Wheaton Precious Metals eyes battery metal mines

Wheaton Precious Metals Corp. is weighing expanding its investments into specialty metal projects to complement its gold and silver business as it attempts to capitalize on the world's mineral-intensive transition to clean energy.

The Canadian precious metals company saw earnings drop in the third quarter primarily due to lower-than-expected gold sales, but it sees opportunity in the "green metals" used in batteries, solar and wind generation, like cobalt, nickel, copper and zinc. The company purchases mostly gold, silver and palladium from mines around the world, but in January entered the cobalt market through an agreement with Vale SA. Wheaton is eyeing further opportunities in energy transition metals, company executives said during a Nov. 5 earnings call. Wheaton reported third-quarter net earnings of $134.9 million, or 30 cents per share, dropping 10.0% from the year-ago period when net earnings totaled $149.9 million, or 33 cents per share. The company reported $269.0 million in revenue for the September quarter, decreasing 12.5% year on year.

"A lot of projects that we're looking at funding are green metals projects," CEO and President Randy Smallwood said during the earnings call. "There's definitely a real push in that direction. I think we're well-positioned to not only take advantage of it with our existing portfolio but to continue to put our balance sheet back to work on this and grow in that space."

Headquartered in Vancouver in western Canada, Wheaton holds streaming agreements for about two dozen active mines and about eight development stage projects.

In January 2021, Wheaton finalized an agreement with mining behemoth Vale to purchase a stream of cobalt from Voisey's Bay, a nickel-copper-cobalt mine located in eastern Canada. Wheaton started receiving cobalt deliveries from the site in the first quarter of 2021 and reported 370,522 pounds of cobalt in the third quarter.

"I really think the cobalt market is just getting started," Smallwood said. "We know the world is shifting in that direction. The demand figures are astounding in terms of the amount of cobalt that's going to be needed over the next while."

Smallwood expects high commodity prices and corresponding inflationary pressures to bode well for the company's core business.

"I think in the face of an inflation wall hitting us, there's no better time to be in precious metals," Smallwood said.

Wheaton's gold output decreased year over year to 85,941 ounces in the third quarter, from 90,500 ounces in the third quarter of 2020, while silver increased to 6.4 million ounces from 6 million ounces. Total gold-equivalent production in the third quarter increased to 184,918 ounces year on year from 181,184 ounces.

Wheaton's 2021 production guidance is forecast to fall between 735,000 gold equivalent ounces and 765,000 gold equivalent ounces, slightly down from its previous range of 720,000 gold equivalent ounces to 780,000 gold equivalent ounces.