Wheaton Precious Metals edges higher on Q3 earnings beat, $670M gold stream deal

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Wheaton Precious Metals (WPM [https://seekingalpha.com/symbol/WPM]) +0.7% in early trading Friday after reporting better than expected Q3 adjusted earnings [https://seekingalpha.com/news/4518224-wheaton-precious-metals-non-gaap-eps-of-0_62-beats-by-0_04-revenue-of-476m-beats-by-3_82m] and saying it agreed to acquire [https://seekingalpha.com/pr/20298254-wheaton-precious-metals-announces-the-acquisition-of-a-gold-stream-on-the-spring-valley] a gold stream worth $670 million on the Spring Valley project in Nevada from Waterton Gold.

Under the deal terms, Wheaton (WPM [https://seekingalpha.com/symbol/WPM]) will pay the $670 million upfront cash consideration in installments and will purchase 8% of payable gold until 300,000 oz have been delivered, and then purchase 6% of the payable gold for the life of the mine; first production is expected in 2028, with attributable production averaging 29,000 oz/year over the first five years.

Wheaton (WPM [https://seekingalpha.com/symbol/WPM]) said the addition of Spring Valley adds another "high-quality, low-cost mine in a tier 1 jurisdiction" to its portfolio.

Wheaton (WPM [https://seekingalpha.com/symbol/WPM]) reported Q3 net earnings more than doubled to US$367.2 million from US$154.6 million in the year-earlier quarter, and revenues rose 54% Y/Y to US$476.3 million, thanks to a 37% jump in the average realized gold equivalent price and a 13% increase in the number of gold equivalent oz sold in the quarter.

Q3 attributable production rose 22% Y/Y to 173,415 gold equivalent oz, driven by stronger output at Salobo and Antamina, combined with the start of production at Blackwater.

"These strong results position us well to meet our annual production guidance of 600,000-670,000 gold equivalent oz and underscores the streaming model's ability to generate predictable levered cash flows in a rising precious metals price environment," CEO Randy Smallwood said.

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