Wheaton Precious Metals Review

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Wheaton Precious Metals is one of the largest precious metals streaming companies in the world and the third largest in British Columbia, Canada. Wheaton has entered into formal agreements to purchase all or a portion of the production from high-quality mining operations and currently has streaming agreements for 24 operating mines with 17 different mining companies and eight projects in the development stage.

The company goal is to become the world’s premier precious metals investment vehicles by delivering a low risk, high quality investment medium to their shareholders. Streaming allows Wheaton Precious Metals to leverage mining production of silver, gold, palladium and cobalt from a mine it neither owns or operates directly.

Precious metals streaming companies are a sub-section of the precious metals mining industry. Streaming companies are similar to standard mining companies, but are usually seen as a less risky investment by comparison. Streaming companies do not mine metals directly, but operate under a sort of leasing agreement where the company provides an upfront payment to adopt the rights to a specific percentage of a mining operation’s future earnings.

A streaming companies makes ongoing payments to the mining company that are usually well below the market price of the actual metal. Shares of precious metal streaming companies typically underperform when compared with the increases of actual gold and silver prices.

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Wheaton Precious Metals’ Mission and Vision

Wheaton Precious Metals Review

Wheaton’s mission is to deliver value to stakeholders and partners by delivering low-risk diversified exposure and growth opportunities to precious metals investors. Wheaton’s business model is designed to create shareholder value through the acquisition of new precious metal streams, increasing divided yield with growth potential and expanding mining operation exploration under the guidelines of their current agreements. Wheaton is able to offer you these benefits and reduces the risks faced by traditional mining companies by predicting future operating costs.

Wheaton Financials

Wheaton Precious Metals Review

While precious metals like gold and silver have long been a symbol of wealth, gold and silver also offer excellent investment trading opportunities. While it is not the largest streaming company in the world, Wheaton has grown to hold a Market Cap of $20.099 billion as of 2021 and trades on the New York Stock Exchange.

The trading range from July of 2020 to 2021 shows a fair amount of volatility, seeing a low of $34.85 a share to a high of $57.89 with the average of 2,054,300 shares traded on a daily basis. However, it should be noted that the global COVID-19 pandemic was believed to be the cause of at least some of this volatility.

Wheaton generated $286.21 million in the fourth quarter of 2020 that was up just over 28 percent from the previous years earnings. Their first quarter's gold production in 2021 reached 178,801 gold equivalent ounces, or GEOs, as compared to 186,027 GEOs in 2020. On March 11, 2021 Wheaton’s board of directors announced a dividend of $0.13 per common share, representing a 30-percent increase over the previous earnings.

Financial analysts expect Wheaton to earn a revenue of $331.99 million for the second quarter of 2021. This indicates you could expect an average earnings estimate increase of 32.6 percent compared to the same quarter in 2021. The estimate for Wheaton’s annual revenue in 2021 is expected to grow by over 23 percent and reach $1.35 billion. Analysis of a stock’s earnings and performance is carefully studied by market experts and the current Wall Street consensus has given Wheaton’s shares a target price of $60.45 per share.

The average analyst rating for stocks is represented by a score of 1.00 to 5.00, with 1.00 being a recommendation to sell and 5.00 being a recommendation to buy. Out of 18 analysts, 15 analysts rate Wheaton Precious metals as a 5.00, giving it a “buy” recommendation.

Wheaton’s Business Model

Wheaton Precious Metals Review

In order for a business to protect a solid long-term outlook it must have what is referred to as a strong “moat.” A moat is a business’s ability to maintain a long-term competitive advantage over its competition to protect its profits and market share. One of the major factors in having a strong moat is a unique business model. While Wheaton Precious Metals business model is not unique to the mining industry, it does have several factors that give it a strong advantage in its sector.

Wheaton has an array of intangible assets that include brand recognition and mining contracts that give the company an advantage over much of its competition. Because of its market capitalization and contracts, Wheaton is able to provide you with streaming services at lower costs than the majority of their competitors.

Wheaton’s Leadership

Randy Smallwood

Randy Smallwood: President & CEO

Smallwood holds a geological engineering degree from the University of British Columbia and a mine engineering certificate from the British Columbia Institute of Technology. He served on the board of Defiance Silver Corp and on the board of Ventana Gold and Castle Peak Resources. Smallwood is also the chair of the World Gold Council, received the British Columbia Institute of Technology Distinguished Alumni Award and in 2019 he received Business in Vancouver’s BC CEO of the Year Award in the enterprise category.

Curt Bernardi

Curt Bernardi: Senior VP and Legal & Corporate Secretary

Bernardi worked at Blake, Cassels & Graydon law firm until joining Westcoast Energy and for Duke Energy Gas Transmission. Bernardi became Director of Union Gas in 2005 and received the Western Canada General Counsel Award for Deal Making in 2015. He holds a Bachelor of Commerce from the University of British Columbia and a Bachelor of Law from the University of Toronto.

Gary Brown

Gary Brown: Senior VP and CFO

Brown was the Chief Financial Officer of TIR Systems Ltd., worked for Westcoast Energy Inc. and Creo Inc. Brown holds professional designations as a Chartered Professional Accountant, a Chartered Financial Analyst and earned a Masters in Accounting from the University of Waterloo.

Douglas Holtby

Douglas Holtby: Chairman of the Board and Director

Holtby is currently President and CEO of Holtby Capital Corporation and was President, CEO and director of WIC Western International Communications Ltd. He served as Chairman of the Canadian Satellite Communications Inc. and as President of Allarcom Pay Television Limited.

Wheaton Precious Metals Streaming Interests

Wheaton Precious Metals Review

Wheaton Precious Metals has current streaming agreements with 24 operating mines with 17 different mining companies and eight projects in the development stage. Wheaton currently has streaming interests purchases agreements in silver, gold, palladium and cobalt in the following operating mines:

  • Minto, Canada: Pembridge
  • Keno Hill, Canada: Alexco Resource
  • 777 Canada: Hudbay’s
  • Sudbury Mines, Canada: Vale
  • Coleman
  • Copper Cliff
  • Creighton
  • Garson
  • Totten
  • Voisey’s Bay: Vale
  • Stillwater, USA: Sibanye-Stillwater
  • Stillwater
  • East Boulder
  • San Dimas, Mexico (First Majestic Silver)
  • Peñasquito, Mexico: Newmont
  • Cozamin, Mexico: Capstone Mining
  • Los Filos, Mexico: Equinox Gold
  • Marmato, Colombia: Aris Gold
  • Antamina, Peru: Glencore
  • Yauliyacu, Peru: Glencore
  • Constancia, Peru: Hudbay s
  • Salobo, Brazil: Vale
  • Aljustrel, Portugal: Almina
  • Neves-Corvo, Portugal: Lundin Mining
  •  Zinkgruvan, Sweden: Lundin Mining
  • Stratoni, Greece: Eldorado Gold

Wheaton currently has streaming interests in the developmental stages for silver, gold, palladium or cobalt mining contracts in the following mines:

  • Kutcho, Canada: Kutcho, Copper
  • Victor, Canada: Sudbury, Vale
  • Rosemont, USA: Hudbay s
  • Toroparu, Guyana: Gold X Mining
  • Cotabambas, Peru: Panoro s
  • Santo Domingo, Chile: Capstone Mining
  • Pascua-Lama, Chile/Argentina: Barrick Gold
  • Navidad, Argentina: Pan American Silver

Precious Metal Historic Value

Wheaton Precious Metals Review

Gold was worth $20.68 per Troy ounce in 1900 and is valued at $1,769.64 in 2021. This would have given you an 84 fold increase in your investment. Compare that with the stock price of Wheaton Precious Metals having an IPO of $3.25 on July 1, 2005 and a closing price of $43.31 per share on July 20, 2021. This would have given you a 13 fold increase on your investment.

Many precious metals are publicly traded on stock exchanges such as the New York Mercantile Commodity Exchange, or COMEX, and the London Metal Exchange, or LME. Precious metals are also bought and sold directly through metal producers using prices set by the producers or trade associations. Less common, or valuable, metals may not be publicly traded and as such can only be acquired through direct and private agreements with the metal producer.

It is important to understand that the prices of a share of a streaming company is not tied to the actual value of precious metals, but, like all stocks, is tied to how the institutional money managers believe the stock will perform in the future.

Community Involvement

Wheaton Precious Metals Review

Wheaton is committed to employing a diverse workforce and promoting a safe and respectful working environment. All employees and officers are treated equally without regard to sex, age, race, color, religion, gender, sexual orientation, marital status, political beliefs or ethnic origin. Wheaton pledges to foster an environment that promotes diversity to enhance their effectiveness. The company offers opportunities for employment and advancement based on ability and performance in their recruitment, hiring, training, promotion, compensation and termination processes.

Environmental Sustainability

While mining operations are oftentimes damaging to the environment, Wheaton takes a proactive approach to reduce its environmental footprint through a commitment to being a carbon-neutral company. Wheaton produces reports on greenhouse gas and climate change data through the Carbon Disclosure Project and have aligned their sustainability reporting with the Task Force on Climate-related Financial Disclosures, or TCFD, recommendations.

Wheaton believes that mining and energy production are key factors that may effect climate change and as such are a key area of focus for Wheaton. Recognizing that assessing climate-related risks are material for their mining streaming operations, Wheaton screens for possible risks associated with their mining contracts. The company works to mitigate environmental concerns of business related climate change by making policy changes were needed and feasible. Wheaton does this by employing diverse methods to identify and assess both long and short term climate risks prior to entering into new agreements.

Waste management is always an ongoing global and local environmental concern in the mining industry. Tailings, the waster products left over after precious metals are removed from the raw ore, must be properly deposed of due to the possible long term toxic hazards of water and ground contamination. Wheaton takes an aggressive approach to waste management and performs research to ensure any potential design risks or shortcomings at tailings facilities are identified and addressed by both in-house and outside experts.

Wheaton Precious Metals Pros and Cons

Pros

  • Wheaton Precious Metals is one of the top rated precious metals streaming companies in the world and the third-largest company in British Columbia, Canada.
  • The company is well capitalized with over $ 20 billion in total assets.
  • Top investment advisors, such as The Motely Fool and Berkshire Hathaway, have recommend Wheaton Precious Metals.
  • Precious metals have historically been one of the safer investment vehicles.
  • Precious metals streaming companies can produce a steady income stream.
  • Predictable costs reduce shareholders risk while allowing the benefit of increasing share value.

Cons

  • While gold and silver are widely thought of as a “safe haven” investment, buying stock in a mining or streaming company does not offer the same level of investment protection. As precious metals have seen a constant steady appreciation in value, stocks can lose money quickly.
  • The precious metals sector is traditionally fairly volatile, so investors must be willing to assume risks.
  • Mining companies must continue to negotiate with governments and sovereign indigenous groups to continue to turn a profit and operate in the black.
  • Mining streaming companies face unique risks tied to geopolitical factors and price fluctuations.

Is Wheaton Precious Metals a Scam?

As the company is in good standing with the Canadian Mining Association and sees an average of over two million shares traded daily on the NYSE and a market capitalization of over $20 billion, Wheaton Precious Metals is definitely not a scam. While Wheaton's shares see a good deal of price fluctuation, this is to be expected in any publicly traded company not tied to a public entity, such as a utility company. If you are one of those people who are willing to assume the risk involved with the purchase of any stock, Wheaton could bring a solid return on your investment.

Conclusion

While there are currently about 15 precious metals streaming companies in the mining sector, Wheaton Precious Metals is one of the stronger companies based on their financial data and industry ratings. Independent analysts expect Wheaton to outperform its 2021 guidance going forward.

While Wheaton Precious Metals seems to be a solid and reputable investment, bear in mind, because any company’s profit and earnings can fluctuate wildly from year to year, and sometimes quarter to quarter, it is always your responsibility to perform your due diligence before buying any stock.

Although we do think that Wheaton Precious Metals is a solid company, we believe that there are better companies out there to make your investment with.

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