Wheaton Precious Metals will be the largest gold and silver-focussed company in London when it lists
Wheaton Precious Metals Corp (TSE:WPM), one of the most successful of all the Canadian royalty and streaming companies, with a market capitalisation of upwards of C$30bn, is to list its shares in London during the fourth quarter of this year.
The listing will give London-based investors the opportunity to invest in a major precious metals company for the first time since Randgold was gobbled up by Barrick last year.
There have been some contenders in the absence of Randgold – Centamin (LON:CEY), the Egyptian-focussed gold miner, is currently worth around GBP2bn, Highland Gold, the erstwhile Abramovich vehicle, is worth just over GBP1bn, Fresnillo (LON:FRES), the silver specialist, is worth GBP9bn, Russian gold producer Polymetal is valued at GBP8bn, and South American-focussed Hochschild is worth GBP1.2bn.
But none of these quite reaches up to the scale of the world’s greatest precious metals specialists, notably Barrick (NYSE:GOLD), worth just over US$50bn, and Newmont (NYSE:NEM), worth US$52bn.
Aside from the major gold producers, only the other major streaming and royalty companies run Wheaton Precious Metals close, in particular Franco Nevada (TSE:FNV) which is worth somewhat more, with a market capitalisation of C$35bn.
To be sure, as a streaming company, Wheaton Precious is offering a different business model to the major gold producers, but historically at least, and to Canadian investors, that has been a strength rather than a weakness.
The company will sign a deal in advance that may include an upfront payment that allows it to purchase a certain amount of precious metal at a certain fixed price, usually at a discount to the prevailing market price.
This means that a company like Wheaton Precious never actually has to go mining, and consequently never incurs any execution risk.
The company has streams over 23 producing mines and nine mines that are in development.
“Wheaton is one of the world’s largest precious metals streaming companies, providing investors a unique and sustainable proposition with some of the highest margins in the mining industry and exposure to a high-quality portfolio of assets,” said chief executive Randy Smallwood.
“As a result, the company has consistently outperformed gold and silver historically, as well as most other traditional mining investments. We have a strong track record of distributing a large portion of our earnings as dividends while retaining the financial firepower to sustainably grow the Company through accretive acquisitions.”
The company recently reported record revenues of over US$500mln in half year results for the six month period ended June 30,2020. That in turn generated US$330mln in operating cash flow.
The ability to generate that sort of money has led, of course, to scores of imitators, some more successful than others. On the Canadian side Nomad Royalty (TSE:NSR) is one of the more attractive up-and-comers.
In the UK, the royalty and streaming space has been largely devoid of players. Only the venerable Anglo Pacific (LON:APF) and the new thrusting Trident Royalties (LON:TRR) have made any real waves in recent years. Both have performed well of late, although Anglo Pacific’s weighting towards coal has proved a mixed blessing. Trident aims to mirror the whole mining sector in its portfolio, and won’t, like Wheaton Precious, be focused almost exclusively on precious metals.