Bloor Street Capital

The Founding of Wheaton Precious Metals | Randy Smallwood and Jimmy Connor

The interview traces Wheaton Precious Metals’ origins, from a 2004 silver‑streaming concept designed to fund Gold Corp. to its current status as the world’s largest precious‑metals streaming firm. Randy Smallwood explains how a simple commodity‑swap idea evolved into a structured financing model that separates metal production risk from capital costs, allowing miners to monetize future output while Wheaton receives a fixed‑price, inflation‑adjusted payment. Key insights include the identification of three distinct "seasons" of streaming: an early growth phase (2004‑2010) funding mine development, a harvest phase (2010‑2013) building a war chest during soaring silver prices, and a recent balance‑sheet/recapitalization era (2013‑2018) where streams helped miners deleverage. Since 2018 the focus has shifted toward gold streams tied to base‑metal projects, reflecting higher gold valuations and the firm’s belief that extracting precious metals from copper or zinc mines yields the greatest arbitrage. Smallwood cites the 2009 Pasqual Lama deal—$625 million for a 25% silver stream—as a cautionary tale that taught Wheaton to base payments on mechanical completion, secure broad compensation clauses, and demand parent guarantees. He contrasts this disciplined approach with peers who ignored such safeguards and suffered political‑risk losses, underscoring Wheaton’s commitment to protecting shareholders through layered security structures. The streaming model has reshaped mining finance by offering a low‑cost, equity‑neutral source of capital that aligns with metal market values. For investors, Wheaton’s evolution demonstrates how innovative contract design can generate billions in cash flow while mitigating operational, jurisdictional, and price‑risk exposure, positioning the company as a pivotal conduit between miners and capital markets.