Wheaton Precious Metals lowers production target

Wheaton Precious Metals Corp. (WPM-TSX, WPM-NYSE) has announced its second quarter financial results and said it is lowering its 2022 production target to 640,000-680,000 ounces of gold equivalent (AuEq).

That compares to the previous target of 700,000-760,000 ounces.

It attributed the lower target to a number of factors, including a proposed termination of a streaming agreement on Alexco Resources Corp.’s (AXR-TSX, AXU-NYSE) Keno Hill mine in the Canadian Yukon, lower production guidance from the Stillwater mine due to severe weather and flooding in the state of Montana in June (2022) as well as expected lower production at Vale’s Salobo mine in Brazil.

Wheaton Precious Metals is a leading precious metals streaming company. Unlike traditional mining companies, Wheaton makes upfront payments and in return it purchases a fixed percentage of the future silver and/or gold production from a mine at a predetermined price. It can then sell the metal in the open market. In many cases, these agreements are for the life of the mine.

The company has streaming agreements covering 20 operating mines and nine development stage projects. These include Vale’s Salobo mine in Brazil, Glencore AG’s Antamina mine in Peru and Newmont Goldcorp Corp’s [NGT-TSX, NEM-NYSE] Penasquito mine in Mexico.

For the five-year period ending December 31, 2026, average annual production is expected to increase to 820,000 gold equivalent ounces, the company said.

Hecla Mining [HL-NYSE], which recently agreed to acquire Alexco Resources, has struck a deal that will see Wheaton Precious Metals terminating its silver streaming interest in the Keno Hill property in exchange for US$135 million worth of Hecla common shares.

“Throughout the first half of 2022, we have focused on optimizing our portfolio and further enhancing our financial flexibility in order to ensure that we are well positioned to respond to accretive growth opportunities and continue creating value for shareholders,’’ said Wheaton President and CEO Randy Smallwood.

“While not without its challenges, our diverse portfolio once again delivered strong operating cash flow and an attractive dividend yield, highlighting the resiliency of the streaming model to the inflationary pressures currently being felt across the global economy,’’ he said.

In the second quarter, the portfolio generated over $300 million in revenue and $206 million in operating cash flow, leaving the company with $449 million in cash and no debt as of June 30, 2022.

The company declared a quarterly dividend of $0.15 per common share, consistent with the comparable period in 2021, after reporting adjusted net earnings of $149 million or 33.1 cents per share.

On Friday, Wheaton Precious Metals shares eased 1.2% or 52 cents to $42.47. The shares are currently trading in a 52-week range of $65.45 and $40.52.

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