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Wheaton Precious Metals picks a good year to up palladium production

Kitco News

Wheaton Precious Metals (NYSE:WPM) produced 50% more palladium in 2019 from its Sibanye-Stillwater stream.

Wheaton produced 21,993 ounces of palladium in 2019 compared to 14,686 in 2018. Palladium prices have been on a tear due to market tightness. Wheaton said it enjoyed a 59% increase in the average realized palladium price in 2019.

Overall revenue was $861 million in 2019 representing an 8% increase from 2018. Total production of gold equivalent ounces was 707,200 in 2019. The company said it exceeded guidance.

While most metals were up, silver production dropped 7.8% to 22,562 ounces.

Hudbay's Constancia operation produced 0.6 million ounces of attributable silver and 4,800 ounces of attributable gold, a decrease of approximately 9% for silver production and an increase of approximately 12% for gold production relative to the fourth quarter of 2018.

Wheaton said there are penalties if production continues to drop.

"Should Hudbay fail to achieve a minimum level of throughput at the Pampacancha deposit during 2018, 2019 and 2020, Wheaton will be entitled to an additional 8,020 ounces of gold (received in quarterly installments) in each of 2019, 2020 and 2021, of which 8,020 ounces of gold was received during 2019. As per Hudbay's news release dated February 18, 2020, Hudbay secured the surface rights for the Pampacancha deposit and expects to begin mining ore from the satellite deposit in late 2020."

Wheaton's estimated attributable production in 2020 is forecast to be 390,000 to 410,000 ounces of gold, 22.0 to 23.5 million ounces of silver, and 23,000 to 24,500 ounces of palladium, resulting in gold equivalent production of approximately 685,000 to 725,000 ounces.

For the five-year period ending in 2024, the company estimates that average annual gold equivalent production will amount to 750,000 ounces.

According to Wheaton's website Stillwater is the only US-based mine for platinum group metals and the largest primary producer of PGMs outside of South Africa and the Russian Federation.

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