Salobo III Streaming Deals Will Shape Future Metals Markets

Key Takeaways

• Expanding streaming agreements and a robust asset portfolio position Wheaton for significant production and revenue growth benefiting from commodity price appreciation.
  
• Strong financial flexibility enables pursuit of new deals amid rising industry capital needs, supporting long-term revenue, stable margins, and resilience to supply constraints.
  
• Intensifying competition, limited access to large high-quality deals, jurisdictional risks, higher taxes, and shifting demand threaten Wheaton's future growth and profitability.

Catalysts

Sells precious metals in North America, Europe, Africa, and South America.

• Robust pipeline of new and expanding streaming agreements-including the ramp-up at Salobo III, commercial production at Blackwater, accelerated Phase 2/3 expansions at Blackwater, and new streams like Goose and Platreef-positions Wheaton for approximately 40% organic production growth by 2029, directly supporting higher future revenue and earnings growth.
  
• A surge in global demand for gold and silver, driven by central bank reserve diversification, geopolitical uncertainty, and persistent inflation fears, is underpinning higher commodity prices; Wheaton's asset-light, full-exposure streaming model maximizes benefit from commodity price appreciation, amplifying revenues and margins.
  
• Structural shifts toward sustainability and increased adoption of solar, electric vehicles, and electronics are intensifying industrial demand for silver and gold-metals well represented within Wheaton's portfolio-supporting sustained higher long-term realized prices and stable top-line growth.
  
• Wheaton's strong financial position, with $1B in cash and a $2B undrawn credit facility, provides flexibility to pursue additional accretive streaming deals and capitalize on an industry trend of rising capital requirements for miners, expanding its addressable market and supporting long-term revenue expansion and EPS growth.
  
• Industry-wide constraints on new mine development and declining exploration success are expected to tighten future supply, structurally supporting higher prices for gold and silver and further enhancing Wheaton's leverage to precious metals pricing, boosting future cash flows and net margins.

Wheaton Precious Metals Future Earnings and Revenue Growth

Assumptions

• Analysts are assuming Wheaton Precious Metals's revenue will grow by 9.2% annually over the next 3 years.
• Analysts assume that profit margins will increase from 47.5% today to 51.3% in 3 years time.
• Analysts expect earnings to reach $1.1 billion (and earnings per share of $2.52) by about September 2028, up from $789.0 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as $862.7 million.
• In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 52.3x on those 2028 earnings, down from 59.0x today. This future PE is greater than the current PE for the CA Metals and Mining industry at 18.0x.
• Analysts expect the number of shares outstanding to grow by 0.06% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 6.42%, as per the Simply Wall St company report.

Wheaton Precious Metals Future Earnings Per Share Growth

Risks

• Intensifying competition in the streaming and royalty space-several players are targeting similar opportunities, resulting in more competitive (and potentially less favorable) deal terms for Wheaton, which could reduce long-term net margins and impact the ability to secure accretive streams to sustain revenue growth.
  
• The pipeline of attractive, high-margin streaming deals appears to be dominated by smaller-sized ($100M–$400M) and development-stage assets (2/3 of current opportunities), potentially leading to a diminishing pool of large, high-quality streams, ultimately constraining the pace and scale of future top-line revenue and earnings expansion.
  
• Persistent jurisdictional and operational risks, particularly in key assets located in regions such as Latin America (e.g., Antamina, Salobo, Pampacancha), where past safety-related shutdowns and anticipated pit depletions raise the probability of government intervention, regulatory changes, or production disruptions that could negatively affect revenue and EPS.
  
• Global implementation of the minimum tax regime (GMT), which will start impacting cash flows from 2026 onward, leading to a material increase in annual tax payments that will lower Wheaton's net margins and reduce free cash flow available for dividends or new investments.
  
• Sustained high commodity prices are currently driving record results, but if the secular macro environment shifts to favor digital assets or higher-yielding financial instruments over precious metals, a decrease in gold and silver demand would pressure Wheaton's revenue, and plateau or contract earnings over the long run.

Valuation

• The analysts have a consensus price target of CA$146.605 for Wheaton Precious Metals based on their expectations of its future earnings growth, profit margins and other risk factors.
• In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $2.2 billion, earnings will come to $1.1 billion, and it would be trading on a PE ratio of 52.3x, assuming you use a discount rate of 6.4%.
• Given the current share price of CA$141.52, the analyst price target of CA$146.6 is 3.5% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.