- 29 Jul 2021
- Greg Morrison
- Precious Metals
- Comments: 0
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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’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
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
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: 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: 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: 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: 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 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: