Hi, and thank you for joining us today. My name is Jimmy Conder and I'm with Bloor Street Capital, which is a corporate access firm based in the City of Toronto. Today, I have the pleasure of introducing you to Randy Smallwood. Randy is the President and CEO of Wheaton Precious Metals. But before Randy begins his presentation, I want to say a few words.
First on the format of this presentation. Going to keep it to 45 minutes. In order for us to meet that timeline, I'm going to be asking questions. A number of attendees have already submitted questions, and I'm going to be asking those throughout the presentation. If however, you would like to ask a question during the presentation, please send us an email to infoblorestreetcapital.com.
And now for a few words on the company. Wheaton Precious Metals is not a mining company per se, but rather a financing company that provides innovative financing solutions to mining companies. As you know, mining companies are very capital intensive and are always looking for new sources of capital and this is one way for them to do it through our streaming agreement. And to give you a very simple explanation, a mining company would need money, wheat and precious metals might give that money to the mining company and in return the mining company would give them a portion of their production in either gold or silver. And that's it in a very simple form.
Wheaton Precious Metals trades on the New York Stock Exchange and the Toronto Stock Exchange under the symbol of WPM. It has a market cap of CAD20 1,000,000,000 US30 $1,000,000,000 It has 450,000,000 shares outstanding fully diluted and it pays a quarterly dividend of $0.10 per share or $0.40 annually. And with that, I'm going to hand things over to Randy. Randy, thank you very much for joining us today. Before you begin your formal presentation, why don't you give us a little bit of background on yourself and also how you became involved in Wheaton Precious?
Yes. Thanks, Jimmy, and always a pleasure to work with you in sharing our story. My name is Randy Smallwood, President and Chief Executive of Wheat and Precious Metals. I've been with the company since we founded this company back in 2004 when we created the streaming business model. I'm a geological engineer by background.
I used to work for Goldcorp and in fact was looking to raise capital for Goldcorp in being part of the team that founded the original Silver Wheaton back in 2004. 2000 and 7 swung over to this company on a full time basis and then took over as the CEO in 2011. As I mentioned, my background is a geological engineer. I've got plenty of experience in the mining industry all the way from grassroots exploration up to operations. I had the good fortune of being part of the discovery team on some very profitable small scale, but very profitable gold mines here in Canada.
And what that's really sort of driven home in our company is the demand for technical expertise, technical best practices in terms of reviewing projects. And we really do focus on understanding the technical risks and the opportunities that exist in these investments. And so, yeah, it's built it's allowed us a very strong foundation of current assets, and I'm sure through this presentation, you'll see that. So thanks, Jimmy. And can I start with this now?
Yes, by all means. So there will be, of course, some forward looking statements in this presentation. I urge everyone to understand the risks associated with those forward looking statements, some of which are described in the fine print here. I'm going to start off with a description of who Wheaton Precious Metals is. Wheaton Precious Metals, of course, as I mentioned, we created the streaming business model, which is clearly a model that is designed to benefit all stakeholders.
Our vision here at Wheaton is to be the world's premier precious metals investment vehicle. And our mandate in achieving and striving for that vision is to deliver value through that streaming model all to all of our stakeholders. And that includes our shareholders. 1st and foremost, that's who I work for directly and we're constantly looking to deliver profitable precious metals production, a long term and high margin precious metals production with a relatively low risk profile attached to that production. It's a very different offering than traditional mining companies and for that matter, traditional bullion buying.
To our partners, the operators that we work with, where we help them crystallize typically, they crystallize the value of a non core portion of their production stream. Generally, these are base metal companies that have precious metals byproduct, and we find a way to give them the value for that precious metals byproduct and bring that into our portfolio. But we also work with our partners past the original upfront payment to purchase the stream in the sense that we have technical ambassador programs and we also have a very strong ESG program that provides parallel support with our operators in terms of strengthening social license within the local communities, looking for sustainability initiatives and such like that. And that really is our 3rd group of stakeholders, which is our neighbors. That is the neighbors that are around us and our employees in this company, but also the neighbors that are living around the mine sites that deliver us on that.
Even though we don't operate these mines, that doesn't absolve us the responsibility of making sure that we leave sustainable benefits to the communities that are most impacted, most benefited from this mine and deliver those back. And so we provide support by working with our share with our sorry, with our partners in improving and strengthening their social license. The streaming advantage, really, it's high upside with much lower risks than what you see in the precious metals sphere. Because of the streaming model, we have commodity price leverage. We have a base price that we pay on a per ounce basis, but that still delivers consistently good strong margins.
However, that does give us leverage over our own in bullion. We do get the exploration upside. These are life of mine agreements where we get a percentage of whatever metal is produced from these mine sites. And so any exploration success or expansion potential all comes into play through that optionality. We have a number of projects that still aren't delivering metal to us, but will sometime in the future delivers some really good upside from that perspective.
The huge advantage of the streaming model compared to a traditional mining investment is our predictable costs. The fact that our capital costs are described are fixed in the original upfront payment and our operating costs are also fixed in the contract as typically either a fixed amount on a per ounce basis or a fixed percentage of the spot price. But the fact that we don't have that cost risk dramatically lowers the risk profile for traditional precious metals investors. Tax confidence. We spent a lengthy time going through an audit and reassessment and successfully defended our business model here in Canada through an agreement with the Canada Revenue Agency, which is much different than a court victory.
We sat down, the CRA went through our business model and is very comfortable with what we're doing now and has signed off and agreed in terms of our business model. So tax confidence in terms of how our business is structured. Sustainable dividend, our dividend is a function of our cash flows. And so, therefore, it's attached to our production growth and our commodity price. And so good, strong, sustainable dividend and a high quality asset portfolio.
It's been an interesting year. Obviously, this virtual world, I'd rather be doing this face to face with everyone, but unfortunately, that's not possible in today's world. But we have been busy. Earlier, about a month ago, we announced close to a month ago, we announced the intent to list on the London Stock Exchange. This is a way of expanding our, as I say, another step in our desire to be a global solution to stream finance and to then to precious metals investing.
And really, the London Stock Exchange, we're not raising capital there. This is really about expanding our potential shareholder base and providing options into the streaming model into our company as an investable way to get into precious metals. We published our inaugural sustainability report earlier on this year. Obviously, we've made great progress in improving the disclosure around our sustainability initiatives and our ESG initiatives. What we have seen is good recognition from a number of the different indices.
And in fact, this has been included into the Euronext VIGIO World 1 20 Index, Sustainability Index. So good strong initiatives, definitely a leader in the streaming and royalty space here and definitely competitive in the mining space in terms of working with the communities to try and leave a positive footprint when we're finished. We did announce a stream earlier on. We're still crossing T's and dotting I's on it with Caldas Gold. It's the Marmato project down in Colombia.
It's relatively small deal, about $110,000,000 total for 6.5% of the gold and 100% of the silver. This is an asset that currently isn't producing very much, but they've had incredible exploration success and are looking to use this capital to construct a new facility for some deeper, much more higher grade and more consistent mineralization and more massive mineralization that they found at depth. And so pretty exciting project to be associated with. And of course, earlier this year, about a month ago, I took over as the Chairman of the World Gold Council. I'm very proud.
I don't think there's a better advocacy group for gold in this world. And in fact, one of the areas that we've been improving transparency and credibility of gold is responsible gold mining principles, which were brought in and all members are working their way towards complying with these principles to ensure that we have transparent and strong gold production standards that are give confidence to the gold investors.
Randy, I'm just curious about your if you don't mind going back to that last slide, but the London Stock Exchange, what percent of your shareholders are out of Europe? What percent would be from North America? And are you getting a lot more calls from the European generalist? Yes.
So currently, about 70% of our stock trades in the New York Stock Exchange, the other 30% trades in the Toronto Stock Exchange. But from an investor base, about 15% of our holdings are over in Europe, mostly UK based, but we definitely do have some holdings, some strong shareholders on the continent in Europe. What we've seen is a lot of interest for the last ever since we made the announcement, been our head offices are here in Vancouver on the West Coast of North America. And I've been working London hours of late. We've been up early dealing with educating new funds and new faces that have a lot of interest.
The London Stock Exchange has never had a substantial streaming company and in fact has very limited options with respect to investing into precious metals period. And so there's a lot of interest in London. We feel there's about €300,000,000,000 to €400,000,000,000 worth of assets under management that has restrictions with respect to investing outside of the UK. And so we feel that we should provide an option for those funds to bring in some precious metals exposure. And around the world, we're seeing a real strong shift in a lot of the generalist funds around the world to have 5% to 10% of their holdings in precious metals exposure, just to provide some stability in this such a volatile world.
And so we're hoping to provide that avenue. I think the intent is to just expand our potential shareholder base and that can only deliver positives to our existing shareholders.
And Randy, just a quick question on Caldas Gold. That's a relatively small deal for you. What was it with that asset that was so attractive?
I think it's the exploration potential. And I've seen similar style deposits down in South America in that region. In fact, in Colombia, I had some experience. We were an investor in Ventana. And what we've seen is these epo mesothermal type deposits, where as you dive deeper, these systems, these broad epithermal veins all over the place seem to coalesce into 1 or several discrete units that have good continuity and excellent grades and excellent thicknesses.
And this is what it sure looks like they've uncovered at Caldas or at the Marmato project is some good strong continuity, some very, very robust numbers and it's totally open. They're still having exploration success there as they work their way towards getting another mill built and new access infrastructure to move this forward. So it just looks like an exciting project that will be delivering value for quite a
while. Very
good. This slide shows our portfolio of assets. As you can see, we currently have 20 minutees delivering us metal right now, another 9 development projects. A real strong Americas focus, some of that comes from our history as a silver focused company originally, where Mexico and Peru were very important to us, being big silver producing countries. But we definitely have expanded our reach since then and are now actually generating more revenue from gold than they are from silver.
But the Americas centric political risk is something that's very important to us. And so it does limit some of the other parts of the world. It doesn't stop us from looking in Africa, looking in Asia, looking in Australia, but we just haven't closed any transactions there. We'll still continue to explore these areas and truly build ourselves up as a global company in terms of delivering finance to mining companies. As I mentioned, 9 development projects, they also provide good optionality to continue growing our company.
What I like highlighting on this slide also is the list of partners that we have down the right hand side of this slide. And you can see that the streaming business model works for everyone in the mining industry from the large diversified companies like Vale and Glencore and Newmont and Barrick as large gold companies, all the way down to the single asset developers like Alexco, Goldex, Plinoro, Cutro Copper, streaming works as a source of finance, a source of capital for the entire mining industry, bodes very well for us on a go forward basis. We constantly we're blessed with an industry that always needs capital and the streaming model delivers a competitive source of capital to the entire spectrum of the industry.
And Randy, of those 9 development projects, which ones are closest to production? And are there any that you're really excited about?
Yes. The Rosemont project just in Arizona, owned by Hudbay, It's it had its permit about 1.5 years ago, and then there was an appeal launched by 1 of the NGO groups. And so there's a decision that's being run through another appeal process and taken up to a higher level. They're hopeful to be reestablishing that permit within a couple of years and commence construction. It's a very strong copper asset that has healthy silver and gold byproduct.
Our stream pays about we paid about $230,000,000 we paid $230,000,000 to get 100% of the silver and 100% of the gold. It will deliver between 50,060,000 gold equivalent ounces per year to our credit. So it's a very attractive deal for us. It will be about a 2.5 to 3 year build. They haven't got a firm timeline.
Obviously, they have to reestablish the permits and move forward. But that one, I find this pretty exciting and could easily come into production within 5, 6 years if everything sort of lines up. Pascua Lama, of course, the largest of those development opportunities. Barrick, Mark Bristow is spending a lot of time focusing on trying to reestablish social license down in Chile and trying to get this project back onto the development plate. And so we're patiently waiting.
It's a very attractive project for us and it would deliver about 9,000,000 silver ounces per year to us over the 1st 5 years based on their original plan. And so it would be a nice substantive addition. And then, of course, NABOT had done Argentina. Pan American Silver continues to move that forward. Michael Steinmann and his team have done good jobs in terms of building relationships both within at the federal and the provincial level in Argentina.
And so those three projects look pretty promising. Toro Crew has also had some success. Goldex continues to move forward, and it could be a sleeper in this package.
Randy, somebody just sent me a question and I think this is a good spot to ask. Can you comment or compare the current environment with later stage developing opportunities and earlier stage developer opportunities with the past? For example, is he having to look at earlier stage developers because of higher gold prices providing cash flow to companies with production?
Well, we typically don't invest until an asset gets to the construction stage. One of the risks that's very tough for us to measure is permitting risk. And so the way we structure our agreements is we wait until projects are at that construction stage or later. They have to have permits in place and they also have to have a financing plan in place that ensures us that the company will have the capacity to finish the construction when it gets underway. And so we don't take a lot of the early stage stuff.
Now we do have an early deposit structure where we'll fund up to 10% of a stream with a clause that allows us to get a refund if we don't like the results. But I can tell you, we're very, very diligent and selective with what we invest into. And that will go in at the pre feasibility stage to help a company get through the feasibility stage and through the permitting stage before we'll put any further monies in. So we've got a few of those type of projects. Currently, what we're seeing is a shift back towards money going into the ground.
So that means instead of improving companies' balance sheets, what we're seeing more interest is companies that are looking for capital to help either build new assets or to expand existing assets or perhaps to fund acquisitions, mergers and acquisitions, but mainly acquisitions on that front. And so we are seeing a shift into that sort of development cycle all the way across, money going back into the ground versus just strengthening balance sheets. So the next slide, I think if there's a slide that differentiates us from our peers, this is probably the one that does the best job of it in terms of the quality of our assets. And I mentioned earlier on, we do really focus on quality investments. And the first way we measure quality is through the cost profile, where does the asset sit on its respective cost curve.
So let's just say that if I'm taking gold from a copper mine, where does that copper mine fit on the worldwide copper cost curve? We're only interested in the assets in the bottom half of that respective cost curve. We're not really interested in the higher cost assets. And as you can see, with 20 minutees delivering us metal right now, 88% of our production comes from the bottom half of the respective cost curve. In fact, the bulk of that 73% comes from the bottom quartile.
These are truly world class high margin mines, not only for us, but also for our partners, for our operators. And that's very important because that means it's the first place that our operators, our partners will continue to reinvest and grow and explore and expand. It's the area that delivers them the best return on their invested capital also. So it's a very important aspect. And I would challenge any precious metals company to compete with these kind of numbers from a quality perspective.
Especially when you add in also the mine life, we've got over 30 years of reserves, another 7 years of measured and indicated resources and another 26 years of inferred resources in front of us. Altogether, a very, very long life portfolio that has high operating margins will be delivering us and our shareholders' metal for a very, very long time.
Brandy, just a couple of questions here, if you don't mind. Once again from the attendees, how many deals do you typically look at in any given year? And what's the number one criteria you look at when deciding if you are going ahead with a proposal?
We typically look at probably 20, I would say we probably outside look at over 50, but I would say probably about 15 to 20 of them get to the point of a data room review. And in a normal year, when you do site visits, we'd probably get to about 5 or 6 site visits and we'd be successful on 1 or 2 of those. So that's probably about the ratio that I would explain out. The criteria, the number one criteria is where does this asset fall on the respective curve. As I said, we are only interested in assets in the 1st or second quartiles of the respective cost curve.
If they're higher than that, we'll put stink bids in. But if we ever make some investments in that space, it'll be for a very good rate of return that reflects the risk. Our real focus is on the 1st and second quartile of the respective cost curves. And that's the number one criteria of any investment that we make.
Just one more question. Do the type of deals you look at differ depending on where we are in the commodity cycle? And if so, how?
It's not so much that. It's how much we're willing to pay. So it doesn't really change the type of deal that we're looking for. But it's what kind of a long term commodity price do we use when we value the asset. And what I can tell you is that when we feel we're closer near the bottom of the commodity price cycle, we use a long term number that's pretty close to the spot price at that time.
But when we see prices climbing and moving up, and by all means, I don't see gold at a high right now, I see still lots of opportunity for it to continue climbing. When I look around the world, it's pretty tough to see any substance behind our argument of us being at a top end goal. There's still lots of space. But as it climbs up, we wind up dropping down our long term commodity price assumptions relative to where the spot price is. So it's a lesser percentage.
And what that means is that we're not going to pay as much on a per ounce basis relative to spot price on the sides or near the top of the commodity price cycle. And I think what this naturally does is stops us from buying in the top part of the price cycle. That's a very important We work in a business that has to deal with cyclical commodity pricing, which means there's times to buy and there's times not to buy. And by just by nature of the way that we invest, when prices are really high, I would say the market is relatively frothy and there's lots of capital coming into the market. That's not the time for us to be investing.
Now we still put out proposals, but our cost of capital by design is higher than a lot of the other opportunities out there and we wind up not making acquisitions during those stages of high commodity prices. That's That allows us to build the war chest and wait for it lower. So we are not a deal machine. We don't just constantly try and deliver deals. We only want to deliver deals when the timing is right from the profile.
We did have an impact from this pandemic early on, had some suspensions, 6 different assets had to shut down for about a 2 month period on average. We did release updated guidance in August at the with our Q2 results that dropped our production down to 670,000 gold equivalent ounces. It was originally estimated to be around 705,000 gold equivalent ounces. So it was about a 5% drop. But what's particularly exciting on this slide is the fact that our 5 year average is still going to stay at 750,000 gold equivalent ounces, which means we've got some substantive organic growth coming down the pipe over the next few years.
And it is a good strong organic growth profile that I think is actually a relatively conservative estimate. Let's start off with Penasquito where we're seeing the highest grades that that mine has ever that deposit it has. And we're going to see that for probably the next 3 or 4 years, the highest silver and gold grades, gold obviously, and 75% of the silver to Newmont's credit, but we get 25% of whatever silver comes out of Penasquito. So we are already seeing higher grades than we've ever seen from this operation. And we're also seeing benefits of improved recovery rates as Newmont goes in and fine tunes that operation.
We're also seeing growth at the Stillwater Mine, a continued effort in terms of trying to improve fill the mill campaign. What they've got is infrastructure there that isn't being fully utilized. So they're trying to expand the number of working phases to deliver more material to the mill. It's a long term program that will be delivering extra benefits to us over the next 2 or 3 years. It's actually, I think their schedule is about 18 months to try and get to full capacity at these mills.
So we should see some continued improvements at the Stillwater operations. The Constancia mine down improved, Pampacancha zone is coming on. It's a high grade satellite zone that will be delivering upwards of 30,000 extra ounces of gold to us every year over and above what Constancia normally delivers. So we'll see some goods that's expected to turn on the switches in the Q1 of next year. We'll see some good increase in precious metals production out of Constancia.
Of course, we start receiving cobalt from Boise's Bay starting in January 1 next year. That will add about 2% to 2.5% to our revenue stream. So it's the equivalent of about 15,000 gold equivalent ounces coming on stream starting in January 1 next year. Perhaps the most exciting out of all of these though is the Salobo mine, which is our key asset, our flagship asset owned and operated by Vale down in Brazil. Last year, it delivered 200 and 78,000 gold ounces to us.
It's an incredible asset that has all sorts of potential. And Vale recognizes that, again, because this is a first quartile producer, it's very profitable for Vale, it's very profitable for us. Vale has been drilling on this project for the last 3 to 4 years and filling in increasing confidence levels within the existing pit, but also expanding the depths of the pit. The previous design pit was down to the bottom of the block model, so it was data limited. They've gone a long ways towards improving, expanding that database.
That block model now goes 250 meters deeper than it was originally. And so Vale is in the process of redoing the mine plan, which is important because they're also substantially through a 3rd phase of expansion down there that will take the daily processing rate from 60,000 tonnes per day to 90,000 tonnes per day. So a 50% increase in throughput capacity. And they expect to turn the switches on, on that expansion sometime in 2020 2, and we should see some substantive increase in gold production. They haven't released their updated mining plan yet.
So we took a conservative approach where we assumed that they would process all the ore through the mill, which meant that it was only going to be a bumpable of 30,000 to 40,000 gold ounces per year with this 50% increase. We don't think they're going to do that, but remains to be seen. We think they're going to continue stockpiling low grade material and process the higher grade material. And if they do that, this 750,000 gold equivalent ounces will be increased by perhaps as much as 50,000 to 70,000 more ounces per year from the Slovo operation starting in 2022. So we could easily see ourselves on a path of well over 800,000 gold equivalent ounces in production before the end of this 5 year period.
Of course, all sorts of other growth from assets like San Dimas. First Majesta continues to improve and expand this and opening up areas that were closed by the previous operator. They're expanding the mill capacity and improving recoveries with replacing some of the milling to get finer grinds, constant reinvestment into these assets. That's what happens when you have high margin assets as your partners want to continue reinvesting and improving these assets. So it's a good strong production profile.
Very good. So Randy, I got a couple of questions here on silver. First of all, just given your background, your view on silver pricing and also silver sensitivities. And what does the move in silver mean to your bottom line if silver goes from $30 to $40 to $50 an ounce?
Well, the beauty of our streaming model is that that's a very easy calculation. 80% of our revenue or of our production comes from fixed cost contracts, which means currently, I think we're about $4 In fact, I think the next slide does highlight that. You can see current costs are about $5 per ounce of silver and about $4.21 per ounce of gold. That doesn't change when the spot price climbs. So what happens is when we see silver climbing to buy $5 an ounce, as you said, that $5 comes right back to our shareholders.
So taking current prices of, call it, dollars 25 in a $5 cost at $20 That $5 will make our mergers now $25 at $5 gain. It's a very easy model to calculate sensitivities because our costs are fixed and predictable. Now about 20% of our contracts have a production payment that's a function about 20% of the spot price. That means that we have a fixed margin on those ounces of 80%. So for 20% of our production, we have a fixed margin of 80%.
And for the other 80% of our production, we have fixed prices that are a little bit over $400 per ounce of gold and a little bit over $5 per ounce of silver. So good healthy response and that is one of the beauties is that in the streaming model, our return of price exposure back to our shareholders is compounded over what a traditional mining company has, mainly because our costs stay the same, our costs don't climb with those higher prices, which is something you see the mining industry suffers from on a regular basis. And so good strong returns on that. My feelings on silver, and I'll just look back one slide. As you can see, gold, we're now producing about 60% of revenue from gold and about 35 percent to 35 percent of our revenue from silver.
And we'll highlight that the optionality that we have at Rosemont and at Pascua Lama and at Navanad is very silver focused. There's a little bit of gold at Rosemont, but Navidad and Pascua Lama are silver focused. So those would deliver strong silver production to us. But our challenge is finding good silver investments, which bodes well in my eyes to the price of silver. And if you ask me, I'm actually more bullish on silver prices than I am on gold prices, mainly because there's some extra fundamentals behind silver that provide additional support for pricing.
Continuing growth in industrial applications. And we've hit peak silver production. The bulk of silver is produced from lead zinc mines, and there hasn't been any substantive lead zinc growth over the last few years, but I've seen several mines shutting down and slowing down in production. And so it's just we've hit peak silver production already. So what we have is increasing industrial demand.
We've already seen a decline in silver production on a worldwide basis. And now we have sparked interest from investors, which always lags gold. But as we know, silver has dramatically outperformed gold over the last 3, 4 months. Took gold a long ways to get to where it is. Silver did it in about 1.5 months.
And so very bullish on silver. Silver has always got higher volatility and so Aurora outperforms. We have to caution, if I want, I mean, higher beta goes in both directions. But right now, very, very bullish in silver. I just wish we had some silver opportunities.
If I look at our current corporate development portfolio, probably about 60% to 70% of it is gold focused and the rest of it is there's probably another 10% or 15% that is gold and silver combined and then there's a couple of silver projects and that's it.
So a couple more related questions to silver. Is silver disconnecting from the monetary metal and becoming more industrial? And has the historic silver gold ratio that a lot of people talk about, is it becoming more irrelevant because of this?
I don't think it is becoming irrelevant, but I think it's always a good indication of how measuring how things are relative to history. But there's no real sound financial relationship there that you can stand behind. But what I will say is that silver, it always has its core investors, but then in times of challenging times, in times of distress, in times of concern about where people are looking for a store of value, silver has a market that sort of steps in. So I can't the increasing industrial demand is only a positive. I don't think there's any change on the supply side or sorry, on the investment side.
But what if you go back and look at every bull run-in precious metals, gold always started well ahead of silver. And it's like all of a sudden, there's a retail side that just has to wake up and silver takes its run at that point. And I think that that's what we started to see here over the last while is that as the retail side has stepped back into and the general side steps back into the precious metals space, that's when silver wakes up and starts to go for a run. And again, the fundamentals behind it, the increasing industrial demand and the shortage of supply, the shrinking supply of silver from mines, all of that combined as that retail, as that generalist investor sits back in the silver space, it will outperform. I already showed this slide, Slide 10, but it is worth reinforcing the healthy margins that we have and the fact that our costs are fixed by the contracts and predictable.
The mining industry suffers from costs climbing as commodity prices climb because there's a real drive towards high grade waste becoming low grade ore and being processed as prices climb, commodity prices climb. You don't see that here. Our costs on a per ounce basis are fixed by the contracts and defined by the contracts. And so if there's anything that differentiates us from the traditional mining companies, this is it. The confidence that you have on our operating costs and on our strong and healthy margins.
And Randy, I just want to clarify one thing. If when I look at 2019, the silver price, for example, it doesn't matter if silver is $30, $40 or $50 an ounce, your cost is $5.02 an ounce.
For 80% of our production, we do have the Antamina mine, which delivered us silver and for that mine, we pay a production payment that is 20% of the spot price. And so our spot prices will climb by 20% of whatever that change is. So there will be a slight increase, but that's only for 20% of our production, which is, in this case, the Antamina operation.
So massive upside with the move in silver?
All we have to do is go back and look at the 2010 to 2013 period, the last time we had a bull cycle. Our company generated well over $2,000,000,000 in excess cash flow that wasn't expected because of that run-in precious metal prices. I know sometime over the next 60 years of reserves and resources, we're going to have a few more runs like that and we're producing a lot more metal than we were back in 2010 to 2013. Our balance sheet is strong. Now we are a bit unique again in the mining space and especially in the streaming and royalty space because we're comfortable with debt.
Our risk profile is so low that the syndicate of banks from North America, from Europe and from Japan offer us $2,000,000,000 revolver, very attractive interest rates. Currently, it's just over 1.6%, 1.6%. And so given that, we find the best way to fund our transactions and acquisitions and keep in mind that our cash flows are very, very consistent. Currently, we're generating well over $200,000,000 per quarter in operating cash flows, very, very consistent cash flows, but our acquisition schedule is very lumpy. In 2018, we spent close to $1,000,000,000 on new acquisitions.
2019, we didn't do any transactions. 2020, we've already announced the Marmato with Caldas, dollars 110,000,000 and hopeful to close a few more. But what this revolver allows us to do is minimize the dilution that our shareholders have to suffer through. We use the debt effectively. So our net debt as of the end of the second quarter, which is back in August, was just over $500,000,000 If we don't spend any money on any new acquisitions over the next few months, that debt is going to be gone by the Q1 of next year.
Now that is obviously I would much rather be putting money to work in the ground. And so we're constantly looking for new opportunities and we have plenty of capacity to do that. But you can see with strong cash flows, as I said, well over 200,000,000 per quarter right now. We are in the best shape we've ever been. We have we do have a pretty active corporate development portfolio right now.
We're looking at a number of opportunities, some as big as $1,000,000,000 There's several of them that are that big. And so hopefully, we can move these projects forward and keep on putting our money to work in the ground. I will say that if it doesn't go into the ground, we build up a bit of a war chest, but then we look at increasing the dividend. And so there's more talk on the dividend a bit later on in this presentation.
So, Brady, a quick question here. First of all, with the revolver, remind me again what interest rate are you paying on that?
I think it's about 1.67% right now or 1.65% somewhere in there. So very cheap money? Yes.
And another question, earlier this year, you announced an ATM or at the market program. Have you used it yet? And under what circumstances will you use the ATM to raise equity or raise cash?
Jimmy, that's a thanks for reminding me because I quite often forget we even have this ATM in place. And I'm proud of the fact that we are the only mining resource company that has an ATM in place and hasn't exercised it and it and hasn't diluted their current shareholders, which is who we work for. We put the ATM in place because we've got a number of large scale opportunities out there. If we're successful on a couple of these larger ones, we may need to tap into the equity side as opposed to keep on amping up. Obviously, we've got a $2,000,000,000 revolver.
As of the end of June, we had $1,500,000,000 in capacity on that. As I mentioned, we do have a couple of deals that we're looking at that are in the $1,000,000,000 range. And so if we were fortunate enough to close a couple of these things, we would have to look at that. And that's what the ATM is there for. It will not get used unless we exhaust our debt capacity.
And we have plenty of capacity beyond the $2,000,000,000 but we're comfortable. We respect the fact that shareholders start getting nervous if we start getting too high on the debt. And so I'm proud of the fact that in the last 8 years, we have spent close to $7,000,000,000 in acquisitions. We've only had to raise $1,500,000,000 through equity financings. The rest of it all came from effectively using this revolver to smooth out the differential between our strong cash flows and those acquisitions.
That has saved by our calculations, that has saved our shareholders, our current shareholders about a 16% dilution. If we had used equity to fund all that growth, we would have 16% more shares issued outstanding right now. Our debt disappears by next year. So our shareholders are 16% richer because of this approach. As I mentioned earlier on, the excess cash flow we generate, this is really what we set ourselves up for.
When we have these bull runs in commodity prices, as long as we have good strong production delivering all the way through, we build up the war chest. And that's when we start looking at how do we if we can't put the money into the ground, then we look at giving it back to our shareholders. And that's where the dividend policy comes into place. We kicked off the current dividend policy back in that period to start returning cash to shareholders. We've since increased it and good strong production.
But really, the fact that we're producing more than twice the metal we were back in that period, you can imagine the cash generation possibility that we have in this company.
So Randy, a general question here. It's more toward the entire mining industry or more specifically gold and silver companies. The average dividend on the S and P 500 is 2%, but with gold stocks, it's less than 1%. Given the cash flow that a lot of producers and royalty and streaming companies are throwing off, when will this change?
Well, I think that what we've seen is dividends have been held relatively constant, but prices have climbed and share prices have climbed. I know in our case, it wasn't that long ago, our yields were 2%, but we've delivered such a strong return on the shareholder on the share price that that's forced the dividend down. Now obviously, people are building up their balance sheets and I would say the industry as a whole is trying to strengthen their balance sheets and get ready for the next phase of reinvestment into the industry. But as those balance sheets get stronger, then there's going to be a continued focus on the dividend side. I can tell you that right now, our dividend on a per share basis will climb because it is a unique dividend.
It's right now currently 30% of our cash flows goes towards our dividend as a minimum. And cash flows, of course, are a function of commodity price. It is averaged over the previous 4 quarters, but commodity price and production growth. We see organic growth. We see higher commodity prices.
There will be upward pressure on our dividend. And so it wouldn't surprise me to see an increase over the next couple of quarters. And I can tell you that if we don't make any further investments into the ground, our debt will disappear in the Q1 of next year. And I assure you that by the end of next year, we will if we haven't made any further investments, we will start looking at returning even more of our cash back to our
shareholders. Very good.
In fact, this I've already described most of this slide, but you can see it is competitive. As our share prices have appreciated over the last year and a bit, you can see the yields have dropped on a per share basis. But we will see some growth in this. Currently, at the end of the second quarter, our dividend was $0.10 per share. We know that the higher commodity prices and the organic growth that we're seeing in the company will put upward pressure on that price.
So stay tuned. Benefits to partner mining companies. Really, there's a number of benefits as to why streaming is the best way for partner mining companies to finance operations. But the most important ones are the first 2 or sorry, the second one and the third one. The arbitrage in value, especially with the base metals company, when you pluck precious metals out and bring it into our company, we actually gain in value and create that value.
We share that arbitrage with the partners. It's unique in that it's truly a win win situation where our share price will go up on an announcement of a deal and so will the partners, truly a win win. The second one is the improvement in project internal rate of return. If we go to the next slide, the Slobo mine is an excellent example of this, where Vale spent $3,900,000,000 building this asset. We supplied $3,100,000,000 or 78 percent of the capital.
We only took away 17% of the revenue. And so substantial improvement in the rate of return for the Vale shareholders on a go forward basis. And you can see the benefits there across the board. It's the dramatic improvement in project rate of return for our partners. Excuse me, it's dry air in here.
So yes, it's the real advantages for the partner streaming companies come from both that arbitrage and also from improving the internal rate of return on these projects. At Wheaton, ESG and community support is incredibly important. It's a core value, sustainability, making sure that we leave a positive footprint behind us. And so we have 4 areas that we focus on. Of course, there's the due diligence stage.
We're selective about what we invest into. We're not scared of areas that need support. In fact, we look at it as trying to be a change agent to try and strengthen our partners on this front. We have strong community investment programs. We've got strong policies and practices in the company itself in terms of making sure we go forward.
And now that we also really push external and voluntary commitments from all of our senior management and such. And so it's a good strong framework that we have within this company that I think makes us a leader in this space, definitely in the streaming space and I think in the entire mining space. We strive to be a leader in this. And I believe we've attained that and we strive to maintain that The community investment program, we're the only streaming company that has a core portion of its revenue going back in about 1.5% of our free cash flow goes back to our communities around us. 0.5% of that actually goes to the communities where our employees live in Vancouver, here in Vancouver and well, sorry, international offices.
But 1% of it goes back to providing parallel support with our partners to try and improve sustainability initiatives and community benefits within the communities around the mine sites. Those areas, there's 4 pillars that we focus on health, education, environment and community, and all sorts of examples of where we've been able to work with our partners to expand and improve health facilities, education facilities, community infrastructure, support entrepreneurial programs to try and build long term sustainable businesses. We are also the only of streaming and royalty companies to establish an additional $5,000,000 U. S. Dollars 5,000,000 CSR Fund, Community Support and Relief Fund, in response to COVID-nineteen.
We and the precious metals industry have survived relatively well through this pandemic, whereas the rest of the world is still suffering. And so this has been put in place to provide additional frontline support to help with the communities again, dealing with the impacts of COVID-nineteen and this pandemic. A lot of that money has gone towards food banks, shelters, hospitals. We brought in an ambulance, funded an ambulance at the San Dimas mine or in the Talitik community or in around San Dimas, all sorts of additional programs. We've kick started a mask making program down in Northern Brazil around the Salobo mine.
So again, this is an area the stronger our partners are, the stronger we are. We continually look for ways to help our partners be stronger. This is a way to strengthen their social license and make sure that they can continue operating in these districts. And so all of this, along with a bunch of increased disclosure, I think a lot of these things we had in place, but we really amped up the amount of disclosure. We just published our 1st sustainability report.
And it's made Wheaton a top rated mining company amongst the ESG analysts here, ranked in A by MSCI. And Sustainalytics ranked us as number 1. We are carbon neutral. We've committed to, obviously, the World Gold Council's responsible gold mining principles. But we're also the 1st streaming company committed to the UN Global Compact, which actually has higher standards in terms of expectations.
We're not striving to meet these, we're striving to exceed these. We think we already do and it's a matter of just working our way forward through this whole process. So very, very important aspect for us. And I will highlight that this is something that's also very important more so within European investments, Lots of interest in these programs from some of the funds that we've been talking to out of London and out of Europe. So why invest into wheat and precious metals?
Well, here's your traditional options. You could usually buy bullion or you could buy the mining companies. Now obviously, we've had our success has spawned other streaming companies. But I'd still say we differentiate ourselves from those other streamers by the fact that we're the only one that's pure precious metals production. And we've got tax confidence and we have a very sustainable dividend policy where it's tied to our cash flows.
Versus bullion in ETFs, I mean, we provide all the upside of a traditional our risk profile is very similar to bullion or an ETF. But the fact that we have all the exploration upside, we pay a dividend, we actually have increased leverage, there's so many reasons why we're much more attractive than a standard bullion and ETF, but our risk profile is very similar. And comparatively to the precious metal mining companies, as you can see, the fact that our costs are fixed, that is usually the source of most disappointment with respect to investing into our precious metals our traditional mining company is the cost risk that comes with that. And yet ours are all fixed, our capital costs are fixed by the contracts and our operating costs are also fixed.
Randy, just another question that was submitted by an attendee. On the metal price forecasting, it was mentioned that there are optimal times to execute deals, but the exposure to the flat price risk can be harmful to metal streaming as much as for trading companies. How much can Wheaton hedge in its operations in order to mitigate that flat price risk and be more exposed to the spread risk?
Well, we believe that our shareholders invest into us to get exposure to those metal prices. And so hedging is not something that we've entertained. Now that being said, we do manage our sales program within any quarter to make sure that we optimize. One of the challenges that we saw with the silver market is that it's so small and sometimes we get such large deliveries, we'd have an impact on the price just by moving that silver into selling that silver into the market. And so we have all sorts of programs in place now to try and smooth out that impact over the period of a quarter, but we never carry hedged amount over a quarter.
To us, it's the reason that shareholders invest into us is they want exposure to profitable precious metals production, but they also want exposure to those precious metal prices. So
Just to clarify on that, when you take delivery of a metal, gold or silver, you don't speculate on where you think it's going in a month or 3 months or 6 months down the road like you sell it right away.
That's right. No, exactly. I hate to say it. I wish I could tell you what the price of gold was going to be tomorrow. My belief is that precious metal prices are going substantially higher, mainly because I have not I don't have a lot of faith in the U.
S. Dollar. But I'm not going to risk my shareholders' capital based on that belief. When we make our investments, we make them so that we make a reasonable rate of return based on a flat price profile. And as long as we can get a reasonable rate of return and the upside, the optionality of that precious metal exposure, combined with the exploration and expansion potential that investing into good mines does generally deliver.
To date, we've averaged over 20% after tax return to our shareholders. So that's a pretty good track record of hedging our bets, so to speak, by making sure we invest into good assets, but not playing any further games. As I mentioned, 100% Precious Metals production. Our peers generally Franco Nevada and Royal Gold are the 2 companies that we are compared to. We actually generate more revenue than Franco Nevada, and we are 100% precious metals production, 60% of that comes from gold, another 30% plus comes from silver and a bit from palladium.
Palladium has actually been very good for us as an investment, but we are focused on precious metals. And in fact, what we've delivered versus the mining companies represented by VanEck and the Philadelphia Gold and Silver Index or just gold and silver. You can see total average rolling returns, multi year returns compared all the way across the board. We have outperformed best collection of portfolio or collection of assets to deliver those returns.
So Randy, just a quick question here. Recently, generalist investors have gotten a lot of attention by getting involved in the precious metals sector. For example, Berkshire Hathaway invested $500,000,000 in Barrick and the Ohio Pension Fund also stated that they were going to allocate 5% of their $16,000,000,000 fund toward gold in some form. Are you getting a lot of calls from U. S.
Journalists?
I was waiting for a call from Warren because I think the last time he even looked at the precious metals industry, the streaming model didn't exist. And I would have loved to have educated Warren, Mr. Buffet about the streaming model. That being said, Barrick obviously is a good mining company and a good track record, but I do think that some education might be warranted. So I'm still waiting for that phone call, Mr.
Buffet. No, it's that's where streaming falls into is that I think and it's one of the reasons that we like the London Stock Exchange is there's a large generalist segment there that doesn't have any options for low risk investing and high return. The risk profile and the reward profile that we deliver is very unique. It's kind of the best of both sides of the traditional precious metals investing sphere. And so I do think that we deliver that to these, especially to generalists.
By taking out the cost risk, it reduces the level of technical due diligence that's required at making a good investment because you know that the costs are fixed by the contract itself. And so you don't have that level of risk. So what we've done to date, as of June 30, we've invested over SEK9 1,000,000,000 into streams, but have already generated from that $9,000,000,000 $6,900,000,000 in cash flow. And keep that in mind as we talk about the reserve and resource life that we've got going forward. We've already paid over $1,000,000,000 back to our shareholders in the dividend, and we know that that's just going to continue to grow.
We only started paying the dividend in 2012. And so we're going to see increased return to shareholders over time. Strong annual cash flow. As I said, we're well over $200,000,000 per quarter in cash flow right now. 40 years of reserves and measured and indicated resource life forward.
Inferred resources had another 25 plus years. And as I said, 20% average annualized after tax return from our portfolio. So a good strong track record in terms of what we've achieved and that's building us a very strong profile going forward where we've got great organic growth profile over the next while, lots of corporate development opportunities coming forward. And yes, it looks very positive for us. So this is the last slide that I was going to talk about, cost predictability.
I mean, why Wheaton? Precious Metals is a good store of value. It's widely becoming even more widely accepted that everyone should have at least 5% to 10% of their portfolio of precious metals just to protect themselves against the fiat currencies of the world. The challenges that we see, the helicopter money that is going to need to continue to be printed to support economies around the world just bodes so well for precious metals. And so what we deliver, of course, is very profitable precious metals production.
We have confident costs. We have one of the highest quality asset bases, very strong sustainable operations. Of course, with this ROC profile, we also deliver leverage and a healthy dividend that's paid to our shareholders, so we pay you to own our shares and tax confidence. We've gone through and full sign off an agreement with the Canada Revenue Agency here. And so a good strong business model that will continue to deliver superior returns to our shareholders and excellent exposure to I think the best exposure possible to precious metals.
We continue to strive to deliver more.
Great. So Randy, maybe just in conclusion, you can just tell our attendees what we can expect in the coming weeks months in terms of catalysts or news coming out of Wheaton Precious Metals?
Well, we're working, as I mentioned earlier, working towards the LSE listing. We announced the intent to list, but it's looking like it will probably happen sometime within the next 2 to 6 weeks. It's in the regulator's hands, and so we're just waiting for some signals back, but hopefully sooner than later. We did give some guidance, updated guidance at the end of the second quarter that had a production drop of about 5% over the year. But so obviously, our Q3 results will be coming out in November.
I think it's November 9 is when we release. Production looks good. We're very comfortable with where we are on everything as a whole. We're seeing good strong results from so many of our operations right now. From a pandemic risk perspective, all of our partners are doing a really good job of managing that risk.
Mine sites do have a bit of an advantage in terms of being able to limit access and therefore limit risk through some strong and strict controls. And so we've been fortunate from that perspective. We are constantly looking at new opportunities. This is an industry that needs capital. So I always like to describe it as there's a bit of a wide spectrum.
We can be fortunate enough to have a couple of $1,000,000,000 opportunities come into play over the next couple or next year or so, or we could not make any acquisitions and pay off the debt by the Q1 of next year and ultimately increase the dividend even more from where it will be currently. So that's those are 2 pretty good scenarios. These are good times to be in the precious metals business. It's good times to be invested into precious metals. And our portfolio is humming right now.
And so we're constantly looking for ways to put the money back into the ground, but if we can't, then we'll give it back to shareholders. So, yes, these are good times.
Well, that's great, Randy. I want to thank you very much. And to all the attendees, I want to thank you for taking the time to sign in. I know your time is valuable and we do appreciate it. If anybody would like to have a deeper discussion with Randy on the And all the attendees, I want to thank you.
Jamie, always a pleasure. And I hope that sometime we can do this again face to face sometime soon.