Sunday 22 September 2019

Jun 25, 2019: Wheaton Precious Metals Stocks Gained 20% in 1 Month

Wheaton Precious Metals used to be called Silver Wheaton (before 2017). The company is no longer a pure play silver mining company. It is still the largest in the business of silver streaming. In 2016 Silver Wheaton reported attributable production totaling 30.4 million ounces of Ag and 353,700 ounces of Au. The Company also reported record silver and gold sales for the year, generating net earnings of US$195 million on operating cash flows of $584 million.

Wheaton Precious Metals (TSX:WPM)(NYSE:WPM) looks like a good investment to make with the stock greatly growing this month with gains of 20%. The good times may be just starting. The company is a precious metals streamer. A metal stream is a puchase agreement that provides, in exchange for an upfront deposit payment, the right to purchase all or a portion of one or more metals produced from a mine, at a price determined for the life of the transaction by the purchase agreement. Wheaton is not a traditional miner. Wheaton provides upfront capital for the traditional miners to set up and begin operations. Once operational, the miner allows Wheaton to purchase a certain amount of the metals produced by the mine at a discounted rate.

Streamers also benefit from not being directly involved in the operation of the mine. A streamer is less exposed to risk. The streamer can move on to the next mining opportunity while leaving the day-to-day operations to the traditional miner. Gold and silver are the bulk of Wheaton’s portfolio. The company also has streams for cobalt and palladium metals. Cobalt is a uniquely rare element in high demand that can only be found in certain mines around the world. It can be found in the DR Congo.

Wheaton’s cobalt stream comes from Voisey’s Bay in Newfoundland and Labrador. This is set to begin streaming on January 1, 2021. Wheaton has 19 operational mines around the world and 9 projects in stages of development. This diversification of different metals and mines made the company remove “Silver” from its name.

In the first 2019 quarter, Wheaton produced 93,585 ounces of gold, representing a 22% increase over the same quarter last year. The company also produced 5,614 ounces of silver, silver, which reflected a 24% decrease over the prior period. The decrease was attributed to the San Dimas silver stream as well as several others coming to a close. Precious metals have always been viewed as stores of wealth in times of uncertainty. Wheaton allows investors to get benefits of the gold market while remaining diversified. Investors want to overcome temporary market volatility problems.

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