Wheaton Precious Metals Corp. (WPM) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals' 2026 Second Quarter Results Conference Call. [Operator Instructions] I would like to remind everyone that this conference call is being recorded on Friday, August 7, 2026 at 11:00 a.m. Eastern Time. I will now turn the conference over to Emma Murray, Vice President of Investor Relations. Please go ahead.

Thank you, Julienne. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Haytham Hodaly, Wheaton Precious Metals' President and Chief Executive Officer; Vincent Lau, Chief Financial Officer; Wes Carson, Vice President, Mining Operations; and Neil Burns, Vice President of Corporate Development. Please note for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the presentation page of our website. Some of the comments on today's call may include forward-looking statements. Please refer to cautionary information and disclosures. It should be noted that all figures referred to on today's call are in U.S. dollars unless otherwise noted. With that, I'd like to turn the call over to Haytham Hodaly, President and Chief Executive Officer.

Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's second quarter results of 2026. The second quarter closed out a record-breaking first half of the year for week. Through the first 6 months of 2026, the company delivered record performance across many of our key metrics including production, sales volumes, revenue, earnings and cash flow. In an environment marked by commodity price volatility and cost pressures, these results reflect the continued strength of our high-quality portfolio and the resilience of the streaming of this model. In the first half of the year, we achieved record production of 415,000 gold equivalent ounces and record sales volumes of 390,000 gold equivalent ounces positioning us well to achieve our 2026 production guidance range of 860,000 to 940,000 gold equivalent ounces. Production in the second quarter was bolstered by the annual contribution from our expanded Antamina silver stream and the continued realization of the company's growth strategy with incremental production realized from Hemlo, Fenix, Platreef, and Goose. Turning to corporate development. We also continue to execute on our growth strategy during the quarter completing several additional transactions that further diversify our portfolio. We closed the Antamina silver stream with BHP, a confining milestone for both Wheaton and the industry, representing the largest precious metal streaming transaction ever completed. We announced our first ever streaming transaction in Australia, a gold and silver stream on the Jervois project through our partnership with TGL Resources. We expanded our royalty portfolio through the Spanish Mountain and Cipango royalties, which also provide Wheaton with the right of refusal on future financings, adding further optionality to our portfolio. Collectively, these transactions further strengthen our portfolio, expand our geographic reach and broaden our counterparty base while maintaining the disciplined approach to capital allocation that has underpinned Wheaton's success. As of June 30, 2026, our balance sheet remains robust with $100 million in cash on hand at quarter end and access to the undrawn portion of our $2.5 billion revolving credit facility which, together with the strength of our forecasted operating cash flows, provides strong flexibility to fund all outstanding commitments and allows us to continue to pay down our existing debt balance as well as the capacity to pursue additional accretive mineral stream interest. We remain committed to disciplined capital deployment, focusing only on the most accretive opportunities that are structured to generate meaningful long-term value for all stakeholders. Importantly, Wheaton's growth is not dependent on additional transactions. Our existing portfolio already supports a strong organic growth profile of 50% by 2030 underpinned by multiple development assets advancing through construction, ramp-up and optimization. Turning to sustainability. Wheaton was once again recognized among Corporate Knights Best 50 Corporate Citizens in Canada a multi-sector accolade that we were proud to receive. During the quarter, we also launched our third annual future of mining challenge which will award $1 million to an initiative focused on advancing solutions for mine optimization and reducing land impacts across the mining sector. We look forward to engaging with innovators who are helping to shape the future of responsible mining further demonstrated in our recently published 2025 sustainability report. With that, I would now like to turn the call over to Wes Carson, our Vice President of Mining Operations, who will provide more detail on our operating results. Wes?

Thanks, Haytham. Good morning, everyone. Overall production in Q2 was 202,000 GEOs, a 6% year-over-year increase primarily driven by the addition of BHP's Antamina stream, together with the new production of Fenix, Hemlo, Platreef, and Goose. In Q2, Salobo produced 62,100 ounces which [indiscernible] gold, a decrease of approximately 11% relative to Q2 2025, primarily the result of lower grades -- [indiscernible] disclosed that the coarse particle flotation is the key near-term growth driver at Salobo, supporting Salobo's expansion from 12 million, 18 million tonnes per annum and targeted total throughput of 42 million tonnes per annum by 2029. In Q2, Antamina produced 2.3 million ounces of attributable silver, an increase of approximately 56% relative to Q2 2025. The increase was primarily driven by the newly acquired BHP Antamina [indiscernible] which increased the company's share of silver production at Antamina from 33.75% to 67.5% effective April 1, 2026. The benefit of the [indiscernible] production share was partially offset by lower silver grades and the timing of planned maintenance as a scheduled July maintenance shutdown was advanced into June. The lower grades were attributable to pit sequencing with a greater portion of copper only ore processed relative to copper zinc ore, which contains more silver. An increase in copper zinc ore is expected to be processed in the third quarter, which is expected to result in higher silver grades. 10,000 ounces of attributable silver and 5,900 ounces of attributable gold, an increase of 7% and 46%, respectively. Relative to Q2 of 2025, primarily the result of higher recoveries, grades and throughput. On August '26, Artemis Gold provided an update on the Phase I expansion at Blackwater, which is anticipated to increase the plant's nameplate capacity by 33% from 6 million to 8 million per annum. Artemis reported that the Phase IA was 57% complete at the end of Q2 2026 and remains on schedule for commissioning in Q4 2026, with the expansion expected to contribute to production beginning in 2027. Artemis also commenced major works construction larger EP2 growth project at Blackwater, which remains on schedule and on budget. Together, Phase IA and EP2 are expected to expand throughput capacity by 250% from 6 million to 21 million tonnes per annum by 2028, increasing annual gold production to over 500,000 ounces. Several development projects continue to ramp up in Q2 2026, including Mineral Park, Fenix, Platreef and Goose. Construction also advanced across a number of projects, including [indiscernible], where Allied Gold reported the project names on budget and on schedule, with start of operations expected in August and [indiscernible] or a few weeks thereafter. And [indiscernible] where Montage Gold reported that the project remains on budget and ahead of schedule. First gold for targeted for Q4 2026 through the oxide circuit and the hard rock comminution circuit on track for completion in Q2 '27. Production outlook for 2026 remains unchanged, and we currently expect to achieve our annual production guidance of 860,000 to 940,000 GEOs. Production is expected to be weighted to the second half of 2026 driven by mine sequencing at Salobo and Panosquito, the first full contribution from the antamina-BHP stream and the continued ramp-up of newly operating assets through 2026. Looking ahead, we project annual production to grow at an industry-leading rate of approximately 50% reaching 1.2 million GEOs by 2030, with average annual production forecast to remain at approximately 1.2 million GEOs from 2021 through 2035. That concludes the operations overview. And with that, I'll turn the call over to Vince.

Thank you, Wes. Production in Q2 was 202,000 GEOs, a 6% increase year-over-year, driven primarily by the addition of the BHP Antamina stream and contributions from our newly operating assets. Sales volumes were 209,000 GEOs, a 14% increase from last year. Sales exceeded production in the quarter as we drew down produced but not yet delivered ounces carried over from prior periods. Consistent with our earlier guidance, Q2 deliveries reflected 2 of the typical 3 quarterly shipments under the new BHP Antamina stream with a full quarterly contribution expected in the second half of the year. At the end of the second quarter, the produced but not yet delivered or PBND balance was approximately 158,000 GEOs, representing 2.6 months of payable production. This is consistent with the preceding 4 quarters and within our guided range of 2.5 to 3.5 months. Strong commodity prices, coupled with solid production led to record quarterly revenue of $929 million, an increase of 85% compared to last year. This was driven primarily by a 61% increase in the average realized gold equivalent price together with a 14% increase in the number of volumes sold. Of this revenue, 46% came from gold, 52% from silver and the remainder from Cobalt and palladium. In the coming quarters, we expect the revenue split to favor gold as the new gold dominant development projects come online. Net earnings increased by 86% from the prior year to $543 million, while operating cash flow totaled $650 million, a 57% increase from last year resulting in year-to-date records achieved across revenue, net earnings and operating cash flow. During the quarter, we generated over $650 million in operating cash flow and deployed approximately $4.5 billion in net upfront cash payments across our streaming portfolio. This was headlined by the [indiscernible] million payment to BHP for the Antamina silver stream funded on April 1 and also included $156 million for KONE, $23 million for Spanish Mountain, $16 million for Jervois and $4.5 million for Cipango. In addition, the company made through dividend payments totaling $171 million and made its first global minimum tax payment relative to the 2024 taxation year amounting to $109 million. After funding these commitments, we ended the quarter with a cash balance of approximately $100 million at June 30 resulting in a net debt balance of approximately $1.9 billion. This is a reduction from the approximately $2.1 billion pro forma net debt position immediately following the Antamina funding on April 1 reflecting the strength of our operating cash flow even after funding additional stream payments and dividends during the quarter. On the Antamina acquisition, on April 1, we drew down on our new $1.5 billion term loan together with a draw on our revolving credit facility and cash on hand. During the quarter, we further enhanced our financial flexibility by upsizing our revolving credit facility by $500 million to $2.5 billion, and extending its maturity by 1 year to June 30, 2031. Together, with the $500 million accordion feature and cash on hand, this provides approximately $2.6 billion of available liquidity. The strength of our production guidance and continued strong margins, we remain well poised to generate robust operating cash flow at current commodity prices, supporting debt repayment over a relatively short period while continuing to build capacity to fund our existing commitments and potential future accretive stream acquisitions. This concludes the financial summary. I'll now hand things back over to Haytham.

Thank you, Vincent. In summary, the first half of 2026 was record-breaking for Wheaton and the second quarter reflected the continued execution of our strategy. The first half of the year saw records achieved across production, sales volumes revenue, earnings and cash flow, reflecting the strength and momentum across our portfolio. In the second quarter, we delivered record revenue in the Antamina silver stream with BHP, the largest streaming transaction to date, which adds meaningful long-term silver exposure. We continue to execute on disciplined accretive growth, further expanding and diversifying our portfolio with the closing of the Jervois transaction, our first stream in Australia. Our development pipeline continued to advance multiple assets progressing through construction, ramp-up and optimization, supporting Wheaton's forecasted sector-leading organic growth profile of 50% by 2030. And Wheaton's strategy remains clear, stay disciplined in pursuing high-quality, low-risk, long-life accretive precious metal streams and deliver sustainable long-term value to our stakeholders. With that, I would now like to turn the call -- open the call up for questions. Operator?

[Operator Instructions] Our first question comes from Daniel Major from UBS.

Yes, I guess the first question, just on the sort of bridge into the second half. Like how much of that uplift is the new sort of new assets coming online. Can you just give us a little like sense of contribution from the new ramp-ups relative to the mine sequencing. Yes, that's the first question. .

Thanks for the question, Daniel. It's really mine sequencing is driving primarily most of the ramp-ups this year, well, all of the ramp-ups only amount to about 3% of our total production on the year. So really, the main thing is that Antamina stream being fully online and then really the shift in mine sequencing, particularly on [indiscernible] to the second half of the year.

Okay. Got it. Yes. And then the second question, I suppose, about the project pipeline and your appetite for deals where you're still digesting the shift to net debt and the Antamina acquisition. I mean, I guess, we've seen a pullback in asset values with the gold price a little bit as that made the the pipeline more active is the first part of the question. And second, I see you've engaged in a couple of royal transactions. You've historically been less active in the space relative to your peers. You're seeing opportunities for transactions in third-party royalties? And third part -- are you seeing any movement on the copper project pipeline, prices at 14,000 is that pipeline looking like we might see some more FIDs in financing requirements.

Thank you for the question, Daniel. I'll start by saying we currently have, as Vincent outlined, almost $2.6 billion in unused capacity through our revolver, and we're generating in excess of $200 million of free cash flow every month. So we feel very, very comfortable continuing to transact on whatever we see out there in the market that would be an accretive transaction for Wheaton. In terms of the royalty transactions we've done lately, it's -- I think you have to look at it differently. We're not just entering into royalties because you're right, royalties won't really move the needle -- what we're doing is we're entering into royalties that have [indiscernible], so right of first refusal on future financing. And that's the key. Having that ability to lock that provides us that certainty that we at least have the last look when there's an opportunity out there for finance. So that's very important. For next question, we're going to pass it over to Neil Burns, our VP of Corporate Development.

Sure, Daniel. You mentioned the drop in metal prices coming off the highs that we saw in the first quarter, moderation in metal prices did contribute to a bit of a softening in the equity markets. I think that led to a bit of an uptick in some of the opportunities we're seeing from smaller companies who are facing a tougher financing environment. We do see the mix still weighted towards gold, as Haytham has said, and generally in the same range of about $200 million to $500 million as we've been mentioning.

Yes, I just wonder if there's any color on any the high-level color on the deal pipeline or potential in the copper industry, whether you're seeing any more movement there on the projects?

Well, I mean, the copper industry itself, there are some large projects out there in the copper industry, but they will take time to come to fruition. There's nothing imminent within the next, I would say, a year or 2 that requires financing. But looking at, call it, 3 to 8 years, there are large -- there are a number of large porphyry copper deposits that will require big funding, and we would hope to be involved in that. In the meantime, we're not just sitting by, obviously waiting for those to happen. We're constantly looking our team that is constantly looking at ways to continue to expand our portfolio through accretive transactions. And as you've seen, we've entered into a stable jurisdiction. We've looked at -- in Australia, we were looking at several other jurisdictions obviously, North America, a lot is going on there. So we're very excited about the way things are looking here over the next little while.

Our next question comes from Tanya Jakusconek from Scotiabank.

Congrats on the strong quarter as well. Can I come back to just the second half of the year, you're going to see stronger production mainly from the operating assets. Maybe some guidance on the sales because sales came in higher than we expected. So I'm kind of wondering how sales and production is going to look for the second half of the year.

Tanya, it's Vince here. Yes, so our PBND balance really drives that. At the end of Q2, we're sitting at about 2.6 months we typically see it range anywhere between 2.5 to 3.5 months. So I would say there is a higher likelihood that -- there will be a little bit of a buildup in the PBND towards year-end than a drawdown. So I would forecast it to be flat or rising a little bit, but nothing dramatic. .

Okay. If that's the case and you're thinking that production and sales could be close to each other? Is that how we should be thinking about it?

That's how I would think about it.

Okay. That's helpful. Maybe I can get my numbers right next time with that guidance. Just turning over to just the deal pipeline. I have 2 questions on the deal pipeline and whoever wants to take that and maybe pays them as well. From understanding the opportunities out there, it appears to me, Haytham, that you mentioned that the big opportunities, the plus $1 billion range seems to be further out like that 3- to 8-year time frame. Would that be a fair statement?

I would say the larger copper opportunities that we're asked about would be further out. There are other opportunities, Tanya in the pipeline that I would say could be in excess of $1 billion, could be as high as $2 billion. But again, those take time to gestate. And so it will be I would say majority of opportunities are focused on sub-$500 million, but there is the odd $1 billion or $2 billion transaction that could come out sooner than the 3- to 7-year time line I mentioned. .

Okay. And are those in gold or silver?

Those are fairly focused towards gold.

Okay. And then Haytham, are you seeing any changes to the structure of the deals in that $200 million to $500 million range? Is it still the same sort of project financing that requires either a stream plus an equity and a debt component. Has anything changed in that?

That's about right, Tanya. I would say that as we're looking at these things, we're trying to provide more of a financing package going forward. Like you've seen us put in working capital facilities. You've seen us put in equity where needed. What we're trying to do is do what's best for the company, provide the company with the flexibility to structure the transaction that is most efficient for them without diluting their existing shareholders. That creates a win-win transaction. .

Okay. And then my last question really comes on to just people. When I look out in the industry and you look at project build and you look at expertise and contractors out there, unfortunately, quality of contractors isn't what it used to be. So maybe, Haytham, can you talk a little bit about what you're doing internally to beef up your technical expertise obviously, trying to take in contractors is not optimal at this point anymore.

Yes, absolutely. Internally, we're a total of 45, 46 people, and we have 2 new hires coming on to expand our engineering team and our operations team. The more opportunities and more streams we lock in, obviously, the more there is to do. And it's important for us to stay on top of everything. I also want to ensure that our team is able to look at all these opportunities without burning themselves out. So we are adding -- doesn't sound like a lot. We're adding 2 to 3 people over the next 3 or 4 months. And we probably, over the next 5 years, as needed as portfolios expand, have the capacity to add another 10% on top of that in....

We do the majority of our reviews and opportunities with internally, so we're not relying on externals.

And can you just remind me of the technical expertise that you currently have in house and the ones...

Absolutely, absolutely. We're all mining engineers, geologists, processing engineers, geological engineers, civil engineers. I don't think I've missed anything. Geotechnical engineers, social scientists. So we have a wide variety of expertise internally. I can tell you, we haven't used an external consultant and it's got to be at least a couple of years. .

And what areas do you need to add Haytham.