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Wheaton Precious Metals - Looking to the long term

On 11 February, Wheaton Precious Metals (WPM) provided production and sales data for FY20. While production was in the top half of WPM’s prior guidance range, there was evidence that sales had not kept pace with output. Uncharacteristically for WPM, we estimate that ounces produced but not yet delivered to WPM probably increased by c 33.6koz gold equivalent in Q420 cf Q320. Both WPM and Edison had previously expected gold equivalent ounces produced but not yet delivered to increase by c 20koz in Q320. When that failed to materialise, we assumed any coronavirus-induced increase in Q4 would be approximately offset by the tendency for WPM’s mining partners to ‘flush though’ sales in the final quarter. We have now adjusted our forecasts for FY20 accordingly. However, we have left our FY21 and longer-term forecasts and valuation ostensibly unchanged, pending information about a material increase in production from WPM at the time of its results on 11 March 2021. In total, we believe the number of ounces produced but not yet delivered has reached a level that means it is more likely to decrease than increase.