Wheaton Precious Metals Announces First Quarter Results For 2018 and Declares Second Quarterly Dividend of 2018

VANCOUVER, May 10, 2018 /CNW/ - Wheaton Precious Metals™ Corp. ("Wheaton" or the "Company") is pleased to announce its results for the first quarter ended March 31, 2018. All figures are presented in United States dollars unless otherwise noted.

Operational Overview

Highlights

• The increase in attributable silver production for the three months ended March 31, 2018 was primarily due to higher production from the San Dimas mine, partially offset with the expiry of the Cozamin silver purchase agreement on April 4, 2017.
• The decrease in attributable gold production for the three months ended March 31, 2018 was a result of lower production at the Minto and Sudbury mines.
• The increase in silver sales volume was due to a combination of increased production and relative changes to payable silver produced but not yet delivered to Wheaton.
• The decrease in gold sales volume was primarily the result of negative changes in the balance of payable gold produced but not yet delivered to Wheaton coupled with the decreased production levels at the Minto and Sudbury mines.
• Declared quarterly dividend of $0.09 per common share. This represents an increase of 29% relative to the comparable period in 2017.

Subsequent to the Quarter

• On May 10, 2018, First Majestic Silver Corp. ("First Majestic") announced that they had closed the previously announced acquisition of Primero Mining Corp. ("Primero"). In connection with this acquisition, the Company has terminated the existing San Dimas silver purchase agreement and entered into a new San Dimas precious metal purchase agreement with First Majestic.
• As it relates to the ongoing dispute with the Canada Revenue Agency (the "CRA"), the Tax Court of Canada has scheduled the trial to commence in mid-September 2019 for a two-month period.
• On April 25, 2018, Wheaton participated in a strategic private placement with Tradewind Markets, Inc. ("Tradewind"), a financial technology company that uses blockchain to streamline digital gold trading.

"Wheaton has had a solid start to 2018 with our core assets performing better than expected, demonstrating the inherent quality of our portfolio," said Randy Smallwood, President and Chief Executive Officer of Wheaton Precious Metals. "We are encouraged by the sharp rebound in production at San Dimas and welcome First Majestic as a partner. With this strong foundation in place, we continue to advance a number of new opportunities for additional accretive growth that we believe will deliver long-term value to our shareholders."

Financial Review

Revenues
Revenue was $199 million in the first quarter of 2018, on sales volume of 6.3 million ounces of silver and 70,000 ounces of gold. This represents a 1% increase from the $198 million of revenue generated in the first quarter of 2017 due primarily to (i) a 21% increase in the number of silver ounces sold, coupled with (ii) a 10% increase in the average realized gold price ($1,330 in Q1 2018 compared with $1,208 in Q1 2017); partially offset by (iii) a 21% decrease in the number of gold ounces sold and (iv) a 4% decrease in the average realized silver price ($16.73 in Q1 2018 compared with $17.45 in Q1 2017).

Costs and Expenses
Average cash costs¹ in the first quarter of 2018 were $4.49 per silver ounce sold and $399 per gold ounce sold, as compared with $4.54 per silver ounce and $391 per gold ounce during the comparable period of 2017. This resulted in a cash operating margin¹ of $12.24 per silver ounce sold and $931 per gold ounce sold, a decrease of 5% per silver ounce sold and an increase of 14% per ounce of gold sold as compared with Q1 2017. The increase in the gold cash operating margin was primarily due to a 10% increase in the average realized gold price in Q1 2018 compared with Q1 2017 while the decrease in the silver cash operating margin was primarily due to a 4% decrease in the average realized silver price during the same period.

Earnings and Operating Cash Flows
Adjusted net earnings¹ and cash flow from operations in the first quarter of 2018 were $70 million ($0.16 per share) and $125 million ($0.28 per share¹), compared with $61 million ($0.14 per share) and $120 million ($0.27 per share¹) for the same period in 2017, an increase of 14% and 5%, respectively.

Balance Sheet
At March 31, 2018, the Company had approximately $116 million of cash on hand and $663 million outstanding under the Company's $2 billion revolving term loan (the "Revolving Facility").

Canadian Tax Dispute
On September 24, 2015, the Company received Notices of Reassessment (the "Reassessments") from the CRA for the 2005-2010 taxation years. The CRA's position in the Reassessments is that the transfer pricing provisions of the Income Tax Act (Canada) relating to income earned by the Company's foreign subsidiaries outside of Canada should apply such that the income of Wheaton subject to tax in Canada should be increased by an amount equal to substantially all of the income earned outside of Canada by the Company's foreign subsidiaries for the 2005-2010 taxation years. Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian tax law and is vigorously defending its tax filing positions.

On January 8, 2016, the Company commenced an appeal in the Tax Court of Canada. The Company is currently in the discovery phase of the appeal, with a trial scheduled to commence in mid-September 2019 for a two-month period.

First Quarter Asset Highlights

During the first quarter of 2018, attributable production was 7.4 million ounces of silver and 79,700 ounces of gold, representing an increase of 12% and a decrease of 5%, as compared with the first quarter of 2017.

Operational highlights for the quarter ended March 31, 2018, based upon counterparties' reporting, are as follows:

Salobo 
In the first quarter of 2018, Salobo produced 61,500 ounces of attributable gold, an increase of approximately 6% relative to the first quarter of 2017 as higher grades were partially offset by lower recovery. The Salobo plant operated at 98% despite a planned shut down for scheduled maintenance in the quarter.

Peñasquito 
In the first quarter of 2018, Peñasquito produced 1.4 million ounces of attributable silver, an increase of approximately 8% relative to the first quarter of 2017 as higher grades and recoveries were partially offset by lower throughput. According to Goldcorp Inc.'s ("Goldcorp") first quarter of 2018 MD&A, lower throughput at Peñasquito was due to ten days of planned shut downs during the month of February for mill relines and completing all tie-ins for the Pyrite Leach Project ("PLP"), which reduced the number of operating days for the mill. Subsequent to the shutdown, Goldcorp reports that new records were established for throughput at the primary crusher and concentrator driven by the continued implementation of a management operating system, which resulted in more consistent ore delivery to the primary crusher. In addition, ongoing mill improvement projects reportedly resulted in higher mill recoveries.

According to Goldcorp, the PLP at Peñasquito was 86% complete as of March 31, 2018, and expected to commence commissioning in the fourth quarter of 2018. The carbon pre-flotation component of the project is reported to have commenced wet commissioning during April 2018. The PLP is reportedly expected to recover approximately 40% of the gold and 48% of the silver currently reporting to the tailings and is expected to add production of approximately 1 million ounces of gold and 44 million ounces of silver over the current life of the mine. As a reminder, Wheaton is entitled to 25% of the silver produced at Peñasquito for the life of mine, or 11 million of the additional 44 million silver ounces.

Antamina
In the first quarter of 2018, Antamina produced 1.3 million ounces of attributable silver, a decrease of approximately 9% relative to the first quarter of 2017 as lower grades were partially offset by higher recovery. As expected, silver grades were lower given mine sequencing in the open pit.

San Dimas
In the first quarter of 2018, San Dimas produced 1.6 million ounces of attributable silver, an increase of approximately 158% relative to the first quarter of 2017 as first quarter 2017 production was impacted by a strike initiated by the union at San Dimas on February 15, 2017.

On May 10, 2018, First Majestic announced that they had closed the previously announced acquisition of Primero. In connection with this acquisition, Wheaton terminated the existing San Dimas silver purchase agreement with Primero (the "Primero SPA") and entered into a new precious metals purchase agreement with First Majestic relating to the San Dimas mine (the "San Dimas PMPA"). Under the San Dimas PMPA: Wheaton is entitled to 25% of gold production plus an additional amount of gold equal to 25% of silver production converted to gold at a fixed gold to silver exchange ratio of 70:1 from the San Dimas mine; for each ounce of gold delivered, Wheaton will pay to First Majestic a production payment equal to the lesser of US$600/oz, subject to a 1% annual inflationary adjustment, and the prevailing market price; and First Majestic has provided a corporate guarantee and security limited to San Dimas assets. As part of the transaction, in addition to the new stream, Wheaton has received 20,914,590 First Majestic common shares.² Upon termination of the Primero SPA, the Company will reflect a gain on the disposal of the Primero SPA and will reflect the San Dimas PMPA as a component of Other gold interests. The Company's guarantee of the Primero credit facility was also terminated concurrent with closing of the acquisition.

Sudbury
In the first quarter of 2018, Vale's Sudbury mines produced 6,500 ounces of attributable gold, a decrease of approximately 29% relative to the first quarter of 2017 primarily due to lower throughput. According to Vale's first quarter of 2018 MD&A, the decrease in throughput was primarily due to the extended unscheduled maintenance at the Coleman mine as well as the cessation of mining activities at the Stobie mine since the second quarter of 2017. Vale reports that the Coleman mine was in a maintenance shutdown since November 2017 but returned to production in April 2018.

Constancia
In the first quarter of 2018, Constancia produced 0.6 million ounces of attributable silver and 3,300 ounces of attributable gold, an increase of approximately 20% and 36%, respectively, relative to the first quarter of 2017, primarily due to higher throughput. As per Hudbay Mineral Inc.'s ("Hudbay") news release dated March 26, 2018, although negotiations to secure surface rights over the Pampacancha deposit continue to progress and Hudbay has been granted access to the land to carry out early-works activities, they anticipate mining of this high-grade satellite deposit to commence in 2019, a one-year delay. In the interim, Hudbay will reportedly continue to mine higher-grade ore from the main Constancia pit. As the mining of the Pampacancha deposit has been delayed beyond 2018, Wheaton will be entitled to an increased portion of gold from Hudbay starting in 2019. Based on the current market price of gold, the additional deliveries due in 2019 will have a net value to the Company of approximately $7 million. 

Other Silver
In the first quarter of 2018, total Other Silver attributable production was 2.4 million ounces, a decrease of approximately 11% relative to the first quarter of 2017. The decrease was driven primarily by the cessation of production from Cozamin as the Cozamin silver purchase agreement with Capstone Mining Corp. ("Capstone") expired on April 4, 2017. 

Other Gold
In the first quarter of 2018, total Other Gold attributable production was 8,400 ounces, a decrease of approximately 41% relative to the first quarter of 2017. The decrease was due primarily to lower production at Minto due to lower grade mill feed during the quarter.

As per Capstone's news release dated February 2, 2018, Capstone has entered into a definitive share purchase agreement pursuant to which it has agreed to sell its Minto mine to Pembridge Resources plc. Capstone expects the transaction to close in the second quarter of 2018.

Development Update – Pascua Lama
According to Barrick Gold Corporation's ("Barrick") first quarter of 2018 MD&A, Barrick has suspended work on the prefeasibility study for a potential underground project at Pascua- Lama as it did not meet Barrick's investment criteria and will focus on adjusting the project closure plan for surface infrastructure on the Chilean side of the project, in line with legal requirements. Barrick will reportedly continue to evaluate opportunities to de-risk the project while maintaining Pascua-Lama as an option for development in the future if economics improve, and related risks can be mitigated. 

The Pascua-Lama silver purchase agreement had a carrying value at March 31, 2018 of $254 million. If the requirements of the completion test have not been satisfied by the completion test deadline of June 30, 2020, the Company may, within 90 days of such date, elect to terminate the Pascua-Lama silver purchase agreement in which case the Company will be entitled to a return of the original upfront cash payment of $625 million less the cash flows received relative to silver deliveries from the Lagunas Norte, Veladero, and Pierina mines. As at March 31, 2018, the Company has received approximately 19.5 million ounces related to silver production from these mines, generating cumulative operating cash flows of approximately $370 million, resulting in a refundable balance of approximately $255 million.

Produced But Not Yet Delivered ³
As at March 31, 2018, payable ounces attributable to the Company produced but not yet delivered³ amounted to 4.8 million payable silver ounces and 84,800 payable gold ounces, representing an increase of 0.3 million payable silver ounces and 5,300 payable gold ounces during the three-month period ended March 31, 2018. Payable silver ounces produced but not yet delivered increased primarily as a result of increases related to the San Dimas and Peñasquito silver interests partially offset by a decrease at the Antamina silver interest. Payable gold ounces produced but not yet delivered increased primarily as a result of increases related to the Salobo and 777 gold interests. Payable ounces produced but not yet delivered to the Wheaton Precious Metals group of companies are expected to average approximately two months of annualized production for silver and two to three months for gold but may vary from quarter to quarter due to a number of mining operation factors including mine ramp-up and timing of shipments.

Detailed mine-by-mine production and sales figures can be found in the Appendix to this press release and in Wheaton's consolidated MD&A in the 'Results of Operations and Operational Review' section.

Subsequent to the Quarter

On April 25, 2018, the Company made a strategic investment of $1 million by participating in a private placement undertaken by Tradewind, a financial technology company that uses blockchain to streamline digital gold trading. Tradewind has built a technology platform for digitizing the trading, settlement, and ownership of precious metals. The Tradewind platform combines exchange technology with Vaultchain™ Gold, Tradewind's blockchain technology tailored for precious metals.   

Dividend

Second Quarterly Dividend
The second quarterly cash dividend for 2018 of US$0.09 will be paid to holders of record of Wheaton Precious Metals common shares as of the close of business on May 25, 2018, and will be distributed on or about June 7, 2018.

Under the Company's dividend policy, the quarterly dividend per common share will be equal to 30% of the average cash generated by operating activities in the previous four quarters divided by the Company's then outstanding common shares, all rounded to the nearest cent. 

The declaration, timing, amount and payment of future dividends remain at the discretion of the Board of Directors. This dividend qualifies as an 'eligible dividend' for Canadian income tax purposes.

Dividend Reinvestment Plan
The Company has previously implemented a Dividend Reinvestment Plan ("DRIP"). Participation in the DRIP is optional. For the purposes of this second quarterly dividend, the Company has elected to issue common shares under the DRIP through treasury at a 3% discount to the Average Market Price, as defined in the DRIP. However, the Company may, from time to time, in its discretion, change or eliminate the discount applicable to Treasury Acquisitions, as defined in the DRIP, or direct that such common shares be purchased in Market Acquisitions, as defined in the DRIP, at the prevailing market price, any of which would be publicly announced.

The DRIP and enrollment forms are available for download on the Company's website at www.wheatonpm.com, accessible by quick links directly from the home page, and can also be found in the 'investors' section, under the 'dividends' tab.

Registered shareholders may also enroll in the DRIP online through the plan agent's self-service web portal at: Click Here.

Beneficial shareholders should contact their financial intermediary to arrange enrollment. All shareholders considering enrollment in the DRIP should carefully review the terms of the DRIP and consult with their advisors as to the implications of enrollment in the DRIP.

This press release is not an offer to sell or a solicitation of an offer of securities. A registration statement relating to the DRIP has been filed with the U.S. Securities and Exchange Commission and may be obtained under the Company's profile on the U.S. Securities and Exchange Commission's website at http://www.sec.gov. A written copy of the prospectus included in the registration statement may be obtained by contacting the Corporate Secretary of the Company at 1021 West Hastings Street, Suite 3500, Vancouver, British Columbia, Canada V6E 0C3.

Outlook

Wheaton's estimated attributable silver and gold production in 2018 is forecast to be approximately 22.5 million silver ounces and 355,000 gold ounces. Estimated average annual attributable silver and gold production over the next five years (including 2018) is anticipated to be approximately 25 million silver ounces and 370,000 gold ounces per year. 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 $116 million of cash and cash equivalents as at March 31, 2018 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 and known contingencies as well as providing flexibility to acquire additional accretive precious metal stream interests.

Webcast and Conference Call Details

A conference call and webcast will be held Friday, May 11, 2018, starting at 11:00 am (Eastern Time) to discuss these results. To participate in the live call, please use one of the following methods:

Participants should dial in five to ten minutes before the call.

The conference call will be recorded and available until May 18, 2018 at 11:59 pm (Eastern Time). The webcast will be available for one year. You can listen to an archive of the call by one of the following methods:

This earnings release should be read in conjunction with Wheaton Precious Metals' MD&A and Financial Statements, which are available on the Company's website at www.wheatonpm.com and have been posted on SEDAR at www.sedar.com. 

Mr. Neil Burns, Vice President, Technical Services for Wheaton Precious Metals, is a "qualified person" as such term is defined under National Instrument 43-101, and has reviewed and approved the technical information including information on mineral reserves and mineral resources disclosed in this news release.

Wheaton Precious Metals believes that there are no significant differences between its corporate governance practices and those required to be followed by United States domestic issuers under the NYSE listing standards. This confirmation is located on the Wheaton Precious Metals website at Click Here.

End Notes