Wheaton Precious Metals - Q3 2024

Transcript

Operator (participant)

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals' 2024 third-quarter results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number one on your telephone keypad. If you would like to withdraw your question, press star then the number two. Thank you. I would like to remind everyone that this conference call is being recorded on Friday, November 8, 2024, at 11:00 A.M. Eastern Time. I will now turn the conference over to Ms. Emma Murray, Vice President of Investor Relations. Please go ahead.

Emma Murray (VP of Investor Relations)

Thank you, Operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Wheaton's President and Chief Executive Officer, Gary Brown, Senior Vice President and Chief Financial Officer, Haytham Hodaly, Senior Vice President, Corporate Development, and Wes Carson, Vice President, Mining Operations. Please note, for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the presentations page of our website. Some of the commentary in today's call may contain forward-looking statements, and I would direct everyone to review slide two of the presentation, which contains important cautionary notes. It should be noted that all figures referred to on today's call are in US dollars unless otherwise noted. With that, I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Randy Smallwood (President and CEO)

Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's third-quarter results of 2024. I am pleased to announce that our portfolio of long-life, low-cost assets delivered another robust quarter, generating record quarterly operating cash flows of $254 million, and underscoring the effectiveness of our business model in leveraging rising commodity prices while maintaining strong cash operating margins. The company has produced approximately 450,000 gold-equivalent ounces year-to-date, and we are well on track to achieve our 2024 production guidance of 550,000-620,000 gold-equivalent ounces. Shortly following the quarter, we announced two accretive precious metal streaming agreements. First, an expansion to the existing stream on Rio2's Fenix project for an additional $100 million. And second, a new $625 million gold stream on Montage's Koné project, marking the largest streaming transaction done by a single streamer in nearly a decade.

Together, these transactions further diversify our strategic partnerships and the geography of our portfolio, and once ramped up, the Koné project is forecast to contribute meaningful near-term production, supporting Wheaton's already prominent position as a leader in the sector's growth landscape. Our corporate development team remains actively engaged in evaluating new opportunities, and we continue to see a healthy appetite for streaming as a source of capital for the mining industry. The company's balance sheet also remains very strong, with approximately $700 million cash at quarter's end and a $2 billion undrawn revolving credit facility, which, when coupled with the strength of our forecasted operating cash flows, provides strong flexibility to fund all outstanding commitments as well as the capacity to acquire additional accretive streams. During the quarter, we launched the inaugural Future of Mining Challenge, which will award $1 million to the winning venture.

The award will be used towards advancing a technology aimed at minimizing environmental impacts while improving productivity and efficiencies in our industry. This exciting challenge will help ensure that key resources are responsibly available for future generations. This award is reflective of our commitment as the founders and architects of sustainable streaming to operate responsibly and help others in our industry to do the same. Our performance year-to-date supports our belief that the strength of our organic growth profile, combined with favorable commodity price trends, firmly positions Wheaton as the premier choice for high-quality, long-life precious metals exposure. And with that, I would like now to turn the call over to Wes Carson, our Vice President of Operations, who will provide more detail on our operating results. Wes.

Wes Carson (VP, Mining Operations)

Thanks, Randy. Good morning. Overall production in the 3Q came in higher than expected, driven by strong performances at Constancia and Salobo relative to forecast. In the 3Q of 2024, Salobo produced 62,700 ounces of attributable gold, a decrease of approximately 9% relative to the 3Q of 2023, primarily due to lower grades, partially offset by higher throughput. On July 25, 2024, Vale reported that the Salobo 3 processing plant operations had resumed after being halted for 31 days due to a fire on a conveyor belt. Vale has confirmed the 2024 copper production guidance of 320,000-355,000 kilotons has been maintained. In the 3Q of 2024, Constancia produced 600,000 ounces of attributable silver and 10,400 ounces of attributable gold, a decrease of approximately 7% and 45%, respectively, relative to the 3Q of 2023.

The decrease in silver production was primarily due to lower grades and recoveries. The decrease in gold production was primarily due to the result of lower gold grades due to the planned stripping activity in the Pampacancha Pit, which commenced in the 2Q and continued throughout the 3Q. On August 13, 2024, Hudbay reported that the stripping program for the next mining phase of Pampacancha was underway and expected to lead to significantly higher copper and gold grades in the 4Q of 2024. In the 3Q of 2024, Peñasquito produced 1.8 million ounces of attributable silver, compared to zero production in the 3Q of 2023, which was impacted by a labor strike that lasted from June 7 through October 13 of 2023.

Production in the 3Q transitioned the focus from mining in the Chile Colorado Pit to the main Peñasco Pit, which has higher gold but lower silver and base metal grades. In the 3Q of 2024, the Stillwater mines produced 2,200 ounces of attributable gold and 4,000 ounces of attributable palladium, a decrease of approximately 8% on gold relative to the 3Q of 2023, primarily due to lower recoveries, while palladium production was virtually unchanged. On September 12, 2024, Sibanye-Stillwater announced that as a result of low platinum and palladium prices, Stillwater West operations are being placed into care and maintenance, while Stillwater East and East Boulder operations will continue to operate. Sibanye-Stillwater reports that Stillwater West could return to production as price permits.

Based on Sibanye-Stillwater's Q3 MD&A, the company's management estimates that while Stillwater West operations remain on care and maintenance, 2025 production relative to the Stillwater PMPA will be approximately 40%-45% lower than historical levels. In the 3Q of 2024, the Voisey's Bay mine produced 397,000 pounds of attributable cobalt, an increase of approximately 118% relative to the 3Q of 2023, as the transitional period between the depletion of the Ovoid Open Pit and the ramp-up to full production of the Voisey's Bay Underground Mine nears completion. Vale reports the physical completion of the Voisey's Bay Underground Mine extension was 99% at the end of the 3Q, with all surface construction completed and the commissioning of the Reid Brook Power Plant remaining.

In the Eastern Deeps mine, the bulk material handling system achieved mechanical completion in early October, and Vale indicated that the focus is now on commissioning, with handover to operations within 2024. Year-to-date, our portfolio of assets has delivered solid production levels and will remain well on track to achieve our annual production guidance range for 2024 of 550,000-620,000 gold-equivalent ounces. In the medium term, production is forecast to increase at an industry-leading rate of approximately 40% to over 800,000 ounces by 2028, primarily due to growth from our operating assets, including Salobo, Antamina, Voisey's Bay, and Marmato. Development projects which are in construction and/or permitting, including Blackwater, Platreef, Goose, Mineral Park, Phoenix, Curipamba, and Santo Domingo, and pre-development projects including Marathon and Copper World, for which production is anticipated towards the latter end of the five-year forecast period.

From 2029 to 2033, attributable production is forecast to average over 850,000 GEOs in the five-year period. The transactions announced in 2024, including the new stream associated with the Koné project and the amendments related to the Phoenix project, have not yet been incorporated into the long-term guidance. The company will provide updated longer-term guidance in normal course in the 1Q of 2025, which will incorporate the impact of recent developments and these recently announced transactions. That concludes the operations review, and with that, I'll turn the call over to Gary.

Gary Brown (CFO)

Thanks, Wes. As described by Wes, production in the 3Q amounted to 144,000 GEOs, consistent with the comparable period of the prior year, with lower production from Salobo and Constancia being offset by higher production from Peñasquito. Sales volumes amounted to 123,000 GEOs, an increase of 10% relative to the comparable period of the prior year, primarily due to timing of sales resulting from the relative changes in ounces produced but not yet delivered, or PBND. Strong commodity prices, coupled with our solid production base, resulted in revenue increasing by 38% to $308 million. Of this revenue, 61% was attributable to gold, 37% to silver, 1% to palladium, and 1% to cobalt.

As of September 30, 2024, approximately 136,000 GEOs were in PBND, representing approximately three months of payable production, a slight increase from the preceding four quarters due to relative differences in timing of sales and at the upper end of our guided range of two to three months. G&A expenses amounted to $9.5 million for the 3Q, and the company now anticipates that G&A will be at the lower end of the previous estimate of $41-$45 million for the year, with these figures excluding share-based compensation as well as donations and community investments. Net earnings amounted to $155 million, an increase of $38 million, with the increased gross margin being partially offset by a $28 million global minimum tax expense, with the related legislation being enacted earlier this year.

As we previously messaged, GMT accrued to December 31, 2024, will be payable on or before June 30, 2026, or 18 months following year-end. Despite the persistent inflationary environment and thanks to our low and predictable cost structure, third-quarter cash flows increased nearly 50%, or $83 million-$254 million, representing a new quarterly record for Wheaton. The company's board declared a quarterly dividend of $0.155 per share, consistent with the prior two quarters and a 3% increase from the prior year. During the quarter, Wheaton made total upfront cash payments of approximately $30 million, $25 million of which was relative to the Mineral Park stream and $5 million of which was relative to the DeLamar royalty. Additionally, the company distributed $70 million in dividend payments.

When coupled with the $254 million of cash generated from operating activities, overall, the company generated net cash inflows of $154 million in the 3Q of 2024, resulting in cash and cash equivalents at September 30 of $694 million. We believe this cash balance, combined with the strength of our forecasted operating cash flows and the fully undrawn $2 billion revolving credit facility, positions the company exceptionally well to satisfy its funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream interests. That concludes the financial summary, and with that, I will turn the call over to Haytham to discuss our recent partnership with Montage in more detail.

Haytham Hodaly (Senior VP, Corporate Development)

Thank you, Gary, and good morning, everyone. On October 23, Wheaton announced that we had entered into a new stream relative to the Koné project for upfront cash consideration of $625 million, in addition to a $75 million secured debt facility. We held a conference call the day after the announcement to discuss the details, the replay of which is available on our website. I will highlight a few of those key points today. With essential permits in place, coupled with its impressive scale, we believe the Koné project stands out as one of the premier gold assets in Africa. Supported by strong shareholder backing from the Lundin Group and Zijin Mining, the Koné project is expected to significantly boost Wheaton's near-term annual gold production and further strengthen our peer-leading growth trajectory.

In fact, once fully ramped up, Montage is forecast to become our second-largest producing asset over its first five years of production and third-largest producing asset overall. Wheaton is focusing on high-quality mining projects that can support streaming transactions in the long term, maintain social license by operating in a responsible manner, and support the communities around their operations. During our site visit to Koné, we visited various community investment projects in and around the mine that are supporting community members, including providing potable water through newly constructed water wells. Based on the feasibility study published in 2024, Koné ranks as one of the highest-quality gold projects in Africa, with a long 16-year mine life, low All-in Sustaining Costs of $998 per ounce over the life of the mine, and sizable total annual production of over 300,000 ounces of gold over the first eight years.

Under the Koné Stream Agreement, Wheaton will receive 19.5% of the payable gold until a total of 400,000 ounces of gold has been delivered, subject to adjustments if there are delays in deliveries relative to an agreed-upon schedule, at which point Wheaton will then purchase 10.8% of the payable gold until an additional 130,000 ounces of gold has been delivered, after which Wheaton will then purchase 5.4% of the payable gold for the life of the mine. In return, Wheaton will make ongoing payments for the ounces delivered equal to 20% of the spot gold price. Attributable gold production is forecast to average over 60,000 ounces of gold per year for the first five years of production, over 47,000 ounces of gold per year for the first 10 years of production, and over 34,000 ounces for the life of the mine, and Wheaton anticipates receiving ounces beginning in early 2027.

As outlined in the definitive agreement, Montage will provide Wheaton with corporate guarantees and certain other securities over their assets. In addition, Wheaton has obtained a right of first refusal on any future precious metal streams, royalties, prepays, or similar transactions. In conclusion, we are very pleased to partner with Montage, who, with long-standing relationships in West Africa, has done an immense amount of work to de-risk the asset and are rapidly advancing the Koné project towards production. With that, I will hand the call back over to Randy.

Randy Smallwood (President and CEO)

Thank you, Haytham. In summary, Wheaton's 3Q was distinguished by several key highlights. We achieved record quarterly cash flows of $254 million and declared a $0.155 quarterly dividend, and we are well-positioned to achieve our annual guidance range of 550,000-620,000 gold-equivalent ounces. Construction activity has advanced at a number of our development projects, including Blackwater, Goose, Platreef, and Mineral Park, all of which are expected to be producing within the next 12 months. Shortly following quarter's end, we announced two accretive precious metal streaming transactions, an expansion to the existing stream on Rio2's Phoenix project, and a new stream on Montage's Koné project, further adding to our already impressive organic growth profile of over 40% in the next five years.

Our balance sheet remains one of the strongest in the industry, providing ample capacity to add accretive, high-quality streams into our portfolio, and lastly, we continue to demonstrate leadership in sustainability with the launch of our inaugural Future of Mining Challenge. With that, operator, I'd like to open up this call for questions, please.

Operator (participant)

Thank you, ladies and gentlemen. We will now begin the question and answer session. Should you have a question, please press star followed by the one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. If you are using a speakerphone, please lift the handset before pressing any keys. There will be a brief pause while we compile the Q&A roster. Thank you. And your first question comes from the line of Ralph Profiti from Eight Capital. Please go ahead.

Ralph Profiti (CFA)

Thanks, operator, and good morning, and thanks for taking my questions. Randy and Wes, Wes, you touched on this a little bit, and I just want to confirm that Copper World is really the only new asset that will be rolling into new guidance when you roll it forward and you think about that 2029 target, right? I'm just trying to separate existing from new streams that are going to come into the guidance, obviously notwithstanding that we're still quite a ways off from providing more details on that guidance that we'll get in the 1Q of 2025.

Haytham Hodaly (Senior VP, Corporate Development)

Sorry, Ralph, you're just talking about ones that are going to come in that aren't in the five-year guidance right now that are rolling in? Is that?

Ralph Profiti (CFA)

Exactly.

Randy Smallwood (President and CEO)

Yeah. Yeah. So that is, you're right. Copper World would be the one that is coming in that 2029 period. So, I mean, obviously, there's quite a number of other assets that are within that five-year period, including the new transactions that we've done. But as far as ones that are in the current ten-year plan that'll be moving forward into the five-year, yes.

Ralph Profiti (CFA)

Okay. That's helpful. Yeah. Randy and maybe Haytham, we're seeing the secured debt as part of the Phoenix transaction. We're increasingly seeing debt structures coming into some of these streams. Just wondering, within that bucket and that portfolio, is there an ultimate limit on how much debt you want to carry in some of these partnerships? How far away are we from a limit on how much Wheaton wants to provide? And can you talk to me a little bit about the sort of the advantages you're getting on securing that debt in and with those streams?

Randy Smallwood (President and CEO)

Yeah. I'll start and then let Haytham add some additional color. There's definitely an appetite in the space for a one-stop shop. We've seen more and more companies look at that. And I have to tell you, when it comes to negotiating security amongst the different number of the debt combined with the stream and stuff like that, if you're negotiating with yourself, it's pretty easy. It's a lot more comfortable than having to negotiate with other institutions that are coming in. And so it allows us to structure the agreement so that it works favorably for Wheaton on the security side. So it's quite attractive. That being said, I mean, we are a streaming company, and so we won't chase down a situation where there'd be more value tied up in the debt side of a one-stop shop financing.

We will always be stream dominant in terms of that value. And so there is an increased appetite for it, and probably wouldn't be surprised to see even more of these things coming out over the next while. Haytham?

Haytham Hodaly (Senior VP, Corporate Development)

Thanks. I mean, that's well put, Randy. I think from our perspective, when we're looking at these opportunities, obviously, we're always looking to do a stream. If it makes sense for us to come in and do a small piece of debt, whether it's secured debt, whether it's cost overrun facility, whatever it happens to be, then we'll definitely consider it. But our primary focus, Ralph, is always just to put as big a stream on there as possible without detrimentally affecting the economics of the project long term.

Randy Smallwood (President and CEO)

Yeah. Just, it really goes back to our belief that the best thing that we can do for our shareholders is just deliver good exposure to high-quality precious metals production. And it's the optionality of that commodity price along with associated expiration upside and such like that. But I think the Montage deal was a really good example of how we can actually do that and actually provide our shareholders even more gold production, access to exposure to even more gold production.

Haytham Hodaly (Senior VP, Corporate Development)

Ralph, I'll just add one thing. That doesn't mean every deal we look at will have a full financing package, just to be clear. There are some areas where it makes sense to diversify the risk among other participants as well. So just keep that in mind. For opportunities where we see very low risk, strong production, long mine life, quick payback, that's the opportunities that we would probably consider.

Ralph Profiti (CFA)

Gotcha. Okay. Well understood. Thanks for your answers.

Randy Smallwood (President and CEO)

Thanks, Ralph.

Operator (participant)

Thank you. And your next question comes from the line of Tanya Jakusconek from Scotiabank. Please go ahead.

Tanya Jakusconek (Managing Director and Senior Equity Analyst)

Hi, good morning, everybody. Thank you for taking my questions, and it's good that the operator gets my name right, so very excited.

Randy Smallwood (President and CEO)

We try hard.

Tanya Jakusconek (Managing Director and Senior Equity Analyst)

I don't know who I was yesterday, but they kept saying, "Your line is open." I said, "I think that might be me." Anywho, can I follow up on Ralph's question, and maybe that's for you, Randy or Haytham, to continue on? As you look at the environment today, and I know it's quite competitive, what I've noticed is that we have a lot of maybe nuanced changes to these agreements. And Ralph touched on the debt portion in addition to the stream. Some have equity, some have prepays, some have collars. Maybe someone can just review with me, what are you seeing out there in terms of, yes, you're a one-stop shop, but what are some of the things that are being asked that have changed over, let's say, the last three months, six months because of the competitive environment?

Randy Smallwood (President and CEO)

Yeah. I mean, having been in the business now for 20 years, we just celebrated our 20th anniversary. We've got a pretty good perspective in terms of how this industry has changed. I think one of the aspects to keep in mind is the capacity. At Wheaton, we've now got such strong capacity to be able to actually consider expanding some of the without losing our core focus of streaming as being the best way to deliver precious metals exposure to our shareholders. We have the capacity to step up and fill in some of the ancillary benefits and stuff like that. I'm going to actually point back to probably about seven, eight years ago when we started seeing private equity heavily invest into the space. Private equity, of course, is a little bit agnostic in terms of what the split of financing is.

And so I think that's probably helped shape the industry in terms of opportunities because there's no doubt that we're competing against that as a source of capital. I mean, there's all sorts of different sources, alternative sources of capital in terms of moving forward. And so I think it's a matter of staying agile and listening to what works for the operators, for the actual mine builders, the developers in terms of what they need as a source of capital, what works for them. Each one of them has a different appetite in terms of mix. I mean, we've seen some very debt-heavy, expensive debt-heavy financings done on other development projects around here with minor streams.

I think the Koné project, the stream we did there, was very, from a Montage perspective, a very attractive source of capital in terms of the cost of capital and what they brought in. The structure worked in terms of aligning between the two groups. So I think really what it comes down to is having flexibility and creativity in terms of shaping it, keeping in mind our core focus, which is to deliver high-quality precious metals production to our shareholders. But to do that, and if it means a couple of ancillary cost overrun facilities or a small amount of debt that's wrapped around that or equity investments, yeah, we've actually been, as equity investors, I think the first equity investment we did was well over 15 years ago or 14 years ago. So equity has always been a part of it.

If we believe in these projects, I mean, we always, as a streamer, we compete against equity as a source of financing. So if we believe in the project, the equity is probably a pretty good deal from our perspective. And so we've long been on the equity side. The debt is something that's a little bit more new, but I think that was probably brought in, as I said, by seeing some private equity groups come into the space. I've talked way too long on this one. Haytham, you have anything to add to that? I probably covered it all there, but.

Haytham Hodaly (Senior VP, Corporate Development)

You have. Tanya, I would just say what we've seen in this industry is, and many industries, businesses have to evolve. We can either evolve or be left behind. And whether we're lagging or leading, I think we would rather be leading than lagging and setting the precedent for the next transaction and how we'd like to see that one structured. As Randy said, streaming, debt, equity, cost overrun facilities, our primary business will always be streaming. But the bigger and more diversified the funding package, the better the return to Wheaton.Now, that being said, as I mentioned in my response to Ralph, not every opportunity we'd be prepared to take on a full funding package. But there are some that we feel very comfortable in supporting with many of these different diversified tools, I would say.

Tanya Jakusconek (Managing Director and Senior Equity Analyst)

Maybe just to continue and just want to confirm, I've been in the business a while as well. I remember one of your peers actually taking a joint venture interest in an asset, deciding that that might be the way to go. I'm just worried we're going to get to that stage of.

Randy Smallwood (President and CEO)

No, no. Don't worry, Tanya. That's never going to happen. I can tell you right now, the reason the streaming model works is because we have that fixed cost structure without that significant capital cost exposure and operating cost exposure. We're not going to take that away. That's going to continue forever.

Tanya Jakusconek (Managing Director and Senior Equity Analyst)

As I said, the déjà vu when I was looking at this, and I'm like, "I have to wake up and see that model pair up again." So, Haytham, maybe now that you've confirmed that's not your model, just coming back to the environment again today, what are you seeing out there? One of your peers mentioned deals that used to be $100-$300 million, now are $500 million or closer to, no, they're more $300 million with a few over $500 million. Can you just tell me what you're seeing out there, deal size, and whether anything has changed from what we had previously talked about, which was the funding for construction, acquisitions of assets and/or other? How has that changed from our last call?

Haytham Hodaly (Senior VP, Corporate Development)

Sure. I'm happy to answer that question. What we're seeing right now, Tanya, is still a focus on the single asset development stage opportunities. The range, I would say, is probably somewhere between 100 and 350. There is one or two out there that are greater than 500, but they don't necessarily fit Wheaton's, I'd say, parameters for investment. So our focus right now, and we've told you over the last couple of years that we're going to do a couple over 500, and you saw that we did do a couple over 500. I think the best ones are gone. I think the focus right now will be on those ones that are one to 300. And the majority is, as I said, it's development funding.

Tanya Jakusconek (Managing Director and Senior Equity Analyst)

Can I just also confirm some of your peers also mentioned a lot of opportunities in the Americas and Australia? Is that what you're seeing, or are you seeing other areas of the world?

Haytham Hodaly (Senior VP, Corporate Development)

We're seeing everywhere. I mean, listen, there's opportunities. There is stuff in the Americas. There's stuff in Europe. There's stuff in Australia and surrounding countries there. I would say the majority of the stuff we're seeing is in first-world jurisdictions.

Tanya Jakusconek (Managing Director and Senior Equity Analyst)

Okay. Thank you so much for taking my questions. I'm sorry. Just leave that to someone else to ask the question.

Randy Smallwood (President and CEO)

A pleasure, Tanya.

Haytham Hodaly (Senior VP, Corporate Development)

Thank you, Tanya.

Operator (participant)

Thank you. Once again, should you have a question, please press star, followed by the one on your telephone keypad. Your next question comes from the line of Lawson Winder from Bank of America. Please go ahead.

Lawson Winder (Senior Equity Research Analyst)

Thanks very much, operator. Good morning, guys. Hello, Randy and team. Thanks for the update today. Just maybe where I'd start is on the long-term guidance and picking up where Ralph had started. When you think about the lower PGMs from Stillwater, but then the really big offset from Koné and some of the other moving parts as you roll forward into 2029, I mean, it seems to me that there's going to be a pretty material increase in what your projected GEO production would be for that year. Is that fair, or are there some moving parts there that we might not be considering?

Randy Smallwood (President and CEO)

Yeah. Lawson, thanks for the call. One of the other projects in the portfolio that really starts ramping up is Platreef in 2029. So that will wind up coming back into, as Ralph's original question, that'll be coming back into the five-year guidance and starting to sort of push us up even farther. And so, yeah, you're right. That combined with Koné coming on stream and the larger Phoenix package, keep in mind that we've substantially grown the size of that stream as part of the expansion of that relationship with Rio2, all will provide good growth on the tail end of that five-year guidance.

Gary Brown (CFO)

I'd also say, Lawson, that really the Stillwater ramp-down that they've got right now is hopefully temporary here as well. I mean, we still believe in this asset. I mean, it's a very strong asset. We'll still see good production out of both East Boulder and Stillwater East over the next number of years. I mean, the impact of that is kind of more in this kind of 10,000-15,000-ounce range, really, overall. It's not that significant compared to the additions that we're seeing from all of these other projects coming online in the next few years. We do see significant growth there, and really the slowdown at Stillwater doesn't impact that growth in a material way.

Lawson Winder (Senior Equity Research Analyst)

Okay. That's very helpful. Thank you both for that color. Wanted to also ask about the projected payments. So there's $238 million projected for Q4. How much of that $238 has already been committed now, quarter to date? And is there some piece of that that might slip into 2025?

Randy Smallwood (President and CEO)

I'll let Gary take that one.

Gary Brown (CFO)

Yeah. Lawson, look, the biggest component of that is the $163 million that would be due to Vale should they satisfy the completion test on the third line there by year-end, which is, I think, very unlikely at this point. So that's likely to move to 2025.

Randy Smallwood (President and CEO)

When it does, it drops down to about 144 million, I think.

Gary Brown (CFO)

144.

Randy Smallwood (President and CEO)

Yeah. As it gets later it gets satisfied, the lower the payment gets.

Gary Brown (CFO)

Yeah. Thanks for reminding us about that one. That's an important consideration.

Lawson Winder (Senior Equity Research Analyst)

Yeah. And then, okay, so one other one just on the asset. So Constancia, how should we think about the sales trailing production? I mean, based on what Hudbay's guiding to, I mean, there's a really big step up in Q4 in precious metal production versus Q3, but then there's that delivery mismatch. I mean, what would you guide us to do to kind of account for that timing mismatch for Q4?

Gary Brown (CFO)

I'll just have an overall comment. We always see this in Q4. That difference between production and sales gets squeezed in Q4 because everyone's trying to get the most sales into their year-end results. And so there's always going to be a lag, especially for something like Constancia where you're producing a con and having to ship it off.

It means that it takes a bit longer to go through the process. We always guide two to three months typically for something like that. But I would say that in Q4, it probably turns into one and a half to two and a half months versus two to three months, if you know what I mean. Everything gets squeezed a little bit tighter in Q4, and so we're hopeful that on that side, Hudbay will take that approach. It's something that we have traditionally seen. We expect to capture back a lot of that produced but not yet delivered in the Q4. So I don't know if Wes, you got anything to add to that?

Wes Carson (VP, Mining Operations)

Yeah. No, I think that covers it well.

I mean, we've seen them starting to move back into Pampacancha in the latter part of Q3, and we'll see that, obviously, as we said, into Q4 there. So, and as Randy said, I wouldn't expect anything different than what they're saying, than what we've seen traditionally at Constancia with that two to three months, other than they will certainly be pushing in Q4, as all of our other assets will be to try to clear out that PBND.

Lawson Winder (Senior Equity Research Analyst)

Can I also get your thoughts on consolidation in the sector and Wheaton's view on that? So as you deploy capital, I mean, it seems like deals are getting done at the streaming and royalty deals well into the $2,000 per ounce range. Meanwhile, I mean, maybe there's value in looking at just acquiring smaller players to get access to various streams and royalties. Is that a fair statement? Is that something that's on the radar for Wheaton right now? And just any additional thoughts?

Gary Brown (CFO)

I would say that Haytham has actually done a really good job of putting our cash flow back to work. And that, combined with growing our dividend, has continued to deliver, I think, a good performance, a good result for our shareholders. And so the challenge with consolidation is that even the smaller of the streaming companies, I'm going to say a lot of them have had to sort of be a little bit more relaxed on structure and security in order to get their foot in the door. And so some of the assets, some of the core assets in there have some structural flaws and some weaknesses that, in our eyes, are just not as good as a good old Wheaton stream. And so the valuation differential may be appropriate in terms of what they trade at versus what we trade at.

By the time when you look at it from a consolidation perspective, by the time you put in any type of a takeover premium, it actually gets very expensive. And I just to date, we have been very successful investing into good operating companies for acquisition prices that are close to NAV, but definitely lower than what even these smaller companies are. So it's not to say that we don't watch the market and keep an eye and see if there are opportunities in the space. We always will. It would be foolish not to. But I think it's rather unlikely, especially given the opportunity set that we see out there. Haytham, I don't know if you got anything to add to that.

Haytham Hodaly (Senior VP, Corporate Development)

Yeah. The only other thing, Lawson, I would add is if you look at the actual valuations and where these things are trading relative to NAV, they're all trading pretty close to NAV. And we're actually out there buying assets at NAV or a slight discount to NAV. So it always doesn't make sense to pay a 30-plus % premium on assets that's trading at NAV to consolidate assets that we've passed on in the past when we looked at them. So, yeah, I don't see us doing any consolidation. Now, that doesn't mean we wouldn't be opportunistic. If one of these companies suddenly had a hiccup and the stock was down 50% and we felt it was recoverable, that's something we would look at. But that's not in the pipeline right now.

Lawson Winder (Senior Equity Research Analyst)

Okay. That's really helpful. Thank you, guys.

Randy Smallwood (President and CEO)

Thanks, Lawson.

Operator (participant)

Thank you. And your next question comes from the line of William Dalby from Berenberg. Please go ahead.

William Dalby (Analyst)

Yeah. Hi, Randy and team. Thanks for the call. And congrats on the solid quarter. Just a couple from me. The first on produced but not delivered. I know you've touched on it already, but got 136,000 GEOs for the quarter. You say about three months' worth. But I'm just looking at kind of steady additions for the last year or so. I wonder if you could maybe give a bit more detail on what's driven that build. And you said you're expecting that to release, but what kind of certainty do you have around that releasing over the next quarter or so? That's the first question. Thanks.

Gary Brown (CFO)

Yeah. Well, I'm going to let Wes answer that one.

Wes Carson (VP, Mining Operations)

Thanks. See, the single largest thing that we've seen there is really the build-up at Peñasquito, and that's really pretty much entirely due to the hurricane that affected the Manzanillo Port, which is the main export for Peñasquito, so we did see a build-up there, and being our second-largest asset, that certainly adds things up. I mean, we do often see these build-ups kind of at various different times during the year, and as we said earlier, we generally see that drawdown in Q4, and that is what we're expecting to see again this year.

William Dalby (Analyst)

Thanks, Wes. That was helpful. And then just a second one on Copper World. I saw as part of their development strategy and financing, they mentioned that they're looking to renegotiate the terms of the stream there. I just wonder if you could give some clarity on how you're expecting those terms to be renegotiated. Thank you.

Randy Smallwood (President and CEO)

I think it comes from the fact that the original plan, the original stream was based on an asset that would deliver, to our credit, somewhere around 60,000 gold-equivalent ounces per year, and the current plan at Copper World is, of course, I mean, it's interesting how these things change. The original stream was signed back in 2010, 14 years ago, and at that point, when we signed that, we had a whole bunch of exploration potential to the north, and that exploration potential has actually turned into Copper World, and so this is a situation where we're going to see the exploration potential delivered ahead of the original ore body, which is Rosemont, into play, so net-net, we've got a lot more ounces and a much bigger ore body than what you had back in 2010.

But the startup for the Copper World area ultimately will deliver us, the current plan has it delivering to us somewhere close to 40,000 gold-equivalent ounces per year versus the 60,000. And so I think we've just got to sit down with Hudbay. Hudbay is a long-term partner of ours on many different assets and hopeful that we can continue to grow the relationship. So we've just got to sit down and understand. We're still waiting for sort of some firm decisions from Hudbay before we have those discussions and get a sense of what the plan is going forward, how the impact changes. Because, as I said, the original deal was structured around something that was about 50% higher than what the current plan is.

That being said, the reserve and resource base, especially if you believe that with responsibly, you hope that common sense prevails and that they're allowed to actually move off the private lands and into the and take advantage of the ultimate resource there, we're definitely in a much more positive position. So we'll have those discussions. As I said, we've got a very strong relationship with Peter and the team at Hudbay, and so looking forward to it. We're just waiting for a little bit of further clarity on their side before we actually go through that discussion.

William Dalby (Analyst)

Okay. Useful. Thanks, Randy. Just thinking out loud on that one, as the development advances a bit further, becomes more certain those negotiations advance, is there maybe scope for Wheaton to take a bigger piece there to put in more upfront CapEx, maybe under renegotiated terms? Is that something that is on the table, potentially?

Randy Smallwood (President and CEO)

I'm not going to sort of bin it by anything. I will say that we do get 100% of the silver and gold. So it's really tough to grow the precious metal stream there. And so not something that we're going to commit to. I wouldn't want to lay anything out here right now that would confine us in the future in terms of those discussions. And so everything's on the table when it comes to these discussions. Hudbay is a good long-term partner of ours. And so look forward to them advancing the project and us being a good part of that.

William Dalby (Analyst)

Okay. Very clear. Thanks very much, guys. Cheers.

Gary Brown (CFO)

Thanks, Will.

Operator (participant)

Thank you. And your next question comes from the line of Carey MacRury from Canaccord Genuity. Please go ahead.

Carey MacRury (Equity Research Analyst)

Hey, good morning, guys. Just a question on cobalt with Voisey's Bay looking like it's finally nearing the finish line. How do you see the cobalt production ramping up for you guys? And when do you expect to hit the steady state runway?

Gary Brown (CFO)

Oh, well, I'll let Wes take that one.

Wes Carson (VP, Mining Operations)

Thanks, Gary. So really, I mean, as I mentioned there, we're starting to see that ramp up. And really, I mean, we're looking at about a 60% increase in grade from what we saw last year right now and a significant increase in recovery as well. So we're well on our way with that. That being said, the full ramp up of those undergrounds is really going to take about 18 months here. So it'll be well, well into 2025, early 2026 before we see kind of full production out of those undergrounds. So I would expect to see a continual increase over the next couple of years from that cobalt production we're seeing from Voisey's Bay.

Carey MacRury (Equity Research Analyst)

What's the steady state run rate again? On an annualized basis?

Wes Carson (VP, Mining Operations)

It comes in somewhere around two million pounds to our account.

Carey MacRury (Equity Research Analyst)

How does that compare to production last year?

Wes Carson (VP, Mining Operations)

Last year production was less, yeah, 600,000. So we're at about 1.2 this year. So there's still a ways to go.

Gary Brown (CFO)

Yeah. There's still quite a bit of growth there yet.

Wes Carson (VP, Mining Operations)

Yeah.

Carey MacRury (Equity Research Analyst)

Yeah. And then in terms of a related question, the production has been ramping up in your numbers, but your sales are still quite a bit lower. Is that by design, or is there something else going on there?

Wes Carson (VP, Mining Operations)

So that one's an interesting one. I mean, there's been some challenges in deliveries as you go through it. It is a very long delivery time lane there. It goes all the way over to the Netherlands to be sold there. And it's coming down from Labrador down to Newfoundland. And so it's a long timeline. It's probably close to our longest as you go through. So there is a lag there. And yeah, we'll continue to see that as things start to stabilize at the undergrounds and as there is more consistent production, we should see that stabilize more. But this year has been a bit more challenged on that.

Gary Brown (CFO)

Yeah. Carey, it's interesting. It is, out of all of our portfolio, it's probably the one that has the biggest gap of how long it takes for production to actually result in sales. It is one where we take physical delivery. And so we have warehouses that stock that cobalt product. And then we have sales contracts that move that out. But the sales contracts are longer term. It definitely trades differently than a precious metal. And because of that, it does have sometimes some bigger lags and sometimes some tighter lags. But just by virtue of the location of the asset and then where the ultimate purchases are and where the transaction, where sales actually gets recorded, it's always going to be the longest lag. It's probably closer to four months, four, five months in terms of production getting through to sales.

Carey MacRury (Equity Research Analyst)

Okay, but we should see a healthy ramp up in 2025, I guess.

Gary Brown (CFO)

Yep. Absolutely.

Carey MacRury (Equity Research Analyst)

Okay. All right. Appreciate it. Thanks.

Randy Smallwood (President and CEO)

Thank you, Carey. And thank you, everyone, for dialing in. We, of course, are very pleased to have reported yet another strong quarter. Wheaton's high-quality portfolio of assets, sector-leading growth profile, and commitment to sustainability provides our shareholders and all of our stakeholders, actually, with a solid outlook for the future in what we believe is one of the best, if not the best, vehicles for investing into the gold and precious metal space. We, of course, have just celebrated our 20th anniversary last month. And as I reflect on the past two decades, I myself am incredibly proud of what our team has been able to accomplish. And I just want to sincerely thank all of our stakeholders for their own support and contributions and for being a part of Wheaton's success. We do look forward to speaking with you all again very soon. Thank you.

Operator (participant)

Thank you. This concludes today's call. Thank you for participating. You may all disconnect.