Wheaton Posts Record Q2, Doubles Antamina Silver Stream Share

Wheaton Precious Metals posted record first-half results, with second-quarter revenue up 85% from a year earlier to $929 million. The quarter also brought the closing of the $4.3 billion silver stream transaction with BHP at Antamina, which doubled Wheaton's share of the mine's silver production to 67.5%.

The company operates no mines. It provides upfront and ongoing financing to miners in exchange for the right to buy a portion of their silver, gold, cobalt and palladium at fixed prices under long-term streaming agreements. Operating and capital-cost risk sits with the mine operators, not with Wheaton.

Wheaton produced 415,000 gold equivalent ounces (GEOs) in the first six months and sold 390,000, keeping full-year guidance of 860,000 to 940,000 GEOs intact. Chief Executive Haytham Hodaly said the first half set company records for production, sales volumes, revenue, earnings and operating cash flow.

Second-quarter production came to 202,000 GEOs, up 6% from a year earlier, while sales volumes rose 14% to 209,000 GEOs. Chief Financial Officer Vincent Lau said sales ran ahead of production because Wheaton delivered ounces that had been produced but not yet delivered in previous periods. The produced-but-not-yet-delivered balance stood at about 158,000 GEOs at quarter-end, equal to 2.6 months of payable production and inside the company's 2.5- to 3.5-month range. The balance acts as a buffer between when metal is produced and when it is priced and delivered under Wheaton's purchase agreements. Lau said he expects production and sales to track closely in the second half, with the balance flat or modestly higher by year-end.

Revenue rose on a 61% increase in the average realized gold equivalent price and higher sales volumes, Lau said. Gold accounted for 46% of quarterly revenue, silver 52%, with cobalt and palladium making up the remainder. Net earnings climbed 86% to $543 million, and operating cash flow rose 57% to $650 million.

Antamina Silver Share Doubles After BHP Deal

The Antamina transaction, effective April 1, raised Wheaton's silver stream from 33.75% of production to 67.5%. Hodaly called it the largest precious-metals streaming deal completed to date. Antamina, a copper-zinc mine in Peru, produces silver as a byproduct, and the mine delivered 2.3 million attributable silver ounces in the quarter, up about 56% from a year earlier.

Vice President of Mining Operations Wes Carson said the bigger ownership share was partly offset by lower silver grades and the timing of maintenance. A scheduled July shutdown was pulled into June, and mine sequencing pushed more copper-only ore through the plant than copper-zinc ore, which carries more silver. Carson said Antamina should process more copper-zinc ore in the third quarter, supporting higher silver grades. Higher-grade material near the mine's former primary crusher is expected to contribute over the next 12 to 18 months, he added.

Wheaton also put capital to work elsewhere in the quarter: $156 million for the Koné project, $23 million for a Spanish Mountain royalty, $16 million for the Jervois gold and silver stream in Australia, and $4.5 million for the Cipango royalty in Japan. The Jervois deal was Wheaton's first stream in Australia. Hodaly said the Spanish Mountain and Cipango royalties carry rights of first refusal on future financings, which he described as a route to later financing opportunities rather than royalty income on their own.

Attributable gold production at Salobo fell about 11% to 62,100 ounces on lower grades. Carson said Vale Base Metals has identified coarse particle flotation as a near-term growth driver, supporting the Salobo III expansion and a targeted throughput of 42 million tonnes a year by 2029.

Blackwater delivered 100,000 attributable silver ounces and 5,900 attributable gold ounces, up 7% and 46%. Artemis Gold said the mine's Phase 1A expansion was 57% complete at the end of the quarter and on schedule for commissioning in the fourth quarter, with a production contribution expected in 2027.

Mineral Park, Fenix, Platreef and Goose continued to ramp up during the quarter, and construction progressed at Kurmuk and Koné. Allied Gold expects operations at Kurmuk to begin in August, with first gold ore a few weeks later. Montage Gold expects first gold ore at Koné through its oxide circuit in the fourth quarter.

Carson said the second-half production increase should come primarily from mine sequencing at Salobo and Peñasquito and the full contribution of the BHP Antamina stream. Newer ramp-up assets will add the rest, he said, and are expected to account for about 3% of full-year production.

Liquidity and the M&A Pipeline

Wheaton ended the quarter with about $100 million in cash and net debt of roughly $1.9 billion, down from about $2.1 billion immediately after the Antamina funding in April. The company raised its revolving credit facility by $500 million to $2.5 billion and extended the maturity to June 30, 2031. Counting a $500 million accordion feature and cash on hand, Lau put available liquidity at about $2.6 billion.

Hodaly said Wheaton is generating more than $200 million of free cash flow a month and can pursue accretive deals while repaying debt. Corporate Development Vice President Neil Burns said opportunities from smaller companies have increased somewhat after lower metal prices softened equity markets. Management said most near-term targets sit in the $200 million to $500 million range and lean toward gold, though some potential deals could top $1 billion. Hodaly said large copper financing opportunities are more likely to emerge over three to eight years than in the next year or two.

The WPM stock page carries an Alpha Score of 68 out of 100, labeled Moderate. BHP, the counterparty on the Antamina deal, scores 74 on its BHP stock page.

Wheaton kept its target of about 1.2 million GEOs of annual production by 2030, roughly 50% above current levels. Management said the forecast rests on projects that are permitted and financed, with all but three already under construction.