U.S. markets open in 1 hour 40 minutes
  • S&P Futures

    4,068.25
    +63.50 (+1.59%)
     
  • Dow Futures

    32,570.00
    +411.00 (+1.28%)
     
  • Nasdaq Futures

    12,483.00
    +238.25 (+1.95%)
     
  • Russell 2000 Futures

    1,816.50
    +34.10 (+1.91%)
     
  • Crude Oil

    115.44
    +1.24 (+1.09%)
     
  • Gold

    1,833.20
    +19.20 (+1.06%)
     
  • Silver

    21.66
    +0.12 (+0.56%)
     
  • EUR/USD

    1.0547
    +0.0109 (+1.04%)
     
  • 10-Yr Bond

    2.8770
    0.0000 (0.00%)
     
  • Vix

    26.56
    -2.31 (-8.00%)
     
  • GBP/USD

    1.2492
    +0.0168 (+1.36%)
     
  • USD/JPY

    129.2490
    +0.1960 (+0.15%)
     
  • BTC-USD

    30,356.39
    +358.74 (+1.20%)
     
  • CMC Crypto 200

    682.49
    +439.81 (+181.23%)
     
  • FTSE 100

    7,528.49
    +63.69 (+0.85%)
     
  • Nikkei 225

    26,659.75
    +112.70 (+0.42%)
     

Wheaton (WPM) Inks Metal Purchase Deal with Generation Mining

  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
·4 min read
In this article:
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.
  • Oops!
    Something went wrong.
    Please try again later.

Wheaton Precious Metals Corp. WPM recently entered into a binding arrangement with Generation Mining Limited. This agreement is for a Precious Metal Purchase Agreement (“PMPA”) in relation to the Marathon Project located in Ontario, Canada. The Marathon Project is expected to be a high-margin palladium mine with a 13-year mine life.

Wheaton will acquire 100% of the payable gold production until 150,000 ounces have been delivered under the Marathon PMPA. When achieved, WPM will acquire 67% of payable gold production for the life of the mine and 22% of the payable platinum production until 120,000 ounces has been delivered, thereafter reducing to 15% for the life of mine.

Wheaton will make a total upfront cash payment of C$240 million (roughly $187.2 million) to Generation Mining. The company will pay C$40 million (roughly $31.2 million) of the consideration amount on an early deposit basis before construction to be used for the development of the Marathon Project. The remaining amount will be paid in four staged installments during construction, subject to the clearance of certain customary conditions and a pre-determined completion test.

Wheaton will make ongoing payments for the gold and platinum ounces delivered at 18% of the spot prices until the difference between value of gold and platinum delivered and the production payment is equal to the upfront consideration of C$240 million. Once this is achieved, the production payment will rise to 22% of the spot prices.

It is expected that the first advance of the early deposit under the Marathon PMPA will occur early in 2022, subject to the completion of certain corporate matters and customary conditions.

Generation Mining expects construction activities to begin in 2022, with production starting in 2024.Following the closing of this acquisition, the Marathon Project will add to Wheaton's estimated proven and probable gold reserves by 0.26 million ounces and platinum by 0.17 million ounces. Measured and indicated gold resources would go up by 0.18 million ounces and platinum by 0.10 million ounces. Inferred gold resources will rise by 0.04 million ounces and platinum by 0.02 million ounces.

Shares of Wheaton have dropped 1.6% in the past year compared with a 5.4% decline of the industry.

Zacks Investment Research
Zacks Investment Research

Image Source: Zacks Investment Research

Wheaton’s attributable production is estimated between 735,000 GEOs and 765,000 GEOs for the current year. Gold production is expected in the band of 330,000-345,000 ounces. Silver production is projected between 25.5 million ounces and 26.5 million ounces, while production of other metals is anticipated in the band of 45,000-55,000 GEOs.

During the third quarter, the company announced a quarterly dividend of 15 cents per share, reflecting an increase of 25% from the year-ago quarter’s levels.

Zacks Rank & Key Picks

Wheaton currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the basic materials space are Nutrien Ltd. NTR, The Chemours Company CC and AdvanSix Inc. ASIX.

Nutrien has an expected earnings growth rate of 233.3% for the current year. The Zacks Consensus Estimate for NTR’s current-year earnings has been revised 16.3% upward in the past 60 days.

Nutrien beat the Zacks Consensus Estimate for earnings in three of the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 73.5%, on average. The stock has rallied 62.3% in a year. NTR currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Chemours has an expected earnings growth rate of 104% for the current year. The Zacks Consensus Estimate for CC’s earnings for the current year has been revised 10% upward in the past 60 days

Chemours beat the Zacks Consensus Estimate for earnings in the last four quarters. The company has a trailing four-quarter earnings surprise of roughly 34.2%, on average. It has rallied 30.8% in a year. CC currently flaunts a Zacks Rank #1.

AdvanSix has a projected earnings growth rate of 194.5% for the current year. The Zacks Consensus Estimate for ASIX’s earnings for the current year has been revised 5.9% upward in the past 60 days.

AdvanSix beat the Zacks Consensus Estimate for earnings in each of the trailing four quarters, the average being 46.9%. ASIX has rallied 130% in a year. ASIX currently carries a Zacks Rank #2 (Buy).


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

The Chemours Company (CC) : Free Stock Analysis Report

AdvanSix (ASIX) : Free Stock Analysis Report

Wheaton Precious Metals Corp. (WPM) : Free Stock Analysis Report

Nutrien Ltd. (NTR) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research