CompanyGraph
Wheaton Precious Metals Corp.
WPM · NYSE Arca · Canada
Pays mines upfront for the right to buy their gold and silver cheaply forever, then sells that metal at full market price.
Wheaton Precious Metals pays mine operators a large sum upfront — before a single ounce is produced — in exchange for the legal right to buy a fixed share of that mine's output for the next 15 to 30 years at a price set 10 to 18 percent below whatever spot is on delivery day, then sells that metal at full spot price, keeping the spread as margin. Because every cost of actually running the mine — drilling, processing, labour, environmental compliance — is borne by the operator, Wheaton captures that spread across 23 operating mines, including Vale's Salobo and Newmont's Peñasquito, using just 42 employees. The contracts are already signed and the cash already spent, so a competitor cannot replicate the arrangement simply by showing up with capital — the obligation is done and the operators are bound. The vulnerability is that Wheaton has no presence at any of the mines it depends on, so if an operator goes bankrupt or a regulator suspends a mine's licence, the delivery behind that stream can disappear with nothing Wheaton can do to replace it.
How does this company make money?
The company buys fixed percentages of precious metals output from mines including Salobo and Peñasquito at prices set 10 to 18 percent below the market rate on delivery day. It immediately sells that metal at the full market rate. The difference between those two prices, multiplied across 23 mines producing simultaneously, is essentially all of the company's income — and because the mine operators pay every cost of actually getting the metal out of the ground, almost none of that income is eaten up by operating expenses.
What makes this company hard to replace?
The contracts run 15 to 30 years and legally require mine operators to keep delivering metal at the agreed price no matter what happens to the market. The upfront cash that created those obligations has already been paid out to partner mines and cannot be taken back or moved somewhere else. There is no exit ramp built into the arrangement for either side.
What limits this company?
Each contract locks in a fixed percentage of one specific mine's output, so the company can only receive as much metal as those mines physically dig up. To grow, it must sign deals with new mines — but mine operators who have already given away a share of their future production at a discount are increasingly choosing loans or joint ventures instead, because those arrangements do not permanently hand over their metal at below-market prices.
What does this company depend on?
The company cannot run without four things: the streaming contracts with operators including Vale, Newmont, Glencore, and Hudbay Minerals that specify exactly how much metal must be delivered and at what price; the physical refining and delivery infrastructure that those same operators control entirely; the environmental permits and operating licences that partner companies hold in each mining jurisdiction; and the continued, uninterrupted operation of specific mines including Salobo, Peñasquito, and the 21 other contracted sites.
Who depends on this company?
Precious metals investment funds and ETFs rely on the company for a steady supply of physical metal to back their holdings. Industrial manufacturers making electronic components need predictable deliveries of gold and palladium for high-reliability connectors. Jewelry makers depend on consistent silver and gold supply to plan their production. If the company stopped delivering, all three groups would face shortfalls in physical metal supply.
How does this company scale?
Each new streaming agreement adds another low-cost buy and full-price sell cycle with no new staff, no new equipment, and no new offices required — the model just repeats. The hard limit is that there are only so many mine operators willing to sell a share of their future output at a permanent discount, and that pool is shrinking as operators find other ways to raise money.
What external forces can significantly affect this company?
When the US Federal Reserve raises interest rates or the US dollar strengthens, gold and silver become less attractive to investors, which pushes spot prices down and shrinks the spread the company captures. Geopolitical tensions work in the opposite direction — they push central banks to stockpile gold and can also destabilise the countries where partner mines operate. Environmental regulations in any jurisdiction where a contracted mine sits could force that mine to cut production or shut down entirely.
Where is this company structurally vulnerable?
If a partner mine operator goes bankrupt, the company's right to receive metal becomes just one claim among many in a court proceeding, with no guarantee of being paid first. Separately, if a government in any of the jurisdictions where these mines operate suspends or cancels the mine's environmental permit, the mine stops producing — and the company has no workers, no equipment, and no presence at the site to do anything about it.