Wheaton Precious Metals Corp

TSX:WPM

Earnings Call Analysis

Wheaton's Strong Performance and Growth Plans

In 2023, Wheaton Precious Metals delivered solid financial results and established bold growth targets. The company achieved a 22% increase in fourth-quarter gold production to 174,000 gold equivalent ounces (GEOs), driven by expansions at Salobo. Revenue for the year reached $1 billion, a slight decrease due to lower gold equivalent sales, but was offset by higher gold prices. Gross margin improved to $573 million, with adjusted net earnings up 6% at $533 million. Despite a net cash outflow of $287 million in Q4, they project a 40% growth over the next five years, targeting over 800,000 GEOs by 2028. The company also continues to pursue significant corporate development, noting a strong market interest in streaming assets.

A Flourishing Future with Tactical Acquisitions

Positioned to achieve an impressive 40% growth over the next five years, reaching an annual output beyond 800,000 gold equivalent ounces by 2028, management underscores the low-risk nature of this trajectory, attributed to a majority share of production stemming from assets either currently operational, under construction, or with permitted status. Additionally, the company is set on an upward path with forecasts suggesting a sustained increase to an average of over 850,000 gold equivalent ounces per annum from 2029 to 2033, reinforcing future prospects.

Quarterly Highlights Indicating a Strong Finish to the Year

Exhibiting a solid Q4 performance with production scaling to 174,000 GEOs, marking a 13% quarter-over-quarter increase and a 22% year-over-year improvement, is a testament to the company's developmental strategies and operational excellence. Indicative of this success are the notably robust throughput expansions, particularly at the Salobo mining site. Despite a 21% drop in silver production primarily due to resolved disputes and asset divestitures, sales volume has surged by 36% compared to Q3 and an 18% increase over the previous year. A healthy mix of strong commodity prices and a steadfast production base has propelled revenue to $313 million and elevated gross margins to $177 million. Of the revenues, gold's substantial share at 74% reflects the company's strong positioning within the precious metals market.

Financial Fortifications and Positive Earnings Forecast

Remaining circumspect on their financial health, the enterprise reports general and administrative expenses of $9.2 million for Q4, cumulatively amounting to $38 million for 2023, slightly below forecasted values due to reductions in compensation. This prudent financial management sets the stage for a projected increase in G&A expenses between $41 million to $45 million for 2024, attributed mainly to ambitions in marketing and due diligence. Net earnings for the quarter reached a commendable $165 million, a sizeable augmentation from the previous year, primarily driven by elevated gross margins and resulting in a notable uptick in adjusted earnings per share at $0.36.

Fiscal Sturdiness Amidst Economic Adversities

Though the company saw a 5% decline in annual revenue to $1 billion in 2023, it effectively compensated through a 6% increase in average realized gold equivalent prices. A 1% year-over-year growth in gross margin to $573 million and a 6% rise in adjusted net earnings to $533 million accentuate the company's resilience against inflationary pressures. Operational cash flows have seen a remarkable 40% increase, and with a strong balance sheet fortified by a cash and cash equivalents total of $547 million, plus an untapped $2 billion credit facility, the company is well-equipped to meet its funding commitments and capitalize on further mining interests.

Strategic Corporate Developments underpinning Growth

The company's corporate development team had a standout year in 2023, formalizing eight critical precious metals transactions, summing over $1 billion in financial commitments. This strategic ingenuity has borne fruit in the form of acquisitions such as the existing streams on the Platreef and Kudz Ze Kayah Projects, in addition to the inception of a new stream on the Curraghinalt Project. Notably, the Platreef project is envisaged to be a globally competitive low-cost producer, with Wheaton anticipating a ramp-up in gold equivalent ounces received from early 2025. These transactions further mosaic the already robust development project pipeline promising accretive growth—and with an unceasing appetite for streaming capital in the mining space, the company eyes 2024 with aspirations for appending more accretive acquisitions to its portfolio.

Earnings Call Transcript 2023-Q4

[Operator]

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to the Wheaton Precious Metals 2023 Fourth Quarter and Full Year Results Conference Call. [Operator Instructions]

I would like to remind everyone that this conference call is being recorded on Friday, March 15, 2024, at 11:00 a.m. Eastern Time. I would now like to turn the conference over to Emma Murray, Vice President of Investor Relations. Please go ahead.

[Emma Murray, executive]

Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Smallwood, Wheaton Precious Metals' President and Chief Executive Officer; Gary Brown, Senior Vice President and Chief Financial Officer; Haytham Hodaly, Senior Vice President, Corporate Development; Curt Bernardi, Senior Vice President, Legal; and Wes Carson, Vice President, Mining Operations.

Please note that for those not currently on the webcast, a slide presentation accompanying this conference call is available in PDF format on the Presentations page of the Wheaton Precious Metals' website.

Some of the commentary in today's call may contain forward-looking statements, and I would direct everyone to review Slide 2 of the presentation, which contains important cautionary notes regarding forward-looking statements. It should be noted that all figures referred to on today's call are in U.S. dollars, unless otherwise noted.

With that, I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

[Randy Smallwood, executive]

Thank you, Emma, and good morning, everyone. Thank you for joining us today to discuss Wheaton's fourth quarter and full year results of 2023. I am pleased to announce that our portfolio of long-life, low-cost assets delivered another solid quarter, allowing us to meet our annual production guidance achieving 620,000 gold equivalent ounces in 2023. Our strong quarterly performance was underscored by Salobo, which reached its highest production level in the last 4 years. We were very excited to see Vale Base Metals successfully complete the throughput test for the first phase of the Salobo III expansion project in November, marking a significant milestone that demonstrates increased reliability and continued operational excellence. We look forward to further advances as that expansion project continues to ramp up through 2024.

In 2023, we also achieved a milestone in our growth strategy with the announcement of a record 8 acquisitions totaling just over $1 billion in commitments. Haytham will discuss in further detail these recent acquisitions, which include a silver stream on Waterton's Mineral Park Project, gold, palladium and platinum streams on Ivanhoe's Platreef project, which is our first foray into Africa; gold and silver streams on BMC's Kudz Ze Kayah project; a gold stream on Dalradian's Curraghinalt Project; and lastly, a royalty on Vista's Mt. Todd Project, marking our first foray into Australia.

We are excited to welcome our new mining partners and look forward to supporting them as they advance these projects, the largest being Ivanhoe's rapidly advancing Platreef project.

We are very pleased to have Ivanhoe as partners who have had long-standing relationships in South Africa and have done an immense amount of work to derisk one of the highest-grade, undeveloped precious metals assets in the world. Each of these acquisitions further diversifies our portfolio in terms of geographic presence and strategic partnerships, and once ramped up, our forecast to contribute meaningful production and further strengthen Wheaton's already prominent position as the leader in the sector's growth landscape.

Our growth pipeline of development projects was also further derisked in the quarter as Adventus Mining received multiple key permits for the Curipamba project and conveyed that a construction decision is expected within the year.

In addition, Rio2 announced that they have received approval of their Environmental Impact Assessment, allowing them to advance the Phoenix project through permitting, financing and into construction activities in 2024. During this quarter, we are also proud to have been recognized as one of the world's 100 Most Sustainable Corporations by Corporate Knights', an achievement reflective of our commitment to operate -- to operating responsibly in all areas of our business and representing the quality of the mining partners that we work with to deliver society its much-needed commodities.

To reinforce our confidence in the sustainability and the growth potential of Wheaton, we are pleased to announce the transition to a new progressive dividend policy. This new approach is marked by an increase to our 2024 annual dividend. Under our new policy, Wheaton's payout ratio is expected to remain the highest within the entire precious metals space. And with that, I would like to turn the call over to Wes Carson, our Vice President of Operations, who will provide more details on our operating results. Wes?

[Wesley Carson, executive]

Thanks, Randy. Good morning. Overall production in the fourth quarter came in higher than expected, driven by strong outperformances at both Salobo and Constancia and a steady ramp-up at Peñasquito, highlighting the strength of our diversified portfolio of long-life, low-cost assets.

In the fourth quarter of 2023, Salobo produced 71,800 ounces of attributable gold, an increase of approximately 89% relative to the fourth quarter of 2022, driven by higher throughput and higher gold recoveries. Salobo reached its highest quarterly production levels since 2019 as the ramp-up of Salobo III expansion continued to advance and overall improvements were realized at both Salobo I and II.

As mentioned by Randy, in November, Vale Base Metals reported the successful completion of the throughput test for the first phase of the Salobo III project, with the Salobo complex exceeding an average of 32 million tonnes per annum over a 90-day period.

Under the terms of the agreement, the company paid Salobo $370 million for the completion of the first phase of Salobo III expansion on December 1, 2023. Salobo III is expected to achieve a sustained throughput capacity of 36 million tonnes per annum by the fourth quarter of 2024. The remaining balance of the expansion payment is dependent on the timing of completion and will be triggered once Vale Base Metals expands actual throughput above 35 million tonnes per annum for a period of 90 days.

In the fourth quarter of 2023, Constancia produced 840,000 ounces of attributable silver and 22,300 ounces of attributable gold, an increase of approximately 28% and 112% relative to the fourth quarter of 2022. Record quarterly gold production combined with strong silver production, are a result of significantly higher grades for mining of high-grade zones in the Pampacancha deposit and associated higher recoveries.

In the fourth quarter of 2023, Peñasquito produced 1 million ounces of attributable silver, a decrease of approximately 41% relative to the fourth quarter of 2022, primarily due to lower throughput resulting from the labor strike which began on June 7, 2023, and ended on October 13. Newmont reports that operations have safely ramped up after the October 13 resolution was reached.

Newmont has indicated that Peñasquito is expected to deliver higher co-product production in 2024 due to higher silver, lead, and zinc content in the Chile Colorado pit.

In the fourth quarter of 2023, Antamina produced 1 million ounces of attributable silver, a decrease of approximately 3% relative to the fourth quarter of 2022, resulting from lower grades due to the mine sequencing. On February 15, 2024, Peru's National Environmental Certification Service for Sustainable Investments approved, after a detailed evaluation process, Modification of the Environmental Impact Study, which allows the extension of Antamina's reserve mine life in 2028 to 2036.

Wheaton's overall attributable reserves and resources saw solid growth across all mineral categories, with the most noteworthy being 10% growth in our proven and probable reserves. This was driven by a 12% increase in gold reserves primarily due to new acquisitions in 2023 combined with the results of a pre-feasibility study at Copper World, which now incorporates gold for the first time. Attributable, measured and indicated mineral resources also saw good growth at 15% on a GEO basis, and overall attributable inferred resources grew by 3%.

In 2024, gold equivalent ounce production is forecast to be consistent with the levels achieved in 2023. As expected, stronger production from Peñasquito and Voisey's Bay is forecast to be offset by anticipated lower production from Salobo, the suspension of operations at Minto and the halting of production at Aljustrel. Wheaton's estimated attributable annual production is forecast to be 325,000 to 370,000 ounces of gold, 18.5 million to 20.5 million ounces of silver, and 12,000 to 15,000 gold equivalent ounces of other metals, resulting in production of approximately 550,000 to 620,000 gold equivalent ounces using our updated 2024 commodity price assumptions.

Production is forecast to increase at Peñasquito as a result of uninterrupted operations and at Voisey's Bay due to the ongoing transition from the Ovoid pit to the underground mines. Production is forecast to decrease slightly at Salobo due to lower grades as per the mine plan, which are expected to be partially offset by increasing throughput as the Salobo III expansion project continues toward completion.

Historically, Wheaton has provided 5- and 10-year averages for its long-term guidance. However, in 2024, the company has elected to introduce a 5-year target in addition to an annual average for years 6 through 10, with a goal of providing increased granularity and further transparency of our expected growth trajectory. As such, we are forecasting growth of approximately 40% over the next 5 years to over 800,000 gold equivalent ounces by 2028 and averaging over 850,000 gold equivalent ounces per year from 2029 to 2033.

We believe this industry-leading 5-year growth profile to be significantly derisked, with over 70% of the growth coming from assets that are either operating, in construction, and/or permitted. We expect growth from operating assets to come from Salobo, Antamina, Peñasquito, Voisey's Bay, and Marmato with expected growth from development projects including Blackwater, Platreef, Goose, Mineral Park, Fenix, Curipamba and Santo Domingo. That concludes the operations review. And with that, I will turn the call over to Gary.

[Gary Brown, executive]

Thank you, Wes. As just described, production in the fourth quarter amounted to 174,000 GEOs, a 13% increase relative to the prior quarter and a 22% increase from the fourth quarter of the prior year, primarily due to the throughput expansion at Salobo, which achieved the highest quarterly production level since 2019. Relative to the fourth quarter of 2022, gold production increased 64% primarily due to outperformances at Salobo and Constancia, partially offset by a 21% decrease in silver production due primarily to the now resolved labor dispute at Peñasquito, the divestment of the Yauliyacu PMPA and the closure of the Minto mine and the temporary suspension of attributable production from Aljustrel.

Sales volumes amounted to 162,000 GEOs, a 36% increase relative to the third quarter of 2023 and an 18% increase relative to the comparable period of the prior year, with the year-over-year variance being primarily due to higher production levels being partially offset by relative changes in ounces produced but not yet delivered or PBND. Strong commodity prices, coupled with our solid production base, resulted in revenue of $313 million and gross margin of $177 million, an increase over the comparable period of the prior year of 33% and 46%, respectively. Of this revenue, 74% was attributable to gold, 24% to silver, 1% to palladium and 1% to cobalt. As at December 31, 2023, approximately 134,000 GEOs were in PBND and cobalt inventory, representing approximately 2.5 months of payable production, slightly lower than the preceding quarter and within our expected range of 2 to 3 months.

G&A expenses amounted to $9.2 million for the fourth quarter of 2023, and total G&A for the year amounted to $38 million, slightly below the low end of our original forecast due primarily to lower compensation costs.

For 2024, the company expects that G&A expenses will amount to $41 million to $45 million, with the anticipated increase from 2023 being attributable primarily to higher marketing and due diligence costs. Adjusted net earnings in the quarter amounted to $165 million, with the $61 million increase from the prior year due primarily to the higher gross margin. Adjusted earnings per share amounted to $0.36 per share, an increase of 59% over the comparable period of the prior year.

Revenue for 2023 amounted to $1 billion, representing a 5% decrease relative to 2022 due primarily to lower gold equivalent sales, partially offset by a 6% increase in the average realized gold equivalent price. Of this revenue, 99% was derived from precious metals with 65% attributable to gold, 32% to silver, 2% to palladium and 1% to cobalt. Gross margin for 2023 increased 1% from the prior year to $573 million with adjusted net earnings increasing by 6% to $533 million. Despite the persistent inflationary environment, we continued to deliver robust cash operating margins in the fourth quarter, resulting in cash flow from operations of over $242 million, an increase of over 40% relative to the fourth quarter of 2022.

During the quarter, Wheaton made total upfront cash payments of approximately $452 million relative to mineral stream interests, including $45 million relative to Blackwater and $370 million relative to the Salobo III expansion, along with dividend payments totaling $67 million. Overall, net cash outflows amounted to $287 million in Q4 2023, resulting in cash and cash equivalents at December 31 of $547 million. This cash balance, combined with the fully undrawn $2 billion revolving credit facility and the strength of our forecasted operating cash flows, positions the company exceptionally well to satisfy its funding commitments and provides us with the financial flexibility to acquire additional accretive mineral stream interests.

It is worth noting that subsequent to the quarter, on February 27, 2024, an additional $450 million was paid through Orion relative to the closing of the acquisition of the Platreef and the Kudz Ze Kayah streams. As mentioned by Randy, we have transitioned to a new progressive dividend policy marked by an increase in our first quarterly dividend of 2024. The Board has declared a dividend of $0.155 a share payable to shareholders of record on April 3, 2024. To date, the company has now returned more than $2 billion to investors through dividends, which notably represents more than 50% of the amount of equity ever raised by the company.

That concludes the financial summary, and with that, I turn the call back over to Haytham.

[Haytham Hodaly, executive]

Thank you, Gary. The corporate development team was exceptionally busy in 2023, announcing a record 8 precious metals transactions on a number of assets and over $1 billion in commitments, resulting in the addition of multiple top-tier assets, adding strong accretive growth to our development project pipeline. I'll take this opportunity to focus on streams relating to 3 new assets that were acquired in November when we entered into an agreement with entities advised by Orion Resource Partners to purchase existing streams on the Platreef and Kudz Ze Kayah Projects, along with the new stream that was created on the [ Curraghinalt ] project for a total cash consideration of $525 million. The Curraghinalt Kernel stream closed December 2023 with the Platreef and Kudz Ze Kayah streams closing on February 27, 2024.

Ivanhoe's Platreef project is the world's largest undeveloped precious metals project and is currently projected to become one of the lowest-cost producers of palladium, platinum, rhodium, nickel, copper, and gold globally. For the existing Platreef stream agreements, Wheaton will receive 62.5% of the payable gold and 5.25% of the payable palladium and platinum, until certain delivery thresholds have been met, at which point the percentage of payable metal will be reduced as set forth in the preexisting agreements. Attributable annual production is forecast to average over 21,000 gold equivalent ounces for the first 10 years, almost doubling to over 37,000 gold equivalent ounces for years 10 through 20. Wheaton expects to begin receiving ounces in early 2025.

On Slide 8, in addition to Platreef, the company also acquired a stream on BMC Minerals' Kudz Ze Kayah Project, a polymetallic feasibility study stage development project projected to be one of Canada's top producers of zinc and silver and a top 10 copper producer. Wheaton is expected to receive payable gold and silver deliveries ranging from 5% to 7.375% of produced metal for the life of mine, with the staged percentages depending on the timing of deliveries. The life of mine attributable production is expected to average 3,900 ounces of gold and over 530,000 ounces of silver per year.

Moving over to Slide 9. The third stream acquired is a newly created gold stream with Dalradian on its Curraghinalt project in Northern Ireland. Wheaton will receive gold production of 3.05%, dropping to 1.5% for the life of mine after 125,000 ounces of gold has been delivered. Attributable production will equal 4,400 ounces of gold per year for the first 10 years of production. We are excited to be partnering with Dalradian and supporting the build of this state-of-the-art modern underground mine. In addition to the streams acquired from Orion in the fourth quarter, Wheaton acquired a silver stream on the Mineral Park mine for $115 million, which was presented on our last conference call, in addition to 1% royalty on Vista Gold's Mt Todd gold project for $20 million.

While 2023 was a record year for corporate development activity at Wheaton, we continue to see strong appetite for streaming capital in the mining space and see opportunities to continue adding accretive acquisitions to our portfolio in 2024. With that, I will hand the call back over to Randy.

[Randy Smallwood, executive]

Thank you, Haytham. In summary, 2023 was a very strong year for Wheaton, distinguished by several key highlights. With production of 620,000 gold equivalent ounces, we achieved our annual guidance, generating robust cash flows of over $750 million and distributing record dividends of over $270 million. Our pipeline of development projects was further derisked by construction advancements and the receipt of various key permits by our partners, supporting our impressive organic growth profile of over 40% in the next 5 years.

We continue to grow our asset base, welcoming 7 new assets into our portfolio, adding further diversification by commodity, operator, region, and development stage. Our balance sheet remains one of the strongest in the industry, providing ample capacity to add accretive high-quality streams into our portfolio. We announced a new progressive dividend policy. And lastly, we continue to demonstrate leadership and sustainability with sector-leading ESG ratings and external recognition. So with that, I would like to open up the call for questions. Operator?

[Operator]

[Operator Instructions] Your first question comes from Richard Hatch from Berenberg.

[Richard Hatch, analyst]

Congrats on the good set of numbers. Three questions. The first one is just on Salobo. I think perhaps the market sort of struggled a bit to get clarity on Salobo volumes over recent years. And I just wonder whether you can perhaps give us a little bit more color and comfort over the estimates that the market should be using. And sort of more reading into this, the comfort you've got over your own guidance, given that Salobo is such a core asset.

The second one is just on Newmont. Obviously, they've come out and said that they want to sell some assets. And I just wonder if you might be able to talk a little bit about whether you're seeing a bit of interesting business development opportunities there, whether you can be part of a funding structure on some companies that are looking to try and do some deals for some noncore assets and get some streams on some interesting assets and some good jurisdictions.

And then the last one is just [indiscernible] I had from an investor today just talking about Wheaton and it's about the IRR evolution of the stream. Like if you were to look at a stream that you would have done at the point of actually doing it, and then fast forwards 5, 10 years or whatever it may be, can you just talk about the additional value you've created in that IRR as the years have gone by, for example, through exploration upside or whatever that may be? Just a question I'm just curious to get your views on.

[Randy Smallwood, executive]

Sure, Richard. And we'll -- hopefully I remember all 3 questions or we will remember all 3 questions. I'll start off with Salobo. So Salobo is just finishing off last year, the Phase 4 of the -- of that pit design and kicking into Phase 5. And as is expected, I mean, these pits are always designed around the higher-grade core and so they're always chasing down. And whenever you're starting a new phase, you chase out to the perimeter, which is a little bit lower grades. And so that's what we're looking at is through the course of this year, we're going to see -- the bulk of it is just going to be the start of mining in Phase 5 as they work their way down.

Now Phase 5 is expected to last probably about 4 or 5 years. And so what we're going to see is gradually increasing grades, again, as they work towards the core of the deposit in Phase 5. But I'll make a prediction. Five years out from now when they shift over to Phase 6, we'll probably see a bit of a kickover in grade again. Now the reason that the third phase of the expansion was sort of time to come on, this third phase of Salobo was to sort of coincide with this hit in lower grade. And so we will see an offset. It's not as hard as it would have been because we are ramping up this third phase.

And so we do expect that they'll be running the operation at its full capacity by the end of this year. The objective is to satisfy the next phase of the expansion test before the end of this year. I'm hoping it happens earlier than expected. They showed really good progress last year. I do think that Vale has taken a little bit of a conservative approach in terms of scheduling that towards the end of this year. But fingers crossed that they can actually get there a little bit earlier. But we will see improved grades over the next 4, 5 years as Phase 5 works its way back down into the core of the ore body. But this is going to be something that's a natural cycle with respect to the open pit. I don't know, Wes, you got anything to add to that?

[Wesley Carson, executive]

Yes. Probably the only other thing I would add is just that they do have an optimized stockpiling strategy there, where they are building up lower-grade stockpiles as they mine ore out of the pit. And we will see that variability over the next several years in grade. But as Randy said, as you get deeper down into the pit in Phase 5 and Phase 6, you will see that grade start to come back up. And really, we're really excited to see that higher throughput coming through and we're really just seeing the beginning of it. As that ramps up over the next year here, we'll see the actual overall production come up with that throughput.

[Randy Smallwood, executive]

I think your second question, Richard, was on Newmont. I don't know, Haytham, you have anything to add on that?

[Haytham Hodaly, executive]

Yes. Happy to take that question, Richard, and thank you for the question. Yes, Newmont, obviously, has indicated that almost half of their portfolio is considered non-world class or non-Tier 1, and they've indicated that they would look to sell probably 7 of those assets. We have been in discussions not with Newmont but with other parties to see if there's interest out there to -- that -- a way that streaming could actually help fund some of those assets.

Now keep in mind, there's only 1 or 2 of those assets that we would consider interesting from a Wheaton perspective, given the long mine lives and the resources and reserves that are in place. Many of the others are very, very short mine lives and wouldn't really be amenable to a good stream.

[Randy Smallwood, executive]

The other aspect is operating costs and margins. We do focus on first and second quartile assets. And so a lot of times when we see opportunities like this, these assets, one of the reasons they are for sale is because they're not very high-margin assets. Their costs have climbed up. And so it is something that we're not willing to stretch as far for in terms of doing that, but there's definitely going to be some activity on that front.

Richard, I think the third question was related to IRR and what kind of an IRR we look at. One of the huge benefits of this business model is the fact that we have commodity price -- pure commodity price exposure. Our costs are defined in the contracts. And so a lot of it comes down to what happens to commodity prices over that period. I think you suggested about a 4- or 5-year period. We deliver the bulk of that right back to our shareholders in terms of cash flows and profits.

And so it's a real key difference in the streaming model versus the traditional mining model where higher prices quite often mean lower grades get processed and costs go up because of that. We don't suffer from that. Our costs actually are defined by our contracts and we still deliver very, very strong margins all the way back up when we see those higher prices. And so I don't know, Gary, you've got something to add, and we've got a pretty good track record on the IRR side.

[Gary Brown, executive]

Yes, we do. Richard, we just still -- the required returns associated with the opportunities that we're looking at, yes, based upon the risks inherent in that opportunity relative to the risks inherent in our existing portfolio. And so we look at how well defined the resources, what the counterparty credit risk looks like, what the political risk looks like, whether we're dealing with a first quartile asset or a second quartile, and we're really only focused on assets that operate in the lowest half of their respective cost curves.

And then we look at whether we're taking development-stage risk or whether it's a currently operating asset. And then we look at the ESG track record or what we expect to be the commitment of the counterparty to ESG, high level of ESG practices. And we come up with an appropriate discount rate associated with that. When we -- we also do what we call a postmortem every year where we look at every deal that we've ever done, and we compare how it performed to how we expected it to perform.

And when you look at that, we put just over $10 billion into streams. We've already recovered all of that money. We have an average mine life of rough -- proven and probable reserve life of roughly [indiscernible] 25 years when you include resources, which our assets have shown a high propensity to deliver on that mine life more than doubled. So when you look at the returns that we've generated on the over $10 billion, we estimate that as being just over 17%. And that's over a 20-year history. We're celebrating our 20th anniversary so I think we feel we've been pretty good stewards of capital.

[Richard Hatch, analyst]

That's incredibly helpful, Gary. And I just -- just for reference, normally when you would do a deal, if we would see [ on some of the ], the IRR that the market probably would calculate would be for high-single digits, low-double digits IRR? So really, there's a good, what, 50% upside on return potentially through whether it's commodity price upside or life of mine upside? Is that a good way to think about it?

[Randy Smallwood, executive]

Yes. I mean, it comes down. Every project is unique, right, because each project has varying risks. If you're going into small countries where you're the only asset running, you assign a higher risk to it, and you take that risk when you're going into it. And so you make sure you structure it to protect yourself so you don't have those kind of problems. If the exploration risk, the metallurgical risk, all of those factors come in, the ESG risk, all of those factors come into what kind of return that we need to satisfy us investing into the project. And as Gary highlighted there, we've got a pretty good track record of making sure that we deliver on those returns.

[Operator]

[Operator Instructions] Your next question comes from Tanya Jakusconek from Scotiabank.

[Tanya Jakusconek, analyst]

I have actually 4 questions, if I could so I'm just going to go through them one by one. So the first one, maybe just on the global minimum tax. Just from your interpretation because my understanding is that it's implemented or when implemented and the Canadian government implements it, it would be retroactive back to January 1, 2024. So I just want to understand your view. Would -- are you seeing it as retroactive going back? Or are you seeing it just being implemented when the Canadian government implements it?

[Gary Brown, executive]

We expect it to be retroactive, Tanya.

[Tanya Jakusconek, analyst]

Okay. So we should think of it that maybe you don't pay it in Q1, but if it's implemented in Q2, then you would have it obviously take through the income statement and going forward in Q2 onwards retroactive back to Jan 1. Would that be a fair way of thinking about it?

[Gary Brown, executive]

Yes. Like I don't think there's much of a chance of the GMT being enacted by the time that we release our Q1 results. So we'll be very transparent as to what that accrued liability would be expected to be by disclosing it in our MD&A. But we likely will take 2 quarters of GMT reflect 2 quarters of it in our second quarter results. So just keep that in mind, assuming that the Canadian government enacts it.

[Tanya Jakusconek, analyst]

Yes. No, no, no. Okay, that's helpful. My second question has to do with dividends. So I'm just -- maybe this is for Randy. Randy, just on the dividend policy, you've gone to a progressive dividend. Can you just talk me through why the move? Is it made because your peers have progressive dividend? Is it made -- like is it just being reviewed once a year, and so like your peers every year, we sort of have a slight increase? And just remind me, your minimum cash balance on your balance sheet that you need to run your business so that I can think about what -- how I model this dividend going forward.

[Randy Smallwood, executive]

Sure. Well, so as a refresher of the previous dividend was -- it had, as a reference, a minimum of 30% of our cash flows, the average over the previous 4 quarters. The challenge that we've had with that is that it's one that had a climbing basement. And so we've been actually holding it relatively constant. And to be honest, we're paying currently somewhere around that, it's 37% of our cash flows.

And so when we looked at our growth profile coming forward, we realized that if that -- with the current framework, we actually wouldn't be raising the dividend even though we're going to see some growth. And of course, current commodity prices would accelerate that. But we haven't seen that growth for a couple of years. And we just felt that having been flat for a couple of years, it was time to add some growth. We've had substantive growth in our dividend, peer group-leading growth in our dividend over the last 5, 6 years, but it has actually been held flat for a couple of years, and we just thought it was time to give it a bump.

And so the commitment towards the progressive, the scale, I mean, what we're committing to is that there will be an increase on an annual basis on a go forward. The scale of that increase is going to be up to us and up to our Board, and it's going to be subjective to what kind of a cash balance are we looking at right now.

In terms of a minimum cash balance, this is a very G&A-light company. We don't have much needs. There's a total of 40 employees in the whole company. And so our G&A, as Gary detailed in his numbers, our G&A numbers are very, very small. And so -- and we've got healthy access to very, very attractively-priced debt if required. That's all going to only be touched if we -- with the strong cash flows and with the production growth we've got over the next few years, that's only going to be -- we're only going to be using that revolver if we're seeing access to larger scale world-class streaming opportunities, which we're always hopeful for.

But currently, what we've been looking at is stuff that's $500 million or less, which is something that's easily handled -- we can handle that with our current expected cash flows. And so I don't see any risks on that side at all. The commitment is it's time to -- it's been flat for close to 2 years now since we've seen a bump up on that, and we're -- and because of that 30% number being well below what we're actually paying in the 37% range, we just -- looking forward, we didn't see that actually impacting our dividend on a go-forward basis.

And so we just felt at the time to deliver bring some of that growth forward and start giving it -- even adding more back to what we already delivered to our shareholders. We're already, by far, the biggest in the entire precious metals space in terms of the percentage of revenue back to shareholders. And so we want to make sure that we continue showing that growth that we have shown for the last 4, 5 years.

[Tanya Jakusconek, analyst]

And the minimum cash I should think about on the balance sheet?

[Gary Brown, executive]

I don't -- we don't really look at there being a minimum cash balance required on our balance sheet. We've got this 5-year $2 billion revolving credit facility, which is fully undrawn should we need to access that fund, some of the opportunity sets that Haytham will hopefully be bringing in. But when we look at the current commitments that we have outstanding, we don't even see ourselves -- even with this new dividend policy, we don't see ourselves even accessing the $2 billion revolving credit facility to fund those commitments over the next 3 years.

[Randy Smallwood, executive]

We've shown a strong track record of just adding to that dividend. And so when you keep on talking about the reference to minimum balance, I mean, we're not going to drop the dividend. So we've got a strong enough balance sheet with all the tools that we have at hand and all the growth we have, that's not something that's a concern to us.

[Tanya Jakusconek, analyst]

Yes. Okay. Well, I'll continue with Gary then on my next question. Just wanted to review Gary with you, just the payments, just to make sure I have all of the payments that you are going to be paying this year. You did mention, obviously, the $450 million that went out on Feb 27, I think it was the one you mentioned. Can you just remind me all of the other ones that are coming, so I have them all captured?

[Gary Brown, executive]

Yes. And I would point you to our -- the table that we have of our commitments on Page 39 of our MD&A. So you've got the Salobo payment that we -- is contingent upon Vale achieving the 35 million tonne per annum throughput test, which we think they should satisfy this year. So that's $163 million. We expect to start making payments relative to Cangrejos. So we've got about $19 million relative to them. We've got about $15 million that we hope to be making through the generation mining relative to the Marathon project.

Marmato is expected to move forward with the development of the deeper zone, and so we've got $80 million there. We've got the $115 million for the Mineral Park stream. We paid the $450 million relative to Platreef and Kudz Ze Kayah. Fenix Gold, we would hope they move forward with a construction decision later this year, so that's $25 million. We've got $17 million that we will pay relative to the Mt Todd royalties. And that's pretty much everything that we expect this year.

[Randy Smallwood, executive]

There is a possibility that Curipamba might move forward a bit. We've got that scheduled in next year. But with the success they've had on permitting and they are considering going into a construction decision, we might see that move forward. That's a great news story.

[Gary Brown, executive]

And that would be $162 million.

[Randy Smallwood, executive]

Unlikely we pay all of that but we might be paying a bit of that here in this year as they -- if they may go ahead and make a construction decision, which they're seriously looking at.

[Tanya Jakusconek, analyst]

I just want to make sure I have the big ticket ones definitely in the model. And then I just wanted to ask just also on the guidance on depreciation getting with Q2 but maybe G&A that you usually provide for us. And then also an understanding of the quarterly guidance. Should I be thinking 48-52, first half, second half?

[Randy Smallwood, executive]

I guess, I mean, from the G&A perspective, what we've got is $41 million -- $45 million over the course of the year and spread out evenly across that. In terms of production, there's no doubt that Salobo is a key influence and they expect to be running that. It's a 90-day completion test to get that second phase. And that's going to be -- their current schedule has that being satisfied during the fourth quarter, but they're going to have to start that in the third quarter to go forward.

And that will be running at a minimum of 35 million tonnes per annum. Keep in mind, the asset has a capacity of 36 million tonnes per annum. So I would probably lean it a little bit towards -- you're probably not too far off the 48-52, 48% first half, 52% second half. It might even be 47-53. There's definitely going to be a little bit of a bias towards the tail end of the year, mainly because Salobo is ramping up through the course of the year.

The other area we're going to see gains over the course of the year is Voisey's Bay on the cobalt side. Every quarter, there's going to be a higher percentage of underground feed satisfying, and that stuff is much higher grade than what we're currently using from the open pit.

[Tanya Jakusconek, analyst]

Yes. No, I appreciate that. And then my final question maybe for Haytham is, again, coming back to the transaction activity or the M&A activity out there. I'm just kind of curious whether now, are you switching back to focusing on production over development or are you happy to take a mix? So I'm just wondering, again, size-wise and development of our production, how do you see that in your portfolio?

[Haytham Hodaly, executive]

Sure. And I think you're right. For the last few years, it has been focused on development. What we've seen is a little bit of focus on balance sheet strengthening by some of the potential diversified and other producers out there. So I think it's probably a 50-50 mix, I'd say, right now. 50% is probably still looking at development-stage opportunities, and the other 50% is looking at balance sheet strength.

And I don't want to say balance sheet repair but people are trying to shore up their balance sheets to be able to add and to increase, acquire, et cetera, in this environment. That's an area that's coming to us and looking for guidance on. I would say that the majority of the opportunities we're looking at are still sub-$300 million. But as always, there's a couple that are greater than $500 million that takes some time to foster and hopefully, we can get those across the line.

I'll also add, Tanya, one thing you've got, I mean, 17 years as an analyst, I don't think anybody ever got my name right on the conference call. So you already upon on me there.

[Operator]

Your next question comes from Brian MacArthur from Raymond James.

[Brian MacArthur, analyst]

Can I go back to the GMT? You talked about how you're going to book at first quarter low and second quarter higher. But can you go through on a cash basis when you'll actually make payment because you also talked about there's some credits about G&A, financing, et cetera? And if you could just walk through how you think that will evolve over the next few years when you think you'll actually have to start making cash payments related to the GMT.

[Gary Brown, executive]

Yes. We -- for the amounts accrued in 2024, we won't actually disperse those until 2026. And I think what we've been guiding people to is you take our non-Canadian income and you apply a 15% tax rate to that. So we don't -- there won't be much, like, additional deductions. We will -- yes, it's income so it does reflect the depletion of the upfront payment.

[Brian MacArthur, analyst]

So as I roll forward then, if I'm paying my 2024 on a cash basis in '26, does it keep going that way, that your '25s will be paid in '27s, we're always like on an 18-month lag? Or does it get trued up and eventually you start paying on a run rate? I'm trying to figure out whether it's actually just defer the payment on a lag basis or are you actually get full credit and shelter some of the cash up front.

[Gary Brown, executive]

Yes. At this point, I think we are operating on the basis that it will be on that kind of 2-year deferral basis or 1.5 year deferral basis.

[Randy Smallwood, executive]

Brian, given that it's what I would call a sweep tax. I think it needs to operate like that in a sense to allow any other taxes that have been paid to be sort of deducted off of what that works. I'm just looking at the mechanics of it. But until we see legislation, it's really tough to be firm on that. But that sounds like it makes sense in terms of them having to wait in the subsequent year. So you get that 18-month lag before you actually calculate it because it's going to look at whatever -- as I said, it's like a sweep tax.

[Brian MacArthur, analyst]

Great. That's very helpful to speak of it in that way. And the other thing is in the MD&A, you talk about how it works in Luxembourg. There's also, I guess, you have stuff in the Netherlands and Barbados. Is there [ anything there ], changes going forward? I mean, you talked about Canon Luxembourg, but you didn't mention the other two.

[Gary Brown, executive]

No. I think we've outlined all of the potentially applicable jurisdictions.

[Brian MacArthur, analyst]

Sorry to go from tax. I'm just trying to get this clear on a cash basis is very helpful.

[Gary Brown, executive]

Thanks, Brian. That's the only question, Brian, on tax?

[Brian MacArthur, analyst]

I don't think we want to do more tax, do we?

[Gary Brown, executive]

No.

[Operator]

Your next question comes from John Tumazos from John Tumazos Independent.

[John Tumazos, analyst]

Congratulations on the Page 39 table, laying out the next $2 billion to invest in such good projects and the good projects you invested in 2023. I wish I could shine the shoes of your corporate development guys and maybe they deserve an extra big bonus.

[Randy Smallwood, executive]

Well, I will tell you that it's an entire team effort here. It's not -- Haytham doesn't get all the credit.

[Haytham Hodaly, executive]

But I do like how you think, John.

[John Tumazos, analyst]

So Randy, when I was sitting in the New Discoveries seminar last Wednesday at PDAC and a year ago, maybe half of the discoveries I thought weren't discoveries or not documented yet. And maybe one big discovery is AngloGold Anglo Gold, Silica Northwest of Vegas, which [indiscernible] and Origin have the royalty on. The [indiscernible] has the royalty on. In the context of sort of not a great stream of new discoveries, your accomplishments in locking up all these deals is even more superhuman.

If you can't sustain this pace of deal generation, you're getting bigger and generating so much cash, do you think you'd simply let cash accumulate on the balance sheet or increase the dividend or buy back shares or buy royalties or other royalty companies? What will you do if you can't sustain the deal generation pace? I don't think you're going to lower your quality standards.

[Randy Smallwood, executive]

Well, and that's, John, excellent point. And I strongly agree with you. One of the challenges -- this isn't a number that's out there, but what we have run into over the last few years is we're putting in a lot less IOVs, indications of value. And so for an asset to actually make it to the IOV level for us at Wheaton, it has to show clear standards in terms of operating margins and responsible site, suitable risks all the way across the board in terms of getting to that stage.

And I can tell you that for the last 4 years, it's less and less and less. We're not seeing as many good quality projects out there. And I'm fearful for the industry in the sense that there's just not a lot of risk capital out there. So there's not a lot of exploration, and that means there's just not a lot of good new discoveries that we see coming down the pipe. It's getting to be a tighter and tighter market. I think in that space, the number of -- the success that we had last year where we -- more acquisitions than ever before, I mean, I just really do hand that to the team in terms of the work that we did on pushing that forward.

A lot of those transactions were with people or companies that we've worked with in the past, and that really does come down to working on being a partner of choice. It's something that we really strive to be here at Wheaton. And so I don't know, Haytham, you want to add any more on the opportunity set, and then I'll come back in and talk about where the cash is going.

[Haytham Hodaly, executive]

Sure. Thanks, Randy. Good question, John. I think I will say what you're seeing now, John, in terms of a lack of quality is something we actually saw a few years ago. So about half a dozen years ago, we had a definite focus to try and find the best development-stage opportunities that we could actually get involved in. And as you saw over the last 5 years, we've got, like, 14 or 15 development-stage opportunities right now that we're actually involved in. And there's 3 or 4 of them coming into production here in the next 12 to 24 months.

So we did have a time line where we looked and said, "Okay, let's work on our near-term growth. Let's work on our medium-term growth. Let's have some optionality in our longer-term growth." And we've accomplished that. So we do think that there's still opportunities out there. They are far and few between, you are right, but Randy's comment is exactly right. Building the relationships and getting that repeat business, and that's going to be the key going forward is to be a partner for choice.

[Randy Smallwood, executive]

And with respect to the cash on hand, it's been a pretty consistent message. If we can't put it back into the ground effectively, it goes back to shareholders. I don't see us ever -- if we ever bump up over $1 billion cash on hand, that to me is a pretty lazy balance sheet. And that's the point that if you ever see a cash balance kicking up at those kind of levels, we'll start ramping up that dividend and start feeding even more of that back to our shareholders.

We already lead the entire precious metals space on that front in terms of how much we -- what percentage we give back to our shareholders, but we can have that up further. And my hope is and what we're always trying to do is manage our existing portfolio and grow it and continue to add quality assets, and that's what we'll keep doing. But we're going to do it for accretive prices for that. We're not going to -- I mean, for us, it's important that we are strong stewards of our shareholders' capital. And so if we can't put it to work effectively, it will go back to shareholders.

Our first choice is always going to be to grow the dividend. I think it's the best way, it's a commitment on a longer-term basis to go out. And so I just think that, that's always going to be our first -- our preferred choice. Thank you, everybody. Go ahead.

[Operator]

I was just going to turn back the call over to yourself. Ladies and gentlemen, this concludes the Q&A portion of today's conference call. I will now turn the call over to Mr. Randy Smallwood for closing remarks.

[Randy Smallwood, executive]

Thank you, everyone, for your time today. As we at Wheaton here celebrate our 20th anniversary here in 2024, I'm just incredibly grateful for the partnerships that we have forged over the years and the strong support of our shareholders. Together, we have provided the industry with an innovative solution to project finance that truly unlocks value for all stakeholders. Wheaton's high-quality portfolio of assets, sector-leading growth profile and commitment to sustainability provides our shareholders with a solid outlook for the future and is one of the best vehicles for investing into the gold and precious metals space.

So as we celebrate our 20th year, I'm just sincerely thankful for all of our stakeholders for their part in our success, in Wheaton's success, and I do look forward to a golden future ahead. So we look forward to speaking to all of you again soon. Thank you.

[Operator]

This concludes your conference call for today. Thank you for participating. You may now disconnect your lines. Thank you.