Good morning, ladies and gentlemen, and thank you for standing by. Welcome to the Wheaton Precious Metals Boise's Bay Acquisition Conference I would like to remind everyone that this conference call is being recorded today, Tuesday, June 12 at 11 o'clock am Eastern Time. I will now turn the conference over to Mr. Patrick Drouin, Senior Vice President of Investor Relations. Please go ahead.
Thank you, operator. Good morning, ladies and gentlemen, and thank you for participating in today's call. I'm joined today by Randy Small with Wheaton Precious Metals' President and Chief Executive Officer Haehm Hoadley, Senior Vice President, Corporate Development Gary Brown, Senior Vice President and Chief Financial Officer and Kurt Bernardi, Senior Vice President, Legal and Corporate Secretary. We will be referring to the presentation today on today's call that is available on the company's site at www.wiesenpm.com. For those of you on the webcast, we do ask that you please open the PDF as we will not be automatically forwarding the slides of the presentation.
I'd like to bring to your attention that some of the commentary on today's call may contain forward looking statements. There can be no assurances that 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. The press release from last night set out the material assumptions and risk factors that could cause actual results to differ, including among others fluctuation of the price of commodities, the absence of control of our mining operations from which Wheaton purchased silver or gold or cobalt and completing new transactions and risks related to such mining operations. It should be noted that all figures referred to on today's call are in U.
S. Dollars unless otherwise noted. 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 dialing into our conference call to discuss the a precious metals focused company. However, we welcome the opportunity to invest into another low cost long life asset with a partner of Vale's caliber. While cobalt isn't considered a precious metal, we think it is far from being just a base metal. Through Voisey's Bay, we not only get exposure to the rapidly growing demand for cobalt, we also get this exposure from what we believe to be the cleanest, most politically stable source of the metal in this world.
Furthermore, we are very excited about the contributions our new cobalt stream to both Wheaton's growth profile and cash flow. So if I could encourage everyone to turn to the presentation itself. Of course, on slide 2, there is some forward looking statements that I think Patrick just summarized very well. So I'll start off on page 4 of the presentation itself. Starting on January 1, 2021, Wheaton will be entitled to 42.4 percent of cobalt production from Vale's Voisey's Bay operations until the delivery of £31,000,000 and then dropping to 21.2 percent thereafter for the remaining life of mine.
It should be noted that the timing of the onset of our stream is coincident with the anticipated ramp up of the underground operations at Voisey's Bay. Wheaton will pay a cash payment of $390,000,000 on closing and 18% of the metal bulletin spot price per pound delivered until the value of the upfront cash consideration is reduced to 0, at which point the spot price per pound claims to 22%. Wheaton's attributable cobalt production is forecast to average £2,600,000 per year for the first 10 years, which for context is approximately 80,000 gold equivalent ounces per year over $75,000,000 per year for the 1st 10 years. Along with strong cash flow and production, Boise's Bay diversifies Wheaton's portfolio with an integral metal for clean energy as cobalt is primarily used in battery technology, especially in the rapidly expanding electric vehicle market. While most cobalt supply comes from high political risk jurisdictions, cobalt produced at Voisey's Bay is among the most environmentally friendly, cleanest and conflict free cobalt production in this world.
In addition, there is great exploration potential as deeper drilling has already shown that mineralization does continue well below the current resource boundaries. Finally, with the strongest cash flows in the streaming space, I would like to highlight that we will be funding this transaction with the ample capacity available under our current revolving credit facility. With that, I'd like to turn the call over to Haitham Hodalei, Senior Vice President of Corporate Development here at Wheaton to provide more details. Haitham?
Thank you, Andy. By now you've all had a chance to go through the specifics of this transaction. So I'll just point out some of the highlights as we so that we can leave time for questions at the end. On Slide number 5, some additional details, transactional review. Randy has already pointed out that what Wheaton has entered into is a streamwood valet effective January 2021, an amount of finished cobalt from the open pit and the underground equal to 42.4% of the cobalt produced at Boise Bank, which reduces after £31,000,000 delivered to 21.2 percent of cobalt production for the life of the mine.
Wheaton will make a cash payment of $390,000,000 as Randy mentioned, and Wheaton will utilize its existing revolving credit facility for the upfront payment. In terms of the production payment, 18% of the metals, gold and cobalt spot price per pound is what we will pay until the value of the upfront consideration to 0, then 22%. Now it's important to make the distinction between the metals bulletin pricing and LME pricing. The LME trading of cobalt is based on very, very light volume. As an example, LME trading reflected only 0.5% of global sales in 2017.
The other 99.5 percent of global sales is based on the metals Bolton reference price, which as of this morning has a lower and upper range of 41.6 $5 to $43 depending on the quality of the cobalt metal produced. Keep in mind that Vale will produce one of the highest quality cobalt metals that is optimal for use in electric vehicles in the form of cobalt rounds that meet the cobalt high grade specification. Turning you to Slide 6.
Again, continuing on with
the transaction overview, Wheaton will take physical delivery of high quality finished metal by way of warehouse certificates. Payable rates for cobalt and concentrate have generally been fixed at 93.3% and Wheaton has a completion test related to the ramp up of the underground operations measured by throughput rate. Wheaton will also be responsible for Canadian tax on the sale of finished cobalt to a 3rd party offtaker. We don't expect to actually pay any cash tax for a number of years given the upfront capital that we're making. The asset of the stream is guaranteed by the project owner and is a financial guarantee by Vale SA as well.
The stream area of interest applies to Boise's base mining lease plus a 2 kilometer surrounding area so long as any cobalt is extracted using the same underground infrastructure as the planned Reed Brook and Eastern Deeps deposits. And Reed Brook comes in 1st, Eastern Deeps comes in 2nd is ramped up, Reed Brook effectively is fully ramped up by about September 2021 and Eastern Deeps by about 2024. Turning you over to Slide number 7, the asset overview. Just a few of the highlights here. It's an open pit mine transitioning into an underground mine.
Deposit type, it's a magnetic sulfide and it's located off the north coast of Labrador. The open pit began in 2,005 and the underground is expected in the beginning of 2021. The 10 year average production of contained cobalt metal is roughly £2,600,000 and cobalt payable rates are fixed at 93.3%. Looking at reserves resources combined, we estimate at least 14 years of mine life based on reserves and resources and are very excited about the exploration potential, which could further expand that. I'll turn you over to slide number 8.
In terms of an asset overview, primary metal here is nickel with byproduct, cobalt and copper. This asset was originally discovered in 19 90 3 in Newfoundland and Labrador, approximately 1200 kilometers north of St. John's. It's an open pit mine and concentrator, which became operational in 2,005 and the 1st full year production as previously stated from the underground mine is forecasted for 2021. The underground development is focused on 2 deposits.
We'll go in a little bit more detail on those, the Reed Brook and Eastern Deeps. There is a revised development agreement with the government of Newfoundland released yesterday and it indicates that Vale now has ample time to actually meet the required timeline. Infrastructure, the Long Harbor processing plant became operational in 2014 and currently processes all nickel concentrates. The cobalt circuit started up in the Q1 2017 and is undergoing ramp up. This is a hydromallurgical facility, which results in significantly higher cobalt recoveries.
Slide number 9. The plan view on Slide number 9 highlights the Ovoid deposit and the Southeast extension. Ovoid deposit, which is the current open pit as well as the Reed Brook and Eastern Deeps deposits, which provide the underground feed. So far Vale has prepped the callers for both Reed Brook and Eastern Deeps and they will access these deposits with ramps with conveyors at Eastern Deeps to get ore out and at Reed Brook, ore will be trucked out of the mine. Slide number 10 highlights the existing reserves and resources.
And you can see the original discovery Hill there. Slide number 11 shows a significant exploration upside potential, which exists at depth below Reed Brook and Eastern Deeps. And just a reminder that the area of interest is the existing lease plus a 2 kilometer surrounding area, which uses the same planned infrastructure. You can see why we're excited about the exploration potential at depth. Turning over to Slide number 12, it's an overview of the Long Harbor facility.
Long Harbor, as I previously mentioned, began in 20 14. In late 2017, all of Boise's Bay's nickel concentrate began going to Long Harbor. The cobalt circuit began in early 2017. It's a a hydrometallurgical facility that will produce nickel and cobalt rounds as well as cathode copper. Boise Bay is the most environmentally sound and cleanest cobalt number 13.
As you can see on this slide, Wheaton has more than enough capacity to fund this transaction. As of the end of the last quarter, our net debt was approximately $547,000,000 and decreasing given our strong cash flows. We'll use our revolving credit facility and cash on hand to fund this transaction. Even after this transaction, we have significant capacity of more than $1,000,000,000 for other transactions, excluding the $500,000,000 in free cash flow annually. I'll turn you over to Slide 14.
On Slide 14, you can see very that we very comfortably comply with our financial covenants with significant room for future growth. Slide 15 shows that this transaction is accretive on all metrics: production, cash flow, reserves and resources. Turning over to Slide 17 gives you a bit of an overview on cobalt. Batteries vehicles is a key demand driver for cobalt. And given the significant drive towards electrifying the automotive industry, we believe there's been a paradigm shift in demand for cobalt.
Cobalt demand for non battery related end use is also expected is also expected to grow. The anticipated demand for cobalt battery related end use is expected to more than double between 20 18 2025. As you can see, cobalt is an integral metal for clean energy storage. Slide number 18 shows lithium ion anticipated battery demand overview. In short, supply constraints and anticipated surge in demand coupled with the fact that this is already a small market will result in a price reset such that we expect to see strong near term and long term demand.
Slide number 19, we'll start with the pie chart on the left. Like silver, cobalt is primarily produced as a byproduct and 98% of cobalt is to be exact is produced as a byproduct. As you can see from the pie chart on the right, most cobalt comes from high political risk jurisdictions, which could be exposed to issues, which could affect supply. We're very happy to be able to source cobalt, an integral metal for clean energy right here in Canada. At this point, I'll pass it back to our CEO, Randy Smollett.
Thank you, Haitham. If I can turn everyone to Slide 21, you can see where Voisey's Bay fits into our portfolio of low political risk assets. We obviously focus on the Americas and Europe, but good strong stable jurisdictions with good strong stable partners. It is listed as a development project, but I would dare to say that with the operating history and the track record of production and processing at the Long Harbor facility that this is should be classed as a strong operating asset. It will be delivering to us again in 2021.
If you turn to Slide 22, you can see our production profile and the impact that Boise's Bay has starting in 2021. Some of you have heard me say that I would call 2018 a foundation year, and you can see the growth that we see. Boise's Bay will add very nicely to that. And of course, this slide doesn't even encounter any of the optionality that we have in Rosemont and Salobo and Navidad coming down the pipe too. So we and it doesn't include any further acquisitions that we may make.
So a good strong foundation year here that we see nothing but growth in front of us and a lot of that organically. So to summarize on Slide 23, what we believe is that Voisey's Bay will add to our existing high quality portfolio of low cost, long life mines. Of course, it will add to our growth profile and continue building from where we are right now. The exploration upside, I think is I encourage people to really understand that long section that that Hatem had in his presentation. The exploration upside on Voisey's Bay is very strong.
We think that life will be much longer than the current scheduled reserve base and very, very optimistic there. This, of course, is strongly accretive to earnings and cash flow across the company on all metrics, diversifies our production profile and, of course, provides exposure to clean, conflict free cobalt. So while we remain focused on precious metals, this Boise Bay cobalt stream checks all of our boxes. So with that, operator, we'd like to open up the call to questions.
Your first question comes from Ralph Profiti of 8 Capital. Please go ahead.
Good morning. Thanks for taking my questions.
Thanks, Ralph.
Thank you. Thanks, Randy. I have 2 of them, if I may. Randy, first off, you had the financial capacity to take down more of the share of the stream. What was your thinking on the 42.4 percent?
And then if I may on the second question, with respect to the due diligence on the network on the cobalt circuit, whether or not you guys are seeing upside to the 84% process recoveries assumption? Thanks very much.
Well, so I'll take the first one and let Haitham answer the second one. We had capacity, but this is a step out of our area. And so when we looked at it and felt the original target for Vale was, of course, to release 75% of the cobalt production to the stream. We weren't because this is our first step out, we were comfortable with taking a piece of this one going forward and working with cobalt 27 in terms of satisfying this opportunity. So we're comfortable with this.
As you can see by the cash flows, it's going to be in excess of 10 percent of cash flow going forward. So that's a nice for us, it's a nice sized venture into this space.
And Ralph, to answer your second question with regards to recoveries, 84% is the average. It actually ranges between 80% 89%. We do think there's further potential for improvement to that.
Very helpful. Thank you.
Thanks, Rahul.
Your next question
Gary. Maybe a few questions for me here. First, I spent the last 2 hours, 3 hours on cobalt. And thanks to Wheaton Precious Metals, I'm now the de facto cobalt analyst now here at CIBC. I'm still trying to get a better handle on the price.
And so clearly, cobalt prices have increased close to $40 a pound now. Previously, 10 year average closer to $15 a pound. So I'm just trying to get a better handle in terms of long term, what should I be looking at? And from that perspective, what have you assumed as a long term price when you look at these opportunities?
Cosmos, and I appreciate the 10 year average. I just one of the big changes where we see is in society is just shifting towards power storage, efficient power storage and the shift towards electric vehicles. And so we see this as being strong. All the evidence supports it. I mean, real evidence, there's real numbers out there.
They're backing the growth in that space. And so this increase in demand, although a 10 year average is always useful to look at, I don't think what we're talking about here is a phase shift and that is what's driven this increase in demand. And then when we look around the world, see that. So I don't know, Haytham, you got anything to add?
Sure. Thanks, Randy. Just to add to the question, cobalt pricing is obviously the key here, because cobalt has risen quite dramatically. Keep in mind, when we're talking about cobalt pricing, we're always referencing metals bold in cobalt pricing. As of this morning, it was $41,65 to $43,000,000 The higher specs material gets closer to $43,000,000 and the lower spec will get 4 1, 65 based on today's pricing.
Now, you asked the question with regards to where we actually think cobalt prices are going and what we actually use What we look at is spot at a given point in time and try to come up with a reasonable discount to spot. Historically, we've been anywhere between 65% and 90% of spot as our long term. We typically start at spot prices and trend down. I can tell you we were closer to the lower end of that range on this one.
Okay. And then, Haitham, going back to the pricing here in terms of LME and the Meadows Bulletin. If I take the numbers that you've given us, dollars 75,000,000 free cash flow per year, £2,600,000 production. If I back calculate and reverse engineer, I come out to a cobalt price of $35 per pound and that doesn't really jive with the over $40 that we had just talked. I'm just trying to piece it all together.
Yes. I mean, as I indicated, we won't use spot prices long term. We take a look at the fundamentals and we have it our own internal commodity research department that actually tells us exactly where we think cobalt prices, the trend for cobalt prices, where they're going and that's what we use in our analysis.
Yes. And maybe one last question on just the supply or the demand and supply. Certainly, you've talked a lot about demand. And obviously, electrical cars, vehicles come up in Toronto and whatnot. But how much work have you done on the supply side?
For 1, I went to school around the Cobalt, Ontario area. I know there's a lot of cobalt even the tailings from the old timers that took out the silver. Have you looked at potential for some of that those tailings to come out? And what is the potential impact on demand and supply?
Cosmos, it's Randy here again. Yes, we have studied that. I mean, obviously, a lot of comes out of the Congo right now. When you sit and look at the worldwide opportunities out there, there's not a lot of tonnage actually when you sit and look at the areas around Cobalt, Ontario. I mean, obviously very, very early stage.
There's some nice grades there and maybe not so much in the tailings, but small, small tonnage. They're not going to be big contributors in terms of a volume. The Congo, of course, the DRC is the source of most cobalt in this world. And of course, they've just made it all that much more expensive to produce cobalt with their change in royalties down there. So from a market perspective, we're pretty comfortable in this space.
You have to obviously believe in the shift towards electric vehicles and more efficient energy storage on a consistent basis. But
So just to add and to reiterate what Randy said, majority of the new cobalt production comes as a byproduct out of the DRC. We don't anticipate that there's any significant cobalt coming in any significant any material volume that would actually depress the actual cobalt price in the near term.
Got you. If I can switch gears a little bit and talk a bit about the operations at Voorhees Bay. Could you maybe give us some a bit more color I don't cover Vale, but give us a bit more color in terms of what they're building with the $2,000,000,000 With the 2 undergrounds, is it ramp access? And then I've looked at the long section here in terms of exploration upside. The further question is it sounds like it only counts towards Wheaton Precious Metals if the downtick extensions are being accessed through the current infrastructure.
At what point would they potentially need a shaft? And what does that mean?
Sure. So, at this point in time, you hit the nail on the head. They're actually accessing both the Eastern Deeps as well as Reed Brooks with ramps. There is no plans for a shaft. And if you look at the actual longitudinal section on Slide number 10, it shows you and sorry, number 11, it also shows you that it makes no sense to put in a shaft at this point in time when you have that ramp excess underground.
So we would not expect that to take place anytime in the near future. Keep in mind, we've got at least 15 years probably closer to just looking at the potential southeast extension of the actual Reed Brook and Eastern Deeps deposits, at least 15 to 20 years of ramp access before they even have to consider a shaft.
Got you. And then maybe one last question from me here. Boise's Bay in Newfoundland, Canada, Gary, how is this structured? And do you have to eventually pay Canadian taxes?
Yes. I think we alluded to that earlier. This is a mine located in Canada. So consistent with the way we've structured any of our previous deals that relate to mines in Canada, this will ultimately be subject to Canadian tax.
But not until you've sort of fully recovered your upfront investment?
That's correct.
Okay.
Thanks, Randy and team, and good luck.
Thanks for calling in Cosmos.
Your next question comes from the line of John Tumazos of John Tumazos Very Independent Research. Please go ahead.
Thanks for taking my question. There's a little stub of the open pit that might continue into 2021 or 2022. And sometimes they find a little more when they get to the bottom. Will you participate in that little bit of open pit output at the beginning of 2021?
Yes, we do. We get all we get 42.4% of all cobalt production as of January 1, 2021, no matter where it comes from. So not only that, the discovery zone itself, which is still got it's not part of the current production plan, but it does represent an additional opportunity from an open pit basis eventually, depending on how nickel pricing, copper pricing and cobalt pricing do in the future. It could actually also play into some potential open pit supplemental production. So yes, we get 42.4 of everything as of January 1, 2021, John.
So I'm looking at the Slide 21 with the baby blue exploration prospects and yellow exploration targets, and it looks very wonderful. How deep do you think it's practical to ramp below 1 kilometer?
Well, I mean, here's what I will say. The Eastern Deeps is actually being accessed and ore material will be fed out by conveyor. It's not actually being ramp haulage out. And so Eastern Deats will be much more efficient in terms of moving materials up. And so it's got the potential to even go beyond that.
It's too early to stage. There's always going to be a crossover point, but one of the biggest challenges, of course, is the expense of trying to define those reserves at such great depth right now. And so it's too early to say what the crossover is. And all I'll be doing is guessing what that crossover is based on today's economics. We'll see how that changes as it goes forward.
That's a great problem to have in the future.
If I can ask one more and this is maybe crossing over into operator land rather than streaming royalty land. The nice people at Kirkland Bay are doing a 7,000 foot shaft and development on a $320,000,000 U. S. Budget. And how does $1,700,000,000 get spent here?
What are the bigger capital? I guess it's good for Wheaton that they need the money. I'm just wondering how a couple of ramps and some conveyors cost $1,700,000,000
Well, and I'll answer that Boise Bay is a lot farther away from civilization than anything in Kirkland, in Ontario, Kirkland Lake. That's really mean, there's a lot of infrastructure cost in terms of being in the northern part of Labrador.
John, I'd be happy to go through some of the details with you if you'd like to give me a call at a later point in time.
Sure. Thank you.
And your next question comes
from And your next question comes from the line of Josh Wolfson of Desjardins. Please go ahead.
Thanks. Just in terms of timing of cash flows, I think you've given us a 10 year average, but given there are a lot of moving parts both with the ramp up and the depletion of the open pit, is there any sort of additional guidance you can give us on 2021 or 2022 expectations?
Sorry, can you repeat the question,
Is there any sort of additional guidance you can give us on some of the more near term years in terms of production given the transition to the underground and depletion of the open pit?
Yes, you bet. In terms of actual attributable cobalt production, I can tell you in the first 3 years, it averages between, call it, 2,000,000 to 2,200,000 tons of contained cobalt. Certain pounds, pardon me, of contained cobalt.
But that and then that will, of course, be supplemented. That's including open pit. There'll be supplemental. And as John mentioned earlier on, the potential for further expansion is just to keep the mill full through that open pit as it gets near the end
of the respect to the completion test, is there any sort of penalties or benefits that you would be able to secure if the expansion is delayed or there is a lull in production between the open pit and underground?
Yes. I mean the way the completion test works, it's a certain throughput that has to be achieved. If a certain bottom level throughput is not achieved, there is a pro rata return of the deposit, which they achieve a certain level, then there's a gross up and potentially in the end if they can't get to where they need to go, there's a refund of a portion of the past.
And I just want to clarify, the throughput is from underground production. It's not throughput at the mill. It has been coming from the underground deposits.
Got it. And then lastly, in terms of the selling offtakes that you will be looking at, I'm assuming that's something that Wheaton will be managing. And I guess in that case, how will you be sort of managing that process? And will you be hiring users within the market?
Well, we have a number of options and we haven't made any decisions yet because we do have 2 years to make those decisions. And so definitely, there's some opportunity. When we look at this as being such a and particularly, it's a brand new mine build, the hydro met facility from a smelting perspective. So this is the cleanest cobalt in the world. And I do think that there's going to be a premium for this even over and above higher quality cobalt that you'd source from other jurisdictions in this world.
And so, it is something that we would want to stay on top of to make sure that we can try and capture some additional value, because we do think that this is worth more from that perspective. So I would fully expect that that's the path that we'd be taking is trying to make sure that we market this as a unique product as it is a unique product and take advantage of that uniqueness. But we do have 2 years to think about that given that we're not going to see any production until 2021.
Got it. So I guess relative to the metals bulletin pricing in the context of the costs that Wheaton would incur for the actual selling of this metal or marketing of it, Should we be assuming that you receive those metals both in prices? Or should we assume a slight premium or discount to it, given the quality as well as the costs?
Well, as you might imagine, we've done quite a bit of study on this. The typical costs for marketing are around 2%. That's what we've seen in this space. I'm hoping that we can claw that and more back from the fact that this is a premium product, but time will tell.
Your next question comes from the line of Chris Bier of RBC Asset Management. Please go ahead.
Good morning, guys. Thanks for the call. Just wondering on the Long Harbor argentia plant, like it's a bit foggy on it, but I guess it started up in 2014 and I'm not sure if they most of these HPALs took 4 or 5 years to get up to 80%, 85% capacity. And in this case, there was some agreement and I didn't read fully the Newfoundland government commentary yesterday, but they had a clause before if the long harbor plant wasn't full from Boise's Bay stuff that they'd have to bring it from Sudbury as well. Is there anything like that in your contract whereby, I don't know, Sudbury stuff can push out Boise Bay stuff?
No. And the economics of pulling it in from there. There is a commitment on Vale's side in terms of any ore that was processed from Boise's Bay in the past. They have to sort of make up that ore at the Long Harbor plant going forward. And there's definitely going to be in the contract to structure to accommodate the potential of commingling.
But there's with the infrastructure and everything that's in and we've got some commitments on their side captured, we're very comfortable with the fact that this was really the Long Harbor plant was built for the Voisey's Bay ore feed. It's ideally tuned for that. So we're pretty comfortable on that side.
Okay. All right. Thank you.
Thanks, Chris.
Your next question comes from the line of Anita Soni of Credit Suisse. Please go ahead. Good morning, guys. All my questions have been asked and answered. Thanks.
Thanks, Anita. Thanks for calling in.
Your next question comes from the line of Dan Rollins of RBC Capital Markets. Please go ahead.
Thanks very much. Randy, Haitham, I was wondering if you
could maybe just comment on your willingness now that you've stepped out of the gold and silver realm to take on other metals beyond gold and silver going forward. And if there is, what type of proportion of your cash flow would you like to make sure that gold, silver continues to be represented at?
Well, and Dan, thanks for calling in. I have to tell you, we could have stepped up possibly for more of this deal if we wanted to. We're pretty comfortable with this as a step out. One of the things that's intriguing, I mean, we'll look at anything. I mean, my objective, our overall responsibility is to deliver value to our shareholders, period.
We focus on precious metals as the best way to do that. But if we see other opportunities like this and boy, when we studied cobalt, I have to say, it just reminds me of silver so much in terms of the fact that so much of it is non core byproduct produced, 98% of it worldwide, noncore byproduct produced. And the fundamentals and how that works for silver, it just delivers that right back to cobalt also in terms of the fact that increases in price of cobalt does not drive an increase in supply. You have to have support from, in this case, nickel prices and copper prices to actually drive that supply. And so it's a metal that is definitely unique.
I have a hard time calling it a base metal actually, and I would say it's maybe on its way to being a precious metal. But it is one I will say that when we look around the space, there's not a lot of other cobalt projects that we would invest into in this world. And so this likely represents one of the only options for us to go into the cobalt space. I don't see any growth beyond where we are on the cobalt side. But we'll have a look at everything.
Again, going back, the ultimate target is always to deliver the best value we can back to our shareholders. And what we saw here was an opportunity to pick up a little dessert on the side of the highway and something that will deliver some value back to our shareholders.
So if you play devil's advocate, one could say you're stepping out to cobalt, does that could one assume there's not as many high quality opportunities in the gold silver space? Or has the model now changed where given the free cash flow you're generating, it's really now focusing on high quality opportunities with potentially the product mix secondary to that now?
Well, that's a good question. What I will say is that the market has changed in terms of the scale and we've been pretty clear on that. We're not seeing the balance sheet repair opportunities that we saw over 3, 4 years. So the size of the deals that are out there have shrunk over what we saw 3, 4 years ago. And so there has been a change in the market, but there still is a lot of opportunities in the precious metal space.
We're hopeful to deliver a couple more transactions within the year. We're definitely working in that space. And so we still do see demand there. This was just a nice tuck in. And obviously, we have a very strong relationship with Vale.
And to have a company the size of Vale commit to taking their base metal shares from share of revenue from 16% to 30%. We know they're going to be investing into assets like Boise's Bay and Sanlobo and Sudbury because that's how they're that's the only way they're going to get their base metals up to 30% of overall corporate revenues. And so we're happy to work with them. They've obviously they understand how streaming will take a good mine and make it a great mine. And they're using that pretty effectively to help grow themselves and help grow their companies and deliver good returns back to their shareholders.
So when we have an opportunity like this, we're going to step up and take it. And but trust me, the focus and you'll see that I hope very shortly. The focus is still on precious metals.
Okay. And then just with respect to the current market, obviously, there's always players that come and go. But are you actually seeing more competition and tougher the ability to get deals done tougher on the smaller royalty streaming companies assets now just because there's so many more competing people competing with those?
I'm going to hand Nathan can answer that one.
Sure, Dan. We put the same amount of effort, whether it's a small deal or a big deal. Are we seeing more competition. What we are seeing is some companies willing to sacrifice a little more, but we know that that doesn't always work in this environment. It's okay to do that, especially when you're private and but going public, it's a different matter.
I think on the public realm, we can compete very well as we've shown as we've demonstrated.
That's very, very helpful. Appreciate the color, gentlemen.
Thank you, Dan. And one last question, please.
And that comes from the line of Michael Gray from Macquarie. Please go ahead.
Yes. Thanks guys for doing the call.
Very valuable color.
Just a couple of quick things. I think Randy you alluded to the hydromet plant and recovery ramp up for Cobalt. Is there any risk
to those recoveries? I think you guys have stated 84% is what you're modeling.
Well, the beauty of this one is that it's up and running. You might say there's risk if it was in full construction. That's why I have a hard time calling this a development project. It's up and running and has a reconciliation, has supported everything that they've said we've gone through and during our due diligence, studied it thoroughly and we're very comfortable with that.
Okay, perfect. And then last thing just on this whole ramp question. Is it fair to say that you guys had gone down to ramp depths that worldwide have been achieved to estimate some of the upside say 1500 meters?
Yes. I just want to clarify. It sounds like if the shaft gets constructed, we still get the cobalt from this. So whichever works the best. It's not it's ore that feeds through the processing the mill up at the site that we get access to.
And so irrespective of how they access the ore, whether it makes sense to do shaft, I mean, the plan right now is ramp access. It makes sense when you sit and look at where the top of these deposits are and where they work down. Obviously, the deeper drilling, it's very tough for us to define those reserves and resources at this stage in order to make those decisions. And so I think given the remote location and the strength behind the flexibility that you have behind ramp access, I think that definitely is the best approach right now.
Okay. Thanks. That's much clear. Appreciate that.
Thank you, Michael, and thank you, everyone, for dialing in today. As I hope we have demonstrated on this call, we're excited about this stream for a number of reasons. Firstly, Voisey's Bay is an asset that fits comfortably into our existing portfolio of low cost long life mines. Secondly, the new stream adds meaningfully to both our cash flow and growth profile. Thirdly, we believe this deal is accretive on all metrics and especially on cash flow.
And finally, this latest stream gives us exposure to some of the cleanest, if not the most if not the cleanest cobalt that is also from a non conflict jurisdiction. As I mentioned at the beginning of the call, we remain committed to our focus on precious metals but are pleased to have gained a little exposure to cobalt, a metal that is integral to decreasing environmental impacts around this world and therefore truly precious to our future. We do look forward to speaking with you again soon. Thank you.
This concludes