Wheaton Precious Metals Corp. (NYSE:WPM) Q3 2019 Earnings Conference Call - Final Transcript

Nov 15, 2019 • 11:00 am ET

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Wheaton Precious Metals Corp. (NYSE:WPM) Q3 2019 Earnings Conference Call - Final Transcript

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Presentation
Executive
Randy Smallwood

production. However, we have updated our guidance for the year to reflect outperformance at Salobo, and the production interruptions at Penasquito.

With that, I'd like to turn the call over to Gary Brown, Senior Vice President and Chief Financial Officer, who will provide more details on our results. Gary?

Executive
Gary Brown

Thank you, Randy, and good morning ladies and gentlemen. The Company's precious metal interests produced a 185,000 gold equivalent ounces in the third quarter of 2019, comprised of 104,200 ounces of gold, 6.1 million ounces of silver, and 5,500 ounces of palladium.

On a gold equivalent basis, this was consistent with the third quarter of the prior year with increased silver production being offset by a decrease in gold and palladium production. The decrease in gold and palladium production was due primarily to lower reported production at the Stillwater mines were reported production in the third quarter of 2018, included some material processed in prior periods.

Gold production was also impacted by lower production at the other gold interests, including Minto, which was placed in the care and maintenance in October of 2018, with these decreases being partially offset by higher production at Salobo and San Dimas. The increase in silver production was primarily due to higher grades at Penasquito. Gold equivalent sales volumes for Q3 2019 amounted to 155,000 ounces, consistent with the third quarter of the prior year with the increases in sales of gold and palladium being partially offset by lower silver sales volumes.

As of September 30, 2019, approximately 85,500 payable gold ounces, 4.2 million payable silver ounces, and 4,200 payable palladium ounces had been produced, but not yet delivered to the Company, representing an increase during the quarter of 4,300 payable gold ounces, and 700,000 payable silver ounces, while payable palladium ounces decreased by 300 ounces. The volume of ounces produced but not delivered were consistent with what we would expect to be normal levels.

Revenue for the third quarter of 2019 amounted to $224 million, representing a 20% increase relative to Q3 2018, primarily due to a 22% increase in the average realized gold price and a 15% increase in the average realized the silver price. Of this revenue, 62% was attributable to gold, 35% silver, and 3% palladium.

Gross margin for the third quarter of 2019 increased by 65% to $96 million, primarily due to the increase in commodity prices. Cash-based G&A expenses amounted to $13 million in the third quarter of 2019, representing an increase of $5 million from Q3 2018, with the increase being primarily related to increased accruals relative to the outstanding performance share units or PSUs during Q3 2019.

For the 2019 fiscal year, the Company has reduced its estimate of the total non-stock based G&A expenses, which excludes expenses relating to the value of stock options, restricted share units, and PSUs to be in the range of $33 million to $36 million.

Interest costs for the third quarter of 2019 amounted to $11 million, resulting in an effective interest