Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2022 Third Quarter 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] Thank you. I would like to remind everyone that this conference call is being recorded on Friday, November 4, 2022 at 11 AM Eastern Time. I will now turn the conference over to Mr. Patrick Drouin, Senior Vice President of Investor Relations and Sustainability. Please go ahead, sir.

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; Haytham Hodaly, Senior Vice President, Corporate Development; and Wes Carson, Vice President, Mining Operations. Please note that for those not currently on the webcast, the slide presentation accompanying this conference call is available in PDF format on the Presentations page of the Wheaton Precious Metal website. I'd like to bring to your attention that some of the commentary on today's call may contain forward-looking statements and I would direct everyone to review Slide 2 of the presentation, which contains important cautionary notes regarding forward-looking statements. It should be noted that all figures referred to on today's call are in U.S. dollars unless otherwise noted. Now I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Thank you, Patrick, and good morning, everyone. Thank you for joining us today to discuss Wheaton's third quarter results of 2022. I'm pleased to announce that our high-quality portfolio once again delivered solid revenue, earnings and cash flow in the third quarter of 2022, as Gary will discuss later. While inflationary pressures are still impacting all sectors of the economy, especially mining, Wheaton has maintained cash operating margins of over 75% year-to-date, highlighting the resiliency of the streaming model in an inflationary environment. Furthermore, we have demonstrated our continued willingness to identify strategic opportunities, both externally and within our portfolio, that create value for our shareholders. To that end, in the quarter, we completed the termination of the Keno Hill stream for $141 million and announced the proposed termination of the Yauliyacu stream with Glencore for $150 million. We are very happy with the returns these mines have brought us over the years. However, we feel they have run their course within our portfolio, and it was the right time for us to part ways and put that capital back to work in growing our portfolio. And we continue to see a very healthy appetite for streaming as a source of capital for the mining industry. So we are actively pursuing a number of new accretive opportunities. Additionally, we once again demonstrated our leadership in sustainability and were recognized as one of the best corporate citizens in Canada by Corporate Knights. And once again, we ranked in the global top 50 out of over 15,000 multi-sector companies by Sustainalytics. It is important to highlight that Wheaton is the only precious metals company in this global top 50, something we are proud of but that we must continue working on. Given our strong balance sheet, liquidity available for investment and our diverse development portfolio, we are on track to generate sustained long-term production and strong growth over the next 10 years and beyond. I would now 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 159,900 gold equivalent ounces, or GEOs, in the third quarter of 2022. Relative to the third quarter of the prior year, this represented a decrease of 13% primarily due to lower production at Salobo and the closure of the 777 mine. Revenue for the third quarter of 2022 amounted to $219 million, representing a 19% decrease relative to Q3 2021 due to a 12% decrease in commodity prices combined with a 7% decrease in sales volumes. Of this revenue, 49% was attributable to gold, 46% silver, 4% palladium and 1% cobalt. As of September 30, 2022, approximately 138,000 GEOs were in PBND and cobalt inventory, representing approximately 2.5 months of payable production. This is 17,000 GEOs lower than the average over the preceding four quarters. Gross margin for the third quarter of 2022 decreased 33% to $102 million, reflecting not only the 19% decrease in revenues but also a higher proportion of sales volumes being attributed to PMPAs having a higher unit cost, primarily Yauliyacu. G&A expenses and donations amounted to $10 million in the third quarter of 2022, virtually unchanged from Q3 2021. For 2022, the company expects that the aggregate of G&A expenses and donations will fall in the lower end of the previously announced range of $47 million to $49 million. The company reflected virtually no stock-based compensation in the third quarter of 2022 as the combination of stock option and RSU expenses were offset by a reversal of previously accrued costs relative to performance share units or PSUs. The combined expense represented a decrease of $4 million relative to the comparable quarter of the prior year. During the third quarter of 2022, the company terminated its Keno Hill PMPA in exchange…

Thanks, Gary, and good morning. Overall production in the third quarter came in as anticipated with stronger production from Constancia and Antamina, offset by lower-than-expected performance from Salobo and Stillwater. In the third quarter, Salobo produced 44,200 ounces of attributable gold, a decrease of approximately 20% relative to the third quarter of 2021 due to lower throughput. Production in the third quarter did, however, represent a 30% increase over the previous quarter. Plant performance improved relative to the second quarter of 2022 despite a continued focus on additional planned and corrective maintenance during the third quarter. Vale expects further maintenance work to continue into the fourth quarter with a focus on improving the overall operational performance and reliability of the process plant, ultimately resulting in improved production through the remainder of the year. Vale also reported that physical completion of the Salobo III mine expansion was 98% at the end of the third quarter. Progress during the quarter included the full commissioning of the primary crushing circuit, hot commissioning of the conveyor systems and commencement of wet commissioning in the flotation circuit. In the third quarter, the Stillwater mines produced 1,800 ounces of attributable gold and 3,200 ounces of attributable palladium, a decrease of approximately 38% for gold and 37% for palladium relative to the second quarter of 2021. Regional floods impacted the Stillwater operations on June 13, 2022, including damage to multiple bridges and the access road into the Stillwater mine. Access to the East Boulder mine and the Columbus metallurgical facilities remain intact, and both facilities continued full operation during the flooding event. Operations at the Stillwater mine, which accounts for 60% of the mine production from the Stillwater operations, resumed production on July 29, 2022, once safe access to the mine had been restored. Production at the…

Thank you, Wes. In summary, Wheaton recorded a solid quarter distinguished by several key highlights. We achieved solid quarterly revenue, earnings and cash flow and declared a $0.15 quarterly dividend. We enhanced and strengthened our financial flexibility, which positions us well for future accretive growth, which we’re very active on. And lastly, we continued to show our leadership in sustainability, an example of which is shown by our support of flood relief to the local communities around the Stillwater mine in Montana. So with that, I would like to open up the call for questions. Operator?

Thank you, sir. [Operator Instructions] First question comes from Trevor Turnbull with Scotiabank. Please go ahead.

Hi, Randy. I just had a question with respect to Salobo’s third line starting its ramp-up. I wanted to ask how we should think about the attributable production for Wheaton. I think the technical report indicated the mines going into a period of lower grades. And I just wondered how quickly the combination of the ramp-up and then the grade profile works out to incremental growth to your account.

Yes. Thanks, Trevor, and good to talk to you. We will see some growth, but there is definitely lower grades coming at Salobo. And they are still working on the final mine plan in terms of how much material they want to move versus – move to the mill versus stockpile. And so until they finalize that, it’s tough for us to sort of finalize what kind of growth we are going to see. I can assure it will be a bump up in gold production for us. It’s a matter of ultimately how much they decide to put into stockpiles versus feeding through the mill. And so there’s still a bit of variability in terms of the possible scenarios here, and we just – they haven’t formed a final decision. The limiting factor or, I guess, the driving factor is their mobile fleet, and that is something that’s relatively easy to make adjustments in terms of scale and size. And so until they make a final decision, it’s really tough for us to give you a firm answer. What I can assure you is that there will be some growth in overall gold production, but it likely won’t be to the 50% scale that we’re seeing in terms of increased throughput capacity. It will be probably much more likely around the 10% to 20%, maybe as high as 25% growth, in overall production.

Okay. Yes, that’s helpful. The only other question I had was just respect then to timing of some of your payments. The ones to Capstone for Santo Domingo and then the payment coming in for Yauliyacu, I was wondering, are those things that happen next year? Or is any of that happening before year-end?

We’re hopeful that the Yauliyacu transaction should close before the end of this year, but we’re still waiting for some final sign-offs and stuff like that. But we just had some discussions last week, and it looks like it’s on track to close before the end of the year. And I can assure you that Santo Domingo, Capstone is busy down finishing off other activities down there. And so they’ve still got some stuff to do. So we’re not going to see anything on Santo Domingo here for, I would think until probably sometime next year we might be the first that we’ll see anything on the Santo Domingo side.

Okay. Perfect. That’s all I had. Thank you.

Thanks, Trevor.

Thank you. Your next question comes from John Tumazos with John Tumazos Very Independent Research. Please go ahead.

Thank you. If we could just run through the cash in and cash out get a flavor for the strong financial position, is it reasonable to look at year-end as near $900 million in cash, including the current cash, the interim earnings, the Glencore payment if it closes, and pro forma the Hecla shares whenever you choose to sell them?

Well, I will highlight that there is a six-month hold on those Hecla shares. And so they would still be Hecla – we would still be holding Hecla shares at the end of the year. But Gary, I’m not sure if you’ve got a sense for that. I mean, I don’t think you’re too far off in terms of that but…

Yes. I mean, I think we would probably expect to be closer to the $800 million level, assuming that the Yauliyacu transaction closes before the end of the year, John.

We do have some payments going out to some of these development projects, and so there may be some more payments before the end of the year on that track.

My next question is, could you just itemize all the property payments due, even though they’re not all going to fall next year or this quarter? Rather than having surplus cash, one way to think of it is that you’ve just prefunded most of your commitments for the next five years.

Yes. I mean, we’ve got some expansion. Obviously, we got the expansion payment at Salobo coming up. It’s – given that that’s a 90-day completion test, they’re going to do their best to try and get that completed before the end of next year. But they do have some work to do in terms of that. And I will say that past commissionings there have typically taken about 18 months to reach full production profile. So that’s likely not going to hit the books until, I would think, early 2024. And then there’s a number of projects all the way across the board. I don’t know if you on the list.

Yes. John, look, this is probably a question that we could take off-line. We – as you know, we’ve got a number of development-stage projects. The payment schedule is very well detailed project by project in our contingency note. Just high level, we do expect that there will be about $80 million of payments made before the end of this year relative to those development-stage projects with the high end of the range relative to the Salobo III expansion being $646 million. We expect that another $1.3 billion will be paid over 2023 and 2024 and with the remainder coming in subsequent to that period.

The biggest items are going to be Sabina as the Goose Project moves forward, Blackwater as Artemis moves forward, Curipamba is moving forward, Adventus and then Marathon should be getting going sometime next year, too. And so those are the most of the biggest items, along with that, the globe expansion payment.

Yes. But it’s important to highlight, John, that even on most the aggressive development plan, we don’t anticipate actually even dipping into our revolver to make any of these payments. They’re all funded out of the cash that we have on hand at the end of September, which is just under $500 million plus our cash flows from operations forecast into the future.

So plenty of capacity for new deals.

It’s really great that there’s no gun to your head to do a deal to put $1 billion to work that you’ve already got good projects locked up. If I could ask one more. Hudbay on their call yesterday and their field trip a couple weeks ago talked about renegotiating the Rosemont stream terms with you? And the copper price is probably higher than when the first deal was done almost a decade ago with Augusta. And the ore grade got higher and the tons of resource got higher. Obviously, CapEx is more too. But it appears as though the project got better. Not obvious to me why the terms would be renegotiated. Are you worried that companies or two have a leader to try to rip up the deals and renegotiate them?

Well, they can’t rip up the deal and we’ve got a good strong relationship with Hudbay. And so I think the reason about renegotiation is the fact that their current plan going forward with Copper World actually contemplates a production rate that’s about two thirds of what the original plan was. And so given, that we were funding a mine that was supposed to be operating at a higher throughput rate, we’re going to have to have some discussions with them about how that works. The original plan had us receiving close to 60,000 gold equivalent ounces a year from Rosemont. Now that gold and silver is still there. But it’s because of the revised development plan that brings Copper World into play. And it would only have us seeing in terms of the early years of production somewhere around 40,000 ounces of gold equivalent production. And so, the renegotiation comes from the change in the mining plan itself, where we have to sit down and look at how that plan. I mean, there’s no doubt we have greatly benefited from the successful exploration of Copper World. And this project has grown. It’s going to be a significant American copper producer. There’s a lot of strong benefits to that. We find it frustrating the effort that Hudbay has had to put in to try and get permits on the federal side. And I find it sad that they’re having to take the route they are going down the Copper World path, especially in a country that’s so focused on trying to improve its own in-country production of essential minerals like copper. And so, I’m hopeful that they can eventually have some success on the other side and get back to the best plan down there, which is the original Rosemont plan with copper will coming into play. But given the challenges that Hudbay has had and all the previous owners have had in terms of trying to permit that project going forward. Copper World seems to be the path forward. And given that change in mining plan, we’re going to have to sit down and see how we can work with them to make sure. Hudbay is a very important partner of ours, a very successful partnership at both Constancia and 777, and ultimately Rosemont as we go forward. And I look forward to working with Peter and his crew in terms of coming to a successful solution. And so there’s no tearing up of the contract. This is just to reflect of changes in the actual mining – the mining plan itself.

Thank you.

Thanks, John.

Thank you. Your next question again from Charlie Rothbarth with Berenberg. Please go ahead.

Good morning or good afternoon, everyone. Thank you very much for taking my questions and congratulations again on your results. Just to Randy, just to confirm, I think you’ve said this at the last earnings call as well, but I think I’ve missed it. Do you expect Vale to initiate that’s triggering in Q4 next year? Is that what you’ve said? Or if I misunderstood that?

Well, I think that would be the earliest they could trigger it. The completion test is, it is a 90-day completion test, and so the fact that it takes a full quarter to satisfy that it’s going to be – they’re going to do their best to try and get it done in Q4 of next year. But I will say that the previous two lines that they’ve commissioned there have taken at least 18 months to go forward for them to actually get to full production levels. And so it’s going to be talent [ph] them to go forward. So I hope you heard that there’s a lot of feedback on the line here.

Yes, I did hear that. I apologize. I apologize for the feedback is me, I’ll mute myself for when you are next informing me of my errors. Could you – with regards to inventory, the sort of inventory you’ve developed, just have me a quick look here. You’ve developed in your gold sold versus your gold produced over the last couple of quarter, it looks like since the start of Q1 2021, you’ve had production versus sales. You’ve had an inventory build about 108 kilo ounces of [indiscernible]. Do you expect any of this to unwind in Q4? Or is this sort stuff that you intend to sort of get hold back for now?

We have seen a trend in Q4 in the fourth quarter of every year in terms of companies pushing sales out to try and improve the year end result. And so I would expect typically what we have seen in years past it’s not every year, but most times. We do see a squeeze quarter where companies do push sales forward to try and actually get that production of extra sales for the year end result.

Okay. Thank you very much. And then finally now that the 777 mine has been successfully closed as part of the deal on a note 11 on your financial statements, you’ve got. When do you expect to receive any refund on this stream, if any at all? If that question makes any sense? Sorry, I feel like I’ve.

Yes, I know what you’re saying. There is a minimum deliverable amount and it hasn’t been achieved yet. And so there is a payment, I believe it’s about 20 or 30 years out. I will say that again, Hudbay is a very important partner of ours. They are investigating the possibility of tailings reprocessing there to try and sort of help put the reclamation but also recover additional metals. And so there’s a possibility we may see some additional production out of 777 sometime in the near future down that path. And again, when it comes to those kind of refunds, you have to keep in mind this is a broader relationship amongst the company itself. And so it always comes into play. And so we’re – it is in the contract, but I hope we never have to ever ask for that.

Right. Masterly understand. That is all my questions. Thank you so much.

Thanks, Charles. So we do have a couple of questions from the webcast that I’ll relay. The – they’re both related to share buybacks. One is, what is our appetite for shared buybacks? And then the second one is, will the new liberal government here in Canada is their policy to tax share buybacks to 2% onward limit any future share buybacks by Wheaton Precious Metals?

Well, I’ll fill that one, Patrick. It’s Gary here. We really look at there being three ways to return excess cash to shareholders. And that is first through the quarterly dividend. And the second would be share buybacks, and the third would be special distributions. And I can just say that we would much rather subscribe to the first of those options and ratchet up the payout ratio which is currently at or targeted to be 30% of our operating cash flow than to subscribe to either one of the other options. And so given the high unlikelihood of us subscribing to share buybacks, I think that answers the second question as well.

That’s all the questions from the webcast.

Okay. Well, thank you everyone for dialing in today. In closing, we believe Wheaton is well positioned to continue delivering value to all of our stakeholders for a number of different reasons. Firstly, by having low and predictable costs, which when coupled with leveraged increasing commodity prices result in some of the highest margins in the entire precious metal space. Secondly, by offering our shareholders exposure to our diversified portfolio of long life low cost assets, and the strong organic growth embedded within it. Thirdly, by returning value to shareholders through our unique cash flow linked dividend policy. And lastly, by being a leader amongst precious metal streamers in sustainability and by supporting our partners and the communities in which we live and operate. I do look forward to speaking with you all again soon. Until then, please stay healthy and stay safe. Thank you.

This concludes the conference call for today. Thank you for participating. Please disconnect your lines.