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Sep 21, 2020

Canada's Wheaton Precious Metals plans London listing this year

A one-kilogram silver bar, left, sits on top of a one-kilogram gold bar at Gold Investments Ltd. bullion dealers in this arranged photograph in London, U.K., on Wednesday, July 29, 2020. Gold held its ground after a record-setting rally as investors awaited the outcome of a Federal Reserve meeting amid expectations policy makers will remain dovish, potentially spurring more gains. Photographer: Chris Ratcliffe/Bloomberg

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Canada’s Wheaton Precious Metals Corp. is planning to list on the London Stock Exchange by the end of the year, seeking to tap into investor demand for so-called streaming deals that have been likened to exchange-traded funds “on steroids.”

Vancouver-based Wheaton expects to join the LSE’s main market by the end of November, Chief Executive Officer Randy Smallwood said. It would be the first major streaming company to list there, and its stock would attract the interest of European funds that manage some $500 billion who can only invest in LSE-listed companies, he said.

“There are several ways you can get gold exposure: you can buy the ETF, you can invest in a streaming company, or you can invest in the mining companies,” Smallwood said by phone Sunday. “Streaming companies haven’t been an option for LSE-based investors before, so we think there’s an opportunity.”

Streaming companies provide upfront payments to miners in exchange for the right to buy metals like gold at a discount in the future. That model allows investors to earn dividends and also benefit as the company grows its assets, whereas the gold in an ETF “doesn’t pay a yield and it doesn’t grow,” Smallwood said.

“To paraphrase what a peer said in the business, streaming is an ETF on steroids,” he said. “The risk profile is very similar but we have growth and we have yield, so in our eyes it’s a much better option.”

Toronto-based Yamana Gold Inc. is also planning an LSE listing, while Vancouver-based B2Gold Corp. said earlier this month it may consider such a move.

Wheaton Precious expects to pay off its debt by the first quarter of next year and may then increase its dividend. “If we get to a positive cash base, where we have cash on hand, we definitely would seriously consider raising the dividend -- that’s the worst-case scenario,” Smallwood said.

The company, which is already listed in Toronto and New York, has seen a 75% gain in its Canadian shares this year amid a record-breaking surge in gold. Demand for the precious metal has been driven by investors in search of safe havens as the pandemic threatens global economic growth. Precious-metal miners have seen their shares skyrocket with a gauge of senior gold producers climbing almost 80% in the past year.

The company doesn’t expect to raise any money along with its listing -- it has enough with nearly C$1 billion ($758 million) in cash flows this year, Smallwood said. His bigger problem is finding new streaming deals to invest in as the surge in metal prices has driven up prices and expectations.

“Our cash flows are so strong -- my biggest challenge is trying to get it back into the ground as fast as I can,” Smallwood said. “It’s a great problem to have.”

©2020 Bloomberg L.P.