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Wheaton (WPM), VALE Announce Salobo's First Phase Test Clearance

Wheaton Precious Metals Corp. WPM announced that Vale Base Metals Limited, the holding entity for VALE S.A’s VALE energy transition metals business, completed the throughput test for the first phase of the Salobo III expansion project. This was a milestone that demonstrated the project's increasing reliability and strong performance.

The test required the Salobo complex to operate for 90 days at an annualized throughput of 32 million tons per annum ("Mtpa"). The test was completed on Nov 17, 2023, with an average throughput of 32.3 Mtpa.

Previously, the mine had a mill throughput capacity of 24 Mtpa. It is currently ramping up to a maximum capacity of 36 Mtpa, which is projected for the fourth quarter of 2024.

The Salobo III expansion is VALE’s flagship copper project in Brazil. Under the terms of the Salobo precious metals purchase agreement, Vale will receive $370 million from Wheaton Precious for the completion of the first phase of the Salobo III expansion project. The remaining part of the expansion payment is subject to completion. It will come into effect whenever Vale increases actual throughput above 35 Mtpa for 90 days.

If the Salobo mine implements a high-grade mine plan, Wheaton Precious will further have to pay amounts between $5.1 million to $8.5 million annually for 10 years after the payment of the expansion payments.

Wheaton Precious has streaming agreements in place in high-margin assets that are operated by leading mining companies. Wheaton Precious receives the benefit from mine exploration and expansion activities carried out by these companies.

It reported adjusted earnings per share of 27 cents in third-quarter 2023, which surpassed the Zacks Consensus Estimate of earnings of 25 cents per share. The bottom line increased 29% year over year as higher average realized prices for gold and silver offset the impacts of the lower Gold Equivalent Ounces (GEOs) sold.

Wheaton Precious generated revenues of around $223 million in the quarter, which rose 1.8% on a year-over-year basis. The year-over-year increase was attributed to higher realized commodity prices, which was partially offset by lower sales volumes. The top line, however, missed the Zacks Consensus Estimate of $242 million.

Price Performance

Shares of Wheaton have gained 22.9% in the past year compared with the industry’s 12.5% growth.


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Zacks Investment Research

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Zacks Rank & Stocks to Consider

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

Some better-ranked stocks from the basic materials space are Ryerson Holding Corporation RYI and Universal Stainless & Alloy Products, Inc. USAP. RYI sports a Zacks Rank #1 (Strong Buy) and ANDE carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for Ryerson’s  2023 earnings is pegged at 24 cents per share. The consensus estimate for 2023 earnings has been unchanged in the past 60 days. Its shares have gained 6.4% in a year.

Universal Stainless & Alloy Products has an average trailing four-quarter earnings surprise of 44.4%. The Zacks Consensus Estimate for USAP’s 2023 earnings is pegged at 27 cents per share. Earnings estimates have been unchanged in the past 60 days. USAP’s shares gained 96% in the last year.

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Universal Stainless & Alloy Products, Inc. (USAP) : Free Stock Analysis Report

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

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