Near the Constancia mine in Peru, Wheaton and Hudbay Minerals helped fund the provision of medical equipment and supplies including test kits, PPE, hygienic items, and blankets and jackets for families in need.SUPPLIED
After a year that left many investors shaken and confused in the wake of the COVID-19 pandemic, Randy Smallwood, president and CEO of Wheaton Precious Metals (TO:WPM), is more convinced than ever that precious metals are a safe haven in turbulent times.
“Precious metals – particularly gold – are a stable, foundational asset that retain their value and offer better liquidity than many other solid stores of value available,” he says. “This is the time when everyone should have at least some gold exposure in their portfolio because of the inflation that will inevitably follow the amount of stimulus that will be required to re-establish economies around the world.”
The streaming model allows companies like Wheaton to enter into agreements with mining partners to purchase all or a portion of their production for an upfront cost and an additional payment on delivery, which is typically below the prevailing spot price for the metal. The streaming company then sells the metal at the prevailing spot price, resulting in some of the highest margins in the industry.
“A high-quality mine should always generate good value for all of its stakeholders, including the streamers,” says Mr. Smallwood. “Streaming provides cost confidence, especially in relation to capital and operating costs, and offers direct exposure to precious metals production. We deliver the traditional upside of mining companies, but at a much lower risk profile, more comparable to owning bullion or ETFs.”
Wheaton’s approach to partner selection is to focus on low-cost, long-life mines in politically stable jurisdictions. The company currently has streaming agreements on 23 operating mines and eight development-stage projects.
However, while the quality of the asset is Wheaton’s primary consideration in choosing a streaming partner, it’s only part of the equation, says Mr. Smallwood. The company is also firmly committed to demonstrating leadership in social licence – the standard expected for mining companies around the world.
Randy Smallwood“We recognized that many of our partners were experiencing additional pressure at the community level, so, we immediately upped our budget by another US$5-million to fund frontline support for pandemic response initiatives ...
President and CEO, Wheaton Precious Metals
And in a year when the COVID-19 pandemic impacted mining companies as much as any other business sector, Wheaton stepped up to help its partners where it could.
While the company already has a community investment program into which it contributes 1.5 per cent of net income, response to the pandemic called for even more concerted action.
“We recognized that many of our partners were experiencing additional pressure at the community level, so, we immediately upped our budget by another US$5-million to fund frontline support for pandemic response initiatives in the communities around our mining partners’ operations and our offices,” says Mr. Smallwood.
The funds have been used to purchase Personal Protective Equipment (PPE), test kits, portable ventilators, medical equipment, food and hygiene products, as well as supporting frontline non-profit organizations including food banks, shelters and hospitals.
Looking ahead, Mr. Smallwood says Wheaton will continue to look for new streaming opportunities. Even with gold and silver prices on the rise, he believes precious metals still have strong growth potential. The company’s strength, he adds, is its high-quality assets.
“Our portfolio is unique, even in the streaming space. We produce more gold than our competitors, and we have the most profitable mines. We have well over 30 years of reserves and another 30-plus years of resources that backstop our company,” says Mr. Smallwood, adding that Wheaton is in growth mode, not harvest mode.
“We are still looking for ways to add value for our shareholders through accretive acquisitions. In 2011, the last time the gold price was at the current level, we were in harvest mode, but now we are looking to add assets; we’re still looking to invest. That’s how confident we are about the upside.”
For more information, visit wheatonpm.com.
Advertising feature produced by Randall Anthony Communications with Prospectors & Developers Association of Canada. The Globe’s editorial department was not involved.