Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2019 Fourth Quarter and Full Year Results Conference call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Thursday, March 12, 2020 at 11:00 a.m. Eastern Time. I will now turn the conference over to Mr. Patrick Drouin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today’s call. I’m joined today by Randy Smallwood, Wheaton Precious Metals’ President and Chief Executive Officer; Gary Brown, Senior Vice President and Chief Financial Officer; and Haytham Hodaly, Senior Vice President of Corporate Development. I’d like to bring to your attention that some of the commentary on today’s call may contain forward-looking statements. There can be no assurances that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. In addition to our financial results cautionary note regarding forward-looking statements, please refer to the text entitled Description of the Business Risk Factors in Wheaton’s annual information form and the risks identified under Risks and Uncertainties in management’s discussion and analysis both available on SEDAR and in Wheaton’s Form 40-F and Wheaton’s Form 6-K, both on file with the U.S. Securities and Exchange Commission. These documents, together with the Q4 2019 MD&A and the press release from last night, set out the material assumptions and risk factors that could cause actual results to differ, including, amongst others, fluctuations in the price of commodities, the absence of control of our mining operations from which Wheaton purchases precious metals and risks related to such mining operations, the continued ability of Wheaton’s counterparties satisfy their obligations under precious metal purchase agreements and the impact of any material change in facts, law or jurisprudence on the CRA settlement. It should be noted that all figures referred to on today’s call are in U.S. dollars, unless otherwise noted. In addition, reference to Wheaton or Wheaton Precious Metals on this call include Wheaton Precious Metals Corp. and/or its wholly owned subsidiaries as applicable. Now I’d like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Thank you, Patrick, and good morning, ladies and gentlemen. Thank you for joining us today to discuss Wheaton’s fourth quarter and year-end results of 2019. And especially in light of the colors of the day today, I am pleased to report that Wheaton Precious Metals has delivered very strong results in 2019. For the first time in the company’s history, Wheaton produced over 400,000 ounces of gold, and that is in addition to over 22.5 million ounces of silver and 22,000 ounces of palladium. Annual gold production and sales volumes achieved a new record for the company, and we significantly exceeded our original guidance for the eighth consecutive year, speaking to our solid track record of delivering on our production forecast. We continue to generate strong operating margins, resulting in cash flow of over $500 million in 2019 from revenue of $860 million. And the company has set a minimum quarterly dividend of $0.10 per common share for the duration of 2020, representing an 11% increase. We entered 2019 with the strongest foundation we have ever had, supported by one of the best portfolios of precious metals assets in the industry and confidence in the sustainability of our business model. And we now look forward to a steady growth profile in the coming years, which I will provide more details on later in this call. So now I’d like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer, who will provide more details on our results. Gary?

Thank you, Randy, and good morning, ladies and gentlemen. The company’s precious metal interests produced 187,000 gold equivalent ounces in the fourth quarter of 2019, comprised of 107,200 ounces of gold, 6 million ounces of silver and 6,100 ounces of palladium, an increase of over 3% from the comparable period of the prior year. Gold production was virtually unchanged, while silver and palladium production increased by 8% and 3% respectively. The increase in silver production was primarily the result of a significant increase in grades at Penasquito, with the legal blockade having ceased on October 22. The increase in palladium production is reflective of the Blitz project ramping up at the Stillwater operation as well as the Fill the Mill program at the East Boulder mine. Gold sales volumes decreased by 13% due to a buildup of ounces produced but not yet delivered relative to Salobo, while silver and palladium sales volumes increased 6% and 5% relative to the fourth quarter of 2018. As at December 31, 2019, approximately 98,600 payable gold ounces, 4.5 million payable silver ounces and 4,900 payable palladium ounces had been produced but not yet delivered to the company, with the payable gold ounces increasing by 13,300 ounces during the quarter. We estimate a normal level for payable ounces produced but not delivered to equate to approximately two to three months for gold, two months for silver and three months for palladium, with the 2019 year-end balances being at the higher end of these ranges. Revenue for the fourth quarter of 2019 amounted to $223 million representing a 14% increase relative to Q4 2018, primarily due to a 21% increase in the average realized gold price, an 18% increase in the average realized silver price and a 59% increase in the average realized palladium price, with…

Thank you, Gary. We are pleased to reiterate our 2020 and long-term production guidance previously announced in February. For 2020, Wheaton’s estimated attributable production is forecast to range between 390,000 to 410,000 ounces of gold, 22 million to 23.5 million ounces of silver and 23,000 to 24,500 ounces of palladium, which amounts to gold equivalent production of approximately 685,000 to 725,000 ounces. Gold production is forecast to remain strong, primarily driven by Salobo and San Dimas. And silver production in 2020 should be stable as growth from Penasquito is expected to be partially offset by slight decreases at Antamina and Constancia due to mine planning. Looking forward, we anticipate steady organic growth building over the next five years. Wheaton estimates that annual gold equivalent production will average 750,000 ounces per year, primarily due to continue growth at Penasquito, Constancia, Stillwater and Salobo. At Penasquito, we expect a stronger year as Newmont applies its full potential continuous improvement program to drive productivity improvements and the mind benefits from higher grades. At Constancia, Hudbay announced that it secured the surface rights for the Pampacancha deposit and expects to begin mining the satellite deposit in late-2020. Wheaton has not included any production from the Pampacancha and its 2020 forecast, but does include this production in its five-year average. And at Stillwater, palladium and gold production is expected to increase with the continued ramp-up of the Blitz and Fill the Mill projects, which are expected to be key growth drivers and should continue to result in more metal being delivered to Wheaton in the coming years. With respect to the Salobo mine expansion, Vale reports that physical completion was at 40% at year-end. Given their progress to date and assuming construction continues at the same pace, we expect the expansion could begin contributing to…

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. [Operator Instructions] Our first question comes from John Tumazos from John Tumazos Very Independent Research. Please go ahead. Your line is open.

Thank you for taking my question. Actually, I have two. First, could you just review the contracts you have where the mines are not yet built and delivering metals for you like Voisey’s Bay and which of those are funded? In addition to the Rosemont and Minto that you’ve already mentioned, they’re not in your forecast.

Sure. Voisey’s Bay, of course, will start delivering cobalt to us starting in January 1 of 2021. The project is moving forward well. We get to cobalt irrespective of whether it comes from the open pit and underground, but the funding was already supplied to Vale as they develop – to convert that operation from an open pit operation to underground. It looks very promising in terms of production and such. We’re very comfortable with where we see that coming. And so it’s on track and on schedule. Rosemont, of course, we haven’t contributed any capital towards yet. Waiting for them to start construction and get all financing in place. And of course, with the current permit appeal down there, we do have to move forward on – or patiently wait for Hudbay to work its way through the appeal process. And hopefully, recommence moving that project forward. Sometime four, five years out is what we would estimate in terms of timing. Pascua Lama, of course, we – Pascua Lama, we did contribute back in 2009 to Barrick’s construction of Pascua Lama. That project has been suspended. We did receive a lot of compensation silver from a number of other assets in the Barrick portfolio to the date. I think we were – there’s about $254 million outstanding on that purchase. We do have the right, up until the end of September, to request that funding back, but we’re strong believers in Pasquelama. We think it’s still one of the best undeveloped gold mines or half-developed gold mines in the world, gold deposits in the world. And hopefully, that it will become a mine. We’re confident in Barrick’s ability to continue advancing that project on a go-forward basis. We also, of course, have Navidad down in Argentina, Pan American Silver owns this. It’s a silver project that we would expect, based on current plans, to see a couple of million ounces of silver delivered to us. Again, I think there’s a payment of about $32.4 million that would be owed as soon as they start construction on that project. They’re still waiting – working their way through trying to get permits on that, moving that forward. We have the electrical Keno Hill operations up in the Yukon, which they’ve had incredibly promising exploration results, very, very high-grade materials at Bermingham deposit. And so continue to wait for them to restart that mill and deliver products back to us. It’s not part of our plans going forward. Toroparu, down in South America, run by Gold X.; again, one of the more promising projects out there. Cotabambas with Panoro, so it’s – the optionality in terms of the projects that aren’t part of our current production profile is very strong and comfortable that at least some of these will be delivering metal to us over the next five to 10 years.

Thank you. Second question, I greatly admire your 14 CSR programs and your unique position in the streaming royalty space and that leadership. As you evaluate new projects, do you seek CSR complicated projects owing to your strength, the potential for operators to turn them around? Or do you take a conservative tact and try to sidestep those or maybe require better returns from those kinds of complicated projects because of the risks involved?

John, excellent question because one of the things that we look at is if we can somehow be an agent of change in terms of helping push improvements, the industry as a whole needs to step up to this plate. We need to continue to find ways to deliver better and better sustainable results to the communities that are impacted by our operations and provide that support. And we don’t necessarily shy away from opportunities or projects that have CSR challenges. We actually try and find ways to help these opportunities move forward. And I can go into detail on several different initiatives that we have with existing partners to try and help them improve in terms of overall performance. It’s something that we try and integrate into the contract. When we’re looking at new opportunities to try and promote improvement on these fronts. And so we have a dedicated – a due diligence team. We have a dedicated person that focuses on that during the site visit and tries to get a handle on past performance, but also new opportunities to try and improve. The industry as a whole needs this and everything we can do as an industry partner and as an industry leader to try and strengthen the industry’s track record on that is, in the long run, going to deliver really strong values back to all of us. And so I don’t think there’s – I don’t think running and hiding from stuff like this is the way to approach it. I think we have to look at it from a perspective of how can we improve things, how can we add value? How can we guide change to the positive. And that’s our whole approach to this. And so I like the concept of being a change agent, where we can actually sit and come in and improve overall performance.

Thank you and thank you for your service to the company.

Thank you, John. Appreciate your support.

Our next question comes from Josh Wolfson from RBC. Please go ahead.

Thanks. Looking at the market equity issue that was disclosed overnight. Just – is there any way we could get some more information on, I guess, what the motivation is to have that program in place, given the company is well-capitalized now and generating free cash flow and then also the decision to incorporate this alongside the current sort of dividend policy plan, which I guess, has increased relative to what the prior plan was?

Yes, Josh. It’s Gary here. Our access to capital is critical in order that we can efficiently consummate new streaming transactions. And I think as Randy outlined, the opportunity set that we’re looking at right now is very strong and with some sizable deals out there. And so we need to ensure that we’re positioned to be very nimble to consummate those transactions. And the ATM product is one that I’m very fond of because of its much lower cost to existing shareholders, issuing at much lower fees and at the market rather than at a discount to market without affecting the market price of the stock. So really, that’s just a program that we have put in place because they take months to put in place and establish. And we just want to make sure that should we need the capital to grow, that we’ve got it efficiently available to us.

Okay.

Josh, I would say, just to finish off your question, you also asked about the dividend and such. Our dividend policy is driven on 30% of cash flows going forward. So it just – it drove us to that 10%, which is why we have this in place, is to share the benefits of some of the higher commodity prices we’ve seen with our shareholders directly through that dividend policy. And then just to expand on what Gary said, we do see a very attractive-looking opportunity set out there on the corporate development front. And we just want to make sure that we have as many tools available as we can. So it makes sense for us to have these tools out there, especially in light of recent market activity, the need for support in the mining industry, especially the base metals industry, which is where we find the best precious metals byproduct streams, is strong. And I can say with days like today, getting stronger. And so we just – it’s up to – it’s our responsibility to make sure we have all and take advantage of all the tools that we have available, and I would describe the ATM as just another arrow in the quiver that we may use, we may not use to help fund that growth.

All right. That makes sense. Thank you very much.

Thanks, Josh.

Our next question comes from Jackie Przybylowski from BMO Capital Markets. Please go ahead.

Thanks very much. And I guess, this is a good segue from Josh’s question. I just was wondering your comments about seeing additional opportunities for growth in the base metal space. Can you maybe, talk a little bit about how quickly things are changing? Right now, I mean, we’ve gone from a fairly strong market at the beginning of the year to obviously one that’s really on its back right now, are using recently a lot of base metals companies coming to you looking for streams? Or maybe can you just talk a little bit about how the landscape has changed over the last month or two months? Thanks.

I’m going to let Haytham answer that one.

Sure, Jackie. Thanks for the question. Over the last year, we spent a lot of time looking at a number of new opportunities that typically fell into the sub-$300 million, $350 million category, primarily development stage opportunities that fit into our early deposit structures as well as expansion in stage streaming opportunities. But in the last few months, we’ve seen interest from producing companies that are considering selling their byproduct precious metals as a way to strengthen their balance sheets, which further highlights the competitive cost of capital streams can provide relative to other financing options. Now, these could be quite significant streams with potential investments of more than $1 billion, although these are still very competitive times, and we’re focused on making accretive transactions for our shareholders. I can tell you, we’ve probably got a handful of those that we’re working through and would hope to be successful on some of those.

And maybe, just a quick follow-up on that. If a company came to you a month or two months ago, so what would be the typical timeframe, if there is one, in terms of like when that deal might be announced to the market? Like how long does it take to go through this process?

Sure. I mean, typically, our process would take anywhere between four weeks to 12 weeks. Obviously, we’re in a bit of a different type of environment right now with all kinds of delays due to travel restrictions and all kinds of stuff. But the average streaming transaction from start to completion of definitive agreements takes, I would say, about 12 weeks.

Great. Okay. Thanks very much.

Thank you, Jackie.

Our next question comes from Trevor Turnbull from Scotiabank. Please go ahead.

Yes, I just had a question about forecasting some of the production. One of the components that comes up every year is the kind of other component, which is certainly an aggregate of lots of smaller assets that aren’t worth providing a lot of detail on but I just wondered, going forward, can you give us any sense of like how that group of smaller pieces is going to trend going forward? Should it continue to stay relatively flat in terms of its contribution? Or are we looking for that to move one way or the other?

I see it as sort of being consistent. And what I will highlight is that the other category, not only does it include our smaller operations, but it also includes the difference. When it comes to partner forecasts of metal production, we will align ourselves with our partners. But our company’s overall production performance, we do come up with our own forecast that we own and deliver. And I’m going to say it’s sort of it’s typically lower than the partner forecast, if you sum up the partner forecast individually. And so that discrepancy is usually buried within the other category. And so the combination of the smaller assets and that – I hope so because, to be honest, some of these smaller assets provide nice little surprises on a pretty regular basis going forward. So, we’re not shy of sort of keeping a decent portion of the portfolio into that smaller size. And when I sit and look at the assets that are in our optionality scenario, there’s a few of those assets that would definitely fall to that other category. They wouldn’t be significant enough to be reported independently. And so I would say it’s probably going to maintain a relatively consistent portion of the overall production reporting.

Great. Thanks, Randy.

Thank you, Trevor.

Our next question comes from Brian MacArthur from Raymond James. Please go ahead.

Good morning. I know there’s a lot of variability between sales and production. But just the last three quarters on the gold side especially, and I know a lot of it is slow, but you built up, as Gary said, a lot of inventory. But if I look at the first quarter of last year, you did a lot of catch-up in that quarter. Do you expect that to happen again this year? Is like the first quarter going to be a big catch-up for those last three quarters? On sales?

Brian, we would expect that the balance overall would probably come down slightly. But we’re guiding people to basically look at our year-end PBND and assume that, that remains relatively constant throughout the year.

Okay, great. Thanks.

Thanks, Brian.

Our next question comes from Chris Terry from Deutsche Bank. Please go ahead.

Hi, Randy, Gary and Haytham. A couple of questions from me. I just wanted to dig into a few things you’ve touched on earlier, but just in terms of the overall commodity mix. You previously said, I think you don’t want to touch oil and gas so much. And just looking at across the whole spectrum of what the opportunities are, precious streams related to base metals or precious companies predominantly. Just wondering if you could comment on some of the opportunities you’re seeing, just reiterate the mix of precious metals that you’re going for? Any other commodities you might be looking at? That’s my first question.

Sure, Chris. It’s randy. I would say that when we changed the name from Silver Wheaton to Wheaton Precious Metals, that was a real strong indication of our focus. We are focused on precious metals. We do have, obviously, some cobalt coming into play next year. If it wasn’t Vale, and if it wasn’t Voisey’s Bay, it wouldn’t be part of our portfolio. It’s the cleanest, greenest, most socially responsible, most environmentally sound cobalt produced in the world out of the Voisey’s Bay operation. And so it’s a very, very unique one-off situation, which we don’t see anything that’s comparable to it in the cobalt space. We are focused on precious metals. Our job is to deliver profitable, high margin, high-quality precious metals production to our shareholders. We’ve long been believers that if our shareholders are interested in owning some oil and gas exposure. There’s plenty of other opportunities out there for them to make those investments in companies that are solely focused in the oil and gas space. And I don’t think that we should be defining the diversity of our shareholders’ portfolios. And so we focus solely on precious metals. I can tell you that 100% of everything we’re looking at on the corporate development front is precious-metals focused.

Okay. That’s clear. Thanks, Randy. And just another follow-up. It’s also related to M&A overall. I just wondered maybe Haytham could comment on this. In terms of the opportunities, you’re seeing on the smaller and below, say, $350 million or so, how are they progressing in the current market just in terms of the volatility and the types of things you might be looking at there on that side? And then just on the sort of the bigger deals, do you think we need to wait a lot longer if this volatility continues, balance sheets go south from some of the other companies, is that the opportunity? Or are you still thinking that, that could be sooner rather than later.

Sure. Thanks for the question, Chris. I guess, just from the opportunity set, we looked at probably over 60 opportunities last year alone and I can tell you, we didn’t transact on a single one. Very few of these opportunities actually ended up meeting our internal requirements in terms of margins, in terms of strength of the company, the geological prospectivity as well as the strength of the management team. So we’re very picky as to what we look at. We’re not motivated to transact unless it is a high-quality transaction. So from that perspective, we’ll continue to look at them. I can tell you, we’ve already looked at probably – what are we now, in March – and we probably already looked at 20 different opportunities so far this year. We would hope that we would find one that fits into our high-quality portfolio, but there are no guarantees on that, obviously.

Okay, that’s it. Thanks, guys.

Thank you, Chris and thank you everyone for dialing in today. In closing, we believe Wheaton is well positioned to continue delivering value to our shareholders for a number of different reasons. Firstly, by having low and predictable costs that result in some of the highest margins in the entire precious metals space and strong operating cash flow. Secondly, through a growing dividend that we increased by over 10%. Thirdly, through our steady organic growth profile over the next several years and a proven track record of accretive quality acquisitions. Fourthly, by offering our shareholders exposure to some of the best mines in the world through our high-quality portfolio of long-life, low-cost assets. And lastly, by being a leader amongst precious metals streamers in sustainability and supporting our partners and the communities in which we live and operate. Our business is strong. I look forward to speaking with you all again very soon. Thank you.

This concludes this conference call for today. Thank you again for participating. Please disconnect your lines at this time.