“[With] the volatility we see in this world right now, the tendency of governments to always overspend and to make it add up by devaluing their currencies — I can tell you, when it comes to keeping capital, to preserving capital wealth, precious metals [are] the solution,” said Randy Smallwood, head of Wheaton Precious Metals (TSX:WPM,NYSE:WPM).
Speaking to the Investing News Network at the Sprott Natural Resource Symposium, Smallwood explained that his firm is a streaming company. That means it provides a payment to a mine operator in exchange for the right to a percentage of precious metals production. After the precious metals are delivered, Wheaton makes a production payment on per-ounce basis.
“The huge benefit to us and our shareholders is our costs are specified at the very start. The capital costs are fixed in that upfront payment, and the production costs are fixed in that production payment that we make as each ounce is delivered to us,” Smallwood said.
Currently Wheaton’s revenue is split about 50/50 between silver and gold, and Smallwood mentioned a number of interesting projects that the company has streaming deals with. One is Vale’s (NYSE:VALE) Salobo mine in Brazil, which is the largest copper deposit ever discovered in the country. Vale recently started exploratory drilling at the property for the first time in 15 years.
“It’s a very exciting project — very early stage, very immature — and we think we’re going to see a lot of promising things from that ore body and from that mine,” Smallwood commented.
He also took the time to comment on the silver market, noting that the metal’s ability to conduct electricity better than any other noble metal secures its place in solar panels, mobile electronics and other high-efficiency applications. He noted that it is also valued in healthcare for its antimicrobial effects. What’s more, despite “growing industrial demand,” world silver production is declining.
Smallwood suggested that investors gain exposure to silver and gold through his company. “If we invest into assets that have good exploration success, then we have good success and our shareholders share that [success].”
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Securities Disclosure: I, Melissa Shaw, hold no direct investment interest in any company mentioned in this article.
Editorial Disclosure: The Investing News Network does not guarantee the accuracy or thoroughness of the information reported in the interviews it conducts. The opinions expressed in these interviews do not reflect the opinions of the Investing News Network and do not constitute investment advice. All readers are encouraged to perform their own due diligence.