitions
occurring on or after January 1, 2020. The Company will apply these amendments to future acquisition
transactions
4.
Key Sources of Estimation Uncertainty and Critical Accounting Judgments
The preparation of the Company’s consolidated financial statements in conformity with IFRS 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
consolidated financial statements are described below.
Key Sources of Estimation Uncertainty
4.1. Attributable Reserve, Resource and Exploration Potential Estimates
Mineral stream interests are significant assets of the Company, with a carrying value of $5.8 billion at December 31,
2019. This amount represents the capitalized expenditures related to the acquisition of the mineral stream interests, net
of accumulated depletion and accumulated impairment charges, if any. The Company estimates the reserves, resources
and exploration potential relating to each agreement. Reserves are estimates of the amount of metals contained in ore
that can be economically and legally extracted from the mining properties in respect of which the Company has PMPAs.
Resources are estimates of the amount of metals contained in mineralized material for which there is a reasonable
prospect for economic extraction from the mining properties in respect of which the Company has PMPAs. Exploration
potential represents an estimate of additional reserves and resources which may be discovered through the mine
operator’s exploration program. The Company adjusts its estimates of reserves, resources (where applicable) and
exploration potential (where applicable) to reflect the Company’s percentage entitlement to metals produced from such
mines. The Company compiles its estimates of its reserves and resources based on information supplied by
appropriately qualified persons relating to the geological data on the size, density and grade of the ore body, and require
complex geological and geostatistical judgments to interpret the data. The estimation of recoverable reserves and
resources is based upon factors such as estimates of foreign exchange rates, commodity prices, future capital
requirements, and production costs along with geological assumptions and judgments made in estimating the size and
grade of the ore body. The Company estimates exploration potential based on assumptions surrounding the ore body
continuity which requires judgment as to future success of any exploration programs undertaken by the mine operator.
Changes in the reserve estimates, resource estimates or exploration potential estimates may impact upon the carrying
value of the Company’s mineral stream interests and depletion charges.
4.2. Depletion
As described in Note 3.8, the Company’s mineral stream interests are separately allocated to reserves, resources and
exploration potential. The value allocated to reserves is classified as depletable and is depleted on a unit-of-production
basis over the estimated recoverable proven and probable reserves at the mine corresponding to the specific
agreement. The value associated with resources and exploration potential is the value beyond proven and probable
reserves at acquisition and is classified as non-depletable until such time as it is transferred to the depletable category
as a result of the conversion of resources and/or exploration potential into reserves. To make this allocation, the
Company estimates the recoverable reserves, resources and exploration potential at each mining operation. These
calculations require the use of estimates and assumptions, including the amount of contained metals, recovery rates and
payable rates. Changes to these assumptions may impact the estimated recoverable reserves, resources or exploration
potential which could directly impact the depletion rates used. Changes to depletion rates are accounted for
prospectively.
Impairment of Assets
4.3.
As more fully described in Note 3.8, the Company assesses each PMPA at the end of every reporting period to
determine whether any indication of impairment or impairment reversal exists. If such an indication exists, the
recoverable amount of the PMPA is estimated in order to determine the extent of the impairment or impairment reversal
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [78]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(if any). The calculation of the recoverable amount requires the use of estimates and assumptions such as long-term
commodity prices, discount rates, recoverable ounces of attributable metals, and operating performance.
The price of precious metals and cobalt has been extremely volatile over the past several years. The Company monitors
spot and forward metal prices and if necessary re-evaluates the long-term metal price assumptions used for impairment
testing. Should price levels decline or increase in the future, either for an extended period of time or due to known macro
economic changes, the Company may need to re-evaluate the long-term metal price assumptions used for impairment
testing. A significant decrease in long-term metal price assumptions may be an indication of potential impairment, while
a significant increase in long-term metal price assumptions may be an indication of potential impairment reversal. Should
the Company conclude that it has an indication of impairment or impairment reversal at any balance sheet date, the
Company is required to perform an impairment assessment.
4.4. Valuation of Stock Based Compensation
As more fully described in Note 3.11, the Company has various forms of stock based compensation, including share
purchase options, restricted share units (“RSUs”) and performance share units (“PSUs”). The calculation of the fair value
of share purchase options, RSUs and PSUs issued requires the use of estimates as more fully described in Notes 20.2,
20.3, and 21.1, respectively.
4.5. Valuation of Convertible Notes Receivable
As more fully described in Notes 3.6 and 5.8.3, the Company measures its convertible notes receivable at fair value for
financial reporting purposes. This calculation requires the use of estimates and assumptions such as rate of interest
prevailing at the balance sheet date for instruments of similar term and risk, expected dividend yield, expected volatility
and expected remaining life of the convertible notes receivable.
4.6. Valuation of Minto Derivative Liability
As more fully described in Note 5.8.3, the Company’s Minto PMPA has a pricing mechanism whereby there is an
increase to the production payment per ounce of gold delivered to Wheaton over the current fixed price in periods where
the market price of copper is lower than $2.50 per pound. As this pricing mechanism meets the definition of a derivative,
it is reflected at fair value for financial reporting purposes. This calculation requires the use of estimates and
assumptions such as long-term price of copper, recoverable ounces of gold and operating performance.
4.7. 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 those matters described in Note 29. 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 management’s estimate of the future resolution of these matters
changes, the Company will recognize the effects of the changes in its consolidated financial statements in the
appropriate period relative to when such changes occur.
Critical Accounting Judgments
4.8. Functional Currency
The functional currency for the Company and each of its subsidiaries is the currency of the primary economic
environment in which the entity operates. As a result of the following factors, the Company has determined that the
functional currency of each entity is the US dollar:
•
•
•
•
The entities’ revenues are denominated in US dollars;
The entities’ cash cost of sales are denominated in US dollars;
The majority of the entities’ cash is held in US dollars; and
The Company generally seeks to raise capital in US dollars.
Determination of the functional currency may involve certain judgments to determine the primary economic environment
and the Company reconsiders the functional currency of its entities if there is a change in events and conditions which
determined the primary economic environment.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [79]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
4.9. Significant Influence over Kutcho
Note 14 describes Kutcho as an associate though the Company only owns a 10% ownership interest in Kutcho. The
Company has determined it has significant influence over Kutcho by virtue of the convertible instruments of Kutcho that
the Company owns.
4.10. Income Taxes
The interpretation and application of existing tax laws, regulations or rules in Canada, the Cayman Islands, Barbados,
Luxembourg, the Netherlands or any of the countries in which the Company’s subsidiaries or the mining operations are
located or to which deliveries of precious metals, precious metal credits or cobalt are made requires the use of
judgment. The likelihood that tax positions taken will be sustained is assessed based on facts and circumstances of the
relevant tax position considering all available evidence. Differing interpretation of these laws, regulations or rules could
result in an increase in the Company’s taxes, or other governmental charges, duties or impositions. Refer to Note 29 for
more information.
In assessing the probability of realizing deferred income tax assets, the Company makes estimates related to
expectations of future taxable income, including the expected timing of reversals of existing temporary differences. Such
estimates are based on forecasted cash flows from operations which require the use of estimates and assumptions such
as long-term commodity prices and recoverable metal ounces. The amount of deferred income tax assets recognized
on the balance sheet could be reduced if the actual taxable income differs significantly from expected taxable income.
The Company reassesses its deferred income tax assets at the end of each reporting period.
4.11. Leases
As more fully described in Note 3.1, on January 1, 2019, the Company adopted IFRS 16 – Leases. Under IFRS 16, the
Company assesses whether a contract contains a lease and, if so, recognizes a lease liability by discounting the future
lease payments by using the Company’s estimated incremental borrowing rate. If the lease agreement contains an
option to extend the lease, the Company must assess the likelihood of whether that option will be exercised. The
determination of whether an option to extend a lease will be exercised requires significant management judgment, and
providing the Company concludes that it is reasonably certain that the option to extend will be exercised, the lease
payments during the extension period will comprise part of the right-of-use asset and corresponding lease liability.
5. Financial Instruments
5.1. Capital Risk Management
The Company manages its capital to ensure that it will be able to continue as a going concern while maximizing the
return to stakeholders through the optimization of the debt and equity balance.
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 December 31, 2019, as described in Note 18.1.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [80]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
5.2. Categories of Financial Assets and Liabilities
The non-revolving term loan, which requires regularly scheduled payments of interest and principal, is carried at
amortized cost. 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 non-revolving term loan and 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:
(in thousands)
Financial assets
Financial assets mandatorily measured at FVTNE
Cash and cash equivalents
Trade receivables from provisional concentrate sales, net of fair
value adjustment
Convertible notes receivable
Investments in equity instruments designated as at FVTOCI
Long-term investments - common shares held
Financial assets measured at amortized cost
Non-revolving term loan
Other accounts receivable
Class action settlement recoverable
Total financial assets
Financial liabilities
Financial liabilities at amortized cost
Accounts payable and accrued liabilities
Bank debt
Pension liability
Class action settlement
Note
December 31
2019
December 31
2018
$
103,986 $
75,767
4,350
21,856
1,332
12,899
309,757
164,753
431
2,788
41,500
-
854
-
$
484,668 $
255,605
11,794
874,500
810
41,500
19,883
1,264,000
-
-
6, 9
15
16
25
9
25, 29
18
28
29
Total financial liabilities
$
928,604 $
1,283,883
5.3. Credit Risk
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
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. In addition,
counterparties used to sell precious metals are all large, international organizations with strong credit ratings and the
balance of trade receivables owed to the Company in the ordinary course of business is not significant. Therefore,
credit risk associated with trade receivables at December 31, 2019 is considered to be negligible.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [81]
The Company’s maximum exposure to credit risk related to its financial assets is as follows:
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
Cash and cash equivalents
Trade receivables from provisional concentrate sales, net of fair value
adjustment
Other accounts receivables
Non-revolving term loan
Convertible notes receivable
Class action settlement recoverable
Note
9
9
25
15
25, 29
December 31 December 31
2019
103,986 $
$
2018
75,767
4,350
2,788
431
21,856
41,500
1,332
854
-
12,899
-
90,852
Maximum exposure to credit risk related to financial assets
$
174,911 $
As it relates to the non-revolving term loan and the convertible notes receivable, the Company has a security interest in
the applicable mining concessions relative to Kutcho Copper Corp. (“Kutcho”) and Gold X Mining Corp (“Gold X”),
respectively, and with some exceptions, all present and after acquired property of Kutcho and Gold X and its applicable
subsidiaries.
5.4. Liquidity Risk
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 December 31, 2019, the
Company had cash and cash equivalents of $104 million (December 31, 2018 - $76 million) and working capital of $90
million (December 31, 2018 - $51 million).
The Company holds equity investments of several companies (Note 16) with a combined market value at December 31,
2019 of $310 million (December 31, 2018 - $165 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. To the extent that applicable interest rates are floating in nature, the
interest charges are estimated based on market-based forward interest rate curves at the end of the reporting period.
(in thousands)
Non-derivative financial liabilities
Bank debt ¹
Interest on bank debt ²
Accounts payable and accrued
liabilities
Performance share units 3
Pension liability 4
Lease liability
Class action settlement 5
2020
2021 - 2023
2024 - 2025
After 2025
Total
As at December 31, 2019
$
-
25,363
$
-
68,061
$ 874,500
5,877
$
- $ 874,500
99,301
-
11,794
10,668
810
724
41,500
-
6,895
-
2,413
-
-
1,506
-
1,115
-
-
-
-
-
-
11,794
19,069
810
4,252
41,500
Total
$
90,859 $
77,369 $ 882,998 $
- $ 1,051,226
1) Assumes the principal balance outstanding at December 31, 2019 does not change until the debt maturity date. On February 27, 2020, the term of the revolving credit facility
was extended by an additional year, with the facility now maturing on February 27, 2025.
2) As the applicable interest rates are floating in nature, the interest charges are estimated based on market-based forward interest rate curves at the end of the reporting
period combined with the assumption that the principal balance outstanding at December 31, 2019 does not change until the debt maturity date.
3) Assumes a weighted average performance factor of 186% (see Note 20.1).
4) As described in Note 28, any benefits under the SERP will be paid out to the employee over a 10-year period, or at the employee’s election, a shorter period upon the
employee’s retirement from the Company.
5) As more fully described in Note 29, the class action settlement will be fully funded by the Company’s insurance carriers and the other Defendants. The Company will not be
required to pay any portion of the settlement. The recoverable amount has been reflected as a component of Other current assets (Note 25).
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [82]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
5.5. Currency Risk
The 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:
(in thousands)
Monetary assets
Cash and cash equivalents
Accounts receivable
Long-term investments - common shares held
Convertible note receivable
Non-revolving term loan
Other long-term assets
December 31
2019
December 31
2018
$
$
4,148
2,519
309,757
11,837
431
3,450
731
637
161,421
12,899
-
1,105
Total Canadian dollar denominated monetary assets
$
332,142
$
176,793
Monetary liabilities
Accounts payable and accrued liabilities
Current taxes payable
Performance share units
Lease liability
Pension liability
$
$
6,059
-
15,423
2,748
810
16,128
3,361
8,808
-
-
Total Canadian dollar denominated monetary liabilities
$
25,040
$
28,297
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.
(in thousands)
Increase (decrease) in net earnings
Increase (decrease) in other comprehensive income
Increase (decrease) in total comprehensive income
(in thousands)
Increase (decrease) in net earnings
Increase (decrease) in other comprehensive income
Increase (decrease) in total comprehensive income
As at December 31, 2019
Change in Canadian Dollar
10%
Increase
10%
Decrease
$
(265) $
30,976
265
(30,976)
$
30,711 $
(30,711)
As at December 31, 2018
Change in Canadian Dollar
10%
Increase
10%
Decrease
$
(1,292) $
16,142
1,292
(16,142)
$
14,850 $
(14,850)
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [83]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Interest Rate Risk
5.6.
The Company is exposed to interest rate risk on its outstanding borrowings and short-term investments. Presently, all
of the Company’s outstanding borrowings are at floating interest rates. The Company monitors its exposure to
interest rates and has not entered into any derivative contracts to manage this risk. During the year ended December
31, 2019, the weighted average effective interest rate paid by the Company on its outstanding borrowings was 4.07%
(2018 – 3.57%).
During the years ended December 31, 2019 and December 31, 2018, a fluctuation in interest rates of 100 basis
points (1 percent) would have impacted the amount of interest expensed by approximately $11 million and $10
million, respectively.
5.7. Other Price Risk
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
years ended December 31, 2019 and December 31, 2018 would have increased/decreased by approximately $31
million and $16 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.
(in thousands)
Note
Total
Level 1
Level 2
Level 3
Cash and cash equivalents
Trade receivables from provisional concentrate
sales, net of fair value adjustment
Long-term investments - common shares held
Convertible notes receivable
$ 103,986 $
103,986 $
- $
-
9
16
15
4,350
309,757
21,856
-
309,757
-
4,350
-
-
-
-
21,856
$ 439,949 $
413,743 $
4,350 $
21,856
December 31, 2019
(in thousands)
Total
Level 1
Level 2
Level 3
Cash and cash equivalents
$ 75,767 $
75,767 $
- $
-
Trade receivables from provisional concentrate
sales, net of fair value adjustment
Long-term investments - common shares held
Convertible note receivable
9
16
15
1,332
164,753
12,899
-
164,753
-
1,332
-
-
-
-
12,899
$ 254,751 $
240,520 $
1,332 $
12,899
December 31, 2018
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [84]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
The non-revolving term loan, which requires regularly scheduled payments of interest and principal, is carried at
amortized cost. Other accounts receivables and accounts payables and accrued liabilities are non-interest bearing
and are stated at carrying values, which approximate fair values due to the short terms to maturity. Where necessary,
the non-revolving term loan as well as other receivables are reported net of allowances for uncollectable amounts.
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.
5.8.3. Valuation Techniques for Level 3 Assets
Convertible Notes Receivable
The fair value of the convertible notes receivable (Note 15), which are not traded in an active market, is determined
by discounting the stream of future interest and principal payments at the rate of interest prevailing at the balance
sheet date for instruments of similar term and risk (the market interest rate), and adding this value to the value of the
convertibility feature which is estimated using a Black-Scholes model based on assumptions including risk free
interest rate, expected dividend yield, expected volatility and expected remaining life of the respective convertible
notes receivable.
As the expected volatility and market interest rate are not observable inputs, the convertible notes receivable are
classified within Level 3 of the fair value hierarchy and any changes in fair value are reflected on the Consolidated
Statement of Earnings under the classification Other (Income) Expense (Note 8).
Relative to the Kutcho Convertible Note, management estimates that the market interest rate on similar borrowings
without the conversion feature was approximately 21% and has used an implied volatility of 30% in valuing the
convertibility feature.
Relative to the Gold X Convertible Note, management estimates that the market interest rate on similar borrowings
without the conversion feature was approximately 12% and has used an implied volatility of 30% in valuing the
convertibility feature.
Holding all other variables constant, a fluctuation in interest rates of 1% and a fluctuation in the implied volatility used
of 5% would have impacted the valuation as below:
(in thousands)
Kutcho Convertible Note
Gold X Convertible Note
As at December 31, 2019
Change in interest rate
Increase
1%
Decrease
1%
Change in volatility
Increase
5%
Decrease
5%
$
(515) $
(262)
542 $
270
72 $
191
(41)
(172)
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [85]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Minto Derivative Liability
The production payment per ounce of gold delivered to Wheaton under the Minto PMPA is to be increased over the
fixed price in periods where the market price of copper is lower than $2.50 per pound. As this pricing mechanism
meets the definition of a derivative, it is reflected at fair value for financial reporting purposes. At December 31, 2019
and December 31, 2018, the Company estimated the fair value of this derivative liability to be $NIL.
6.
Revenue
(in thousands)
Sales
Gold
Gold credit sales
Concentrate sales
Silver
Silver credit sales
Concentrate sales
Palladium
Palladium credit sales
Total sales revenue
Years Ended December 31
2019
2018
$ 535,766 62%
1%
5,279
$ 541,045 63%
$ 431,618 54%
9,575 1%
$ 441,193 55%
$ 225,316 26%
63,085
7%
$ 288,401 33%
$ 290,152 37%
53,427 7%
$ 343,579 44%
$ 31,886
4%
$
9,240 1%
$ 861,332 100%
$ 794,012 100%
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 a network of third party brokers or dealers. 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.
During the year ended December 31, 2019, sales to two financial institutions accounted for 33% and 25% of the
Company’s revenue as compared to sales to three financial institutions that accounted for 29%, 22% and 13% of the
Company’s revenue during the comparable period of the previous year. The Company would not be materially
affected should any of these financial institutions cease to buy precious metal credits from the Company as these
sales would be redirected to alternate financial institutions.
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. No forward contracts were outstanding at December 31, 2019 or
December 31, 2018. 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
“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 buyer, 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 and the retroactive pricing adjustment for the
Quotational Period are not significant and do not constrain the recognition of revenue.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [86]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
At December 31, 2019, the Company had outstanding provisionally priced sales of $8 million (December 31, 2018 -
$7 million) where the quotational period pricing was estimated based on the forward price for silver (December 31,
2018 - gold and silver). These sales consisted of 0.5 million ounces of silver (December 31, 2018 - 500 ounces of
gold and 0.4 million ounces of silver) which had a fair value gain adjustment of approximately $0.5 million (December
31, 2018 - $0.5 million) associated with the embedded derivative. For each one cent per ounce increase or decrease
in the realized silver price, revenue would increase or decrease by approximately $4,600 (December 31, 2018 - for
each one dollar per ounce increase or decrease in the realized gold price, revenue would increase or decrease by
approximately $500 and for each one cent per ounce increase or decrease in the realized silver price, revenue would
increase or decrease by approximately $4,500).
7.
General and Administrative
(in thousands)
Salaries and benefits
Salaries and benefits, excluding PSUs
PSUs 1
Total salaries and benefits
Depreciation
Donations
Professional fees
Other
General and administrative before equity settled stock based
compensation
Equity settled stock based compensation 2
Stock options
RSUs
Total equity settled stock based compensation
Total general and administrative
Years Ended December 31
Note
2019
2018
21.1
$
$
13,840 $
17,174
31,014 $
1,903
2,946
2,496
10,457
14,397
9,517
23,914
1,057
2,610
8,559
10,078
$
48,816 $
46,218
20.2 $
20.3
$
2,474 $
3,217
5,691 $
2,401
3,031
5,432
$
54,507 $
51,650
1) The PSU accrual related to the anticipated fair value of the PSUs issued uses a weighted average performance factor of 186% during the year ended December 31, 2019 as
compared to 141% during the comparable period of 2018.
2) Equity settled stock based compensation is a non-cash expense.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [87]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
8.
Other (Income) Expense
(in thousands)
Interest income
Dividends received from equity investments designated as FVTOCI ¹
relating to investments held at the end of the reporting period
Dividends received from equity investments designated as FVTOCI ¹
relating to investments disposed of during the period
Guarantee fees - Primero Revolving Credit Facility
Fees for contract amendments and reconciliations
Share of losses of associate
Impairment loss - investment in associate
Foreign exchange loss (gain)
Gain on disposal of mineral royalty interest
Interest and penalties related to CRA Settlement 2
Net (gain) loss arising on financial assets mandatorily measured at
FVTPL ³
(Gain) loss on fair value adjustment of share purchase warrants held
(Gain) loss on fair value adjustment of convertible notes receivable
Other
Total other (income) expense
1) FVTOCI refers to Fair Value Through Other Comprehensive Income.
2) Please see Note 24 for more information.
3) FVTPL refers to Fair Value Through Profit or Loss.
9.
Accounts Receivable
Years Ended December 31
Note
$
2019
(816) $
2018
(750)
16
16
14
14
13
24
16
15
-
(78)
(59)
-
-
164
1,649
1,028
(2,929)
(225)
16
1,043
(145)
-
(858)
(248)
432
-
(144)
-
4,317
124
2,878
153
$
(274) $
5,826
(in thousands)
Trade receivables from provisional concentrate sales, net of fair value
adjustment
Other accounts receivable
Total accounts receivable
December 31 December 31
Note
2019
2018
6
$
$
4,350 $
2,788
1,332
854
7,138 $
2,186
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [88]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
10. Mineral Stream Interests
Cost
Accumulated Depletion & Impairment 1
Year Ended December 31, 2019
Balance
Jan 1, 2019
Additions
(Reductions)
Balance
Dec 31, 2019
Balance
Jan 1, 2019
Depletion
Impairment
Balance
Dec 31, 2019
Carrying
Amount
Dec 31, 2019
(in thousands)
Gold interests
Salobo
Sudbury 2
Constancia
San Dimas
Stillwater 3
Other 4
$ 3,059,876 $
- $ 3,059,876 $
(353,816) $ (100,803) $
- $
(454,619) $ 2,605,257
623,864
136,058
220,429
239,357
402,232
-
-
-
623,864
(257,401)
(22,420)
136,058
(18,511)
(7,141)
220,429
(12,234)
(13,828)
(5)
239,352
(2,925)
-
402,232
(380,873)
(6,433)
(8,191)
-
-
-
-
-
(279,821)
344,043
(25,652)
110,406
(26,062)
194,367
(9,358)
229,994
(389,064)
13,168
$ 4,681,816 $
(5) $ 4,681,811 $ (1,025,760) $ (158,816) $
- $ (1,184,576) $ 3,497,235
Silver interests
Peñasquito
Antamina
Constancia
Other 5
$ 524,626
900,343
302,948
1,283,039
-
-
-
524,626 $
(135,904) $
(14,020) $
- $
(149,924) $ 374,702
900,343
(190,266)
(41,267)
302,948
(56,717)
(18,044)
15
1,283,054
(780,401)
(14,960)
-
-
-
(231,533)
668,810
(74,761)
228,187
(795,361)
487,693
$ 3,010,956 $
15 $ 3,010,971 $ (1,163,288) $
(88,291) $
- $ (1,251,579) $ 1,759,392
Palladium interests
Stillwater 3
$ 263,726 $
(5) $ 263,721 $
(4,033) $
(9,719) $
- $
(13,752) $ 249,969
Cobalt interests
Voisey's Bay $ 393,422 $
- $ 393,422 $
- $
- $ (165,912) $
(165,912) $ 227,510
$ 8,349,920 $
5 $ 8,349,925 $ (2,193,081) $ (256,826) $ (165,912) $ (2,615,819) $ 5,734,106
1) Includes cumulative impairment charges to December 31, 2019 as follows: Keno Hill silver interest - $11 million; Pascua-Lama silver interest - $338 million; 777 silver
interest - $64 million; 777 gold interest - $151 million; Sudbury gold interest - $120 million; and Voisey’s Bay cobalt interest - $166 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, Rosemont and 777 gold interests.
5) Comprised of the Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata, Pascua-Lama, Rosemont and 777 silver interests.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [89]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Year Ended December 31, 2018
Cost
Accumulated Depletion & Impairment 1
Balance
Jan 1, 2018
Additions
Disposal
Balance
Dec 31, 2018
Balance
Jan 1, 2018
Depletion Disposal
(in thousands)
Gold interests
Balance
Dec 31, 2018
Carrying
Amount
Dec 31, 2018
Salobo
$ 3,059,876 $
- $
- $ 3,059,876 $
(251,144) $ (102,672) $
- $
(353,816) $ 2,706,060
Sudbury 2
Constancia
San Dimas
Stillwater 3
Other 4
623,864
136,058
-
-
402,232
-
-
220,429
239,357
-
-
-
-
-
-
623,864
(243,876)
136,058
(14,007)
(13,525)
(4,504)
220,429
239,357
-
-
(12,234)
(2,925)
402,232
(370,414)
(10,459)
-
-
-
-
-
(257,401)
366,463
(18,511)
117,547
(12,234)
208,195
(2,925)
236,432
(380,873)
21,359
$ 4,222,030 $ 459,786 $
- $ 4,681,816 $
(879,441) $ (146,319) $
- $ (1,025,760) $ 3,656,056
Silver interests
San Dimas
$ 190,331 $
- $ (190,331) $
- $
(55,469) $
(3,575) $ 59,044 $
- $
-
Peñasquito
Antamina
Constancia
Other 5
524,626
900,343
302,948
1,282,837
-
-
-
202
-
-
-
-
524,626
(121,376)
900,343
(142,705)
302,948
(41,145)
1,283,039
(759,702)
(14,528)
(47,561)
(15,572)
(20,699)
-
-
-
-
(135,904)
388,722
(190,266)
710,077
(56,717)
246,231
(780,401)
502,638
$ 3,201,085 $
202 $ (190,331) $ 3,010,956 $ (1,120,397) $ (101,935) $ 59,044 $ (1,163,288) $ 1,847,668
Palladium interests
Stillwater 3
$
- $ 263,726
- $ 263,726 $
- $
(4,033)
- $
(4,033) $ 259,693
Cobalt interests
Voisey's Bay $
- $ 393,422
- $ 393,422 $
- $
-
- $
- $ 393,422
$ 7,423,115 $ 1,117,136 $ (190,331) $ 8,349,920 $ (1,999,838) $ (252,287) $ 59,044 $ (2,193,081) $ 6,156,839
1) Includes cumulative impairment charges to December 31, 2018 as follows: Keno Hill silver interest - $11 million; Pascua-Lama silver interest - $338 million; 777 silver
interest - $64 million; 777 gold interest - $151 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, Rosemont and 777 gold interests.
5) Comprised of the currently owned Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata, Pascua-Lama, Rosemont and 777
silver interests in addition to the Lagunas Norte, Pierina and Veladero silver interests, all of which expired on March 31, 2018.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [90]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
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.
December 31, 2019
December 31, 2018
Depletable
Non-
Depletable
Total
Depletable
Non-
Depletable
Total
$ 2,078,666 $
526,591 $ 2,605,257 $ 2,171,292 $
534,768 $ 2,706,060
290,841
101,263
53,202
9,143
87,593
106,774
203,163
13,168
26,831
-
344,043
110,406
194,367
229,994
13,168
308,041
108,403
101,421
209,569
21,359
58,422
9,144
106,774
26,863
-
366,463
117,547
208,195
236,432
21,359
$ 2,774,694 $
722,541 $ 3,497,235 $ 2,920,085 $
735,971 $ 3,656,056
$
287,493 $
322,148
87,209 $
346,662
374,702 $
668,810
284,194 $
353,679
104,528 $
356,398
212,173
16,014
83,687
404,006
228,187
487,693
230,983
15,248
87,386
415,252
388,722
710,077
246,231
502,638
$
905,501 $
853,891 $ 1,759,392 $
956,242 $
891,426 $ 1,847,668
$
238,485 $
11,484 $
249,969 $
248,299 $
11,394 $
259,693
(in thousands)
Gold interests
Salobo
Sudbury 1
Constancia
San Dimas
Stillwater 2
Other 3
Silver interests
Peñasquito
Antamina
Constancia
Other 4
Palladium interests
Stillwater 3
Cobalt interests
Voisey's Bay
$
- $
227,510 $
227,510 $
- $
393,422 $
393,422
$ 3,918,680 $ 1,815,426 $ 5,734,106 $ 4,124,626 $ 2,032,213 $ 6,156,839
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, Rosemont and 777 gold interests.
4) Comprised of the Los Filos, Zinkgruvan, Yauliyacu, Stratoni, Keno Hill, Neves-Corvo, Minto, Aljustrel, Loma de La Plata, Pascua-Lama, Rosemont and 777 silver interests.
Termination of the San Dimas Silver Interest and Acquisition of the San Dimas Gold Interest
On May 10, 2018, First Majestic Silver Corp. ("First Majestic") completed the acquisition of all the issued and
outstanding common shares of Primero Mining Corp. ("Primero") (the “Acquisition”). The Company had a silver
purchase agreement with Primero (the “San Dimas SPA”), under which the Company acquired 100% of the payable
silver produced at San Dimas up to 6 million ounces annually, and 50% of any excess for the life of the mine.
In connection with the Acquisition, on May 10, 2018, the Company terminated the San Dimas SPA and entered into a
new precious metal purchase agreement with First Majestic relating to the San Dimas mine (the “San Dimas PMPA”).
As consideration for terminating the San Dimas SPA, the Company received a cash payment of $220 million and
20,914,590 First Majestic common shares with a fair value of $151 million (the "First Majestic Shares"1), as well as a
$10 million payment received from Goldcorp Inc. (“Goldcorp”) as consideration for the termination of a guarantee
provided by Goldcorp with respect to the delivery by Primero of all silver produced and owing to the Company until
2029, with the net result being that during the year ended December 31, 2018, the Company reflected a gain on
disposal of the San Dimas SPA in the amount of $246 million, calculated as follows:
1 The First Majestic Shares are subject to volume selling restrictions.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [91]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
Cash received
Fair value of First Majestic shares received
Fee from Goldcorp in exchange for release from the
guarantee of deliveries relative to San Dimas
Total net proceeds from the disposal of the San Dimas SPA
Less: carrying value plus closing costs
Gain on disposal of the San Dimas SPA
$
220,000
151,000
10,000
381,000
(135,285)
245,715
$
$
Under the terms of the new San Dimas PMPA, for which the Company paid total upfront cash consideration of $220
million, 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
70:1.1 In addition to the $220 million upfront cash payment, the Company will make ongoing payments of $600 per
gold ounce delivered.
Acquisition of the Voisey’s Bay Cobalt Interest
On June 11, 2018, the Company entered into an agreement (the “Voisey’s Bay PMPA”) to acquire from Vale S.A.
(“Vale”) an amount of cobalt equal to 42.4% of the cobalt production from its Voisey’s Bay mine, located in Canada,
until the delivery of 31 million pounds of cobalt and 21.2% of cobalt production thereafter for the life of mine for a total
upfront cash payment of $390 million. In addition, Wheaton will make ongoing payments of 18% of the spot price of
cobalt per pound of cobalt delivered under the agreement until the market value of cobalt delivered to Wheaton, net
of the per pound cash payment, exceeds the initial upfront cash deposit, and 22% of the spot price of cobalt
thereafter. Payable rates for cobalt in concentrate have generally been fixed at 93.3%. Deliveries under the contract
are scheduled to begin effective January 1, 2021.
Acquisition of the Stillwater Gold and Palladium Interest
On July 16, 2018, the Company entered into an agreement with Sibanye Gold Limited ("Sibanye-Stillwater") to
acquire an amount of gold and palladium equal to a fixed percentage of production from the Stillwater and East
Boulder mines located in Montana in the United States (collectively referred to as the “Stillwater” mines) for a total
upfront cash payment of $500 million. The Company is entitled to the attributable gold and palladium production for
which an offtaker payment is received after July 1, 2018 at a fixed payable rate of 99% for gold and 99.6% for
palladium.
Under the terms of the agreement, the Company has acquired an amount of gold equal to 100% of the gold
production for the life of the mine and an amount of palladium equal to 4.5% of the palladium production until 375,000
ounces are delivered to the Company, 2.25% of Stillwater palladium production thereafter until 550,000 ounces are
delivered and 1% of Stillwater palladium production thereafter for the life of mine.
In addition to the initial upfront cash consideration, the Company will make ongoing payments of 18% of the spot
price of gold and palladium for each ounce of gold and palladium delivered under the agreement until the market
value of gold and palladium delivered to Wheaton, net of the per ounce cash payment, exceeds the initial upfront
cash deposit, and 22% of the spot price thereafter2.
1 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.
2 The production payment is subject to further downward adjustment based upon Sibanye-Stillwater’s leverage ratios.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [92]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
11.
Impairment of Mineral Stream Interests
As more fully described in Note 3.8, at every reporting period the Company assesses each PMPA to determine
whether any indication of impairment or impairment reversal exists. Based on the Company’s analysis, the following
PMPAs were determined to be impaired:
(in thousands)
Cobalt Interests
Voisey's Bay
Total impairment charges
Years Ended December 31
2019
2018
$
$
165,912 $
165,912 $
-
-
Voisey’s Bay - Indicator of Impairment at June 30, 2019
As described in Note 10, on June 11, 2018, the Company entered into the Voisey’s Bay PMPA. Concurrently, Vale
also entered into a streaming agreement with Cobalt 27 Capital Corp. (“Cobalt 27”) on the Voisey’s Bay mine with
similar terms and conditions to the Voisey’s Bay PMPA.
On June 18, 2019, Cobalt 27 announced that it had entered into an agreement with Pala Investments Limited (“Pala”)
whereby Pala would acquire 100% of Cobalt 27’s issued and outstanding common shares. The estimated implied
price paid by Pala for Cobalt 27’s streaming agreement on the Voisey’s Bay mine was significantly lower than the
original upfront cash payment paid by Cobalt 27 to Vale at the time their agreement was entered into. The implied
purchase price paid by Pala to acquire Cobalt 27’s Voisey’s Bay stream was determined to be an indicator of
impairment relative to the Company’s Voisey’s Bay PMPA.
The Voisey’s Bay PMPA had a carrying value at June 30, 2019 of $393 million. Management estimated that the
recoverable amount at June 30, 2019 under the Voisey’s Bay PMPA was $227 million, representing its FVLCD and
resulting in an impairment charge of $166 million. The recoverable amount related to the Voisey’s Bay PMPA was
estimated using an average discount rate of 7% and the market price of cobalt of $14.83 per pound. As this valuation
technique requires the use of estimates and assumptions such as commodity prices, discount rates, recoverable
pounds of cobalt and operating performance, it is classified within Level 3 of the fair value hierarchy.
During the six months ended December 31, 2019, there were no further indications of impairment or any indications
of impairment reversal that resulted in a reassessment of the recoverable value of the Voisey’s Bay PMPA.
12.
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 29 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.
The following table summarizes the early deposit mineral stream interests currently owned by the Company:
Early Deposit Mineral
Stream Interests
Toroparu
Cotabambas
Kutcho
Mine
Owner
Gold X
Panoro
Kutcho
Location of
Mine
Guyana $
Peru
Canada
Upfront
Consideration
Paid to Date 1
Upfront
Consideration
to be Paid 1, 2
15,500 $
8,500
7,000
138,000 $
131,500
58,000
Total
Upfront
Consideration¹
153,500
140,000
65,000
Attributable
Production to be
Purchased
Gold
10%
25% ³
100% ⁴
Term of
Silver
Agreement
50% Life of Mine
100% ³ Life of Mine
100% ⁴ Life of Mine
1) Expressed in thousands of United States dollars; excludes closing costs and capitalized interest, where applicable.
2) Please refer to Note 29 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 to be purchased will decrease to 16.67% of gold
production and 66.67% of silver production for the life of mine.
4) Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, the stream will decrease to 66.67% of gold and silver production for the life
of mine.
$
31,000 $
327,500 $
358,500
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [93]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
13. Mineral Royalty Interest
On August 7, 2014, the Company purchased a 1.5% net smelter return royalty interest (the “Royalty”) in the Metates
properties located in Mexico from Chesapeake Gold Corp. (“Chesapeake”) for the life of mine. Under the terms of the
agreement, the Company paid total upfront cash consideration of $9 million. In accordance with the terms of the
agreement, on August 7, 2019, Chesapeake exercised its option to re-acquire two-thirds of the Royalty, or 1%, for $9
million. As a result, the Company’s Royalty has been reduced to 0.5%. The Company has reflected the transaction as
a disposal of two-thirds of its original investment, resulting in a gain on disposal of $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 this royalty agreement.
14.
Investment in Associate
Kutcho
On June 6, 2019, the Company acquired 1 million common shares and warrants to acquire an additional 1 million
common shares of Kutcho Copper Corp. (“Kutcho”) for Cdn$0.2 million, resulting in the Company owning 7,153,846
common shares and warrants to acquire an additional 4,076,923 common shares of Kutcho. Additionally, the Company
holds a Cdn$20 million subordinated secured convertible term debt loan agreement bearing interest at 10% per annum
with Kutcho (the “Kutcho Convertible Note” – see Note 15).
As at December 31, 2019, Kutcho had 68,247,628 shares issued and outstanding, resulting in Wheaton owning
approximately 10% of Kutcho on a non-diluted basis. However, as the convertible instruments described above are
currently exercisable, on a fully diluted basis, Wheaton has the potential to own approximately 29% of Kutcho (37% on a
non-fully diluted basis). As a result of the potential ownership position, the Company has concluded that it has significant
influence over Kutcho and as such the investment in Kutcho is considered an Investment in Associate which is
accounted for using the equity method. The Company records its share of Kutcho's profit or loss based on Wheaton’s
ownership interest in Kutcho on a non-diluted basis.
Kutcho’s principal address is 1030 West Georgia Street, Suite 717, Vancouver, British Columbia, Canada, V6E 2Y3.
Indicator of Impairment
Since the original investment in Kutcho on December 14, 2017, the value of Kutcho’s shares have had a significant
decline in value. This decline in value was determined to be an indicator of impairment relative to the Company’s
investment in Kutcho.
During the year, the Company recorded an impairment charge of $1.6 million to its recoverable amount of $1 million.
The recoverable amount, which represents Kutcho’s FVLCD, was calculated as the quoted market price of the
common share multiplied by the quantity of shares held by the Company, and as such is classified within Level 1 of
the fair value hierarchy.
A continuity schedule of the Kutcho Investment in Associate from January 1, 2018 to December 31, 2019 is
presented below:
(in thousands)
At January 1, 2018
Share of losses
At December 31, 2018
Amount invested
Share of losses
Impairment
At December 31, 2019
Investment in
Associate
$
$
2,994
(432)
2,562
133
(164)
(1,649)
$
882
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [94]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
15. Convertible Notes Receivable
Kutcho Copper Corp.
Effective December 14, 2017, in connection with the Kutcho Early Deposit Agreement (Note 12), the Company
advanced to Kutcho $16 million (Cdn$20 million) and received the Kutcho Convertible Note. The Kutcho Convertible
Note, which has a seven year term to maturity, carries interest at 10% per annum, compounded and payable semi-
annually. Kutcho elected to defer the first three interest payments until December 31, 2019 and, as per an amendment
entered into on November 27, 2019, can defer this interest in addition to the fourth interest payment for an additional
period not to exceed 4 years. The deferred interest carries interest at 15% per annum, compounded semi-annually. As
part of the November 27, 2019 amendment, Wheaton forfeited its option to convert the outstanding deferred interest into
common shares of Kutcho.
At any time prior to the maturity date, the Company has the right to convert all or any part of the outstanding amount of
the Kutcho Convertible Note, excluding outstanding deferred interest, into common shares of Kutcho at Cdn$0.8125 per
share. Kutcho has the right to repay the Kutcho Convertible Note early, subject to the applicable pre-payment cash
penalties as follows:
•
•
•
25% of the outstanding amount if pre-paid on or after 24 months until 36 months;
20% of the outstanding amount if pre-paid on or after 36 months until 60 months; and
15% of the outstanding amount if pre-paid on or after 60 months until maturity.
Gold X Mining Corp.
Effective December 24, 2019, in connection with the Toroparu Early Deposit Agreement (Note 12), the Company
advanced $10 million to Gold X as part of a $20 million 10% secured convertible debenture private placement offering
completed by Gold X (the “Gold X Convertible Note”). The Gold X Convertible Note, which has a three-year term to
maturity, carries interest at 10% per annum, compounded semi-annually and payable annually. Gold X has the option to
defer the interest payments until December 4, 2022, being the maturity date. Wheaton can, at its option, convert the
deferred interest into common shares of Gold X.
At any time prior to the maturity date, the Company has the right to convert all or any part of the outstanding amount of
the Gold X Convertible Note, converted into Canadian dollars using the exchange rate published by the Bank of Canada
on the business day prior to the conversion, into common shares of Gold X at Cdn$3.20 per share.
Convertible Notes Receivable Valuation Summary
The Kutcho Convertible Note and Gold X Convertible Note are revalued quarterly by discounting the stream of future
interest and principal payments at the rate of interest prevailing at the balance sheet date for instruments of similar
term and risk, and adding this value to the value of the convertibility feature which is estimated using a Black-Scholes
model based on assumptions including risk free interest rate, expected dividend yield, expected volatility and
expected remaining life of the respective notes.
A continuity schedule of these convertible notes from January 1, 2018 to December 31, 2019 is presented below:
(in thousands)
At January 1, 2018
Fair value gain (loss) reflected in net earnings
At December 31, 2018
Amount advanced
Fair value gain (loss) reflected in net earnings
Kutcho
Convertible
Note
15,777
(2,878)
12,899
-
(1,062)
$
$
Gold X
Convertible
Note
-
-
-
10,000
19
$
$
$
$
Total
15,777
(2,878)
12,899
10,000
(1,043)
At December 31, 2019
$
11,837
$
10,019
$
21,856
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [95]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Long-Term Equity Investments
16.
Common Shares Held
Shares
Owned
Percentage of
Outstanding
Shares Owned
13,264,305
11,700,000
20,239,590
12.84%
3.95%
9.73%
December 31, 2019
Fair Value
Adjustment
Gains
Included in
OCI
Realized
Gain
(Loss) on
Disposal
$
17,871 $
6,747
130,346
6,972
-
-
521
(7,803)
Fair Value
$
27,983
17,296
248,137
16,341
$ 309,757
$
161,936 $
(7,282)
Shares
Owned
Percentage of
Outstanding
Shares Owned
Fair Value
December 31, 2018
Fair Value
Adjustment
Gains
(Losses)
Included in
OCI
Realized
Gain on
Disposal
13,264,305
11,700,000
n.a.
20,914,590
$
13%
4%
n.a.
11%
10,112
10,549
-
123,187
20,905
$
(11,247)
(10,622)
20,153
(27,813)
(10,456)
$
-
-
34,061
-
-
$ 164,753
$
(39,985)
$ 34,061
(in thousands, except
shares owned)
Bear Creek
Sabina
First Majestic
Other
Total
(in thousands, except
shares owned)
Bear Creek
Sabina
Arizona Mining
First Majestic
Other
Total
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.
While long-term investments in warrants are also held for long-term strategic purposes, they meet the definition of a
derivative and therefore are classified as financial assets with fair value adjustments being recorded as a component of
net earnings under the classification Other (Income) Expense. Warrants that do not have a quoted market price are
valued using a Black-Scholes option pricing model.
By holding these long-term investments, the Company is inherently exposed to various risk factors including currency
risk, market price risk and liquidity risk.
Acquisitions of Long-Term Equity Investments
In connection with the termination of the San Dimas SPA (Note 10), on May 10, 2018, the Company received
20,914,590 First Majestic common shares with a fair value of $151 million.
On April 25, 2018, the Company made a strategic investment of $1 million by participating in a private placement
undertaken by Tradewind Markets, Inc. ("Tradewind"), a financial technology company that uses blockchain to speed
up and streamline digital gold and silver trading.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [96]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
On July 17, 2018, the Company acquired 7,093,392 common shares of Adventus Zinc Corporation ("Adventus") in a
private placement transaction, for total consideration of Cdn$6 million, representing 9.99% of Adventus’ issued and
outstanding common shares. Concurrently, the Company paid an additional Cdn$1 million to acquire a right of first
refusal on any new streaming or royalty transactions on precious metals on the Adventus existing properties in Ecuador
and a right of first offer on any subsequently acquired properties in Ecuador (the “Adventus ROFR”).
On May 17, 2019, the Company acquired an additional 1,371,711 common shares of Adventus in a private placement
transaction for total consideration of Cdn$1 million, thus maintaining the Company’s ownership position.
The shares of Tradewind and Adventus have been classified as part of the Other long-term investments in these
financial statements, while the Adventus ROFR has been classified as a component of Other non-current assets on the
balance sheet.
Disposal of Long-Term Equity Investments
On August 10, 2018, South32 Limited announced that it had completed its acquisition of all the issued and
outstanding common shares of Arizona Mining Inc. (“Arizona Mining”), which resulted in a disposition of the
Company’s investment in Arizona Mining for total proceeds of $48 million (Cdn$62 million), and a realized gain of $34
million.
During the year ended December 31, 2019, the Company disposed of 675,000 shares of First Majestic reducing its
ownership position to under 10% of the issued and outstanding common shares. The Company received total
proceeds of $5 million and realized a gain on disposal of $0.5 million.
During the year ended December 31, 2019, the Company disposed of several investments which had been classified
as “Other” long-term equity investments as they were no longer considered to have strategic value. The Company
received total proceeds of $13 million and realized a loss on disposal of $8 million.
17.
Property, Plant and Equipment
(in thousands)
Cost
Balance - January 1, 2019
Additions upon adoption of IFRS 16
Additions
Disposals
Balance - December 31, 2019
Accumulated Depreciation
Balance - January 1, 2019
Disposals
Depreciation
Balance - December 31, 2019
Net book value - December 31, 2019
December 31, 2019
Leasehold
Improvements
Right of Use
Assets -
Property
$
$
$
$
$
4,378
-
9
(7)
4,380
(2,024)
7
(501)
(2,518)
1,862
-
$
4,679
59
-
$ 4,738
$
-
-
(704)
$
(704)
$ 4,034
Other
Total
$
$
$
$
$
3,318
-
547
(29)
3,836
(2,046)
29
(404)
(2,421)
1,415
$
7,696
4,679
615
(36)
$ 12,954
$
$
$
(4,070)
36
(1,609)
(5,643)
7,311
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [97]
18. Credit Facilities
18.1. Bank Debt
(in thousands)
Current portion
Long-term portion
Gross bank debt outstanding 1
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
December 31 December 31
2018
2019
$ - $ -
1,264,000
874,500
$ 874,500 $ 1,264,000
1) There is $5 million unamortized debt issue costs associated with the Revolving Facility which have been recorded as a long-term asset under the classification Other (see
Note 26).
On February 27, 2020, the term of the Company’s $2 billion revolving term loan (“Revolving Facility”) was extended
by an additional year, with the facility now maturing on February 27, 2025. The Company incurred fees of $1 million in
relation to this extension.
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 December 31, 2019.
Effective February 27, 2020, the Company’s option, amounts drawn under the Revolving Facility incur interest based
on the Company’s leverage ratio at either (i) LIBOR plus 1.00% to 2.05%; or (ii) the Bank of Nova Scotia’s Base Rate
plus 0.00% to 1.05%. Undrawn amounts under the Revolving Facility are subject to a stand-by fee of 0.20% to 0.41%
per annum, dependent on the Company’s leverage ratio.
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.
18.2. Letters of Guarantee
On March 15, 2016, the Company entered into a letter of guarantee in favour of Her Majesty the Queen in Right of
Canada, as represented by the Minister of National Revenue in the amount of Cdn$192 million. On March 15, 2017
and 2018, additional letters of guarantee in the amount of Cdn$11 million and Cdn$10 million, respectively, were
delivered to the Canada Revenue Agency (“CRA”) as security for additional estimated interest for the respective
following year.
The letters of guarantee, which carried an annual fee of 100 basis points, were cancelled effective December 18,
2018.
18.3. Lease Liabilities
The lease liability relative to the Company’s offices located in Vancouver, Canada and the Cayman Islands is as
follows:
(in thousands)
Current portion
Long-term portion
Total lease liabilities
December 31 December 31
2019
724 $
3,528
4,252 $
$
$
2018
-
-
-
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [98]
The maturity analysis of these leases is as follows:
(in thousands)
Not later than 1 year
Later than 1 year and not later than 5 years
Later than 5 years
Total lease liabilities
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
December 31
$
2019
724
3,294
234
$
4,252
18.4. Finance Costs
A summary of the Company’s finance costs relative to the above facilities during the period is as follows:
(in thousands)
Interest Expense During Period
Average principal outstanding during period
Average effective interest rate during period
Total interest expense incurred during period
Costs related to undrawn credit facilities
Interest expense - lease liabilities
Letters of guarantee
Total finance costs
19.
Issued Capital
(in thousands)
Issued capital
Years Ended December 31
Note
2019
2018
$
$
18.1
18.1
18.3
18.2
1,099,846 $ 1,005,222
3.57%
35,839
3,707
-
1,641
4.07%
44,767 $
3,834
175
(46)
$
48,730 $
41,187
December 31 December 31
2018
2019
Note
Share capital issued and outstanding: 447,771,433 common shares
(December 31, 2018: 444,336,361 common shares)
19.1
$ 3,599,203 $ 3,516,437
19.1. Shares Issued
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 December 31, 2019, the Company had no preference shares
outstanding.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [99]
A continuity schedule of the Company’s issued and outstanding common shares from January 1, 2018 to December
31, 2019 is presented below:
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
At January 1, 2018
Share purchase options exercised 1
Restricted share units released 1
Dividend reinvestment plan 2
At December 31, 2018
Share purchase options exercised 1
Restricted share units released 1
Dividend reinvestment plan 2
At December 31, 2019
Number
of
Shares
Weighted
Average
Price
442,724,309
46,800
Cdn$24.28
104,178
$0.00
1,461,074
444,336,361
US$18.28
2,039,735
Cdn$25.79
133,670
$0.00
1,261,667
US$24.31
447,771,433
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 3%.
19.2. Dividends Declared
(in thousands, except per share amounts)
Dividends declared per share
Average number of shares eligible for dividend
Total dividends paid
Paid as follows:
Cash
DRIP 1
Total dividends paid
Years Ended December 31
2019
2018
$
0.36
446,267
$
0.36
443,386
$ 160,656
$ 159,619
$ 129,986 81% $ 132,915 83%
30,670 19%
26,704 17%
$ 160,656 100% $ 159,619 100%
Shares issued under the DRIP
1,262
1,461
1) The Company has implemented a DRIP whereby shareholders can elect to have dividends reinvested directly into additional Wheaton common shares.
2) As at December 31, 2019, cumulative dividends of $1,078 million have been declared and paid by the Company.
20. Reserves
(in thousands)
Reserves
Share purchase warrants
Share purchase options
Restricted share units
Long-term investment revaluation reserve, net of tax
Total reserves
December 31 December 31
2018
2019
Note
$
20.1
20.2
20.3
20.4
83,077 $
24,010
6,405
47,209
83,077
31,002
5,970
(112,156)
$
160,701 $
7,893
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [100]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
20.1. Share Purchase Warrants
The Company’s share purchase warrants (“warrants”) are presented below:
Warrants outstanding
Weighted
Average
Exercise
Price
Exchange
Ratio
Share
Purchase
Warrants
Reserve
Number of
Warrants
10,000,000
$43.75
1.00 $
83,077
The warrants, which expire on February 28, 2023, were valued using a Black-Scholes option pricing model. Each
warrant entitles the holder the right to purchase one of the Company’s common shares.
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 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 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 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:
Black-Scholes weighted average assumptions
Grant date share price and exercise price
Expected dividend yield
Expected volatility
Risk-free interest rate
Expected option life, in years
Weighted average fair value per option granted
Number of options issued during the period
Total fair value of options issued (000's)
Years Ended December 31
2019
2018
Cdn$32.88
1.49%
31%
1.60%
2.5
Cdn$6.10
583,500
Cdn$26.25
1.73%
35%
1.91%
2.5
Cdn$5.49
549,210
$ 2,652
$ 2,347
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [101]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
The following table summarizes information about the options outstanding and exercisable at December 31, 2019:
Exercise Price (Cdn$)
Exercisable
Options
Non-Exercisable
Options
Total Options
Outstanding
Weighted
Average
Remaining
Contractual Life
$23.26
$23.27¹
$24.11
$25.48
$26.24
$26.26¹
$26.51¹
$26.79¹
$27.03
$27.51
$27.60
$28.43¹
$30.82
$31.89¹
$32.93
$39.52
691,250
58,850
8,440
115,000
203,240
5,900
29,450
47,900
-
380,900
1,820
1,095
-
-
-
8,000
-
-
-
-
219,510
-
49,320
-
2,230
-
-
1,095
5,970
95,480
469,040
-
691,250
58,850
8,440
115,000
422,750
5,900
78,770
47,900
2,230
380,900
1,820
2,190
5,970
95,480
469,040
8,000
1.2 years
1.2 years
2.6 years
0.2 years
3.2 years
0.2 years
3.2 years
2.2 years
4.3 years
2.2 years
2.4 years
3.3 years
4.4 years
4.2 years
4.2 years
1.6 years
1,551,845
842,645
2,394,490
2.5 years
1) US$ share purchase options converted to Cdn$ using the exchange rate of 1.2988, being the Cdn$/US$ exchange rate at December 31, 2019.
At December 31, 2019, there were 2,394,490 share purchase options outstanding with a weighted average exercise
price of Cdn$27.08 per option. For the comparable period in 2018, there were 3,883,350 share purchase options
outstanding with a weighted average exercise price of Cdn$25.71 per option.
A continuity schedule of the Company’s outstanding share purchase options from January 1, 2018 to December 31,
2019 is presented below:
At January 1, 2018
Granted (fair value - $2 million or Cdn$5.49 per option)
Exercised
Forfeited
Expired
At December 31, 2018
Granted (fair value - $3 million or Cdn$6.10 per option)
Exercised
Forfeited
Expired
Number of
Options
Outstanding
Weighted
Average
Exercise Price
4,232,260
549,210
(46,800)
(7,320)
(844,000)
3,883,350
583,500
(2,039,735)
(15,475)
(17,150)
Cdn$26.71
26.25
24.28
29.24
32.70
Cdn$25.71
32.88
25.79
31.04
30.69
At December 31, 2019
2,394,490
Cdn$27.08
As it relates to share purchase options, during the year ended December 31, 2019, the weighted average share price
at the time of exercise was Cdn$34.83 per share, as compared to Cdn$28.10 per share per share during the
comparable period in 2018.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [102]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
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 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 General and Administrative.
A continuity schedule of the Company’s restricted share units outstanding from January 1, 2018 to December 31,
2019 is presented below:
At January 1, 2018
Granted (fair value - $3 million)
Released
Forfeited
At December 31, 2018
Granted (fair value - $3 million)
Released
Forfeited
At December 31, 2019
Number of
RSUs
Outstanding
Weighted
Average
Intrinsic Value at
Date Granted
313,846
161,060
(104,178)
(595)
370,133
132,620
(133,670)
(2,760)
366,323
$20.71
20.42
21.49
20.48
$20.36
24.51
20.82
23.19
$21.67
During the year ended December 31, 2019, the Company issued 132,620 RSUs with a fair value of $3 million or
Cdn$32.89 per RSU. For the same period in 2018, the Company issued 161,060 RSUs with a fair value of $3 million
or Cdn$26.25 per RSU.
As of December 31, 2019, there were 366,323 RSUs outstanding. For the comparable period in 2018, there were
370,133 RSUs outstanding.
20.4. Long-Term Investment Revaluation Reserve
The Company’s long-term investments in common shares (Note 16) are held for long-term strategic purposes and not
for trading purposes. The Company has chosen to designate these long-term investments in common shares as
financial assets with fair value adjustments being recorded as a component of OCI as it believes that this provides a
more meaningful presentation for long-term strategic investments, rather than reflecting changes in fair value as a
component of net earnings. As some of these long-term investments are denominated in Canadian dollars, changes in
their fair value is affected by both the change in share price in addition to changes in the Cdn$/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 to offset the loss.
A continuity schedule of the Company’s long-term investment revaluation reserve from January 1, 2018 to December
31, 2019 is presented below:
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [103]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
At January 1, 2018
Unrealized gain (loss) on LTIs 1
Reallocate reserve to retained earnings upon disposal of LTIs 1
At December 31, 2018
Deferred
Tax
Recovery
Total
(Expense)
$ (38,110) $ (1,937) $ (40,047)
Change in
Fair Value
(39,985)
(34,061)
(42,647)
(29,462)
$(112,156) $ - $(112,156)
(2,662)
4,599
Unrealized gain (loss) on LTIs 1
Reallocate reserve to retained earnings upon disposal of LTIs 1
161,936
(9,623)
152,313
16
7,282
(230)
7,052
At December 31, 2019
$ 57,062 $ (9,853) $ 47,209
1) LTIs refers to long-term investments in common shares held.
21.
Stock Based Compensation
The Company’s stock 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.
During the year ended December 31, 2019, the Company issued 191,410 PSUs as compared to 220,260 PSUs
during the comparable period of the previous year.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [104]
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, 2018 to December 31, 2019 is presented
below:
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands, except for number of PSUs outstanding)
At January 1, 2018
Granted
Accrual related to the fair value of the PSUs outstanding
Foreign exchange adjustment
Paid 1
Forfeited
At December 31, 2018
Granted
Accrual related to the fair value of the PSUs outstanding
Foreign exchange adjustment
Paid
Forfeited
Number of
PSUs
Outstanding
PSU accrual
liability
656,599 $
220,260
-
-
(218,615)
(2,517)
655,727 $
191,410
-
-
(229,050)
(13,395)
1,430
-
9,517
(185)
-
(6)
10,756
-
17,174
479
(9,325)
(15)
At December 31, 2019
604,692 $
19,069
1) The PSUs paid out during 2018 had a performance factor of 0% resulting in a cash disbursement of $Nil.
A summary of the PSUs outstanding at December 31, 2019 is as follows:
Year
of Grant
2017
2018
2019
Year of
Maturity
2020
2021
2022
Estimated Value
Per PSU at
Maturity
$28.46
$28.46
$28.45
Number
outstanding
204,142
213,820
186,730
604,692
Anticipated
Performance
Factor
at Maturity
199%
192%
111%
Percent of
Vesting Period
PSU
Complete at
Liability at
Dec 31, 2019
Dec 31, 2019
$ 10,668
92%
59% 6,895
26% 1,506
$ 19,069
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:
(in thousands)
Basic weighted average number of shares outstanding
Effect of dilutive securities
Share purchase options
Restricted share units
Diluted weighted average number of shares outstanding
Years Ended December 31
2019
446,021
2018
443,407
627
282
81
374
446,930
443,862
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [105]
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$32.40, compared to Cdn$25.32 for the comparable period in 2018.
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
Share purchase options
Share purchase warrants
Total
23. Supplemental Cash Flow Information
Change in Non-Cash Working Capital
(in thousands)
Change in non-cash working capital
Accounts receivable
Accounts payable and accrued liabilities
Other
Total change in non-cash working capital
Years Ended December 31
2019
2018
477
10,000
2,801
10,000
10,477
12,801
Years Ended December 31
2019
2018
$ (2,514)
(9,791)
468
$ 828
7,977
159
$ (11,837)
$ 8,964
Cash Outflow Relative to Leases
During the year ended December 31, 2019, the total cash outflows relative to the Company’s leases were $804,000.
Non-Cash Transactions – Receipt of Shares as Consideration for Contract Amendments
As more fully described in note 10, during 2018 the Company received 20,914,590 First Majestic common shares
with a fair value of $151 million as partial consideration for the termination of the previously owned San Dimas SPA.
Non-Cash Transactions – Payment of Dividends Under DRIP
As more fully described in Note 19.2, during the year ended December 31, 2019, the Company declared and paid
dividends to its shareholders in the amount of $0.36 per common share for total dividends of $161 million.
Approximately 19% of shareholders elected to have their dividends reinvested in common shares of the Company
under the Company's dividend reinvestment plan ("DRIP"). As a result, $130 million of dividend payments were made
in cash and $31 million in common shares issued. For the comparable period in 2018, the Company declared and
paid dividends to its shareholders in the amount of $0.36 per common share for total dividends of $160 million, with
the payment being comprised of $133 million in cash and $27 million in common shares issued.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [106]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
24.
Income Taxes
A summary of the Company’s income tax expense (recovery) is as follows:
Income tax recognized in net earnings is comprised of the following:
(in thousands)
Current income tax expense related to foreign jurisdictions
Deferred income tax expense (recovery) related to:
Origination and reversal of temporary differences
Write down (reversal of write down) or recognition of prior period
temporary differences
Total deferred income tax expense (recovery) from operations
Total income tax expense (recovery) from operations
Income tax expense related to CRA Settlement 1
Current income tax expense related to CRA Settlement
Reversal of previously recognized non-capital losses
Income tax expense offset by previously unrecognized non-capital
losses recognized through Equity
Total income tax expense related to CRA Settlement 2
Income tax expense (recovery) recognized in net earnings
Years Ended December 31
2019
73
$
2018
86
7,311 $
841
(16,521)
(9,210) $
(9,137) $
(5,393)
(4,552)
(4,466)
$
71
-
4,020
3,848
-
71
$
12,466
20,334
(9,066)
$
15,868
$
$
$
$
$
$
$
1) Reference to the CRA Settlement refers to the settlement of the 2005 to 2010 tax dispute and the application of the CRA Settlement principles to the 2011 to 2017 taxation
years. Refer to the discussion on page 109 for more information.
2) The figures for 2018 are net of an $18 million tax benefit relating to non-capital losses and other deductions recognized through net earnings.
Income tax recognized as a component of OCI is comprised of the following:
(in thousands)
2019
Income tax expense (recovery) related to LTIs - common shares held
$
9,623 $
2018
2,662
Years Ended December 31
Income tax recognized directly in equity is comprised of the following:
(in thousands)
Income tax expense (recovery) related to share issue costs
Origination and reversal of temporary differences
Write down (reversal of write down) or recognition of prior period
temporary differences
Income tax expense (recovery) from operations
Income tax recovery related to CRA Settlement
Benefit of previously unrecognized non-capital losses related to share
issue costs
Income tax expense (recovery) recognized in equity
Years Ended December 31
2019
2018
$
$
$
$
$
- $
1,078
(376) $
(376) $
(3,001)
(1,923)
- $
(12,466)
(376)
$
(14,389)
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [107]
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:
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
Earnings before income taxes
Canadian federal and provincial income tax rates
Income tax expense (recovery) based on above rates
Non-deductible stock based compensation and other
Differences in tax rates in foreign jurisdictions
Impact of CRA Settlement
Current period unrecognized temporary differences - impairment of
mineral stream interests
Current period unrecognized temporary differences - other
Write down (reversal of write down) or recognition of prior period
temporary differences
Income tax expense (recovery)
Years Ended December 31
2019
2018
$
$
77,072 $
27.00%
20,809 $
3,291
(78,724)
71
442,983
27.00%
119,605
4,676
(133,361)
20,334
44,796
17,212
-
10,007
(16,521)
(5,393)
$
(9,066) $
15,868
The majority of the Company’s income generating activities, including the sale of precious metals, 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.
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 years ended
December 31, 2019 and December 31, 2018, respectively, is shown below:
Recognized deferred income tax assets and
liabilities
Deferred tax assets
Non-capital loss carryforward 1
Capital loss carryforward 2
Other 3
Deferred tax liabilities
Interest capitalized for accounting
Debt and share financing fees 4
Unrealized gains on long-term investments
Mineral stream interests 5
Foreign withholding tax
Year Ended December 31, 2019
Recovery
(Expense)
Recognized
In Net
Earnings
Recovery
(Expense)
Recognized
In OCI
Opening
Balance
Recovery
(Expense)
Recognized
In
Shareholders'
Equity
Closing
Balance
$
3,823 $
-
387
4,497 $
4,503
307
- $
4,450
-
436 $
-
-
8,756
8,953
694
(87)
(591)
-
(3,532)
(111)
-
(60)
-
-
(37)
-
-
(14,073)
-
-
-
(60)
-
-
-
(87)
(711)
(14,073)
(3,532)
(148)
Total
$
(111) $
9,210 $
(9,623) $
376 $
(148)
1) As at December 31, 2019, the Company had recognized the tax effect on $32 million of non-capital losses against deferred tax liabilities.
2) As at December 31, 2019, the Company had recognized the tax effect on $33 million of net capital losses to offset unrealized taxable capital gains on long-term investments.
3) Other includes capital assets, charitable donation carryforward, and PSU and pension liabilities.
4) 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.
5) 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 4.2.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [108]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Year Ended December 31, 2018
Recovery
(Expense)
Recognized
In Net
Earnings
Opening
Balance
LTI
Disposition
Recovery
(Expense)
Recognized
In
Shareholders'
Equity
Recovery
(Expense)
Recognized
In OCI
Closing
Balance
$
3,848 $
1,965
147
(2,057) $
2,633
240
- $
(4,598)
-
- $
-
-
2,032 $
-
-
3,823
-
387
(87)
(375)
(29)
(1,937)
(3,532)
(76)
-
(107)
29
1
-
(35)
-
-
-
4,598
-
-
-
-
-
(2,662)
-
-
-
(109)
-
-
-
-
(87)
(591)
-
-
(3,532)
(111)
Recognized deferred income tax assets and liabilities
Deferred tax assets
Non-capital loss carryforward
Capital loss carryforward
Other
Deferred tax liabilities
Interest capitalized for accounting
Debt and share financing fees
Kutcho Convertible Note
Unrealized gains on long-term investments
Mineral stream interests
Foreign withholding tax
Total
$
(76) $
704 $
- $
(2,662) $
1,923 $
(111)
Deferred income tax assets in Canada not recognized are shown below:
(in thousands)
Non-capital loss carryforward 1
Debt and equity financing fees
Mineral stream interests
Other
Capital loss carryforward
Kutcho Convertible Note
Unrealized losses on long-term investments
Total
December 31 December 31
$
2019
19,145 $
1,383
107,785
4,282
-
951
6,733
2018
7,209
4,474
67,717
3,656
7,723
648
15,907
$
140,279 $
107,334
1) As at December 31, 2019, the Company had not recognized the tax effect on $71 million of non-capital losses as a deferred tax asset.
At December 31, 2019, the Company has available non-capital losses for Canadian income tax purposes which may
be carried forward to reduce taxable income in future years. If not utilized, the non-capital losses in the amount of
$103 million will expire as follows: 2038 – $40 million; 2039 – $63 million. In addition, the Company has available net
capital losses of $33 million for Canadian income tax purposes which may be carried forward indefinitely to reduce
taxable capital gains in future years.
Settlement of the Canada Revenue Agency International Tax Dispute - 2018
On December 13, 2018, the Company reached a settlement with the CRA which provided for a final resolution of the
Company’s tax appeal in connection with the reassessment of the 2005 to 2010 taxation years under transfer pricing
rules related to the income generated by the Company’s foreign subsidiaries outside of Canada (the “CRA
Settlement”).
Under the terms of the CRA Settlement, income earned outside of Canada by the Company’s foreign subsidiaries will
not be subject to income tax in Canada. The CRA Settlement principles also apply to all taxation years after 2010,
subject to there being no material change in facts or change in law or jurisprudence. From time to time there may be
proposed legislative changes to law or outstanding legal actions that may have an impact on applicable law or
jurisprudence, the outcome, applicability and impact of which is not known or determinable by the Company.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [109]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
After the application of non-capital losses, for the 2005 to 2017 taxation years, the Company accrued in the results for
the year ended December 31, 2018 cash taxes of $4 million (Cdn$5.5 million) as well as interest and other penalties
of $4.3 million (Cdn$5.9 million). Interest and other penalties are reflected in the line item Other (Income) Expense on
the Statement of Earnings.
A significant component of the non-capital losses that have been applied to offset the additional taxable income
arising from the CRA Settlement relate to share issue costs. As share issue costs, which are deducted for tax
purposes over a 5-year period, reduce share capital for accounting purposes rather than being deducted as an
expense in the Statement of Earnings, the tax benefit related to these costs are also recognized in share capital. As
such, the Company recorded an income tax expense of $12 million in the Statement of Earnings with an offsetting
income tax recovery reflected directly in the Statement of Shareholders’ Equity for the year ended December 31,
2018.
The 2012 to 2015 taxation years remain under audit for international transactions and the 2016 to 2019 taxation
years remain open to audit.
25. Other Current Assets
The composition of other current assets is shown below:
(in thousands)
Non-revolving term loan
Prepaid expenses
Class action settlement recoverable
Other
Total other current assets
December 31 December 31
Note
2019
$
431 $
29
1,492
41,500
81
2018
-
1,508
-
33
$
43,504 $
1,541
Non-revolving term loan
On November 25, 2019, the Company entered into a non-revolving term loan with Kutcho, under which Kutcho can
draw up to a maximum of $1 million (Cdn$1.3 million). The credit facility, which matures on December 31, 2020,
carries interest at 15% per annum, compounded monthly.
26. Other Long-Term Assets
The composition of other long-term assets is shown below:
(in thousands)
Intangible assets
Debt issue costs - Revolving Facility
Adventus ROFR
Subscription rights
Other
Total other long-term assets
December 31 December 31
$
Note
18.1
16
2019
3,419 $
5,154
615
1,524
3,854
2018
3,291
5,507
615
-
902
$
14,566 $
10,315
Subscription Rights
During December 2019, the Company acquired 1 million subscription rights relative to Caldas Finance Corp. for $1.5
million (Cdn$2 million). On February 28, 2020, upon the successful transfer of the Marmato project assets located in
Colombia by Gran Colombia Gold Corp. to Caldas Finance and the completion of a reverse takeover transaction
between Caldas Finance and Bluenose Gold Corp. to form a new public company, Caldas Gold Corp., the
subscription receipts were automatically converted into common shares and warrants of Caldas Gold Corp. The value
of these shares and warrants will be reflected as a component of Other long-term equity investments.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [110]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
27. Related Party Transactions
Compensation of Key Management Personnel
Key management personnel compensation, including directors, is as follows:
(in thousands)
Short-term benefits 1
Post-employment benefits
PSUs 2
Equity settled stock based compensation (a non-cash expense) 3
Years Ended December 31
$
2019
2018
6,599 $
661
10,643
3,709
7,402
56
6,001
3,559
Total executive compensation
$
21,612 $
17,018
1) Short-term employee benefits include salaries, bonuses payable within twelve months of the balance sheet date and other annual employee benefits.
2) As more fully disclosed in Note 21.1, PSU compensation expense is recorded on a straight-line basis over the three year vesting period, with the expense being 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.
3) As more fully disclosed in Notes 20.2 and 20.3, equity settled stock based compensation expense is recorded on a straight-line basis over the vesting period.
28.
Post-Employment Benefit Costs
The Company sponsors a Group Registered Retirement Savings Plan (“RRSP”) for all qualified employees.
Participants in the plan can elect to contribute up to the lesser of (i) 50% of the RRSP contribution limit as established
under the Income Tax Act (Canada) or (ii) 9% of their annual base salary, and the Company will match this
contribution. The assets of the Group RRSP are held separately from those of the Company in independently
administered funds.
During 2019, the Company implemented an unregistered and unfunded defined contribution plan (known as the
Supplemental Employee Retirement Plan, or the “SERP”) for all qualified employees. Under the terms of the SERP,
benefits accumulate equal to 10% (or 15% for certain senior employees) of the employee’s base salary plus target
bonus, less amounts contributed by the Company under the Group RRSP plan. Interest on this benefit accrues
annually based on the 5-year Government of Canada bond rate. Any benefits under the SERP have a vesting period
of five years from the first date of employment and will be paid out to the employee over a 10-year period, or at the
employee’s election, a shorter period upon the employee’s retirement from the Company.
A summary of the Company’s post-employment benefit costs during the years ended December 31, 2019 and 2018 is
summarized below:
(in thousands)
Post-employment benefits
Supplemental Employee Retirement Plan (SERP)
Group RRSP
Total post-employment benefits
Years Ended December 31
2019
2018
$
$
810 $
223
1,033 $
-
226
226
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [111]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
29. Commitments and Contingencies
Mineral Stream Interests
The following table summarizes the Company’s commitments to make per-ounce cash payments for gold, silver and
palladium and per pound cash payments for cobalt to which it has the contractual right pursuant to the PMPAs:
Attributable Payable Production to be
Purchased
Per Unit of Measurement Cash Payment 1, 2
Mineral Stream Interests
Peñasquito
Constancia
Salobo
Sudbury
Antamina
San Dimas
Stillwater
Voisey's Bay
Other
Gold
0%
50% ³
75%
70%
0%
variable ⁶
100%
0%
Silver Palladium Cobalt
25%
100%
0%
0%
33.75%
0% ⁶
0%
0%
0%
0%
0%
0%
0%
0%
4.5% ⁷
0%
0% $
0% $
0% $
0%
0% $
0%
0% 42.4% ⁹
Gold
n/a
$
404 ⁴ $
408
400
n/a
606
Silver
4.26
5.96 ⁴
n/a
n/a
variable ⁵
n/a
n/a
n/a
variable ⁸
n/a
Los Filos
Zinkgruvan
Yauliyacu
Stratoni
Neves-Corvo
Aljustrel
Minto
Keno Hill
Pascua-Lama
Rosemont
Loma de La Plata
777
Early Deposit
Toroparu
Cotabambas
Kutcho
0%
0%
0%
0%
0%
0%
100%
100%
100% ¹¹
100%
100%
100% ¹⁴
100% ¹⁶ 100%
0%
0%
100%
0%
50%
25%
25%
100%
12.5%
100%
10%
25% ²⁰
100% ²¹
50%
100% ²⁰
100% ²¹
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0%
0% $
0%
0% $
4.43
$
n/a
4.43
$
n/a
8.89 ¹²
$
n/a
9.33 ¹³
$
n/a
4.30
$
n/a
variable ¹⁵
n/a
variable ¹⁷ $
4.27
variable ¹⁸
n/a
3.90
$
n/a
3.90
$
450
4.00
$
n/a
6.20 ⁴
420 ⁴ $
0% $
0% $
0%
400
450
3.90
$
$
5.90
variable ²²
variable ²²
Palladium
n/a
n/a
n/a
n/a
n/a
n/a
variable ⁸
Cobalt
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
variable ¹⁰
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
n/a
Date of
Original
Term of
Contract
Agreement
24-Jul-07
Life of Mine
Life of Mine
8-Aug-12
Life of Mine 28-Feb-13
20 years 28-Feb-13
Life of Mine
3-Nov-15
Life of Mine 10-May-18
Life of Mine
16-Jul-18
Life of Mine 11-Jun-18
15-Oct-04
25 years
Life of Mine
8-Dec-04
Life of Mine 23-Mar-06
23-Apr-07
Life of Mine
5-Jun-07
50 years
5-Jun-07
50 years
Life of Mine 20-Nov-08
2-Oct-08
Life of Mine
Life of Mine
8-Sep-09
Life of Mine 10-Feb-10
Life of Mine
Life of Mine
8-Aug-12
n/a ¹⁹
Life of Mine 11-Nov-13
Life of Mine 21-Mar-16
Life of Mine 14-Dec-17
1) Subject to an annual inflationary adjustment with the exception of Loma de La Plata and Sudbury.
2) All amounts are measured on a per ounce basis with the exception of cobalt which is measured on a per pound basis. Should the prevailing market price for the applicable
metal be lower than this amount, the per ounce or per pound cash payment will be reduced to the prevailing market price, with the exception of Yauliyacu where the per
ounce cash payment will not be reduced below $4.35 per ounce, subject to an annual inflationary factor.
3) Gold recoveries will be set at 55% for the Constancia deposit and 70% for the Pampacancha deposit until 265,000 ounces of gold have been delivered to the Company.
4) Subject to an increase to $9.90 per ounce of silver and $550 per ounce of gold after the initial 40-year term.
5) The Company is committed to pay Glencore 20% of the spot price of silver for each ounce of silver delivered under the Antamina PMPA.
6) 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.
7) 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.
8) The Company is committed to pay Sibanye 18% of the spot price of gold and palladium for each ounce of gold and palladium delivered under the Stillwater PMPA until the
market value of gold and palladium delivered to Wheaton, net of the per ounce cash payment, exceeds the initial upfront cash deposit, and 22% of the spot price thereafter.
9) Once the Company has received 31 million pounds of cobalt, the Company’s attributable cobalt production to be purchased will be reduced to 21.2%.
10) The Company is committed to pay Vale 18% of the spot price of cobalt per pound of cobalt delivered under the agreement until the market value of cobalt delivered to
Wheaton, net of the per pound cash payment, exceeds the initial upfront cash deposit, and 22% of the spot price thereafter.
11) The Company is committed to purchase from Glencore an amount equal to 100% of the first 1.5 million ounces of payable silver produced at Yauliyacu per annum and
50% of any excess.
12) Should the market price of silver exceed $20 per ounce, in addition to the $8.89 per ounce, the Company is committed to pay Glencore an additional amount for each
ounce of silver delivered equal to 50% of the excess, to a maximum of $10 per ounce, such that when the market price of silver is $40 or above, the Company will pay
Glencore $18.89 per ounce of silver delivered.
13) In October 2015, in order to incentivize additional exploration and potentially extend the limited remaining mine life of Stratoni, Wheaton and Eldorado Gold agreed to
modify the Stratoni PMPA. The primary modification is to increase the production price per ounce of silver delivered to Wheaton over the current fixed price by one of the
following amounts: (i) $2.50 per ounce of silver delivered if 10,000 meters of drilling is completed outside of the existing ore body and within Wheaton’s defined area of
interest (“Expansion Drilling”); (ii) $5.00 per ounce of silver delivered if 20,000 meters of Expansion Drilling is completed; and (iii) $7.00 per ounce of silver delivered if
30,000 meters of Expansion Drilling is completed. Drilling in all three cases must be completed by December 31, 2020, in order for the agreed upon increase in production
price to be initiated. The figures in the above table reflect the fact that Eldorado completed 20,000 meters of Expansion Drilling in June 2019.
14) Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.
15) In respect of the Aljustrel PMPA, the Company is committed to pay Almina 50% of the amount received under the respective concentrate sales contracts.
16) The Company is committed to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.
17) The Company has amended the Minto PMPA such that the per ounce cash payment per ounce of gold delivered will be 75% of the spot price of gold for each ounce of
gold delivered under the Minto PMPA. This amended pricing will end on the earlier of (i) 14 months after the first delivery is due; or (ii) once 11,000 ounces of gold have
been delivered to the Company. Once this amended pricing ends, the per ounce cash payment per ounce of gold delivered will be $325, subject to an increase in periods
where the market price of copper is lower than $2.50 per pound.
18) The production payment related to the Keno Hill silver interest is a function of the silver head grade and silver spot price in the month in which the silver is produced.
19) Terms of the agreement not yet finalized.
20) Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production to be purchased will decrease to 16.67% of gold
production and 66.67% of silver production for the life of mine.
21) Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, attributable production to be purchased will decrease to 66.67% of gold and
silver production for the life of mine.
22) The Company is committed to pay Kutcho 20% of the spot price of gold and silver for each ounce of gold and silver delivered under the Kutcho Early Deposit Agreement.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [112]
Other Contractual Obligations and Contingencies
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
(in thousands)
2020
2021 - 2023
2024 - 2025
After 2025
Sub-Total
Other
Commitments
Total
Obligations With Scheduled Payment Dates
$
-
25,363
$
-
68,061
$ 874,500 $
5,877
-
-
$ 874,500
99,301
$
- $
-
874,500
99,301
Bank debt 1
Interest 2
Payments for mineral
stream interests 3
Rosemont 4
Loma de La Plata
Payments for early
deposit mineral
stream interest
Toroparu
Cotabambas
Kutcho
Non-revolving credit
facility 5
Leases liabilities
Total contractual
obligations
-
-
-
-
-
1,500
-
-
4,000
-
-
-
-
-
-
-
-
-
-
-
-
-
231,150
231,150
32,400
32,400
-
5,500
-
138,000
126,000
58,000
138,000
131,500
58,000
564
4,684
564
865
-
2,675
-
1,144
-
-
564
4,684
-
-
$
28,292 $
74,736 $ 881,521 $
- $ 984,549 $
585,550 $ 1,570,099
1) At December 31, 2019, the Company had $875 million drawn and outstanding on the Revolving Facility.
2) As the applicable interest rates are floating in nature, the interest charges are estimated based on market-based forward interest rate curves at the end of the reporting
period combined with the assumption that the principal balance outstanding at December 31, 2019 does not change until the debt maturity date.
3) Does not reflect the contingent payment due related to the Salobo gold purchase agreement (see the Salobo section on the following page).
4) Includes contingent transaction costs of $1 million.
5) Represents the maximum amount available to Kutcho under the non-revolving credit facility (Note 25).
Rosemont
Effective February 8, 2019, the Company amended the Rosemont PMPA. In connection with the amended Rosemont
PMPA, 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 Rosemont project and other
customary conditions and the balance of $180 million being advanced once project costs incurred on the Rosemont
project exceed $98 million. Under the amendment, the Company is now permitted to elect to pay the deposit in cash
or the delivery of common shares and Hudbay has provided a corporate guarantee. 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.
On August 1, 2019, Hudbay announced that the U.S. District Court for the District of Arizona (“Court”) issued a ruling
in the lawsuits challenging the U.S. Forest Service’s issuance of the Final Record of Decision (“FROD”) for the
Rosemont project in Arizona. The Court ruled to vacate and remand the FROD such that Rosemont cannot proceed
with construction at this time. Hudbay states that they will be appealing the Court’s decision to the U.S. Ninth Circuit
Court of Appeals.
Loma de La Plata
In connection with 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.
Toroparu
In connection with the Toroparu Early Deposit Agreement, the Company is committed to pay Gold X an additional
$138 million, payable on an installment basis to partially fund construction of the mine. Following the delivery of
certain feasibility documentation or after December 31, 2020 if the feasibility documentation has not been delivered to
Wheaton by such date, Wheaton may elect not to proceed with the agreement or 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 Wheaton elects to terminate, Wheaton will be entitled to a return of the amounts advanced less $2
million which is non-refundable on the occurrence of certain events. If Wheaton elects to reduce the streams, Gold X
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 which is non-refundable. Gold X has filed a Preliminary Economic Assessment defining the
re-scoping of the Toroparu project, including a revised operating plan.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [113]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Cotabambas
In connection with the Cotabambas Early Deposit Agreement, the Company is committed to pay Panoro a total cash
consideration of $140 million, of which $9 million has been paid to date. Once certain conditions have been met, the
Company will advance an additional $5 million to Panoro, spread over up to five years. 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.
Kutcho
In connection with the Kutcho Early Deposit Agreement, the Company is committed to pay Kutcho a total cash
consideration of $65 million, of which $7 million has been paid to date. The remaining $58 million will be advanced on
an installment basis to partially fund construction of the mine once certain conditions have been satisfied.
The Company will be required to make an additional payment to Kutcho, of up to $20 million, if processing throughput
is increased to 4,500 tonnes per day or more within 5 years of attaining commercial production.
Salobo
The Salobo mine currently has a mill throughput capacity of 24 million tonnes per annum (“Mtpa”). In October 2018,
Vale’s Board of Directors approved the investment in the Salobo III mine expansion (the “Salobo Expansion”). The
Salobo Expansion is proposed to include a third concentrator line and will use Salobo’s existing infrastructure. Vale
anticipates that the Salobo Expansion, which is scheduled to start up in the first half of 2022 with a ramp-up of 15
months, will result in an increase of throughput capacity from 24 Mtpa to 36 Mtpa once fully ramped up.
If actual throughput is expanded above 28 Mtpa, then under the terms of the Salobo PMPA, Wheaton will be required
to make an additional set payment to Vale based on the size of the expansion, the timing of completion and the grade
of the material processed. The set payment ranges from $113 million if throughput is expanded beyond 28 Mtpa by
January 1, 2036 up to $953 million if throughput is expanded beyond 40 Mtpa by January 1, 2021. Assuming the
Salobo III expansion project achieves 12 Mtpa of additional processing capacity (bringing total processing capacity at
Salobo to 36 Mtpa) by the end of 2023, the Company would expect to pay an estimated expansion payment of
between $550 million to $670 million. The actual amount and timing of any expansion payment may significantly differ
from this estimate depending on the size, timing and processed grade of any expansion.
Canada Revenue Agency – Canada Revenue Agency – 2013-2015 Taxation Years - Domestic Reassessments
The Company has received Notices of Reassessment for the 2013 to 2015 taxation years in which the 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 Domestic Reassessments assessed tax, interest and
other penalties of $7 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 challenge the Domestic Reassessments. The 2016 to 2019
taxation years remain open to a domestic audit.
If CRA were to apply the methodology in the Domestic Reassessments to taxation years subsequent to 2015, the
Company estimates that losses would arise that could be carried back to reduce tax and interest relating to the
Domestic Reassessments to approximately $2 million.
U.S. Shareholder Class Action
During July 2015, after the Company disclosed that the CRA was proposing that they would issue notices of
reassessment for federal and provincial tax, transfer pricing penalties, interest and other penalties for the 2005-2010
taxation years (the “Reassessments”), two putative securities class action lawsuits were filed against the Company in
the U.S. District Court for the Central District of California in connection with the proposal (the “Complaints”).
On October 19, 2015, the Complaints were consolidated into one action, In re Silver Wheaton Securities Litigation, as
against the Company, Randy Smallwood, President & Chief Executive Officer, Gary Brown, Senior Vice President &
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [114]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Chief Financial Officer and Peter Barnes, former Chief Executive Officer (together the “Initial Defendants”) and a lead
plaintiff (the “Plaintiff”) was selected. The Plaintiff filed a consolidated amended complaint in December 2015, which
focuses on the Reassessments and asserted claims under Sections 10(b) and 20(a) of the Securities Exchange Act
of 1934 (“Exchange Act”).
On March 27, 2018, the court granted Plaintiff’s motion for leave to file a Second Amended Complaint, which alleges
that Initial Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts
about the Company’s business, operations, prospects and performance in violation of Sections 10(b) and 20(a) of the
Exchange Act, and adds a claim under Section 10(b) against our auditors (together with the “Initial Defendants, the
“Defendants”).
On February 11, 2020, the parties to the Second Amended Complaint filed a stipulation of settlement with the court
that, if approved by the court, will settle the lawsuit for $41.5 million, without admission of liability by any of the
Defendants. This settlement amount has been reflected as a component of Other current liabilities on the balance
sheet with an offsetting recoverable for the same amount being reflected as a component of Other current assets as
the settlement will be fully funded by the Company’s insurance carriers and the other Defendants. The Company will
not be required to pay any portion of the settlement.
Canadian Shareholder Class Action
By Notice of Action dated August 10, 2016 (as amended September 2, 2016), proposed representative plaintiff Suzan
Poirier commenced proceedings pursuant to the Class Proceedings Act (Ontario) in the Ontario Superior Court of
Justice against Wheaton Precious Metals Corp., Randy Smallwood, President and Chief Executive Officer and Gary
Brown, Senior Vice President & Chief Financial Officer. The statement of claim filed alleges, among other things,
misrepresentation pursuant to primary and secondary market civil liability provisions under the Securities Act
(Ontario), common law negligence and negligent misrepresentation. The claim focuses on the Reassessments. The
statement of claim purports to be brought on behalf of persons who (i) acquired Wheaton common shares in
Wheaton’s March 2015 public offering, and (ii) acquired Wheaton common shares in the secondary market, other
than in the United States, during an alleged class period of August 14, 2013 to July 6, 2015 inclusive.
The Company believes that the allegations are without merit and intends to vigorously defend against this matter. No
amounts have been recorded for potential liability arising from this claim as no value has been specified in the
statement of claim and the Company cannot reasonably predict the outcome.
Other
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, disputes and the matters disclosed in Note 24. 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 management’s estimate of the future resolution of
these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements
in the appropriate period relative to when such changes occur.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [115]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
30.
Segmented Information
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:
(in thousands)
Gold
Salobo 5
Sudbury 2, 5
Constancia 5
San Dimas
Stillwater
Other 3, 5
Sales
Cost
of Sales
Depletion
Gross
Margin
Impairment
Charges 1
Net (Loss)
Earnings
Cash Flow
From
Operations
Total
Assets
Year Ended December 31, 2019
$ 365,448 $ 106,282 $ 100,803 $ 158,363 $
- $ 158,363 $ 259,166 $ 2,605,257
38,234
27,613
62,528
17,303
29,919
10,946
7,945
26,994
3,094
8,736
22,420
7,141
13,828
6,433
8,191
4,868
12,527
21,706
7,776
12,992
-
-
-
-
-
4,868
12,527
21,706
7,776
12,992
27,385
19,668
35,534
14,209
21,561
344,043
110,406
194,367
229,994
13,168
Total gold interests
$ 541,045 $ 163,997 $ 158,816 $ 218,232 $
- $ 218,232 $ 377,523 $ 3,497,235
Silver
Peñasquito
Antamina 5
Constancia
Other 4, 5
$
74,578 $
19,267 $
14,020 $
41,291 $
- $
41,291 $
55,310 $
374,702
76,328
38,895
98,600
15,322
14,258
40,059
41,267
18,044
14,960
19,739
6,593
43,581
-
-
-
19,739
6,593
43,581
61,007
24,637
55,509
668,810
228,187
487,693
Total silver interests
$ 288,401 $
88,906 $
88,291 $ 111,204 $
- $ 111,204 $ 196,463 $ 1,759,392
Palladium
Stillwater
Cobalt
$
31,886 $
5,656 $
9,719 $
16,511 $
- $
16,511 $
26,230 $
249,969
Voisey's Bay 5
$
- $
- $
- $
- $ 165,912 $ (165,912) $
- $
227,510
Total mineral stream
interests
Other
$ 861,332 $ 258,559 $ 256,826 $ 345,947 $ 165,912 $ 180,035 $ 600,216 $ 5,734,106
General and administrative
$
(48,730)
(54,507) $ (46,292)
(44,733)
(2,191)
274
9,066
(5,380)
$
(93,897) $ (98,596) $
543,901
$
86,138 $ 501,620 $ 6,278,007
Finance costs
Other
Income tax
Total other
Consolidated
1) See Note 11 for more information.
2) Comprised of the operating Coleman, Copper Cliff, Garson, Creighton and Totten gold interests as well as the non-operating Stobie and Victor gold interests.
3) 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 and Minto gold interests and the non-operating Rosemont gold interest. The Minto mine was placed into care and maintenance from October 2018 to October
2019
4) 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, Yauliyacu, Stratoni, Neves-Corvo, Aljustrel, Minto and 777 silver interests and the non-operating Keno Hill, Loma de La Plata, Pascua-Lama
and Rosemont silver interests. The Minto mine was placed into care and maintenance from October 2018 to October 2019.
5) As it relates to mine operator concentration risk:
a. The counterparty obligations under the Salobo, Sudbury and Voisey’s Bay PMPAs are guaranteed by the parent company Vale. Total revenues relative to Vale during
the year ended December 31, 2019 were 47% of the Company’s total revenue.
b. The counterparty obligations under the Antamina PMPA and the Yauliyacu PMPA (which is included as part of Other silver interests) are guaranteed by the parent
company Glencore plc (“Glencore”) and its subsidiary. Total revenues relative to Glencore during the year ended December 31, 2019 were 12% of the Company’s
total revenue.
c. The counterparty obligations under the Constancia PMPA and the 777 PMPA (which is included as part of Other gold and silver interests) are guaranteed by the
parent company Hudbay Minerals Inc. (“Hudbay”). Total revenues relative to Hudbay during the year ended December 31, 2019 were 11% of the Company’s total
revenue.
Should any of these mine operators become unable or unwilling to fulfill their obligations under their agreements with the Company, there could be a material adverse impact
on the Company including, but not limited to, the Company’s revenue, net income and cash flows from operations.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [116]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
Sales
Cost
of Sales
Depletion
Net
Earnings
Year Ended December 31, 2018
Cash Flow
From
Operations
Total
Assets
$
336,474 $
106,347 $
102,672 $
127,455 $
230,126 $
2,706,060
21,785
15,259
26,943
6,777
33,955
6,804
4,818
13,177
1,215
10,367
13,525
4,504
12,234
2,925
10,459
1,456
5,937
1,532
2,637
13,129
14,959
10,441
13,766
5,562
22,162
366,463
117,547
208,195
236,432
21,359
(in thousands)
Gold
Salobo 5
Sudbury 1, 5
Constancia 5
San Dimas
Stillwater
Other 2, 5
Total gold interests
$
441,193 $
142,728 $
146,319 $
152,146 $
297,016 $
3,656,056
Silver
San Dimas 3
Peñasquito 5
Antamina 5
Constancia 5
Other 4
$
40,594 $
10,549 $
3,575 $
26,470 $
30,045 $
-
77,691
86,408
34,082
104,804
20,501
17,265
12,863
40,232
14,528
47,561
15,572
20,699
42,662
21,582
5,647
43,873
57,190
69,143
21,219
64,645
388,722
710,077
246,231
502,638
Total silver interests
$
343,579 $
101,410 $
101,935 $
140,234 $
242,242 $
1,847,668
Palladium
Stillwater
Cobalt
Voisey's Bay 5
$
$
9,240 $
1,656 $
4,033 $
3,551 $
7,584 $
259,693
- $
- $
- $
- $
- $
393,422
Total mineral stream interests
$
794,012 $
245,794 $
252,287 $
295,931 $
546,842 $
6,156,839
Other
General and administrative
Finance costs
Gain on disposal of San Dimas SPA 3
Other
Income tax
Total other
Consolidated
$
(51,650)
$
(29,564)
(41,187)
245,715
(5,826)
(15,868)
(40,363)
-
1,458
(960)
$
$
131,184 $
(69,429)
$
313,207
427,115 $
477,413 $
6,470,046
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 777 gold interests and the non-operating Rosemont gold interest. The Minto mine was placed into care and maintenance from October 2018 to October
2019.
3) On May 10, 2018, the Company terminated the San Dimas SPA and concurrently entered into the new San Dimas PMPA.
4) 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, Yauliyacu, Stratoni, Neves-Corvo, Minto, and 777 silver interests, the non-operating Keno Hill, Aljustrel, Loma de La Plata, Pascua-Lama
and Rosemont silver interests as well as the previously owned Lagunas Norte, Pierina and Veladero silver interests which expired on March 31, 2018. The Minto mine was
placed into care and maintenance from October 2018 to October 2019.
5) As it relates to mine operator concentration risk:
a. The counterparty obligations under the Salobo, Sudbury and Voisey’s Bay PMPAs are guaranteed by the parent company Vale. Total revenues relative to Vale during
the year ended December 31, 2018 were 45% of the Company’s total revenue.
b. The counterparty obligations under the Antamina PMPA and the Yauliyacu PMPA (which is included as part of Other silver interests) are guaranteed by the parent
company Glencore plc (“Glencore”) and its subsidiary. Total revenues relative to Glencore during the year ended December 31, 2018 were 15% of the Company’s
total revenue.
c. The counterparty obligations under the Peñasquito PMPA and the Los Filos PMPA (which is included as part of Other silver interests) are guaranteed by Goldcorp.
Total revenues relative to Goldcorp during the year ended December 31, 2018 were 10% of the Company’s total revenue.
d. The counterparty obligations under the Constancia PMPA and the 777 PMPA (which is included as part of Other gold and silver interests) are guaranteed by the
parent company Hudbay Minerals Inc. (“Hudbay”). Total revenues relative to Hudbay during the year ended December 31, 2018 were 10% of the Company’s total
revenue.
Should any of these mine operators become unable or unwilling to fulfill their obligations under their agreements with the Company, there could be a material adverse impact
on the Company including, but not limited to, the Company’s revenue, net income and cash flows from operations.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [117]
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
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:
Carrying Amount at
December 31, 2019
(in thousands)
Sales
North America
Gold
Interests
Silver
Interests
Palladium
Interests
Cobalt
Interests
Total
Canada
$
74,307
9% $
357,212 $
32,124 $
- $
227,510 $
616,846 11%
566
249,969
United States
Mexico
Europe
Greece
Portugal
Sweden
South America
Argentina/Chile 1
Brazil
Peru
49,189
6%
139,275 16%
229,994
194,365
9,339
28,012
25,250
1%
3%
3%
-
0%
-
-
-
-
365,448 42%
2,605,258
376,020
1,990
21,355
35,059
264,403
-
170,512 20%
110,406
1,027,875
-
-
-
-
-
-
-
-
480,529
8%
570,385 10%
1,990
21,355
35,059
0%
0%
1%
264,403
5%
2,605,258 45%
1,138,281 20%
Consolidated
$ 861,332 100% $ 3,497,235 $ 1,759,392 $
249,969 $
227,510 $ 5,734,106 100%
1) Includes the Pascua-Lama project, which straddles the border of Argentina and Chile.
Carrying Amount at
December 31, 2018
Gold
Interests
Silver
Interests
Palladium
Interests
Cobalt
Interests
Total
(in thousands)
Sales
North America
Canada
$
64,589
8% $
387,823 $
33,901 $
- $
393,422 $
815,146 13%
16,018
1%
147,274 19%
236,432
208,194
551
259,693
United States
Mexico
Europe
Greece
Portugal
Sweden
South America
8,020
20,484
24,188
1%
3%
3%
390,079
5,884
22,420
37,371
264,401
-
-
-
-
-
Argentina/Chile 1
4,444
1%
Brazil
Peru
336,474 42%
2,706,061
172,521 22%
117,546
1,093,061
-
-
-
-
-
-
-
-
496,676
8%
598,273 10%
5,884
22,420
37,371
0%
0%
1%
264,401
4%
2,706,061 44%
1,210,607 20%
Consolidated
$ 794,012 100% $ 3,656,056 $ 1,847,668 $
259,693 $
393,422 $ 6,156,839 100%
1) Includes the Pascua-Lama project, which straddles the border of Argentina and Chile.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [118]
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Notes to the Consolidated Financial Statements
Years Ended December 31, 2019 and 2018 (US Dollars)
31.
Subsequent Events
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 of $0.10 per common share for the duration of 2020.
The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors.
On March 11, 2020, the Board of Directors declared a dividend in the amount of $0.10 per common share, with this
dividend being payable to shareholders of record on March 26, 2020 and is expected to be distributed on or about
April 9, 2020. The Company has implemented a dividend reinvestment plan (“DRIP”) whereby shareholders can elect
to have dividends reinvested directly into additional Wheaton common shares at a discount of 1% of the Average
Market Price, as defined in the DRIP.
WHEATON PRECIOUS METALS 2019 ANNUAL REPORT [119]
CORPORATE
INFORMATION
TRANSFER AGENT
AST 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: inquiries@canstockta.com
AUDITORS
Deloitte LLP
Vancouver, BC
INVESTOR RELATIONS
PATRICK DROUIN
Senior Vice President, Investor Relations
T: 1 604 684 9648
TF: 1 800 380 8687
E: info@wheatonpm.com
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
DIRECTORS
GEORGE BRACK
JOHN BROUGH
PETER GILLIN
CHANTAL GOSSELIN
DOUGLAS HOLTBY, Chairman
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,
Investor Relations
HAYTHAM HODALY
Senior Vice President,
Corporate Development
Wheaton Precious Metals is a trademark of Wheaton Precious Metals Corp. in Canada, the United States and certain other jurisdictions.
Wheaton Precious Metals Corp.
Suite 3500 – 1021 West Hastings St.
Vancouver, BC Canada V6E 0C3
T: 1 604 684 9648
F: 1 604 684 3123
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