Wheaton Precious Metals (WPM) Q3 2020 Earnings Call Transcript

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Wheaton Precious Metals (NYSE:WPM)
Q3 2020 Earnings Call
Nov 10, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2020 third-quarter results conference call. [Operator instructions] Thank you.

I would like to remind everyone that this conference call is being recorded on Tuesday, November 10, 2020, at 11 a.m. Eastern Time. I would now turn the conference over to Mr. Patrick Drouin, senior vice president of investor relations.

Please go ahead.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today’s call. I am joined today by Randy Smallwood, Wheaton Precious Metals’ chief executive officer and president; Gary Brown, senior vice president and chief financial officer; and Haytham Hodaly, senior vice president, corporate development. I’d like to bring to your attention that some of the commentary in today’s call may contain forward-looking statements.

There can be no assurances that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. In addition to our financial results cautionary note regarding forward-looking statements, please refer to the section entitled Description of the business risk factors in Wheaton’s annual information form, and the risks identified under risk and uncertainties in management discussion and analysis, both available on SEDAR and in Wheaton’s Form 40-F and Wheaton’s Form 6-K, both available on EDGAR. These documents, together with the Q1 2020 MD&A, the Q3 2020 MD&A and the press release from last night, set out the material assumptions and risk factors that could cause actual results to differ, including, among others, fluctuations in the price of commodities, impacts on Wheaton or mining operations from the precious metals purchase as a result of the epidemic, including the COVID-19 pandemic, risks was related to mining operations from which Wheaton purchases precious metals, the continued ability of Wheaton’s counterparty to satisfy the obligations under precious metal purchase agreements, and the impact of any material changes in fact, law, or jurisprudence on the CRA Settlement. It should be noted that all figures referred to on today’s call are in U.S.

dollars unless otherwise noted. In addition, reference to Wheaton or Wheaton Precious Metals on this call includes Wheaten Precious Metals Corp. and/or its wholly owned subsidiaries, as applicable. Now I’d like to turn the call over to Randy Smallwood, our president and chief executive officer.

Thank you, Patrick, and good morning, ladies and gentlemen. Thank you for joining us today to discuss Wheaton’s third-quarter results of 2020. I hope everyone has been keeping healthy and safe since our last quarterly conference call. At Wheaton, our top priority remains the health and safety of our employees and the communities in which we operate.

Now with regard to our third-quarter results, I am very pleased to announce that Wheaton’s high quality portfolio of assets generated nearly $230 million in operating cash flow in the third quarter alone, resulting in a record of over $555 million for the first nine months of 2020. And given Wheaton’s unique dividend policy, this strong cash flow has resulted in a 20% increase in our dividend to be paid in the fourth quarter. In addition, we recently announced the listing on the London Stock Exchange that we hope will provide another point of entry and make it easier for new internationally based shareholders to invest into Wheaton. We continue to focus on delivering value to all of our stakeholders.

I will provide updates on Wheaton’s response to COVID-19 after Gary discusses our third-quarter results. So now I’d like to turn the call over to Gary Brown, senior vice president and chief financial officer, who will provide more details on our results. Gary?

Gary BrownSenior Vice President and Chief Financial Officer

Thank you, Randy, and good morning, ladies and gentlemen. The company’s precious metal interests produced 171,400 gold equivalent ounces in the third quarter of 2020, comprised of 91,800 ounces of gold, 6 million ounces of silver and 5,400 ounces of palladium. This represents a 22% increase in production relative to the prior quarter with the mines that were temporarily suspended due to COVID-19 in Q2 having returned to operation. Relative to the third quarter of the prior year, production decreased by 7%, with gold production decreasing 11%, due primarily to the expected mining of lower grade material at Salobo, while silver and palladium production was virtually unchanged.

Gold equivalent sales volumes increased by 2% relative to the third quarter of 2019 to 157,500 ounces with sales volumes in the comparable quarter of the prior year, reflecting a buildup in ounces produced but not delivered. It is interesting to note that our GEO sales volume was 17% higher than that reported by any other streaming or royalty company in the quarter. As of September 30, 2020, ounces produced but not delivered or PBND, amounted to approximately 124,000 gold equivalent payable ounces, representing approximately 2.2 months’ worth of payable production. This compares to an average PBND balance of approximately 140,000 gold equivalent ounces over the preceding four quarters, and it is possible that a buildup of PBND could occur in the future.

Revenue for the third quarter of 2020 amounted to a record setting $307 million, representing a 37% increase relative to Q3 2019, primarily due to a 35% increase in the average realized gold equivalent prices. Of this revenue, 56% was attributable to gold sales, 40% to silver and 4% to palladium. Again, it is worth noting that our revenue in Q3 2020 was 10% higher than any other streaming or royalty company. Gross margins for the third quarter of 2020 increased 85% to $177 million, highlighting the leverage our business model provides to increases in precious metal prices.

Cash-based G&A expenses amounted to $20 million in the third quarter of 2020, representing an increase of $7 million from Q3 2019, with the increase being primarily related to higher crude costs associated with the performance share units or PSUs and higher charitable donations with the company donating $1 million during Q3 2020 relative to the previously announced $5 million community support and response fund related to the COVID-19 pandemic. Interest costs for the third quarter of 2020 amounted to $2 million, resulting in an effective interest rate on outstanding debt of 1.24%, as compared to $11 million of interest costs and an effective interest rate of 4.02% incurred in Q3 2019, with the average outstanding debt balance decreasing by over 45%. Net earnings amounted to $150 million in the third quarter of 2020, compared to $76 million in Q3 2019. Basic adjusted earnings per share increased 113% to $0.34, compared to $0.16 per share in the prior year.

Operating cash flow for the third quarter of $228 million or $0.51 per share, compared to $142 million or a $0.32 per share in the prior year, representing a 59% increase on a per-share basis. Although, this level of operating cash flow did not represent a record for the company, it was 7% higher than any other streaming or royalty company generated in the quarter. Based on the company’s dividend policy, the company’s board has declared a dividend of $0.12 a share payable to shareholders of record on November 25, 2020. This represents a 20% increase relative to the dividend paid in the prior quarter and highlights how shareholders participate directly and efficiently in any precious metal pricing rally under our unique dividend policy.

Under the dividend reinvestment plan, the board has elected to offer shareholders the option of having their dividends reinvested in newly issued common shares of the company at a 1% discount to market. For 2020, the company continues to estimate that non-stock-based G&A expenses, which exclude expenses relating to the value of stock options and PSUs will amount to $40 million to $43 million for 2020. During the third quarter of 2020, the company repaid $153 million on the revolving facility, disbursed $37 million in dividends and invested $11 million in long-term investments. With these cash outflows being partially offset by proceeds from the sale of various equity instruments, totaling $49 million and the exercise of stock options in the amount of $3 million.

Overall, net cash increased by $78 million in Q3 2020, resulting in cash and cash equivalents at September 30 of $210 million. This combined with the $488 million outstanding under the revolving facility, resulted in a net debt position as of September 30 of only $278 million. As such, the company is well-positioned to satisfy its funding commitments and sustain its dividend policy, while at the same time, having the flexibility to consummate additional accretive precious metal purchase agreements. In summary, our high quality portfolio of streaming assets not only helped Wheaton set new records in Q3 2020, they generated the highest GEO sales volume, revenue and operating cash flow of any streaming or royalty company in the world, leading to a 20% increase in its dividend and positioning the company extremely well to reap the benefits of any continuation of the rally in precious metal prices, as well as to execute on its accretive growth strategy.

With that, I will turn the call back over to Randy.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, Gary. The company continues to keep up-to-date on developments surrounding COVID-19 and has taken steps to protect the health and safety of our employees and the community, as well as measures to minimize any impacts to our business. I will now provide a general update on our guidance, corporate development activities and community initiatives. We’re pleased that all of our mining partner’s operations that were temporarily suspended due to COVID-19 have resumed operations.

Production in the third quarter rebounded strongly following the temporary suspensions in the prior quarter and the company is on track to meet the higher end of our guidance. As a reminder, on a gold-equivalent basis, we expect to produce between 655,000 to 685,000 gold equivalent ounces in 2020. Wheaton’s long-term production forecast remains unchanged at 750,000 gold equivalent ounces per year on average between 2020 and 2024. On the corporate development front, we continue to remain very active.

Subsequent to the quarter, we announced that we had finalized the previously announced Precious Metals stream with Caldas Gold to purchase 6.5% of the gold production and 100% of the silver production from the Marmato Project located in Colombia. We’re excited to partner with Caldas in advancing this project and we are very encouraged by the continued strong exploration success. We remain unwavering in our focus on delivering the highest quality portfolio, Precious Metals production to our shareholders through our top tier asset base, strong organic growth profile and acquisition of accretive growth opportunities such as Marmato. At Wheaton, our success is not only measured in terms of financial results and accretive acquisitions, but also in our ability to make a positive difference.

In that regard, earlier in this year, we established a dedicated, $5 million fund to help address the impacts of COVID-19, more than doubling our budget for community support. We have now deployed approximately $3 million of those dollars of our COVID-19 response fund to support various programs globally. The majority of these funds are dedicated to the communities around our mining partner’s operations and not only help to alleviate the near-term impacts of the pandemic, but also leave positive sustainable benefits. In Brazil, in Mexico, and in Peru, the fund has helped to provide food security, medical services and supplies, such as an ambulance and ventilators and economic opportunities for those in need.

Specifically in Brazil, we have funded the production of face masks to help product the spread of COVID-19, while supporting local female entrepreneurs. We continue to work with our partners to identify additional programs that support their COVID-19 relief efforts. Now more than ever, we must come together to help support our communities and make a positive impact and we continue to urge our peers in the streaming space to follow our lead in this regard. In summary, despite the temporary shutdowns of some operations, the first nine months of 2020 has resulted in record revenue and cash flow, and the second increase to our dividend this year.

Not only that, but we remained optimistic that we will be able to continue growing the company and add additional production from long life assets, producing in the most half of their respective cost curves. And with our recent listing in the London Stock Exchange, we are excited that a new audience now has the opportunity to invest in Wheaton. And we believe our business model offers U.K. investors a new and appealing opportunity to gain exposure to precious metals through a streaming company of Wheaton scale.

Given the bullish precious metals markets, the strength of our business model and our high quality portfolio of assets, we remained confident that we can continue to create sustainable value for all of our stakeholders and continue to be leaders in the streaming and royalty space. So with that, I would like to open up the call for questions. Operator?

Questions & Answers:

Operator

Thank you. [Operator instructions] And your first question here comes from the line of Ralph Profiti from Eight Capital. Please go ahead. Your line is now open.

Ralph ProfitiEight Capital — Analyst

Hi there. Good morning, everyone.

Randy SmallwoodSenior Vice President of Investor Relations

Hey, Ralph.

Ralph ProfitiEight Capital — Analyst

Good morning. Thank you for taking my questions, Randy. Randy, in your commentary and in the MD&A, you talked about the comfort with higher end of guidance for 2020. Where are you feeling most confident in terms of the operations, I think it’s been well-telegraphed that Peñasquito was strong quarter over quarter and Q4 is going to be very strong.

So is that the primary source, are you feeling greater comfort in some of the other operations, and if so, which ones?

Randy SmallwoodSenior Vice President of Investor Relations

Well, Peñasquito is definitely seeing the best grades and continues to surprise us at site. And on top of that, Newmont is doing great work there with respect to recoveries and throughput. And so it’s just a combination of Peñasquito probably is the strongest within the group itself. But we’re seeing strength in every asset.

I think where the comfort is coming from is actually the fact that everyone rebounded from the suspension so rapidly, good strong production numbers. And we had — when we originally came up with the revised guidance, we had felt that the combination of the higher absenteeism and the restart of the operations that were suspended was going to slow things down. But it really appears that our operators had put a lot of effort into making sure that when the restart happened, it happened strong and relatively well. So yeah, I think, across the board it was Peñasquito outperforming a bit on grades and recoveries.

And then, overall, just all of the operations that the impacts on — from the pandemic have — they just rebounded in a stronger sense all the way across the board.

Ralph ProfitiEight Capital — Analyst

Great. Yeah, good answer. I appreciate that. And as an industry we have seen a lot of dividend increases, right, and it’s becoming sort of a little bit more competitive in terms of one-upmanship.

And in the context of the London listing and the new source of capital, how are you feeling in particular about that 30% ratio, right? it’s been in place for a couple of years. Could you go higher? Would you go higher? You are thoughts on that would be appreciated?

Randy SmallwoodSenior Vice President of Investor Relations

We will go higher. it’s just a matter of timing. We, of course, have very, very strong cash flows and good strong organic growth in the portfolio and so we have a choice. We fund our dividend, but the rest of it goes back into the ground.

Now if we don’t make any further investments, our debt should disappear by the first quarter of next year, and we start building up a war chest to put back into the ground. But if that war chest gets too big, we will be increasing the dividend to fit it back. And so as I’d like to say, our first objective is to pay a good, strong healthy dividend like we are right now, but continue growing the company. But if we don’t see the right opportunity to put the money back into the ground then we return it to our shareholders and the dividend will grow.

So it’s all — I think it’s a matter of time. As our company grows, as the organic growth that we have got scheduled over the next five years to 10 years comes into fruition. I can’t see — it’s going to get tougher and tougher for us to invest all of that cash flow back into the ground, which means that the dividend will grow. But the real advantage of our dividend mechanism is the fact that it is directly linked to our cash flows, and of course, our cash flows are directly linked to commodity prices.

And so the shareholders are actually reaping a benefit beyond the increase in share price with these higher precious metal prices that we see. And so it’s a good strong system that we do averages over the previous fourth quarters. So it doesn’t take much to understand that there’s still upward pressure on this dividend even for the next quarter and the quarter after that. As long as prices stay up where we are right now, it’s going to continue growing it on a per-share basis.

Ralph ProfitiEight Capital — Analyst

Great. Well said, Randy. Thank you.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, Ralph.

Operator

[Operator instructions] Your next question comes from the line of Cosmos Chiu with CIBC. Please go ahead. Your line is now open.

Cosmos ChiuCIBC World Markets — Analyst

Hi. Thanks, Randy. Gary, Haytham and Patrick, and thanks for taking my questions here.

Randy SmallwoodSenior Vice President of Investor Relations

Cosmos, always a pleasure.

Cosmos ChiuCIBC World Markets — Analyst

Thanks, Randy. Maybe my first question here is on the ounces produce and not yet delivered. Clearly, 2020 was an unusual year with COVID-19. But in the past, in Q4, there were usually be a big drawdown in terms of inventory and then it will result in higher sales and production for Q4 for Wheaton Precious Metals.

Maybe it’s too early to tell at this point in time, but should we expect that once again in year 2020?

Gary BrownSenior Vice President and Chief Financial Officer

Hi, Cosmos. It’s Gary.

Cosmos ChiuCIBC World Markets — Analyst

Hi, Gary.

Gary BrownSenior Vice President and Chief Financial Officer

It’s very difficult to predict. We had, I think, expected that the PBND balance would have been higher at the end of Q3 than it ended up being. So our partners were doing a very good job of keeping concentrate and doré flowing. And yeah, we generally do anticipate that mining companies, in general, will try to minimize the amount of unsold concentrated and doré that they have at year-end.

And so we’re not anticipating a significant build up in Q4. But if you look over the past few years, there have been surprises in that regard. And so it’s hard to anticipate. I would highlight that, if there was a build up that translates into sales the next quarter.

So it’s not like a long-term issue. it’s a very short-term issue. it’s just very difficult to predict.

Cosmos ChiuCIBC World Markets — Analyst

Of course. Maybe switching gears a little bit. I was reading your MD&A, and I guess, as you mentioned, Barrick and Pascua-Lama in Q3 they elected not to exercise the option to cancel the stream, the PMPA. Could you remind us, is this their last sort of opportunity to cancel that? And on that, is this the outcome that you had expected and preferred? Could you maybe comment on that?

Randy SmallwoodSenior Vice President of Investor Relations

Cosmos, you had that backwards? It was us that had the opportunity to cancel the stream?

Cosmos ChiuCIBC World Markets — Analyst

Oh, OK.

Randy SmallwoodSenior Vice President of Investor Relations

Yeah, yeah. So I think they would have canceled it a long time ago actually.

Cosmos ChiuCIBC World Markets — Analyst

Yeah.

Randy SmallwoodSenior Vice President of Investor Relations

No, it was us. We had the opportunity. So the way that the deal was structured was up to a certain point. We could ask for the remainder of our money back.

And so that point was essentially at the end of September. And we’re still believers in the project. We think that — we did receive a substantial amount of compensation silver back from Barrick already. So although, we invested $625 million into the project originally, we are — I think we are only about $255 million into it right now, because of the compensation silver from the other mines in South America.

But that has ended and for $255 million, we feel the Pascua-Lama is the — that the 25% of the silver on Pascua-Lama, we think it’s worth more than that. We think it’s a — we’re still a believer in the project. It definitely has its challenges. But we know that Barrick is working on it to try and find the way around the challenges and work with the community and we do think it’s a project that will deliver strong sustainable benefits to both Chile and Argentina at some time in the future and to Barrick shareholders sometime in the future, and we’re going to be patient and wait for that.

So it was our choice to do that and we chose not to take the refund and to stay invested into Pascua-Lama.

Cosmos ChiuCIBC World Markets — Analyst

And that Pascua-Lama number, that’s not included in your 750,000 ounces that you are projecting in terms of GEOs, is right?

Randy SmallwoodSenior Vice President of Investor Relations

Definitely not. No, that’s 750,000 ounces is for the next five years, including 2020. I think it’s important to highlight that, if we are going to maintain that and if you look at our 2020 production that means that the next four years will average about 770,000 gold equivalent ounces. There is no Pascua-Lama in there.

There is no Rosemont in there. There is no Navidad in there. it’s only projects that are on schedule. And in fact, I would say, we have taken a pretty conservative approach on Salobo in that forecast also.

So there’s a — we’re always for the updated mining plan from Vale, expected sometime next year. So we think there’s definitely some upside in that 770,000 over the next four years.

Cosmos ChiuCIBC World Markets — Analyst

OK. Maybe quickly on Constancia, as you mentioned, Pampacancha was delayed in 2020. As a result, you were able to receive additional — about 8,000 ounces in a year. Now it seems like they are on track for start up early 2021.

Nothing is going to happen. But could you remind us, if there’s further delays, is there any kind of other sort of ounces that you will receive in compensation or was the 8,000 ounces pretty much in?

Randy SmallwoodSenior Vice President of Investor Relations

We did give them an extension because of they have had pandemic impact down in Peru with respect to government agencies in terms of giving approval on a go-forward basis. So we did give them an extension through to the end of June next year, and at that point, we get to sort of refresh and look at the stream itself, whether we decide to adjust the stream or go-forward. Hudbay has been doing a great job in this thing, moving it forward and we are a supportive partner of theirs. So we will work with them to make sure that it comes to a satisfactory arrangement.

But I am very confident that they will have it up and running before the end of June.

Cosmos ChiuCIBC World Markets — Analyst

Great. Thanks a lot. Once again, those are all the questions I have. Thanks for answering my questions.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, Cosmos.

Operator

Your next question comes from the line of John Tumazos from John Tumazos Very Independent Research. Please go ahead. Your line is now open.

John TumazosVery Independent Research — Analyst

Thank you for taking my question. 

Randy SmallwoodSenior Vice President of Investor Relations

I was expecting you, John.

John TumazosVery Independent Research — Analyst

I noticed some of the mind operating companies that have a lot more operating risk have raised their dividend many times by large percentages. Could you tell us a little bit more about the philosophy in the 20% dividend hike? You are financially strong enough to raise the dividend a little more? Are you going slow and gradual, because you don’t want to raise it too quickly or cut it too quickly? Are you just putting a priority on repaying your debt and accumulating money for the Rosemont payment to search Salobo payment and your other reinvestments?

Randy SmallwoodSenior Vice President of Investor Relations

I would actually say, it’s a — we’re still confident that we have some new opportunities we will be able to bring into the portfolio. We’re very active on the corporate development front, John. We have got lots of — lots, in fact, I would almost argue that we’re as busy as we have ever been on that front. And so we’re hopeful that we can actually add a few new assets to the portfolio over the next few months.

So it’s basically building up that capital. But I have no doubt we will eventually grow into a yield — more yield focused company that dividend as a percentage overall will grow. I think it’s important to sort of, again, highlight the fact that the 30% was scheduled as per our formula. So it was predictable.

I think everyone, sorry, that the 20% increase that we have just had it scheduled. You could sit and look at it, and you know that we average it on our cash flows over the previous four quarters. I am pretty confident that, of course, depending on how precious metal prices do over the next three months or the remainder of this quarter, there’s going to be upward pressure the next quarter, too, for the next round of dividends. We establish a basement or a floor price every year that we won’t drop below for the course of the year and then we use 30% of the reference.

Now I can tell you that if we don’t put money back into the ground, then the dividend will grow. But as of right now, we still have a bit of net debt that will disappear in the first quarter. We will probably build up a little bit of a war chest if we don’t put it back in the ground and then we won’t let it get to be too big of a war chest, because we’re not really believers in money. We would rather have it in ounces in the ground and cash in the bank.

And so that’s the point that will turn it around and put it back into a dividend if we — if the war chest gets too big.

John TumazosVery Independent Research — Analyst

Randy naturally we as outsiders can’t see the evaluation project flow that you have. But do you think of the likelihood is that there’s a $500 million or $1 billion large project on the horizon in the next year or two?

Randy SmallwoodSenior Vice President of Investor Relations

You know what, Haytham is on the line here. I am going to let him answer that one. He leads our corporate development…

John TumazosVery Independent Research — Analyst

Oh, sure. The pretty girls you are romancing, Haytham.

Haytham HodalySenior Vice President, Corporate Development

Good morning, John. How are you?

John TumazosVery Independent Research — Analyst

Fine.

Haytham HodalySenior Vice President, Corporate Development

Just to give you a bit of an idea, John. As Randy mentioned earlier, we have been incredibly and pleasantly busy. I guess, we have got lots of new opportunities we are looking at. The majority of them fall into the sub-$500 million category and those are primarily development stage opportunities that fit into our early deposit structure, as well as expansion opportunities.

But we’re seeing still some large billion dollar deals out there. At least a couple out there that they take time to come to fruition, but they are there. there’s also been some royalty packages, which really don’t make sense from a Wheaton perspective, mostly because they come with a significant amount of non-precious metals. But yeah, there’s, John, as Randy mentioned earlier, I don’t think we have been as busy in a long time, we are — I have been saying that for probably the last three quarters, and it pleasantly keeps going.

John TumazosVery Independent Research — Analyst

How much capacity does the project team have to go to sites and rigorously evaluate in the COVID world as long as it last? Can you look at — can you physically do due diligence on one project a week or one project a month or how tough is it?

Haytham HodalySenior Vice President, Corporate Development

Sure. I should — great question. The pandemic has not really affected our ability to advance streaming due diligence and consummate transactions. We’re constantly looking at and evaluating new opportunities.

When we have completed four site visits in the last month alone, two of those were with external consultants and two of those were with our team specifically. And one of the reasons I am actually doing this by a telephone rather than in the office, because I am actually at a two-week quarantine period, because I just got back from one of those sites myself. So we’re still very, very active. We have probably got at least another three site visits in the next month and a half schedule alone and they may be using Wheaton employees, they may be using consultants we can rely on.

But we’re definitely still very, very active.

Randy SmallwoodSenior Vice President of Investor Relations

John, every jurisdiction is different in terms of how we manage that and so it all comes down to minimizing the risk and being confident in terms of what we’re investing into or what we are looking at. And so there’s a balancing act with respect to every asset that we look at.

John TumazosVery Independent Research — Analyst

Thank you.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, John.

Operator

Your next question comes from the line of Jackie Przybylowski from BMO Capital Markets. Please go ahead. Your line is now open.

Jackie PrzybylowskiBMO Capital Markets — Analyst

Sure. Thanks. Thanks very much. Good morning, everyone.

I guess, just a follow-up on John’s question. He’s asking about the pipeline of deals you are seeing. Can you maybe give us an indication? Are these deals of meaningful size? Are you talking about deals that would be sort of $300 million, $500 million in an upfront payment or is that changed to deals that are smaller? Is there any color you can give in terms of that distinction?

Randy SmallwoodSenior Vice President of Investor Relations

Haytham, I will hand it over to you again.

Haytham HodalySenior Vice President, Corporate Development

Yeah, you bet. Hey, Jackie. How are you?

Jackie PrzybylowskiBMO Capital Markets — Analyst

Fine.

Haytham HodalySenior Vice President, Corporate Development

No. Listen, Jackie, there’s a whole array of deals, say, they range anywhere from $100 million to $200 million all the way up to $700 million to $1 billion. So there’s quite a few. The majority of them are, I would say, between the $300 million and $400 million range or $200 million and 400 billion.

that’s probably a better range. So we’re definitely still looking at a lot of opportunities out there.

Jackie PrzybylowskiBMO Capital Markets — Analyst

Thanks very much. And just switching gears to your MD&A. You talked about Voisey’s Bay, you are scheduled to start receiving cobalt from that mine, I guess, in a couple of months. Now it’s hard to believe 2021 is almost here.

In the MD&A you talked about the pace of implementation at the underground project is being slowed because of COVID. Does that affect the deliveries of cobalt that you are expecting? Is there any potential for delays to that delivery? Thanks.

Haytham HodalySenior Vice President, Corporate Development

Yeah.

Randy SmallwoodSenior Vice President of Investor Relations

No, the beauty of the mine is, essentially it’s transitioning from open pit to underground, but they still have several years of open pit reserves in front of them and it was always going to be a gradual transition. If anything, they did suspend operations in 2020 and a year that, I think, we’re all going to be very happy to see behind us. But they did suspend production up at Voisey’s Bay during 2020 with — which, in fact, push some of the stuff that would have been mined in 2020 into our streaming period starts in 2021. So there’s a slight advantage.

We have had probably a bit more open pit reserves that will keep the mill full and processing and so we don’t expect any change in the production profile. It’s just that there will be sourcing from the open pit as they get the underground up. It was always planned as being a very phased transition over a number of years, and they have always got the backup of some of the open pit mineable material available to keep make sure that the mill stays full.

Jackie PrzybylowskiBMO Capital Markets — Analyst

OK, that’s really helpful. Thanks very much. that’s all my questions. Thanks.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, Jackie.

Jackie PrzybylowskiBMO Capital Markets — Analyst

Thank you.

Operator

And your next question comes from the line of Charles Gibson from Edison. Please go ahead. Your line is now open.

Charles GibsonEdison Investment Research — Analyst

Hello. Good morning, and if I may congratulations on an excellent quarter, Randy.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you, Charles.

Charles GibsonEdison Investment Research — Analyst

If I could just ask. I wonder if I could ask just about Marmato quickly. I see and congratulations again on closing that deal. I saw it was backdated to the first of July.

there’s no sign of it having contributed in the third quarter. And I just wonder what that means in terms of the accounting, if you like, I suppose this might be a question for Gary going forwards. When it comes to the fourth-quarter results, you are going to have two quarters of Marmato in the fourth quarter or is — are you going to restate the third quarter or just how you are going to treat that?

Randy SmallwoodSenior Vice President of Investor Relations

Yeah, good question, Charles. there’s still some conditions that need to be satisfied here in order to cross the barrel head with silver, so to speak. And so assuming that those conditions are satisfied in Q4, we would report the production from July. In Q4 we and any sales that would result would be attributed to Q4 as well.

Charles GibsonEdison Investment Research — Analyst

OK, that makes perfect sense. Thank you. Can I ask just a follow-up question, which has nothing to do with that, of course, but I just noticed the last couple of quarters, Minto has been contributing to production, but not to sales? And I just wonder if you could give us an idea of when you think Minto might start contributing to sales?

Randy SmallwoodSenior Vice President of Investor Relations

Yeah, we would expect that, though, that production will be converted to sales in Q4.

Charles GibsonEdison Investment Research — Analyst

OK.

Gary BrownSenior Vice President and Chief Financial Officer

It was a recent start-up, and they are moving materials out and it’s new operators that are in there, and so we’re working our way through that process. But we will have it all cleaned up by the fourth quarter.

Charles GibsonEdison Investment Research — Analyst

Excellent. All right. Look forward to that. Thank you very much indeed.

that’s everything for me and congratulations again.

Randy SmallwoodSenior Vice President of Investor Relations

Thanks, Charles. One more call, please, operator?

Operator

Certainly. Your next question comes from a line of Brian MacArthur from Raymond James. Please go ahead. Your line is now open.

Brian MacArthurRaymond James — Analyst

Hi, good morning. The other thing you mentioned in the MD&A is just the delay of Blitz. Can you just go through how you see that sort of evolving with the Fill the Mill and then how that looks in your five-year versus what it looked before?

Randy SmallwoodSenior Vice President of Investor Relations

Well, I mean, originally it was scheduled out to be coming in the — and it is a gradual gain and so it’s not like they are turning on a switch or something like that. They are just increasing the number of working phases in both Blitz and East Boulder operation. So it’s going on both sides. But this is sort of the more headline project.

But one of the challenges and we have actually seen this — surprises actually doesn’t get talked about a bit more in the industry. But the biggest impact in terms of the new measures that we have to sort of minimize risk on pandemic seems to be the underground operations. And the time it takes to safely move everyone to the phase to get the work done and at the end of their shift back away from the phase. Productivity in underground mines is has definitely been impacted by the pandemic response and by the efforts to minimize risk and I think that’s what’s capturing Stillwater as a whole is that they are seeing higher absenteeism rates, like, a lot of mines.

But they are also — because they are entirely underground also dealing with extra or lower productivity on a per-manship basis because of the extra efforts that are required to minimize risk. And we don’t — it’s not just a Stillwater problem. We have seen it in all of our underground operations that seems to be an impact, it’s having impact on productivity. And so all of that sort of spills over into challenges on the Blitz.

Because the Blitz being an expansion project and their efforts are to — first priority is to maintain current levels of production and the expansion that sort of is what’s required after that. And so their new guidance came out to believe its two years now before they expect to be up to that full level. Of course, the original — they had already delayed that expected completion date. But the original date would have been in 2021 was when they were first expecting it to be up and running and so at the full levels.

So there will be a gradual increase over time. They continue to work on that and I am hopeful that the industry does find ways to address these productivity issues that we are seeing, because it’s a broader industry impact as a result of this pandemic. And we have to have to find some way to get to work around that, at the same time, minimizing risk, of course.

Brian MacArthurRaymond James — Analyst

Great. Thanks very much, Randy.

Randy SmallwoodSenior Vice President of Investor Relations

Thank you. Thank you, Brian. And thank you everyone for dialing in today. In closing, we believe Wheaton is well-positioned to continue delivering value to our shareholders for a number of different reasons.

Firstly, by having low and predictable costs that result in some of the highest margins in the entire precious metal space and sector leading operating cash flows, secondly, through our steady organic growth profile and proven track record of accretive quality acquisitions, thirdly, by offering our shareholders exposure to some of the highest quality mines in the world through our portfolio of long life low cost assets, and lastly, by being a leader among precious metal streamers and sustainability through initiatives such as the CSR fund and supporting our partners and the communities in which we live and operate. I do look forward to speaking with you all again soon. Stay healthy, stay safe. Thank you.

Operator

[Operator signoff]

Duration: 42 minutes

Call participants:

Randy SmallwoodSenior Vice President of Investor Relations

Gary BrownSenior Vice President and Chief Financial Officer

Ralph ProfitiEight Capital — Analyst

Cosmos ChiuCIBC World Markets — Analyst

John TumazosVery Independent Research — Analyst

Haytham HodalySenior Vice President, Corporate Development

Jackie PrzybylowskiBMO Capital Markets — Analyst

Charles GibsonEdison Investment Research — Analyst

Brian MacArthurRaymond James — Analyst

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