Wheaton Precious Metals — Maiden US$1bn annual net earnings beckon

Wheaton Precious Metals’ (WPM’s) Q3 adjusted EPS was 6.6% above Edison’s expectations and 1.6% above the market consensus (source: LSEG Data & Analytics, 6 November), with operational results from Sudbury, Blackwater, Marmato, Antamina, Stillwater (for palladium) and Voisey’s Bay ahead of our forecasts. Production also beat our forecasts for Constancia and Penasquito although sales lagged. For the third quarter in succession, net earnings achieved a record level. The main reason for the outperformance was a positive variance in Salobo’s sales. Whereas we had expected sales to undershoot production by 25.0% (or 18,624oz), in the event they only undershot by 16.8% (11,229oz). As a result, gold inventories rose by 3,852oz less than expected to only 3.31 months of production (cf 3.45 months forecast). Aggregate costs were also well controlled ( US$4.1m better than our forecasts). Together with a lower tax charge, these drove a US$17.5m (6.6%) positive variance in underlying net earnings and contributed to the upgrading of our FY25 adjusted net EPS forecast by 4.0c/share (1.5%). Note that, at current metals prices, our FY26 EPS estimate more than doubles from that shown below to US$3.70/share.