Wheaton Precious Metals Corp. (WPM) Q3 2016 Earnings Report, Transcript and Summary

Good morning, ladies and gentlemen. Thank you for standing by. Welcome to Silver Wheaton’s 2016 Third Quarter Results Conference Call. [Operator Instructions] Thank you. I would like to remind everyone that this conference call is being recorded on Thursday, November 10 at 11:00 a.m. Eastern Time. I will now turn the conference call over to Mr. Patrick Drouin, Senior Vice President of Investor Relations. Please go ahead.

Thank you, operator. Good morning, ladies and gentlemen and thank you for participating in today’s call. I am joined today by Randy Smallwood, Silver Wheaton’s President and Chief Executive Officer; Gary Brown, Senior Vice President and Chief Financial Officer; and Haytham Hodaly, Senior Vice President, Corporate Development. I would like to bring to your attention that some of the commentary in today’s call may contain forward-looking statements. There can be no assurances that forward-looking statements will prove to be accurate as actual results and future events could differ materially from those anticipated in such statements. In addition to our financial results cautionary note regarding forward-looking statements, please refer to the section entitled, Description of the Business Risk Factors in Silver Wheaton’s Annual Information Form and the risks identified under risks and uncertainties in Management’s Discussion and Analysis, both available on SEDAR and in Silver Wheaton’s Form 40-F and Silver Wheaton’s Form 6-K both on file with the U.S. Securities and Exchange Commission. The Annual Information Form, Q3 2016 Management’s Discussion and Analysis and press release from last night set out the material assumptions and risk factors that could cause actual results to differ, including among others, fluctuation in the price of the commodity, the outcome of the challenge by the CRA of Silver Wheaton’s tax filings, the absence of control over mining operations from which Silver Wheaton purchases silver or gold and risks related to such mining operations. It should be noted that all figures referred to on today’s call are in U.S. dollars unless otherwise noted. Now, I would like to turn the call over to Randy Smallwood, our President and Chief Executive Officer.

Thank you, Patrick and good morning ladies and gentlemen. Thank you for dialing into our conference call to discuss our third quarter of 2016 results. I am happy to announce that Silver Wheaton has achieved yet another solid quarter, with record gold production and gold sales. The record production in sales, were driven by strong results from across our gold portfolio, but particularly strong from Salobo. In the third quarter, we produced 109,000 ounces of gold and 7.7 million ounces of silver. From a sales perspective, we sold over 85,000 ounces of gold and over 6 million ounces of silver. This represents record gold sales volume for our third consecutive quarter. This quarter exemplifies the value of having a diversified portfolio backed by four cornerstone assets to provide a secure foundation for our company. Shortfalls from the San Dimas and Peñasquito mines were offset by strong performances from the Salobo and Antamina mines. And speaking of the Salobo mine, we are very excited to have added an additional 25% of the life of mine gold coming from this cornerstone asset. For now, a total of 75% of the life of mine gold production from that Salobo mine. We are also pleased to welcome Chuck Jeannes to our Board of Directors. Chuck brings a wealth of experience in the mining industry and will no doubt prove to be a valuable addition to our board. For the third quarter of 2016, quarterly silver production increased by 11% and gold production increased by 86% from the previous year. Silver sales volumes decreased slightly by 7% and gold sales volumes increased by 77% from the previous year. For the second consecutive quarter, I am pleased to report that our average realized sale prices for both silver and gold were up year-over-year at 30% and 18% respectively. And as a result, Silver Wheaton’s revenues increased 52%, adjusted net earnings were up by 67%, and operating cash flows increased by 62% compared to the third quarter of 2015. With the increase in commodity prices, our cash operating margin was strong at around 70%, resulting in operating cash flows of over $116 million during the quarter. We have now generated over $400 million in operating cash flow in the first 9 months of this year. With regard to cash flows, our quarterly dividends continued to deliver 20% of that average cash generated by operating activities in the previous four quarters. And as a result of increased cash flows driven by these record gold sales and commodity prices, our fourth quarterly dividend from 2016 rose to $0.06 per share, a 20% increase relative to the previous quarterly dividend. Despite the volatility of this commodity market, our dividend policy continues to prove its sustainability and its ability to deliver direct reward back to our shareholders. And with our solid portfolio of low cost, long life assets and the recent strength we have seen in precious metals prices, having a dividend policy linked directly to cash flow should bode well for continued increases in our dividends. On the corporate development front, in the third quarter of 2016, we acquired an additional amount of gold equal to 25% of the life of mine gold production from Vale’s Salobo mine in Brazil, which now entitles us to 75% of the gold production from this world class mine. This latest acquisition contributed immediate production sales and cash flow for Silver Wheaton as illustrated in the strong performance in this third quarter. As always, Silver Wheaton continues to focus on acquiring accretive new streams from high-quality, low-cost mines. There are still a number of tangible opportunities that we are busy assessing and hope to pull some of these over the line in the very near future. With the first 9 months of 2016 behind us, we felt it important to update our guidance, especially in light of the strong performance from our gold streams. Gold production is now expected to total 335,000 ounces in 2016, up from previous guidance of 305,000 ounces as our gold portfolio has shown a consistency to outperform. Silver production is now expected to total 30 million ounces in 2016, down from previous guidance of 32 million ounces. Lower than expected results from San Dimas and Peñasquito have been partially offset by better than expected results from Antamina. In summary, the third quarter was an excellent example of the unparalleled quality of Silver Wheaton’s portfolio. By acquiring streams with attractive economics during the downturn, we reap the robust cash flows when the commodity prices turn. Cash flow from operations increased by over 60% relative to the same quarter last year, while commodity prices climbed on average only about 25% over that same time period. We believe this clearly highlights the strength of our streaming business model and the leverage it delivers to high commodity prices. Our production is founded on the highest quality portfolio streams in the industry, underpinned by very low-cost mining operations. We are also optimistic about our ability to capitalize on the favorable corporate development environment and to add additional top tier assets to our portfolio. With that, I would like to turn the call over to Gary Brown, our Senior Vice President and Chief Financial Officer to provide a bit more detail. Gary?

Thank you, Randy and good morning, ladies and gentlemen. The company’s precious metal interest produced 7.7 million ounces of silver and a record 109,200 ounces of gold in the third quarter of 2016. With respect to silver, this represented an increase of 11%, with production from the recently acquired Antamina stream being partially offset by decreased production from San Dimas and Peñasquito. Gold production increased 86%, primarily due to the 25% increase in the gold interest relative to Salobo, combined with gold production at Minto increasing by over 12,000 ounces. Sales volumes amounted to 6.1 million ounces of silver and 85,100 ounces of gold in Q3 2016, representing a 7% increase for silver and a 77% increase for gold. The decrease in the silver sales volumes was attributable to changes in the balance of payable silver produced, but not yet delivered to Silver Wheaton partially offset by the increased production. The increase in gold sales volumes, which represented a third conservative quarterly record, was attributable primarily to the increase in the company’s interest in gold production from Salobo as well as the increased production from Minto, partially offset by changes in payable gold ounces produced, but not yet delivered to the company. As of September 30, 2016, approximately 3.8 million payable silver ounces and 63,300 payable gold ounces had been produced, but not yet delivered to the company, representing an increase during the quarter of approximately 800,000 ounces of silver and 18,500 ounces of gold. It is important to remember that we estimate a normal level for ounces produced, but not delivered to equate to approximately 2 months worth of payable production. So, the increase in the quantum of these ounces during the third quarter of 2016 brought the balance in the line with our guidance. Revenue for the third quarter of 2016 amounted to $233 million, representing a 52% increase due to the increased gold sales volumes combined with average selling prices increasing by 30% for silver and 18% for gold. Of this revenue, 51% was attributable to silver sales, while 49% related to gold. Gross margin for the third quarter of 2016 increased by 61% to $99 million, cash based G&A expenses amounted to $8 million in the third quarter of 2016, representing a $3 million increase from Q3 2015, due to a combination of higher legal costs relating to the company’s ongoing dispute with the CRA and a higher accrued expense relating to the company’s outstanding performance share units. The company currently estimates that non-stock based G&A expenses, which exclude expenses relating to the value of the stock options granted in PSUs, will be approximately $31 million to $32 million for 2016. Interest costs for the third quarter of 2016 amounted to $6 million, resulting in an effective interest rate on outstanding debt of 2.27%. All of this interest was expensed in the calculation of net income. This compares to $3 million of interest costs incurred in the prior year, of which only $1 million was expensed with $2 million having been capitalized in relation to the Barrick silver interest. Net earnings amounted to $83 million in the third quarter of 2016 compared to a net loss of $96 million in Q3 2015, with the loss in the prior year reflecting impairment charges, net of tax effects amounting to $146 million. After negating the effect of these impairment charges, adjusted net earnings in the third quarter of the prior year amounted to $50 million. The $33 million increase in net earnings in the most recently completed quarter relative to the adjusted net earnings in Q3 2015 was attributable primarily to the higher gross margins being partially offset by higher G&A and interest costs. Basic earnings per share increased 53% to $0.19 compared to adjusted basic earnings per share of $0.12 in the prior year. Operating cash flow for the third quarter of 2016 amounted to $162 million or $0.37 per share compared to $100 million or $0.25 per share in the prior year, representing a 48% increase on a per share basis, once again highlighting the accretiveness of the company’s acquisitions over the past year. Based on the company’s dividend policy, the company’s Board has declared a dividend of $0.06 a share payable to shareholders of record on November 23, 2016, a 20% increase relative to the previous quarter. Under the dividend reinvestment plan, the Board has elected to offer shareholders the option of having their dividends reinvested in newly issued common shares of the company at a 3% discount to market. The operational highlights for the third quarter of 2016 included the following. Attributable silver production relative to the San Dimas mine decreased 11% to 1.3 million ounces, due to lower throughput and grade. Silver sales volumes in Q3 2016 relative to San Dimas decreased 47% to 1.1 million ounces due to a combination of lower production and negative changes in payable ounces produced but not yet delivered to Silver Wheaton, with such balances having decreased by approximately 600,000 ounces in the comparable period of the prior year. Peñasquito generated 1.5 million ounces of attributable silver production in Q3 2016, representing a 29% decrease, reflecting lower throughput grades and recoveries. However, Gold Corp has indicated that mining has shifted from the lower grade upper transitional ore into higher grade in the lower portion of the pit. Additionally, Gold Corp has indicated that throughput is expected to increase due to a lower level of plant maintenance. Finally, the Northern Well Field project has reportedly ramped up as expected and reached full design capacity in the fourth quarter of 2016. Antamina generated 1.5 million silver ounces of attributable production and 1.6 million ounces of silver sales in Q3 of 2016, with this stream having been added in the fourth quarter of the prior year. The lower levels of production relative to prior quarters was expected and is attributable to lower throughput and recoveries, partially offset by higher grades. It is important to highlight that Antamina is on track to well will exceed the company’s original full year guidance. The Sudbury mines produced 10,000 ounces of attributable gold during Q3 2016, representing an increase of 36% attributable primarily to higher grades and recoveries at the Coleman and Totten mines. Sales volume relative to Sudbury increased by 84% to 12,300 ounces of gold due to a combination of increased production and positive changes in gold ounces produced, but not yet delivered to Silver Wheaton. Salobo production almost doubled to 68,200 ounces of attributable gold during Q3 2016, with such being primarily due to the increase in the company’s attributable gold interest from 50% to 75% effective July 1, 2016. The two lines operated at an average rate of approximately 88% of capacity during the third quarter of 2016. Sales volume relating to Salobo increased 128% to 50,000 ounces of gold in Q3 2016, with such being attributable to the increased production, partially offset by negative changes in gold ounces produced but not yet delivered to Silver Wheaton. Other gold interests generated over 31,000 ounces of attributable gold production in Q3 2016, 99% higher than the prior year, primarily due to record gold production from Minto combined with the strong gold production from 777. Sales volumes from other gold interests increased 17% to 22,700 ounces in Q3 2016, with the increased production being largely offset by a buildup in ounces produced but not yet delivered in Q3 2016, compared to a significant reduction in such balances in Q3 2015. During the third quarter of 2016, the company drew down $780 million on the revolving facility and disbursed $800 million relative to the closing of the previously announced amendment to the Salobo gold purchase agreement. In addition, the company received $20 million from the exercise of the stock option, repaid $141 million of bank debt and disbursed $19 million in dividend. Overall, net cash increased by $1 million in Q3 2016, resulting in cash and cash equivalents at quarter end of $126 million. This combined with the $1.3 billion outstanding on the revolving facility, resulted in a net debt position as of September 30, 2016, of just over $1.2 billion. The company’s cash position strong forecast future operating cash flows, combined with available credit capacity under the revolving facility, positions the company well to satisfy its funding commitments, sustain its dividend policy, while at the same time, providing flexibility to consummate additional accretive precious metal purchase agreements. Finally, there is no material update relative to the company’s ongoing dispute with the CRA. We continue to work diligently with counsel to advance the case as expeditiously as possible. And that concludes the financial summary. And with that, I will turn the call back over to Randy.

Thank you, Gary. Operator, we would like to open up this conference call for questions please.

Thank you. Ladies and gentlemen, we will now conduct the question-and-answer session. [Operator Instructions] Your first question comes from the line of Chris Terry from Deutsche Bank. Please go ahead.

Hi, guys. Just a couple of questions for me, maybe for you Randy, I guess the M&A cycle and your ability to do deals is ever evolving process, we have had a number of movements during the quarter, just came to see what opportunities could be out there, whether you had looked a little outside of the traditional precious space and whether you are more focused on building up the optionality from early stage projects or like you said I think earlier around quality assets in the portfolio that might already be producing, so just wanted your updated thoughts where we are at?

Thanks Chris. Yes. The one thing I would say is that I mean we remain focused, 100% on precious metals and so we still see lots of opportunities in that. The one sort of change that I think we have seen over the last three months, four months is that we are starting to see a few more development projects coming into play, projects that are being invested back into or see going back into the ground. For the last 2 or 3 years, most of our opportunities have been sort of balance sheet repairs that would have been interesting into existing assets that are already producing and it’s mainly just to raise capital to try and strengthen up balance sheets, but we are definitely seeing a rebound in the – bit of a rebound in the base metal space and some strength there. So, we are starting to see some development projects where people are looking for construction capital and it’s something where I feel this streamlining works very well just because of the improvement to project IRR and how it manages risk for the actual construction company of the operator, right? So, I hope that continues to grow, because I think the mining industry does need that investment. The early stage stuff, it’s we remain active in looking at those things. I really do like the optionality that, that brings to us as a company and I think for reasonable dollars, for very low dollars to get great exposure to some really good upside. Challenges of course and you have heard this from probably every company you have talked to over the last – well, the challenges finding good quantity projects is just not a lot of good quality early stage expiration projects out there that meet our criteria. And so we remain active in that space and hopeful to complete a few more of those things in the near-term, but we are still maintaining a pretty high standard of selectivity in terms of what want to invest into.

Okay, great. Thanks for that. And then just one for Gary, you talked through, I think on the produced but not yet delivered ounces, so just to be clear on that, you are saying that you are at roughly even levels right now or do you expect that number to reverse a little in the fourth quarter given it built up in the third quarter?

Yes. I mean, we are – we project that at any given time we should have about 2 months worth of payable production sitting in various ports or con sheds around the world. And that’s just sort of an average. Now what tends to happen leading into calendar year end is a lot of the mining companies tried to get most of those con sheds cleared out and we have traditionally seen a reduction in those balances in the fourth quarter. So although we wouldn’t expect those balances to drop, our forecast is not based on those ounces dropping in Q4, traditionally, we have seen that kind of behavior.

Okay, that makes sense. And then one last one, just in terms of how you use the excess cash flow obviously, we have got the dividend policy firmly in place, but I assume it will still be about debt payback, but would you consider buyback again or is it really just focused on paying down debt and then having optionality for any M&A deals that come your way?

Yes. It’s about any excess cash flow will go to repaying outstanding debt and recharging our ability to pursue accretive acquisitions.

Thanks, guys.

Thank you, Chris.

[Operator Instructions] Your next question comes from the line of Michael Gray from Macquarie. Your line is open. Please go ahead.

Yes, good morning guys. Thanks for taking my call.

Good morning, Michael.

Hey, guys. So, on the Salobo performance in Q3 be the higher output, are you able to give us any color on what drove the performance? Was it sequential ramp up or softer or...

At first, it’s the asset, as you know in terms of startups the second line is still sort of achieving its peak production levels. And so it really comes back to continued ramp up and the asset sort of getting closer and closer to its full capacity as it stands right now. So we expect to see this on a continued basis. I mean, there is some great scheduling and stuff like that, but we see strength in this asset coming forward. It’s going to continue to get better and better every quarter.

Okay, thanks. And at San Dimas with the Primero team that are going some labor union challenges and focus on simplifying the mine, to what extent, are you concerned with the lower near-term silver production and do you see the operation turning around in a reasonable timeframe?

San Dimas has got hundreds of years of operating history. It’s been going nonstop since I think the first mining there started way back in the 1500s or 1600s originally right. So, it’s got a very long operating history. Primarily, it’s having some challenges at this mine site. It is a mine that needs to be invested into and it has a very, very long history of rewarding investments very well. And so we are hopeful that Primero can make it through these challenges and I have to say pretty impressive with the team they have got in place there now, there has been a lot of changes. But I think they are doing the right things and so we are watching it closely, but expect that they are going to continue to work towards trying to find resolution of these issues.

Okay, thanks. The final question, maybe for Gary, just on the other operations for gold production, you mentioned Minto and 777. Can you – are you able to give us a breakdown on the gold production from those two assets?

Yes. I mean, the amounts are relatively small. It’s included in our other section. For details like that, perhaps offline might be…

Sure. Yes, okay.

Yes, that’s probably the best way.

Okay. Thanks, guys. Appreciate it.

Yes.

Your next question comes from the line of Cosmos Chiu from CIBC. Your line is open. Please go ahead.

Thanks, Randy, Gary and team. A few questions from me here. Maybe first off again on San Dimas, could you remind us once again how that Goldcorp guarantee works?

Sure. The Goldcorp guarantee, I mean, the mine used to be owned by Goldcorp and so when they sold it to Primero, because the status of Primero at that time a one mine company versus Goldcorp, one of the provisions that we acquired at Silver Wheaton from Goldcorp when they sold the mines at Primero was that they would guarantee that Primero satisfied the terms of the contract. And so quite literally, it comes down to as long as they satisfied the terms of the silver purchase agreement, then there is not an issue.

So, it’s not – Randy, so it’s not like a minimum guarantee. So, in the case where if there is any kind of labor situation at San Dimas and there might be a temporary production suspension, then you wouldn’t get anything during that period?

That’s right. All streaming agreements share operating risk. And so that’s no different than any of our contracts. It’s not – there is no minimums involved, it’s just that we wanted to ensure that Primero satisfied the terms of the silver purchase agreement.

Of course. And then as part of the when Goldcorp sold it to Primero as well, I guess Silver Wheaton right now has a role for any kind of future streaming agreement or similar transactions, Silver Wheaton has a role for on that. Certainly, Primero looks like a company that could need more money. Is this an asset where Silver Wheaton can foresee putting more money into in terms of further investments, how would you look at that?

Yes, I don’t see that. I mean, as it is right now, we receive the bulk of the silver. We share any silver over 6 million ounces, but under 6 million ounces is 100% ours. That asset itself is pretty fully burdened from the stream. We want to make sure that all assets are healthy and with the challenges they are having right now, it’s not something that we would invest more money into in terms of expanding our stream exposure.

Okay. And then maybe I know it’s in the back of the MD&A, could you maybe touch on the security that you have on the stream?

The security? Yes, sure. We have security at the asset level.

We do. Yes, Cosmos, it’s Gary here.

Hi, Gary.

We have got full security package on all of the material assets of San Dimas operation, along with Primero guarantees. And then as Randy has just outlined, the – Goldcorp subsidized by the – or supported by the Goldcorp guarantee.

Of course. And since I have you here Gary, maybe one question for you and I don’t know if you can answer this, but certainly Antamina is having a very good year in 2016, but you are not the only royalty on it, two days ago, Franco Nevado reported and on a quarter-over-quarter basis, they reported an increase in Antamina contribution, on the other hand you reported a decrease quarter-over-quarter, should they match up or is there a reason why they don’t?

Hi Cosmos, it’s Patrick.

Hey Patrick.

It’s a nuance. If you look at the – and I believe the reason they have reported an increase was they reported in gold equivalent ounces. So, it’s just a conversion factor between silver and gold that their silver stream as they are reporting is gold equivalent. So we report silver and silver.

So Patrick, they should really match-up if it’s metal to metal?

That’s right. And the decrease was primarily to them being more in zinc rich zones in the third quarter, which we would anticipate in the prior quarter [ph] as well. It’s just purely a mine plan. It was fully expected and part of our guidance.

Okay, great. Thank you.

Cosmos, thank you.

Your next question comes from the line of Dan Rollins from RBC Capital Markets. Please go ahead.

Yes. Thanks very much. Randy, I was wondering if we could go back to the sort of the opportunity pipeline, it’s been evolving quickly over the last nine months to six months, nine months ago, six months ago, it was about balance sheet repair, could you maybe touch based on what you are seeing now given we are seeing a lot of green in base metal prices, ball prices have rebounded quite significantly, the opportunities that were there, are they still there on the table right now or have they sort of pulled back those offer sheets or the build to get those deals done right now?

Well, and that’s what we have seen is that some of these companies that had balance sheet issues are – the necessity isn’t as strong as it was six months to nine months ago. We have seen it across the board. It doesn’t take much. All it takes is to have a look at some of these big diversified base metal driven companies. Their balance sheets are much stronger than they were six months to nine months ago and that was the driving force behind doing streams back then. Now what we are seeing is more corporate development stuff. More materials that are looking at investing dollars into the ground and trying to find that source that capital in terms of investing into new mines or expansions or even acquisitions, mergers and acquisitions we are seeing of a kick-up in that space. And so it’s healthy because it was always concerned if all you are doing is paying off past debt, this is an industry that constantly needs to invest into it. So we weren’t seeing that for the last couple of years, but we are starting to see a bit of a wake up in that direction.

Okay. And then just with respect to the deals themselves, the industry is definitely involved, a lot of the original deals are sort of one-off, the company would come to you and say okay, we want to do a stream, are you seeing more of the deals being run in a process now going forward?

Yes. I mean there are three principal streaming companies in this industry right now, but there is a lot of other companies that are trying to make work their way into the space. And so there is no doubt from a seller’s perspective, the more people that are at the dance and at the auction, typically the better the price is. And so it’s been a competitive process, that’s something that we have seen for quite a while, actually, I would say that that is pretty consistent for probably the last 7 years, 8 years.

And then on the M&A side, its one that it’s been mentioned in the past, I know we talked about it a few years ago that, that could be a real potential area of to get new deals and just to provide that sort of cash for a deal, where do you see the ability actually to start transacting on that type of acquisition, is it something that could play a pretty good growth model for the industry or is it nice to have?

I think it’s a nice to have. I mean in terms of the growth model for the industry as a whole, M&A is just swapping from one owner to another, right. And so in terms of the growth model, its growth from one company in terms of making an acquisition, but these are assets that are pretty well defined and they are basically changing ownership. I have always felt that the streaming model works the best at the project development stage. It dramatically reduces the risk from the operator side and it dramatically improves the internal rate of return from an operator side. And so we think that we have got an extra leg up in terms of being competitive source of capital in situations like them.

That sort of brings another topic. We are potentially going to see some supply crunches over the next few years in some of the base metal areas, have you started to have conversations with some of the companies about having to go after big capital intensive pit wall lay backs, expansions of milling facilities to go out for lower grade, is that something you are now talking with the majors about potentially streaming become a part of that financing back because taking on more debt is still probably going to be pretty challenging?

Yes. That is some of the opportunities that we are seeing. As these – I mean first thing that has to happen is those commodity prices have declined and sort of justify those investments. But we are starting to see that I mean even today, copper is doing much very nicely in a long time and both lead and zinc are pushing their way, definitely improving. We are seeing zinc do relatively well over the next six months. So that is going to bring on these investment decisions that have to be made in terms of capital investments into these assets. I will say though that it’s a pretty skinny market out there, especially in the zinc space, there is just not a lot of assets yet for a market itself.

Perfect, that’s all the questions that I have. Thanks very much.

Thank you, Dan.

Your next question comes from the line of Andrew Kaip from BMO. Please go ahead.

Hi Randy. Hi Gary.

Hi Andrew.

Hi Andrew.

Hi. And look, most of my questions have already been asked, but I guess the one question I would have for you is given the share price reaction to San Dimas today on the back of the results, when does your share price get back into a range where you feel comfortable at executing and buying back your shares again?

Buying, on the buyback basis?

That’s correct, yes.

Yes. I mean right now, it always comes down to where is the best place for us to invest our capital in terms of return to our shareholders. And right now, with the opportunity set that we see in front of us, our preference is to go in that direction. And so it really comes down to that decision. We always, every time we make an acquisition, we look at it and determine whether it’s better to put that money into that acquisition or is it better to put it into our shares or in the sense right now, pay down debt. And so it’s something that we could constantly assess, but I don’t see us in that position right now. The reaction today, this is bit of an odd market. We have had a few significant events over the last couple of days. And so I don’t know if I would be so possessed in San Dimas, I mean Primero reported their results yesterday morning and so we had plenty of time to respond to the San Dimas update from that perspective. I think there was a pretty good read through in terms of what would have impacted. So I would not point the actions today to San Dimas itself. That’s – as we have seen, the company is still very strong. We have done relatively well. The only reason there is a slight miss is because we have built up our inventory back to normal levels, back to the two months of production. And so I would tend to point more towards the fact that this is a pretty volatile period with some of the events we have seen over the last couple of days.

Alright. But you are – I mean you are trading outsized on the downside relative to many of your peers and many of them, so there has to be something else driving you and the reality is – or I would hope that most investors understand that the inventory build that would have had to have taken place with the additional 25%...?

Well, that’s why we have conference calls like this. It’s important for us to make sure that they understand that, because we had a good quarter. And we have set ourselves up nicely so that – as Gary mentioned earlier on in the fourth quarter, we typically see our partners squeeze that produced but not yet sold pipeline. And so that’s, if anything, I think we have had a good quarter here, something that’s actually going to set us up very for a – what should be a pretty good year end. And across the board, the fact that we have got assets outperforming and assets under-performing is – that’s one of the reasons we have a diversified portfolio. So I can’t – there is a lot of time, so I don’t understand the market. This is one of them. When I look at our results, I don’t think that we should be out. I think it’s a strong quarter.

Okay, definitely. Thank you very much.

Thank you, Andrew. And thank you everyone for dialing in today. Silver Wheaton is on track for another record year of production and sales here in 2016. We continue to believe that Silver Wheaton offers the best option for gaining exposure to precious metals for a number of reasons; Firstly, being 100% focused on precious metals; secondly, through our portfolio of long life, low cost streams; thirdly, by offering a proven track record of accretive acquisitions such as the recent Salobo transaction; and finally, by delivering our shareholders optionality measured in ounces, not acres. We do look forward to speaking with you all again soon. Thank you.

This concludes the conference call for today. Thank you for participating. Please disconnect your lines.