Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Wheaton Precious Metals 2022 fourth quarter conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star then the number 1 on your telephone keypad, or type your question in the Q&A box of the webinar. If you would like to withdraw your question, press star 2. Thank you. I would like to remind everyone that this conference is being recorded on Friday, March 10th, 2023 at 11:00 A.M. Eastern Time. I will now turn the conference over to Mr. Patrick Drouin, Senior Vice President of Investor Relations and Sustainability. 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 Smallwood, Wheaton Precious Metals President and Chief Executive Officer; Gary Brown, Senior Vice President and Chief Financial Officer; Haytham Hodaly, Senior Vice President, Corporate Development; and Wes Carson, Vice President, Mining Operations. Please note that for those not currently on the webcast, the slide presentation accompanying this conference call is available in PDF format on the Presentations page of the Wheaton Precious Metals website. I'd like to bring to your attention that some of the commentary in today's call may contain forward-looking statements, and I would direct everyone to review slide two of the presentation, which contains important cautionary notes regarding forward-looking statements. It should be noted all figures referred to on today's call are in U.S. dollars unless otherwise noted.
In addition, reference to Wheaton or Wheaton Precious Metals on this call includes Wheaton Precious Metals Corp. and/or its wholly owned subsidiaries as applicable. Now I'd like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.
Thank you, Patrick. Good morning, everyone. Thank you for joining us today to discuss Wheaton's fourth quarter and year-end results for 2022. During 2022, we remained extremely active as we added more streams, optimized our current portfolio, and made several industry-leading commitments on the sustainability front. While gold held historically high levels throughout the year, inflationary pressures had a significant impact on traditional miners, resulting in their margins being compressed. Wheaton, however, continued to deliver cash operating margins of 75% in the fourth quarter, reflecting the resilience of our business model. From a financial perspective, in the fourth quarter, Wheaton generated $236 million in revenue, $172 million in operating cash flow, and $166 million in net earnings, as Gary will discuss shortly.
This solid performance contributed to our record annual dividend distribution of $237 million to shareholders. As we continue to see a healthy appetite for streaming as a source of capital for the mining industry, we are actively pursuing a number of new accretive opportunities. We have demonstrated our continued willingness to identify strategic opportunities, both externally and within our portfolio that create value for our shareholders. To that end, in the quarter, we completed the previously announced sale of the Yauliyacu stream back to Glencore for $132 million, a continuation of our portfolio optimization efforts, which also saw us sell the Keno Hill stream for $141 million earlier in the year.
The sale of Yauliyacu and Keno Hill streams contributed to the overall quality of our portfolio, where now 93% of Wheaton's production comes from assets that fall in the lowest half of the cost curve. The sale of these assets positions Wheaton with one of the strongest balance sheets in the industry, and we enter 2023 exceptionally well positioned to deliver long-term shareholder value through the significant organic growth profile that is already embedded into our portfolio, as well as through additional accretive acquisitions. Wheaton continues to demonstrate our leadership in sustainability with sector leading scores, including an AA rating from MSCI and a genuine #1 rating in precious metals from Sustainalytics. I would now like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer, who will provide more details on our results. Gary.
Thank you, Randy Smallwood, and good morning, ladies and gentlemen. The company's precious metal interests produced 148,300 Gold Equivalent Ounces or GEOs in the fourth quarter of 2022. Relative to the fourth quarter of the prior year, this represented a decrease of 20%, primarily due to lower production from Salobo, Peñasquito, and Voisey's Bay, coupled with the closure of the Stratoni and Triple Seven mines and the termination of the Keno Hill and Yauliyacu streams. Revenue for the fourth quarter of 2022 amounted to $236 million, representing a 15% decrease relative to Q4 2021 due to the combination of a 10% decrease in sales volumes and a 6% drop in commodity prices. Of this revenue, 50% was attributable to gold, 45% silver, 3% palladium, and 2% cobalt.
As at December 31, 2022, approximately 112,000 GEOs were in PND, in addition to cobalt inventory amounting to 12,000 GEOs, with a combined figure of 124,000 GEOs representing approximately 2.3 months of payable production. This balance is 24,000 GEOs lower than the average over the preceding 4 quarters. Gross margin for the fourth quarter of 2022 decreased 20% to $121 million, reflecting not only the 15% decrease in revenues, but also a higher proportion of sales volumes being attributed to streams with a higher unit cost, coupled with a cobalt inventory writedown. G&A expenses and donations amounted to $11 million in the fourth quarter of 2022, virtually unchanged from Q4 2021.
During the fourth quarter of 2022, the company terminated its Yauliyacu stream, resulting in a gain on disposal of $51 million, including the Yauliyacu disposition. Net earnings amounted to $166 million. Neutralizing for the Yauliyacu disposition together with other anomalous items, adjusted net earnings amounted to $104 million compared to $132 million in Q4 2021, with the decrease being attributable to the lower gross margin. Basic adjusted earnings per share amounted to $0.23 compared to $0.29 per share in the prior year. Operating cash flow for the fourth quarter of 2022 amounted to $172 million, or $0.38 per share, compared to $195 million or $0.43 per share in the prior year, representing a 12% decrease on a per share basis.
Based on the company's dividend policy, the company's board has declared a dividend of $0.15 a share payable to shareholders of record on April 6, 2023. During the fourth quarter of 2022, the company received $132 million in exchange for the termination of the Yauliyacu stream, disbursed $60 million in dividends, invested $31 million relative to the Goose project and $13 million relative to the Curipamba project, highlighting that these projects are advancing, fueling Wheaton's future organic growth. Overall, net cash inflows amounted to $201 million in Q4 2022, resulting in cash and cash equivalents at December 31 of $696 million. Looking at our annual results. For the year ended December 31, 2022, production amounted to 638,000 GEOs.
Revenue amounted to $1.1 billion, representing 11% decrease relative to 2021 due to the combination of lower sales volumes and commodity prices. Of this revenue, 50% was attributable to gold, 44% silver, 3% palladium, and 3% cobalt. Gross margin decreased 14% to $565 million. G&A expenses amounted to $36 million, and donations amounted to $6 million, with a total of $42 million being virtually unchanged from 2021. However, this was $5 million below the lower end of our original guidance, primarily due to lower professional fees and employee compensation costs.
For 2023, the company expects the G&A expenses and donations will amount to $47 million to $50 million, with the increase from 2022 being attributable primarily to higher marketing and due diligence costs, in addition to costs associated with the company's ATM program. During 2022, the company terminated the Keno Hill stream in exchange for $141 million of Hecla common stock. With the disposal of the Yauliyacu stream, the total income inclusion reflected in our annual results from these two dispositions amounted to $166 million. Basic adjusted earnings per share decreased 15% to $1.12 compared to $1.32 in 2021. From a cash flow perspective, the company generated $743 million on operating cash flow, a decrease of 12%, primarily due to the lower sales volumes and commodity prices.
This translated into operating cash flow per share of $1.65 compared to $1.88 in 2021. The company distributed $237 million of dividends in 2022, received $132 million in proceeds from the disposal of the Yauliyacu stream, and disbursed $152 million in upfront payments relative to our portfolio of development stage projects. Cash increased by $470 million during 2022.
The $696 million cash balance as at December 31, 2022, combined with the capacity provided by the undrawn $2 billion revolving credit facility and the strong forecast operating cash flows, positions the company very well to satisfy its funding commitments and sustain its dividend policy, while at the same time having the flexibility to consummate additional accretive precious metal purchase agreements. That concludes the financial summary. With that, I turn the call over to Wes.
Thanks, Gary. Good morning. Overall production in the fourth quarter came in lower than expected, with weaker production from Salobo and Constancia offset by higher than expected performance from Antamina. In the fourth quarter, Salobo produced 37,900 ounces of attributable gold, a decrease of approximately 21% relative to the fourth quarter of 2021 due to lower than throughput and grades. Vale reported that production was lower than expected due to reduced plant availability during the quarter, caused by additional planned and corrective maintenance. That being said, Vale also reported that Salobo Three mine expansion was physically completed at the end of the fourth quarter, with the first line starting up during the quarter and the second line expected to start in the first quarter of 2023.
Subsequent to the quarter, Wheaton and Vale agreed to amend the Salobo PMPA to adjust the expansion payment terms in order to provide increased flexibility for the ramp-up of the expansion, while also maintaining an incentive for Vale to maximize grade on an annual basis. During the quarter, Constancia produced 700,000 ounces of attributable silver and 10,500 ounces of attributable gold, an increase of approximately 13% and 6% respectively relative to the fourth quarter of 2021. The increase in both silver and gold production was due to higher grades resulting from additional ore production from the Pampacancha satellite deposit. Gold production was lower than expected during the quarter as a result of short-term changes in the mine plan that prioritized lower grade stockpiles and shorter haul distances.
These changes were implemented as Hudbay was forced to ration fuel during the period of nationwide social unrest and road blockades following the change in Peru's political leadership in December 2022. These changes did, however, allow Hudbay to continue to operate the process plant continuously through the quarter. During the fourth quarter, Antamina produced 1.1 million ounces of attributable silver, a decrease of 19% relative to the fourth quarter of 2021, primarily due to lower grades as per the mine plan. Antamina did, however, continue to exceed expected production for 2022, driven primarily by increased productivity and better than expected mine grades. Additionally, in 2022, Antamina submitted a modification of environmental impact assessment to the Peruvian regulators to extend its mine life from 2028 to 2036.
The regulatory review process is progressing as scheduled, with an approval anticipated in the second half of 2023. Wheaton's estimated attributable production in 2023 is forecast to be 320,000 to 350,000 ounces of gold, 20 million to 22 million ounces of silver, and 22,000 to 25,000 GEOs of other metals, resulting in production of approximately 600,000 to 660,000 GEOs. For the five-year period ending in 2027, the company estimates that average production will amount to 810,000 GEOs. For the 10-year period ending in 2032, the company estimates that the average annual production will amount to 850,000 GEOs. This includes organic growth of over 40%, with total production from our current portfolio increasing to over 900,000 GEOs by 2027.
That concludes the operations review, and with that, I'll turn the call back to Randy.
Thank you, Wes. In summary, while 2022 was not without challenges, our high-quality portfolio proved to be resilient and was distinguished by several key highlights, including sector-leading 5-year organic production growth of over 40%, with approximately two-thirds of that growth coming from mines that are already in operation. Accretive growth emphasized by the addition of 4 new streams that will collectively provide over 65,000 Gold Equivalent Ounces of annual production. Continued portfolio optimization efforts, enhancing, improving the quality of our asset base and contributing to one of the strongest balance sheets in the industry. Record annual dividend distribution of $237 million. Lastly, continued leadership in sustainability with sector-leading ESG ratings. With that, I would like to open up the call for questions, please. Operator?
Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. If you would like to ask a question, please press star then the number 1 on your touch tone phone. If you would like to withdraw your question, press the star followed by the 2. There will be a brief pause while we compile the Q&A roster. The first question comes from Brian MacArthur of Raymond James. Please go ahead.
Good morning. I have a couple of questions. On the revised Salobo 3 payment, do they still have to do a 90-day trial run to execute that like they did in the old one? Is the, what I call the stop dead date of January 21st or January 1st next year just a hard date? Is there anything else they have to do?
No. It's still has the 90-day completion test. For each of the phases, they have to run at those levels or in excess of those levels for a 90-day period to qualify for that, phase payment.
In your financials, you sort of do put the full $552 million as an obligation this year. Does that imply you're reasonably comfortable they're gonna get those 35 million tons with that 90-day run this year?
I'll let Gary take that one.
Hey, Brian. Look, we're always, you know, trying to be conservative in the way that we, frame, you know, the timing associated with the payment of those upfront payments. You know, we're continuing to, reflect that as potentially going out in 2023.
You know, and I think it's important. I mean, Vale is doing their best to try and satisfy that, right? They have told us they're gonna do their best to try and move the entire site up to those production levels. You know, I think we have to reflect that possibility in terms of, as Gary said, maintaining a conservative forecast. I would be very happy if we had to make the whole payment this year. You know, but, you know, realistically, there's a lot of work to do down there yet and, you know, I do think that Vale's definitely got the desire. It's a matter of there's a lot of work yet to do. We'll see how it goes.
Great. Thanks. Very clear. There has been talk historically about a Salobo 4. Is there anything changed if there's anywhere to happen there as a result of this agreement? There's nothing different?
Nothing, nothing has changed. you know, it's still You can still see Salobo 4 on their longer-term vision within the Vale, production objectives. It's still their reference, but there's been no progress on that front.
Great. Thanks. If I could just ask one other topic, the 777 refundable deposit. I've got two questions. One, just you put some numbers in there, discounting rates and all the rest of it. Do you actually get payments over time through 2052? The second thing is, can I just ask, are there any other... I mean, most of your contracts I realize are life of mine, they're long dated. But are there any other contracts here where there might be a situation whereas if you don't get the upfront pack, there's a true up like this one? I guess where I'm going with this, you have a very good chart in the back that sort of shows upfront payments for your deposits and how much you've got back.
If I look at Sudbury, which maybe has 10 years left, you know, depending on what happens, you may or may not get there. Would it have a true up thing, if I wanna call it that, like the triple seven one does? Maybe you can't comment on that for confidentiality.
Yeah, I mean, you know, some of our contracts are structured in that method where there is a minimum amount, you know, focused around the deposit. You know, I will say, all you have to do is go back and look, Hudbay did not have as much exploration success at triple seven as we anticipated, and we did have to take a write down on that asset in years past because of that lack of success. You know, in most cases the deposit level is something that, in fact, I'm trying to think of another asset where, you know, we're not gonna get to that number. It is one of the functions of the contracts. You know, I would just highlight the fact that Hudbay is a strong partner of ours.
We do a lot of work with them. Obviously Constancia and other, you know, the Copper World, Rosemont. We've got a lot of other discussions coming up with them. You know, it is a partnership with Hudbay and, you know, that's the way it's structured through this contract, but it is something that 2052 is a long ways away.
Just to add to that, Brian, we won't be receiving any money in between. We don't get paid until until 2052, assuming that we don't come to some other arrangement with Hudbay.
Great. Thank you. Thank you very much. That's very clear. I appreciate it.
Yep. Thanks, Brian.
Thank you. The next question comes from Lawson Winder of Bank of America Securities. Please go ahead.
Hey, Randy, Gary, and team. Good morning. Thanks for the update here. I wanted to ask one follow-up on Salobo. Vale has guided to Salobo 3 achieving full capacity Q4 2024. I was curious, based on your understanding, when they say full capacity, is that the 35 million tons per year by Q4 2024 or is that the 35? What is baked into your long-term guidance in terms of when that 32 and then the 35 is hit?
Thanks, Alex. This is Wes. They, what they've got in there is that ramping up to full production by the end of next year is that 36 million tons that they're getting to. If you remember what's in there is actually this 90-day test can be done at any time, which actually allows them to operate at that level earlier on. The full year is definitely... It'll take them a little bit longer to get to that. We've got baked in the same as what Vale does all the way through, and it is that full production by the end of next year, and then carrying on into the future, we'll see them at that full capacity.
All right. Fantastic. Thanks for clearing that up. Then on Rosemont Copper World, you mentioned in the release that sort of in the latter part of the guidance is where that comes in terms of the 5-year guidance actually, to be specific. Could you maybe just sort of clarify when more precisely you have Copper World and Rosemont coming into that 5-year guidance? Like, is that end of 2027 or is that early 2027?
Yeah, let's just leave it at the latter portion of the five-year guidance. That probably gives you enough guidance. Near the end of it. I mean, you know, it's. As we have seen, permitting is a little bit more challenging than you would expect out of Arizona, right? There's so many variables that can adjust that. What we do know is Hudbay is committed to try and move that project forward as fast as they can. You know, we've had to sort of try and reflect that. We do think that things are lining up quite nicely to have a bit of an impact, but a very small impact on 2027.
We are staying in really close contact with Hudbay as they work through this pre-feasibility study that they've announced as well, and we're expecting that about mid this year. That kind of gives you sort of a better idea as these things move through, and we'll just continue to work with Hudbay as we move forward on it.
Okay. Yeah, fantastic. Just one follow-up then on Rosemont. In terms of the discussions, I mean, both sides, you and Hudbay have indicated that there will be some sort of discussion around what the, what the agreement looks like, and there's this potential for some sort of amendment to the agreement. From your point of view, is it looking like it could become a larger piece of the portfolio for Wheaton or a smaller piece of the portfolio?
We already get 100% of all the silver and gold from the asset. I, you know, that's not gonna change with respect to, you know, there's over and above that. If you look at the copper world, the, you know, sort of the numbers that have been put out to date, and that is of course subject to continued studies down there, but it looks like it's about two-thirds of what we were expecting out of the original Rosemont concept. I think that's, you know, we've just got to sit down and hammer that out. You know, we are, you know, sort of waiting for a bit more clarity in, on terms of their path going forward.
You know, as I said, it's a good strong relationship with Peter and the team over at Hudbay. You know, as they get a little bit more firm as to their plans going forward, that's when we'll sit down and get a little bit more firm in terms of how the contract's going to be adjusted to reflect that difference. You know, again, continue working with them as partners.
Then I guess once they have this study out later in the first half of this year, I mean, would that be kind of the firmness that you'd be looking for to sit down and sort of finalize this?
Yeah. Ideally sometime this year. They'd like the clarity so that they know what they need to do in terms of a go forward basis. So, you know, it should be happening within this year.
Okay, fantastic. Good, great start to the year. Take care, guys.
Thanks, Lawson.
Thank you. Once again, ladies and gentlemen, if you do have a question, please press star one at this time. The next question comes from Martin Pradier of the Veritas. Please go ahead.
Hey, Martin.
Hi. Thank you for taking my question. The first question is, you mentioned that in Salobo, the throughput is expected to increase 50%, but the grades are also coming down. What is the expected increase in production, or what is the difference in grades from the previous grades?
Well, it's not a simple answer because one of the variables that comes into play is the amount of stockpiling that they do of low-grade material. To be honest, you know, they've committed towards, you know, trying to strive towards maintaining higher grade feed through the mill, but it's a function of how much low grade they stockpile, which then itself is a function of mining capacity and how much material they can move, both, waste material, low-grade stockpile material and mill feed material. You know, there's a lot of variables moving there and it's very tough to sort of lay that out.
I mean, it's one of the reasons why when we structured the, restructured the expansion payment, that there's a couple of triggers, both grade and total tonnage that come into play, total tonnage move that come into play in terms of determining whether they've satisfied that higher grade. You know, we think that, I mean, it's not our payment that should incentivize Vale to maximize that. It just makes common sense for them to stockpile low, continue stockpiling low-grade material and move higher grade material through. You know, it's really tough to push that out. That being said, you're right. The, you know, the overall grades are gonna continue pushing down on this deposit as we, as it gets a little bit more mature.
A 50% increase in throughput capacity is not going to be a 50% increase in metal production. You know, depending on stockpiling, it should be pretty close to 30% to 40% increase in metal production. Again, depending on their stockpiling approach. Of course, stockpiling, all that does is bring forward ounces that would've eventually been mined, right? In terms of total metal production, you know, it really doesn't change a lot. It's a matter of the timing of when that metal gets delivered. There's so many variables there that it's really tough to give you sort of a clear answer.
Hopefully you understand there's a lot of different issues that come in, and I think that's one of the reasons why we're very happy with the way the new expansion payment is structured, is that, you know, it'll be based on yearly performance with respect to how they do in maintaining not only minimum, you know, grades through the mill, but also total materials moved at the site itself.
No, that helps. 30% to 40% gives me an idea. That's sort of what I was looking for. Similar question with Pampacancha. I know that the deposit has higher grade and production will increase for Constancia. But how much higher grade is Pampacancha, and what is really the expected impact that you see in terms of, you know, this higher grade coming through in 2023, 2024?
Yeah, Pampacancha, the Pampacancha gold grades are 10 times higher than what are contained in the Constancia pit. Of course our stream is focused on getting 50% of that gold. Both Hudbay and ourselves profit mightily by having Pampacancha ore pushed through the, you know, pushed through the mill. Unfortunately, some of the challenges that they've had with respect to fuel supply have, you know, it's complicated things. It is a farther haulage distance to bring Pampacancha in to the Constancia or to the milling complex at the Constancia pit or right beside the Constancia pit. You know, they continue to work forward on that.
You know, again, you know, both companies are very incented to try and move as much Pampacancha through as they can. You know, the key number there is copper grades are also slightly higher, but gold grades are substantially higher. It's a, it's quite a rich ore body for both parties here.
It's important to note that that's just delayed that metal coming in as well. I mean, it's not that it's gone anywhere. It'll come in, and it's over about a 5-year period that we'll see Pampacancha be mined out.
Okay, you have a level of production today. What is the expected impact in, you know, in 2023, 2024 of, you know, this much higher grade coming in?
Well, we could see substantially. Yeah, we could see upwards of. Now, you know, they're not going to entirely feed the mill from Pampacancha zone. They just can't mine and haul it that fast and that far. It'll be batch treated. You know, the guidance that Hudbay has come out with for 2023 has more Pampacancha towards the end of this year versus the start. I do think that that might be a, you know, a result of, you know, some of the challenges they had at the end of last year with respect to fuel supply and stuff. If that does get resolved, we could see a pleasant surprise on that side. You know, if that strengthens and we, and we, you know, lessen those restrictions. You know, the.
I think the key thing to keep in mind is that it's 10 times higher grade, but they can't shift fully to it because they don't have the mobile fleet to be able to go 100% from Pampacancha just because of its greater haulage distance to the mill. There'll be batch treatment through there. It's, you know, I'm gonna say that, you know, we should healthily see a good increase in terms of gold production from the overall Constancia of, I'm gonna say, the 3 to 4 times what we've seen in times past. You know, again, it's gonna come down to the capacity to get that material over to the mill and get it processed.
Okay. That's quite helpful. That gives me an idea. In Voisey's Bay, your production was down 66%. You're talking about the new Reid Brook ore grades. Again, how does that compare with your previous grade, the old open pit grades?
The challenge at Voisey's Bay was that there was probably no other asset that was impacted more from the pandemic and the response. You know, in support of the local communities around the mine site, the mine was shut down for a period of time. The underground development is quite a bit behind schedule. The open pit, they, you know, is still supplying, albeit lower and lower and lower grade material, stuff that originally wasn't part of this. We should see, as the underground phases in, we should see cobalt production probably three to four times higher than where we are right now coming out of the open pit.
You know, the whole concept is both, I think it's Reid Brook and Eastern Deeps coming on. As they continue to displace this low-grade ore that's being pulled out of the remnants of the open pits, that we will see a dramatic uptick in cobalt production from that. That's probably over the next year and a half, two years.
Okay. Didn't they already start mining one of the deposits, Reid Brook?
It's development ore. There's some development ore. It's not to the full scale of production. You know, with a underground operation like that, you need multiple working phases, they've now got some, you know, they're down into the that point. I don't know if you wanna add more color.
Sure, yeah. I mean, it's over this year that we'll start seeing those undergrounds come online. It's, as Randy said, it's been development ore that's come out so far, so we actually haven't seen any production ore from those undergrounds. It is a significant ramp up over the next really closer to the end of this year that we'll really start seeing that come in. It's open pit most of this year, over the next couple of years, you'll see that significant increase in the production there.
It'll be a phased startup from the underground, because as more working phases become developed, you'll be able to access and pull a bit more ore out of each one of those working phases. It's gonna be a phased ramp up over the next, as I said, 1.5 to 2 years. We should, you know, hopefully a couple of years from now, we should be entirely on underground ore, much higher grade underground ore.
Okay.
This year is still going to be quite weak.
Yes.
Yeah.
Yes. Yes. The majority of the ore this year will still be coming from the open pit. I will say they're scratching the surfaces to try and find it. We are seeing lower and lower grades. It'll be offset by some, you know, more and more ore from the underground. The open pit material, the grades are actually dropping, you know, over the course of this year.
Perfect. Thank you. That's very helpful.
Great. Thank you, Martin.
Thank you. The next question comes from John Tumazos of John Tumazos Very Independent Research, LLC. Please go ahead.
Thank you. Could you update us for the Americas, where you do the overwhelming portion of your business, what are the countries that might be off-limits from a political risk standpoint? I presume, for example, you would never go to Cuba or Venezuela.
There are other things that might change. I don't know. For example, there's 5 copper projects in Argentina that look like they're very big and very prospective, and at least 3 of them might be streamable from the standpoint of the operator wanting to have financing. In addition to Argentina, could you comment on Ecuador and Bolivia, which have something called plurinationalism, where the indigenous have a state with their own courts and laws? Could you comment on Nicaragua and Bolivia that very consistently vote with Russia in the United Nations? Anything else you could tell us about countries?
Sure. Well, that's, I'm glad we're just focused on the Americas. Thanks, thanks, John. You know, political risk is important to us. When we make an investment into an asset, it's typically a life of mine investment when. We have to make sure that, you know, first off, the assets that we're investing into have healthy enough operating margins because things will change. You know, We've brought in outside political specialists and consultants to talk to us about political risk and how to, you know, try and address that in terms of how we do valuations. Probably one of the wisest, you know, comments is the fact that, you know, politics are like pendulums.
They kind of swing to the left and they swing to the right, every country is gonna go through that. So for us, you know, the first criteria is making sure that we have assets that have good, strong operating margins, so that not only is Wheaton doing well as a stakeholder in this asset, but so is the operating company, and so is the country, and so is the surrounding communities. You know, everyone should be. You know, this industry needs to sort of recognize that all stakeholders need to be benefiting from these investments and going forward. Anyone that's impacted should have a net positive effect in terms of whatever happens with these things. If that's not the case, then I don't think that's a sustainable situation.
It's one of the reasons why we also kickstarted such a strong commitment towards helping our partners be stronger with respect to social license. The co-funding that we do with our sustainability initiatives on communities around the mine sites was a first for the streaming and royalty space. We were the first company to do it, and I'm happy and proud of the fact that just about every new streaming and royalty agreement that there is out there does, you know, now capture a commitment from whoever the actual streaming and royalty company is to try and strengthen that up. You know, it is something that we factor into.
You know, when I sit back and look at how our assets have done in the face of some pretty challenging times here, just even more recently within South America, our assets have done well. I like to think that the fact that, you know, we really try and encourage and support, not just with words, but with capital, support our partners in terms of maintaining good, strong social license. That helps us in these type of situations. The other aspect that I'd say comes into play is political risk is something that's a bit unique, but it also. It can be offset a bit by the scale of the partner that you're working with, the company, the operating company.
In fact, you know, a lot of times in terms of how we structure these things, we can actually, you know, protect ourselves in a little bit riskier jurisdictions by relying on a parent company guarantee that provides that support. There's a number of times I've had to remind potential partners that we are in the business of streaming precious metals. We don't stream political risk. We don't wanna be involved in that. What we wanna be is supportive, but we shouldn't have any role in that space. It's very tough for us to take on that type of risk in our own investments. We're always exploring for ways to try and make sure that the political risk stays with the operator where it should.
The operator itself is the face of the operation, and they're the ones that maintain the government relations and such. There's a huge number of factors that all come into play in terms of making sure. I think you can synthesize it down to just trying to do our best as an industry. Not just Wheaton, but as an industry in terms of making sure that all stakeholders are rewarded, you know, that have benefits, have a net positive benefit or impact from these operations. If there's stakeholders that aren't, then we've gotta find a way to get there. Sometimes that takes a very long time, and it's very, it requires incredible patience to get there.
In the end, you have a good, strong, sustainable project. You know, I can start off by going down and you mentioned Venezuela and Cuba. You're right. We're not even. I can't remember. You know, I will say 20 years ago, I looked at something in Venezuela. I've never looked at anything in Cuba. You know, there is a spectrum of risk all the way through the entire hemisphere. Or, you know, within the Americas both. It's something that you always have to assess. I mean, the one caution that you have to have in this industry is because even if a country is politically stable currently, it doesn't mean that it's not going to be there.
I just underscore the importance of how I started off my answer here. You have to make sure that there's healthy enough margins, because sometimes the government's gonna come knocking on the door and wanting a bit more of that piece of the pie. you know, as we've just seen in Central America, you know, without mentioning names, the asset better be, better have enough capacity to sort of hand over a little bit more of that pie and hopefully come up with a good long-term sustainable arrangement on a go-forward basis. Sometimes it's. Well, in fact, most times it's very challenging, but in the end, it's the only way that we thrive as an industry. Hope that sort of answers you. I don't wanna get down to details.
Sure. If I could ask a different one.
Sure.
Bear with me. Of the 8 recent portfolio additions, or 8 or 9, 4 of them are pre-production companies. Could you just review the number of employees Wheaton has, augmented by the number of outside technical consultants? For us to get an idea whether you solely do pre-transaction due diligence and for. I'm just looking at Rio2, Artemis, Gen Mining and Adventus that are new companies that might operate for the first time, how much assistance you might offer to them and.
Sure. Yeah. Let's not forget Sabina on there, although it's on its way to being taken over by B2Gold. You know, we pride ourselves on being owners of our own decisions, and that really comes down to a lot of internal technical strength. You know, we have a good, strong technical team. I think we have a total of just over 40 employees right now. Just about a third of us have a technical background, including myself as a geological engineer. You know, when you sit and look at that, you know, that sort of highlights what the focus is in terms of making sure that we have good technical strength, bench strength within the company itself on a go-forward basis.
It's something that I've always believed is really important because when it comes to measuring risk, having outside consultants that, you know, to sign off on a report and then go off into the sunset, it just doesn't, to me, doesn't reflect what we owe to our shareholders. We do put a lot of pressure on that. You're right, when you look at our recent transactions, there's a heavy bias towards single asset development companies. These companies don't have access to operating cash flows, when it comes time to raise capital, a stream is by far the most competitive, the most attractive source of that capital in terms of helping these companies become operators. We're very busy on that front.
Haytham's sitting here beside me, and he's got a long list of assets that he's working on. We don't rely on outside consultants. That's not to say that we don't pull them in. You know, there's sometimes unique aspects of a project where there's a specialization, and we're not gonna, you know, pay to have that expertise on site. So we don't hesitate to chase down that direction if we need to, but it's very few and far between. We truly believe that having an internal team here means that we own responsibility for these assets on a go-forward basis.
It's also worth noting that it's.
online.
Sorry, John, Wes is gonna add something here.
Sorry, John, I was just gonna add in that one of the really important parts of maintaining the relationships with our partners is providing that kind of technical help as well, and it's a huge part of what we do when we do our annual site visits and as we maintain relationships. That certainly has become a bigger part of that as you bring on some of these smaller companies in there, is we can really offer that assistance to them. It goes across the entire portfolio. We have great relationships with all of our partners, and we continue to build those in as many different ways we can, and that technical assistance is a huge part of that.
Yeah. I think, John, one of the things that's worth highlighting on that front, and thank you, Wes, it's a good point. When you look at that list of recent transactions, the majority of those come with either people or companies that we have done transactions with in the past. It really does come down to, you know, repeat customers. And, you know, we really do put a lot of focus on trying to deliver value, not just with the upfront payment, but with the material underneath. John, we do have a long list of other people here with questions.
Sure, sure. You guys busy?
Just-
Go, go do your next deal.
Thanks, John. Thanks for the call.
Thank you. The next question comes from Lord Ashbourne, Edison. Please go ahead.
Thank you very much. Morning, Randy, chaps, and congratulations, if I may, on your results.
Thank you.
Not at all. Can I ask about your investments just in terms of pounds, shillings and pence, how they're looking for this year? You touched upon Salobo there, and there potentially being a payment due this year. Then you talked about those other pre-production companies, and it seems to me that some of those payments could be becoming due this year or next year. I just wonder, can you give us an idea of what you're going to have to invest in streams this year or maybe a minimum and a maximum and the range it might fall in?
Sure thing, Charlie. I'm gonna, or sorry, Lord. I'm gonna, hand you over to Gary here.
Yeah. I mean, we, I think, disclose all of that information in both the notes to our financial statements and the MD&A and in our contractual obligations and contingency note. You know, if you look at that note, in total, we've got just over $2 billion of commitments outstanding relative to upfront payments for these development stage projects. We're forecasting about $850 million of that being dispersed in 2023. And, you know, that's as I think I previously connoted, you know, a conservative estimate. Conservative meaning that it's likely showing more being paid earlier. But that's, you know, that's our best estimate now.
We have another $765 million going out in 2024, 25, and, then the vast majority of the rest of it or, you know, just over $400 million going out after 2027.
It's important to note that, you know, those are all based on certain achievements on a go-forward basis. You know, for instance, Salobo, we'd be very happy if they got to that level, but it's a lot of work, you know. You know, it strikes us that the team that is coming in, you know, we've seen a lot of improvements from Vale in terms of operations and continued improvement within the first two lines and such like that. It would be a real big step to get that full payment in on Salobo this year. Be happy to have it. You know, everything else is all funding that construction that ultimately delivers, you know, a good portion of the growth that we're gonna see over the next four years.
That's understood and appreciated. It's just useful to understand what you think the timing might be, but I greatly appreciate that. Thank you very much.
Great. Thanks for the call.
Thank you. The next question comes from Charlie Rothbarth of Berenberg. Please go ahead.
Hi. Thank you. Thank you very much indeed for taking my question. Congratulations again on your results. I'd just like to ask you about Fenix, if I may, and just about, I appreciate you haven't impaired it. Does Fenix sit within your guidance?
No, it does not. I mean, you know, we have to wait, you know, we have to wait and see how Rio2 Limited does on a go-forward basis in terms of getting back to the point of getting a permit to operate on a go-forward basis. You know, we're patiently waiting for Rio2 Limited to continue advancing those efforts. You know, we were comfortable in our own due diligence in terms of the work that Rio2 Limited did on that project, and so we were a bit surprised at the result. I would, you know, point to the fact that it was a challenging time in Chile. I do think that we are confident that they'll ultimately be successful.
It's a matter of timing, and that's one of the challenges is, until we get more clarity on the timing, it's not part.
Okay, thank you. My final question is just around what you're seeing in the market in terms of options. I appreciate you might not be able to give us loads of color, but anything you could give us would be greatly appreciated.
Yeah.
Your previous strategy looks to have been sort of around smaller, sort of smaller developer companies with very good projects, given that the larger companies are very strong balance sheets. Is that still the case, or are you finding it easier to negotiate with larger companies at this point?
I'll let Haytham add a few words to this one. He's the one carrying that charge.
Good morning, Charlie. Thank you for the question. You know, maybe I'll just highlight what happened in the fourth quarter. The fourth quarter, we saw a significant rise in activity, you know, some very small streams, some larger royalties changing hands at what seemed to be some rather expensive valuations by some of our competitors. You know, these expensive valuations have made every company look for royalties in their portfolio, and they're hoping to sell them to try to get similar valuations. I can assure you we won't be overpaying for royalties or streams regardless of what precedent has been set. You know, we're continuing to see a number of smaller opportunities, with the majority still falling into the sub-$300 million range.
Primarily, as you said, the development stage opportunities and the occasional small operator with a focus on streaming precious metals as a byproduct. My team is currently working through a number of due diligence process, if all goes well, you know, we hope to be able to narrow down one or two streams on high-quality assets over the next 12 months.
You know, a heavy focus on the single asset development companies, 'cause as we've said in times past, anyone that's got operations in this environment is actually doing relatively well in terms of operating cash flow. It is definitely a bias towards, you know, that early-stage development company and trying to help them get to the point of having that operating cash flow. The streaming business model, you know, is a very, very competitive source of capital, especially when you look at how the market is supporting a lot of those junior companies.
Understood. Thank you very much. Can I just quickly clarify? Would you therefore say that you would be looking at royalties as well, or are you sticking to just streaming?
We've always looked at royalties, but not new royalties. I mean, it doesn't make any sense. New royalties, there's a lot more value created in a stream than there is in a royalty on a number of different fronts. Existing royalties, we'll always sniff at them and see if there's an opportunity there. Again, reinforcing what Haytham just said, only for accretive prices. You know, to be honest, we actually have a couple of royalties already in the portfolio, but it's just stuff that was already in existence that came as part of a broader acquisition. Our focus is doing streams in terms of new transactions with companies.
If there's existing royalties around, we'll always have a look at them and see if there's an opportunity to create value for our shareholders.
Yeah, especially producing royalties, Charlie. We, you know, we take those very seriously because they have the ability to add to our near-term cash flows, so.
Thank you very much for your time. Thank you, for taking my questions and congratulations again.
Yes. Thank you, Charlie. I think we've got one question.
We've got one question from the webcast. Is there a notable trend towards fixed price contracts or fixed margin contracts, and what does Wheaton prefer?
When we created the business model, the streaming business model back 20 years ago, fixed price contracts were the standard. You know, we have, you know, the beauty of that is, of course, it does give us some leverage with respect to commodity prices that you don't see with royalties or with bullion holdings. The challenge with it, though, is that if we see differences at the site with respect to, and specifically what we saw was with higher commodity prices typically come higher taxation burdens. We've come to the conclusion over the last 5 or 6 years that a more sustainable model, a stronger model is actually the fixed margin contract. I think we've seen this across the industry.
It's pretty well the standard in the industry. The real reason behind that is that it does help our partners be much more Sustainable, especially in high commodity price environments, because they do wind up getting a bit more of value from the metal that's being delivered into the streaming contract to help offset any additional costs that might be attached to that type of an environment. Definitely focus more on that. A very full list of questions. Thank you everyone, but really appreciate everyone dialing in today. I will close off here by just saying that we currently believe Wheaton is very well-positioned to continue delivering value to all of our stakeholders for a number of different reasons.
Firstly, by having one of the best organic growth profiles in the mining industry at 40% over the next five years, more than 40% over the next five years. Secondly, with low and predictable costs, which are resilient to inflationary pressures, resulting in some of the highest margins in the entire precious metals space. Thirdly, by offering our shareholders exposure to our diversified portfolio of long life, low cost assets, good strong asset base, 93% from the bottom half of the respective cost curves. Fourthly, by returning value to shareholders through a unique cash flow linked dividend. With that, I really like to thank everyone for joining us today. I believe, you know, that we are in great shape. I think it's a great time to own more Wheaton.
Thanks for dialing in today, and I look forward to talking to everyone again soon. Stay safe, stay healthy. We'll move forward. Thanks.
Ladies and gentlemen, this does conclude the conference call for today. Thank you for participating and bye-bye.