TSX: WPM
NYSE: WPM
VANCOUVER, June 11, 2018 /PRNewswire/ - Wheaton Precious
Metals™ Corp. ("Wheaton" or the "Company") is pleased to announce
that it has agreed to acquire from a subsidiary of Vale S.A.
("Vale") (NYSE:VALE) an amount of finished cobalt equal to a fixed
percentage of cobalt production from the Voisey's Bay mine (the
"Cobalt Stream"). Wheaton will pay Vale upfront cash consideration
of US$390 million upon closing of the
Cobalt Stream. In addition, Wheaton will make ongoing payments of
18% of the Metal Bulletin market price ("cobalt spot price") per
cobalt pound delivered1. Also on June 11, 2018, Vale entered into a separate
streaming agreement with Cobalt 27 Capital Corp. ("Cobalt 27"). In
total, Wheaton and Cobalt 27 will provide Vale an aggregate of
US$690 million in funding for the
combined purchase of cobalt equal to 75% of Voisey's Bay cobalt
production effective January 1,
2021.
TRANSACTION HIGHLIGHTS
- Adds to Wheaton's existing high-quality portfolio
-
- Effective January 1, 2021,
Wheaton will be entitled to receive from Vale an amount of cobalt
equal to 42.4% of the Voisey's Bay mine cobalt production until the
delivery of 31 million pounds of cobalt and an amount of cobalt
equal to 21.2% of cobalt production thereafter for the life of
mine.
- Voisey's Bay is one of the lowest-cost, highest-margin nickel
mines globally, ranking in the bottom half of the nickel cost
curve.2
- Further strengthens Wheaton's partnership with Vale, one of the
largest diversified mining companies in the world.
- Increases Wheaton's growth profile and cash flow
-
- Wheaton will be entitled to production starting in 2021,
coincident with the anticipated ramp up in underground production
from Voisey's Bay.
- Attributable cobalt production is forecast to average 2.6
million pounds per year for the first 10 years and 2.4 million
pounds for the life of mine. For context, on a gold equivalent
ounce ("GEO") basis, that is the equivalent to approximately 80
thousand GEOs and 75 thousand GEOs per year,
respectively.3
- Operating cash flow to Wheaton at current cobalt prices is
forecast to average over US$75
million per year for the first 10 years4.
- Diversifies Wheaton's portfolio with an integral metal for
clean energy
-
- Cobalt is primarily used in battery technology, especially in
the rapidly expanding electric vehicles ("EV") market.
- Similar to silver, cobalt is primarily produced as a
by-product.
- While most cobalt supply comes from high political risk
jurisdictions, Voisey's Bay is located in Newfoundland and Labrador, Canada.
"While our focus has been, and always will be on precious metal
streaming, we welcomed the opportunity to invest in another
low-cost, long-life asset with a partner of Vale's calibre. Wheaton
has built a portfolio of streams on high-quality mines, and
Voisey's Bay has both the quality and the scale to make it an
accretive addition to this portfolio," said Randy Smallwood, Wheaton's President and Chief
Executive Officer. "We see numerous similarities between cobalt and
silver, as both are primarily produced as by-products and both are
integral to sustainable clean energy and electronics. In addition,
given cobalt supply is concentrated in high political risk
jurisdictions, Voisey's Bay is particularly attractive for cobalt
production as it is located in Canada."
TRANSACTION TERMS
- Effective January 1, 2021,
Wheaton will be entitled to receive from Vale an amount of cobalt
equal to 42.4% of the Voisey's Bay mine cobalt production until the
delivery of 31 million pounds of cobalt.
- Once Wheaton has received 31 million pounds of cobalt, Wheaton
will be entitled to 21.2% of cobalt production for the life of
mine.
- Wheaton will pay Vale cash consideration of US$390 million upon closing of the Cobalt
Stream.
- Wheaton will make ongoing payments of 18% of the cobalt spot
price to Vale per cobalt pound delivered until the balance of the
upfront cash consideration is reduced to zero.
- When the balance of the upfront cash consideration is reduced
to zero, Wheaton will make ongoing payments of 22% of the cobalt
spot price per cobalt pound delivered.
- Payable rates for cobalt in concentrate have generally been
fixed at 93.3%
- Wheaton will take physical deliveries of high-quality, finished
cobalt by way of warehouse certificates.
- Cobalt deliveries will be the obligation of Vale but will be
guaranteed by Vale Newfoundland & Labrador Ltd., the project
owner, and Vale S.A. will provide a financial guarantee.
- The Cobalt Stream includes a completion test on underground
operations measured by the throughput rate.
- The stream area of interest is defined as the area including
Voisey's Bay mining lease plus a 2 kilometre surrounding area of
interest so long as any such cobalt is extracted using the same
underground infrastructure as the planned Reid Brook and Eastern Deeps deposits.
- Closing of the transaction is expected to occur shortly
following announcement and is subject to the completion of certain
corporate matters and customary conditions.
- On June 11, 2018, Vale entered
into separate streaming agreements with each of Wheaton and Cobalt
27 Capital Corp. for an aggregate total upfront consideration of
US$690 million, of which Wheaton will
contribute US$390 million for its
stream. The terms of each streaming agreement are substantially
similar other than in respect of the upfront consideration and
cobalt stream percentages.
FINANCING THE TRANSACTION
The initial upfront cash payment of US$390 million will be paid by using amounts
drawn from the Company's US$2 billion
revolving credit facility. At March 31,
2018, the Company had approximately US$116 million of cash on hand and US$663 million outstanding under the revolving
credit facility. With trailing four-quarter operating cash flow of
just under $550 million5,
the Company believes it has ample capacity to service the
additional debt resulting from this transaction, especially given
the low interest rate and flexible nature of the covenants under
the revolving credit facility (minimum net debt to total net worth
and minimum interest coverage tests).
ABOUT THE VOISEY'S BAY MINE
The Voisey's Bay mine and concentrator is located on the north
coast of Labrador, approximately
1,200 kilometres north of St. John's,
Newfoundland. Production began in 2005 and open pit mining
is expected to continue until 2022. There will be a gradual
transition from open pit to underground mining beginning in
2021.
In July 2015 Vale's Board of
Directors sanctioned the development of the underground deposits at
Voisey's Bay. The mine expansion project will focus on the
development of two separate deposits, Reid
Brook and Eastern Deeps. Once in operation, underground
mining is expected to extend the life of the Voisey's Bay operation
until at least 2034. At peak production, the underground mines are
expected to produce about 45,000 tonnes per year of
nickel-in-concentrate which will be shipped to Vale's processing
facility in Long Harbour,
Newfoundland for further processing into finished nickel.
The mine also produces a copper concentrate which is shipped to
third party smelters but does not contain payable cobalt.
The construction phase of the mine expansion began in 2016 and
is expected to be completed in 2022. This will include the
expansion of existing surface infrastructure at Voisey's Bay for
increased power generation capacity, additional permanent
accommodations, offices, warehousing and maintenance shops. The
water and sewage treatment facilities will also be upgraded.
The development of the underground mines, which is the largest
segment of the construction program, requires the development of
declines from surface to access the ore bodies, and the
construction and installation of supporting infrastructure
including underground crushing and conveying, paste / backfill
plant, maintenance facilities and underground mine ventilation
systems.
Vale has entered into a development agreement with the
Government of Newfoundland and
Labrador in respect of the
development and construction of the underground mines, including
commitments as to the timing of completion of those underground
mines. In addition, as Voisey's Bay is located in an area subject
to land claims by both the Innu Nation and the Nunatsiavut
Government, Vale has also entered into impacts and benefits
agreements with both groups.
Below are Wheaton's attributable Mineral Reserves and Resources
in respect of the Voisey's Bay mine.6
Attributable Mineral Reserves and Mineral Resources –
Voisey's Bay, effective as of December 31,
2017
|
Tonnage
|
Grade
|
Contained
|
Category
|
Mt
|
Co
%
|
Co
Mlbs
|
Proven
|
4.6
|
0.14
|
13.9
|
Probable
|
6.5
|
0.13
|
18.7
|
P&P
|
11.1
|
0.13
|
32.6
|
Measured
|
-
|
-
|
-
|
Indicated
|
2.2
|
0.04
|
2.0
|
M&I
|
2.2
|
0.04
|
2.0
|
Inferred
|
3.9
|
0.10
|
8.6
|
ABOUT COBALT
Cobalt derives its name from the Germanic word for goblin,
kobold, a reference to cobalt's propensity to turn to black powder
on smelting. Despite that early name, today, cobalt is known as the
hard, lustrous metal whose high energy density, low thermal
conductivity, ability to alloy, and ferromagnetism results in
diverse commercial, industrial and military applications.
The leading use of cobalt is in rechargeable batteries as cobalt
significantly improves lithium ion batteries' ("LIB") performance
by providing stability and prolonging battery life. Battery
chemicals already consume just under half of the world's cobalt and
that percentage is expected to grow by 57% in 2020 and 73% in 2025
with the broader adoption of electric vehicles. The EV industry is
expected to lead the demand for cobalt-containing LIB as relative
to the traditional lead-acid battery, LIB have higher charge
density, power-to-weight ratio and a longer
lifespan.7
The two main global supply risks for cobalt relate to its
geographic concentration and its by-product nature. The top three
producing countries account for two-thirds of supply, with most of
the world's production coming from the African Copper Belt, mainly
the Democratic Republic of Congo
("DRC"). The DRC is the world's largest producer of mined cobalt
with a 55% global share, and the US Geological Survey estimates
that half of global in situ reserves are in the DRC. Similar to
silver, the vast majority of cobalt is produced as a by-product of
other base metals. In cobalt's case, from copper and nickel, and as
such, cobalt production is more tied to the economics of those two
metals rather than any tightness in the cobalt market.
CONFERENCE CALL
A conference call will be held on June
12, 2018, starting at 11:00 am
(Eastern Time) to discuss this transaction. A presentation
on the transaction will be available on the Company's website
shortly before the conference call. To participate in the live call
please use one of the following methods:
Dial toll free from
Canada or the US:
|
888-231-8191
|
Dial from outside
Canada or the US:
|
647-427-7450
|
Pass code:
|
7861228
|
Live audio
webcast:
|
www.wheatonpm.com
|
Participants should dial in ten to fifteen minutes before the
call.
The conference call will be recorded and available until
June 19, 2018 at 11:59 pm ET. The webcast will be available for
one year. You can listen to an archive of the call by one of the
following methods:
Dial toll free from
Canada or the US:
|
855-859-2056
|
Dial from outside
Canada or the US:
|
416-849-0833
|
Pass code:
|
7861228
|
Archived audio
webcast:
|
www.wheatonpm.com
|
Mr. Neil Burns, Vice President of
Technical Services for Wheaton, is a "qualified person" as such
term is defined under National Instrument 43-101 and has reviewed
and approved the technical disclosure in this news release
including information on Mineral Reserves and Mineral
Resources.
ADVISORS AND COUNSEL
Scotiabank acted as financial advisor and Cassels Brock & Blackwell LLP acted as legal
counsel to Wheaton.
End Notes
_________________
1 Production payment is set at 18% of
cobalt spot prices, increasing to 22% upon the balance of upfront
consideration being reduced to zero.
|
2 Based on Wood Mackenzie est. of 2nd
quarter of 2018 by-product cost curve for nickel mines.
|
3
Production is defined as metal contained in concentrate and is
based on mine plans provided by Vale and a gold to cobalt ratio
based on $1,300 per ounce of gold and $40 per pound of
cobalt.
|
4
Operating cash flow is based on current market cobalt prices of
approximately $40 per pound of cobalt, 2.6 million pounds of cobalt
produced annually, a payable cobalt rate of 93.3%, production
payment of 18%, and an assumed cobalt marketing fee. Statements as
to estimated operating cash flow and EBITDA contain forward looking
information and readers are cautioned that actual outcomes may
vary. Please see the "Cautionary Note Regarding Forward
Looking-Statements" at the end of this news release for material
risks, assumptions, and important disclosure associated with this
information.
|
5
Operating cash flow based on Q2, Q3, and Q4 of 2017, and Q1
2018
|
6 Please
refer to the Mineral Reserves & Mineral Resources table at the
end of this news release for full disclosure of reserves and
resources associated with Voisey's Bay including accompanying
footnotes.
|
7 Spender,
Reg, Larry Hill, Eric Zaunscherb, Thomas Gallo and John Kratochwil.
"Cobalt: Out of the shadows and into the spotlight" Specialty
Minerals and Metals, Global Equity Research, Canaccord Genuity.
25-May-17.
|
ATTRIBUTABLE MINERAL RESERVES AND MINERAL RESOURCES FOR
VOISEY'S BAY
|
|
|
|
|
Deposit
|
Category
|
Tonnage
|
Grade
|
Contained
|
Mt
|
Co
%
|
Co
Mlbs
|
Main & Mini
Ovoid
|
Proven
|
0.3
|
0.18
|
1.3
|
SE
Extension
|
Proven
|
0.8
|
0.04
|
0.7
|
Reid Brook
|
Proven
|
1.7
|
0.15
|
5.6
|
|
Probable
|
0.9
|
0.13
|
2.6
|
Eastern
Deeps
|
Proven
|
1.8
|
0.16
|
6.3
|
|
Probable
|
5.6
|
0.13
|
16.2
|
Total
Reserves
|
Proven
|
4.6
|
0.14
|
13.9
|
|
Probable
|
6.5
|
0.13
|
18.7
|
|
P&P
|
11.1
|
0.13
|
32.6
|
Discovery
Hill
|
Indicated
|
1.4
|
0.05
|
1.5
|
|
Inferred
|
1.4
|
0.05
|
1.6
|
SE
Extension
|
Indicated
|
0.8
|
0.03
|
0.5
|
Reid Brook
|
Inferred
|
2.5
|
0.13
|
7.0
|
Total
Resources
|
Measured
|
-
|
-
|
-
|
|
Indicated
|
2.2
|
0.04
|
2.0
|
|
M&I
|
2.2
|
0.04
|
2.0
|
|
Inferred
|
3.9
|
0.10
|
8.6
|
Notes on Mineral Reserves and Mineral Resources
- All Mineral Reserves and Mineral Resources have been estimated
in accordance with the 2014 Canadian Institute of Mining,
Metallurgy and Petroleum (CIM) Standards for Mineral Resources and
Mineral Reserves and National Instrument 43-101 – Standards for
Disclosure for Mineral Projects ("NI 43-101"), or the 2012
Australasian Joint Ore Reserves Committee (JORC) Code for Reporting
of Exploration Results, Mineral Resources and Ore Reserves.
- Mineral Reserves and Mineral Resources are reported above in
millions of metric tonnes ("Mt"), percent ("%") and millions of
pounds ("Mlbs").
- Qualified persons ("QPs"), as defined by the NI 43-101, for the
Mineral Reserve and Mineral Resource estimates are:
-
- Neil Burns, M.Sc., P.Geo. (Vice
President, Technical Services); and
- Ryan Ulansky, M.A.Sc., P.Eng.
(Senior Director, Engineering),
- The Mineral Resources reported in the above tables are
exclusive of Mineral Reserves.
- Mineral Resources which are not Mineral Reserves do not have
demonstrated economic viability.
- Mineral Reserves and Mineral Resources are reported as of
December 31, 2017 based on
information available to the Company as of the date of this
document, and therefore will not reflect updates, if any, after
such date.
- Process recovery of cobalt to a nickel concentrate averages
84%.
- Mineral Reserves and Resources are estimated using appropriate
process recovery rates and the following NSR cut-offs and commodity
prices:
-
- Ovoid, Mini Ovoid and SE Extension Mineral Reserves – Cdn
$24.04 per tonne assuming
$9.07 per pound nickel, $2.86 per pound copper and $12.25 per pound cobalt;
- Reid Brook Mineral Reserves and Mineral Resources -
$275.00 per tonne assuming
$9.72 per pound nickel, $3.40 per pound copper and $11.50 per pound cobalt;
- Eastern Deeps Mineral Reserves - $225.00 per tonne assuming $6.35 per pound nickel, $2.81 per pound copper and $18.13 per pound cobalt;
- SE Extension Mineral Resources - $24.00 per tonne assuming $10.43 per pound nickel, $3.45 per pound copper and $13.00 per pound cobalt; and
- Discovery Hill Mineral Resources - $24.81 per tonne assuming $9.53 per pound nickel, $3.13 per pound copper and $12.50 per pound cobalt.
- The Company's attributable Resources and Reserves for Voisey's
Bay have been constrained to the production expected from
January 1, 2021 onwards.
- The Voisey's Bay cobalt purchase and sale agreement provides
that Vale will deliver an amount of finished cobalt equal to 42.4%
of the cobalt production until 31 million pounds are delivered and
21.2% of cobalt production thereafter, for the life of the
mine. Attributable reserves and resources have been
calculated on the 42.4% / 21.2% basis.
- Cobalt is produced as a by-product metal; therefore, the
economic cut-off applied to the reporting of cobalt Resources and
Reserves will be influenced by changes in the commodity prices of
other metals at the time.
- Full Reserve and Resource tables are available on the Company's
website, www.wheatonpm.com.
CAUTIONARY NOTE REGARDING FORWARD LOOKING-STATEMENTS
The information contained herein contains "forward-looking
statements" within the meaning of the United States Private
Securities Litigation Reform Act of 1995 and "forward-looking
information" within the meaning of applicable Canadian securities
legislation. Forward-looking statements, which are all statements
other than statements of historical fact, include, but are not
limited to, statements with respect to:
- the payment of the upfront cash consideration of US$390 million to Vale in connection with the
Cobalt Stream;
- the construction timeline, including completion, of the mine
expansion, including the underground mines, at Voisey's Bay by
Vale;
- the commencement and timing of delivery of cobalt by Vale under
the Cobalt Stream;
- the receipt of cobalt by Wheaton of cobalt production in
respect of Voisey's Bay;
- Vale's obligations under the development agreement with the
Government of Newfoundland and
Labrador and the impacts and
benefits agreements with the Innu Nation and the Nunatsiavut
government;
- the demand, uses and supply of cobalt;
- future payments by the Company in accordance with precious
metal purchase agreements, including any acceleration of payments,
estimated throughput and exploration potential;
- projected increases to Wheaton's production and cash flow
profile;
- the expansion and exploration potential at the Salobo and
Peñasquito mines;
- projected changes to Wheaton's production mix;
- anticipated increases in total throughput;
- the estimated future production;
- the future price of commodities;
- the estimation of mineral reserves and mineral resources;
- the realization of mineral reserve estimates;
- the timing and amount of estimated future production (including
2018 and average attributable annual production over the next five
years);
- the costs of future production;
- reserve determination;
- estimated reserve conversion rates and produced but not yet
delivered ounces;
- any statements as to future dividends, the ability to fund
outstanding commitments and the ability to continue to acquire
accretive precious metal stream interests;
- confidence in the Company's business structure;
- the Company's position relating to any dispute with the CRA and
the Company's intention to defend reassessments issued by the CRA;
the impact of potential taxes, penalties and interest payable to
the CRA; possible audits for taxation years subsequent to 2015;
estimates as to amounts that may be reassessed by the CRA in
respect of taxation years subsequent to 2010; amounts that may be
payable in respect of penalties and interest; the Company's
intention to file future tax returns in a manner consistent with
previous filings; that the CRA will continue to accept the Company
posting security for amounts sought by the CRA under notices of
reassessment for the 2005-2010 taxation years or will accept
posting security for any other amounts that may be sought by the
CRA under other notices of reassessment; the length of time it
would take to resolve any dispute with the CRA or an objection to a
reassessment; and assessments of the impact and resolution of
various tax matters, including outstanding audits, proceedings with
the CRA and proceedings before the courts; and
- assessments of the impact and resolution of various legal and
tax matters, including but not limited to outstanding class
actions.
Generally, these forward-looking statements can be identified by
the use of forward-looking terminology such as "plans", "expects"
or "does not expect", "is expected", "budget", "scheduled",
"estimates", "forecasts", "projects", "intends", "anticipates" or
"does not anticipate", or "believes", "potential", or variations of
such words and phrases or statements that certain actions, events
or results "may", "could", "would", "might" or "will be taken",
"occur" or "be achieved". Forward-looking statements are subject to
known and unknown risks, uncertainties and other factors that may
cause the actual results, level of activity, performance or
achievements of Wheaton to be materially different from those
expressed or implied by such forward-looking statements, including
but not limited to:
- that each party does not satisfy its obligations in accordance
with the terms of the Cobalt Stream;
- Vale does not meet the construction timeline, including
anticipated completion, of the mine expansion, including the
underground mines, at Voisey's Bay;
- Vale is unable to commence, or the timing of delivery of cobalt
by Vale is delayed or deferred under the Cobalt Stream or Wheaton
is unable to sell its cobalt production delivered under the Cobalt
Stream at acceptable prices or at all;
- Vale does not meet its obligations under the development
agreement with the Government of Newfoundland and Labrador or the impacts and benefits
agreements with the Innu Nation and the Nunatsiavut
government;
- the decrease in demand for cobalt, the decrease in uses for
cobalt or the discovery of new supplies of cobalt, any or all of
which could result in a decrease to the price of cobalt or a
decrease in the ability to sell cobalt;
- risks related to the satisfaction of each party's obligations
in accordance with the terms of Wheaton's precious metal purchase
agreements, including any acceleration of payments, estimated
throughput and exploration potential;
- fluctuations in the price of commodities;
- risks related to the Mining Operations including risks related
to fluctuations in the price of the primary commodities mined at
such operations, actual results of mining and exploration
activities, environmental, economic and political risks of the
jurisdictions in which the Mining Operations are located, and
changes in project parameters as plans continue to be refined;
- absence of control over the Mining Operations and having to
rely on the accuracy of the public disclosure and other information
Wheaton receives from the owners and operators of the Mining
Operations as the basis for its analyses, forecasts and assessments
relating to its own business;
- differences in the interpretation or application of tax laws
and regulations or accounting policies and rules;
- Wheaton's interpretation of, or compliance with, tax laws and
regulations or accounting policies and rules, being found to be
incorrect or the tax impact to the Company's business operations
being materially different than currently contemplated;
- any challenge by the CRA of the Company's tax filings being
successful and the potential negative impact to the Company's
previous and future tax filings;
- the Company's business or ability to enter into precious metal
purchase agreements being materially impacted as a result of any
CRA reassessment;
- any reassessment of the Company's tax filings and the
continuation or timing of any such process is outside the Company's
control;
- any requirement to pay reassessed tax, and the amount of any
tax, interest and penalties that may be payable changing due to
currency fluctuations;
- the Company not being assessed taxes on its foreign
subsidiary's income on the same basis that the Company pays taxes
on its Canadian income, if taxable in Canada;
- interest and penalties associated with a CRA reassessment
having an adverse impact on the Company's financial position;
- litigation risk associated with a challenge to the Company's
tax filings;
- credit and liquidity risks;
- indebtedness and guarantees risks;
- mine operator concentration risks;
- hedging risk;
- competition in the mining industry;
- risks related to Wheaton's acquisition strategy;
- risks related to the market price of the common shares of
Wheaton;
- equity price risks related to Wheaton's holding of long‑term
investments in other exploration and mining companies;
- risks related to interest rates;
- risks related to the declaration, timing and payment of
dividends;
- the ability of Wheaton and the Mining Operations to retain key
management employees or procure the services of skilled and
experienced personnel;
- litigation risk associated with outstanding legal matters;
- risks related to claims and legal proceedings against Wheaton
or the Mining Operations;
- risks relating to unknown defects and impairments;
- risks relating to security over underlying assets;
- risks related to ensuring the security and safety of
information systems, including cyber security risks;
- risks related to the adequacy of internal control over
financial reporting;
- risks related to governmental regulations;
- risks related to international operations of Wheaton and the
Mining Operations;
- risks relating to exploration, development and operations at
the Mining Operations;
- risks related to the ability of the companies with which
Wheaton has precious metal purchase agreements to perform their
obligations under those precious metal purchase agreements in the
event of a material adverse effect on the results of operations,
financial condition, cash flows or business of such companies;
- risks related to environmental regulations and climate
change;
- the ability of Wheaton and the Mining Operations to obtain and
maintain necessary licenses, permits, approvals and rulings;
- the ability of Wheaton and the Mining Operations to comply with
applicable laws, regulations and permitting requirements;
- lack of suitable infrastructure and employees to support the
Mining Operations;
- uncertainty in the accuracy of mineral reserve and mineral
resource estimates;
- inability to replace and expand mineral reserves;
- risks relating to production estimates from Mining Operations,
including anticipated timing of the commencement of production by
certain Mining Operations;
- uncertainties related to title and indigenous rights with
respect to the mineral properties of the Mining Operations;
- fluctuations in the commodity prices other than silver or
gold;
- the ability of Wheaton and the Mining Operations to obtain
adequate financing;
- the ability of the Mining Operations to complete permitting,
construction, development and expansion;
- challenges related to global financial conditions;
- risks relating to future sales or the issuance of equity
securities; and
- other risks discussed in the section entitled "Description of
the Business – Risk Factors" in Wheaton's Annual Information Form
available on SEDAR at www.sedar.com, and in Wheaton's Form 40-F for
the year ended December 31, 2017 and
Form 6-K filed March 21, 2018 both on
file with the U.S. Securities and Exchange Commission in
Washington, D.C. (the
"Disclosure").
Forward-looking statements are based on assumptions management
currently believes to be reasonable, including but not limited
to:
- the payment of US$390 million to
Vale and the satisfaction of each party's obligations in accordance
with the terms of the Cobalt Stream;
- Vale is able to meet the construction timeline, including
anticipated completion, of the mine expansion, including the
underground mines, at Voisey's Bay;
- Vale is able to commence and meet its timing for delivery of
cobalt under the Cobalt Stream and Wheaton is able to sell cobalt
production delivered under the Cobalt Stream at acceptable
prices;
- Vale meets its obligations under the development agreement with
the Government of Newfoundland and
Labrador and the impacts and
benefits agreements with the Innu Nation and the Nunatsiavut
government;
- the demand and uses for cobalt will not significantly decrease
and the supply of cobalt will not significantly increase;
- that each party will satisfy their obligations in accordance
with the precious metal purchase agreements;
- that there will be no material adverse change in the market
price of commodities;
- that the Mining Operations will continue to operate and the
mining projects will be completed in accordance with public
statements and achieve their stated production estimates;
- that Wheaton will continue to be able to fund or obtain funding
for outstanding commitments;
- that Wheaton will be able to source and obtain accretive
precious metal stream interests;
- expectations regarding the resolution of legal and tax matters,
including the ongoing class action litigation and CRA audit
involving the Company;
- that Wheaton will be successful in challenging any reassessment
by the CRA;
- that Wheaton has properly considered the application of
Canadian tax law to its structure and operations;
- that Wheaton will continue to be permitted to post security for
amounts sought by the CRA under notices of reassessment;
- that Wheaton has filed its tax returns and paid applicable
taxes in compliance with Canadian tax law;
- that Wheaton will not change its business as a result of any
CRA reassessment;
- that Wheaton's ability to enter into new precious metal
purchase agreements will not be impacted by any CRA
reassessment;
- expectations and assumptions concerning prevailing tax laws and
the potential amount that could be reassessed as additional tax,
penalties and interest by the CRA;
- that any foreign subsidiary income, if taxable in Canada, would be subject to the same or
similar tax calculations as Wheaton's Canadian income, including
the Company's position, in respect of precious metal purchase
agreements with upfront payments paid in the form of a deposit,
that the estimates of income subject to tax is based on the cost of
precious metal acquired under such precious metal purchase
agreements being equal to the market value of such precious metal
while the deposit is outstanding, and the cash cost
thereafter;
- the estimate of the recoverable amount for any precious metal
purchase agreement with an indicator of impairment; and
- such other assumptions and factors as set out in the
Disclosure.
Although Wheaton has attempted to identify important factors
that could cause actual results, level of activity, performance or
achievements to differ materially from those contained in
forward-looking statements, there may be other factors that cause
results, level of activity, performance or achievements not to be
as anticipated, estimated or intended. There can be no assurance
that forward-looking statements will prove to be accurate and even
if events or results described in the forward-looking statements
are realized or substantially realized, there can be no assurance
that they will have the expected consequences to, or effects on,
Wheaton. Accordingly, readers should not place undue reliance on
forward-looking statements and are cautioned that actual outcomes
may vary. The forward-looking statements included herein are for
the purpose of providing investors with information to assist them
in understanding Wheaton's expected financial and operational
performance and may not be appropriate for other purposes. Any
forward looking statement speaks only as of the date on which it is
made. Wheaton does not undertake to update any forward-looking
statements that are included or incorporated by reference herein,
except in accordance with applicable securities laws.
Non IFRS Measures
Wheaton has included, certain non-IFRS performance measures,
including operating cash flow. The Company believes that, in
addition to conventional measures prepared in accordance with IFRS,
management and certain investors use this information to evaluate
the Company's performance. Operating cash flow is based on
current market cobalt prices of approximately $40 per pound of cobalt, 2.6 million pounds of
cobalt produced annually, a payable cobalt rate of 93.3%,
production payment of 18%, and an assumed cobalt marketing fee.
Non-IFRS measures do not have any standardized meaning prescribed
by IFRS, and other companies may calculate these measures
differently. The presentation of non-IFRS measures is
intended to provide additional information and should not be
considered in isolation or as a substitute for measures of
performance prepared in accordance with IFRS. For more detailed
information, please refer to Wheaton ' Management Discussion and
Analysis available on the Company's website at www.wheatonpm.com
and posted on SEDAR at www.sedar.com.
Cautionary Language Regarding Reserves And Resources
For further information on Mineral Reserves and Mineral
Resources and on Wheaton more generally, readers should refer to
Wheaton's Annual Information Form for the year ended December 31, 2017 and other continuous disclosure
documents filed by Wheaton since January 1,
2018, available on SEDAR at www.sedar.com. Wheaton's Mineral
Reserves and Mineral Resources are subject to the qualifications
and notes set forth therein. Mineral Resources which are not
Mineral Reserves do not have demonstrated economic viability.
Cautionary Note to United States Investors Concerning
Estimates of Measured, Indicated and Inferred Resources: The
information contained herein has been prepared in accordance with
the requirements of the securities laws in effect in Canada, which differ from the requirements of
United States securities laws. The
terms "mineral reserve", "proven mineral reserve" and "probable
mineral reserve" are Canadian mining terms defined in accordance
with Canadian National Instrument 43-101 – Standards of Disclosure
for Mineral Projects ("NI 43-101") and the Canadian Institute of
Mining, Metallurgy and Petroleum (the "CIM") – CIM Definition
Standards on Mineral Resources and Mineral Reserves, adopted by the
CIM Council, as amended (the "CIM Standards"). These definitions
differ from the definitions in Industry Guide 7 ("SEC Industry
Guide 7") under the U.S. Securities Act of 1933, as amended (the
"U.S. Securities Act"). Under U.S. standards, mineralization may
not be classified as a "reserve" unless the determination has been
made that the mineralization could be economically and legally
produced or extracted at the time the reserve determination is
made. Also, under SEC Industry Guide 7 standards, a "final" or
"bankable" feasibility study is required to report reserves, the
three-year historical average price is used in any reserve or cash
flow analysis to designate reserves and the primary environmental
analysis or report must be filed with the appropriate governmental
authority. In addition, the terms "mineral resource", "measured
mineral resource", "indicated mineral resource" and "inferred
mineral resource" are defined in and required to be disclosed by NI
43-101; however, these terms are not defined terms under SEC
Industry Guide 7 and are normally not permitted to be used in
reports and registration statements filed with the SEC. Investors
are cautioned not to assume that any part or all of the mineral
deposits in these categories will ever be converted into reserves.
"Inferred mineral resources" have a great amount of uncertainty as
to their existence and as to their economic and legal feasibility.
It cannot be assumed that all or any part of an inferred mineral
resource will ever be upgraded to a higher category. Under Canadian
rules, estimates of inferred mineral resources may not form the
basis of feasibility or pre-feasibility studies, except in rare
cases. Investors are cautioned not to assume that all or any part
of an inferred mineral resource exists or is economically or
legally mineable. Mineral resources that are not mineral reserves
do not have demonstrated economic viability. Disclosure of
"contained ounces" in a resource is permitted disclosure under
Canadian regulations; however, the SEC normally only permits
issuers to report mineralization that does not constitute
"reserves" by SEC standards as in place tonnage and grade without
reference to unit measures. Accordingly, information contained
herein that describes Wheaton's mineral deposits may not be
comparable to similar information made public by U.S. companies
subject to reporting and disclosure requirements under the United States federal securities laws and
the rules and regulations thereunder. United States investors are urged to consider
closely the disclosure in Wheaton's Form 40-F, a copy of which may
be obtained from Wheaton or from
http://www.sec.gov/edgar.shtml.
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SOURCE Wheaton Precious Metals Corp.