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Editing
Wheaton Precious Metals
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=== Streaming agreement characteristics === While royalty companies compete with WPM to some extent in the provision of capital to the mining industry, there are notable differences between the two business plans. Royalties are typically linked to tenement areas, for example, and also typically relate to a mine’s primary output, whereas streaming arrangements are governed by a commercial agreement between two companies (albeit often relating to a single mine) and typically relate to a mine’s secondary, or by-product, output. A summary of the unique features of WPM’s streaming business plan and how it is distinguished from other investment opportunities in the precious metal, precious metal mining and mining finance industries is as follows: Compared to exchange traded funds (ETFs), WPM: * has exposure to exploration success in the form of extended mine lives; * has exposure to levels of production; * is operationally geared to changes in metals prices; * balances costs and revenues, such that inventory held is minimal at the WPM level; and * pays a dividend. Compared to precious metal mining companies, WPM: * has no exposure to capital cost overruns; * has no exposure to operating cost overruns; * is only exposed to grade fluctuations inasmuch as they affect production levels rather than margins; * has a predetermined level of inflation (typically 1%) applied to its own unit cash costs; and * is unaffected by changes in a host country’s mining tax and regulatory regimes. Compared to royalty companies, WPM: * has geared exposure to metals prices; and * typically negotiates and exploits the value differential around a secondary, or by-product, metal, rather than applying the stream to all metals including the primary one. A key advantage for WPM compared to potential competitors is its size, scale and valuation, which allows it to raise equity on a non-dilutive basis to fund new streams, or even to issue counterparties with equity in consideration of new streams.
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