27.

Commitments and Contingencies

Silver and Gold Interests

The following table summarizes the Company’s commitments to make per-ounce cash payments for silver and gold to which it has the contractual right pursuant to the precious metal purchase agreements:


	Attributable Payable Production to be Purchased						Per Ounce Cash Payment ^{1, 2}						Term of Agreement			Date of Original Contract
Silver and Gold Interests	Silver			Gold			Silver			Gold			Term of Agreement			Date of Original Contract

San Dimas		100	% ³		0	% ³	$	4.32		$	n/a			Life of Mine			15-Oct-04
Peñasquito		25	%		0	%	$	4.17			n/a			Life of Mine			24-Jul-07
Salobo		0	%		75	%		n/a		$	400			Life of Mine			28-Feb-13
Sudbury		0	%		70	%		n/a		$	400			20 years			28-Feb-13
Antamina		33.75	%		0	%		variable	⁴		n/a			Life of Mine			3-Nov-15
Constancia		100	%		50	% ⁵	$	5.90	⁶	$	400	⁶		Life of Mine			8-Aug-12
Other
Los Filos		100	%		0	%	$	4.34			n/a			25 years			15-Oct-04
Zinkgruvan		100	%		0	%	$	4.34			n/a			Life of Mine			8-Dec-04
Yauliyacu		100	%⁷		0	%	$	8.80	⁸		n/a			Life of Mine			23-Mar-06
Stratoni		100	%		0	%	$	4.22	⁹		n/a			Life of Mine			23-Apr-07
Minto		100	%		100	% ¹⁰	$	4.18		$	322	¹¹		Life of Mine			20-Nov-08
Neves-Corvo		100	%		0	%	$	4.22			n/a			50 years			5-Jun-07
Aljustrel		100	% ¹²		0	%	$	4.06			n/a			50 years			5-Jun-07
Keno Hill		25	%		0	%	$	variable	¹³		n/a			Life of Mine			2-Oct-08
Barrick
Pascua-Lama		25	%		0	%	$	3.90			n/a			Life of Mine			8-Sep-09
Lagunas Norte		100	%		0	%	$	3.90			n/a			8.5 years			8-Sep-09
Pierina		100	%		0	%	$	3.90			n/a			8.5 years	¹⁴		8-Sep-09
Veladero		100	%¹⁵		0	%	$	3.90			n/a			8.5 years			8-Sep-09
Rosemont		100	%		100	%	$	3.90		$	450			Life of Mine			10-Feb-10
Loma de La Plata		12.5	%		0	%	$	4.00			n/a			Life of Mine			n/a	¹⁶
777		100	%		50	%	$	6.08	⁶	$	412	⁶		Life of Mine			8-Aug-12
Early Deposit
Toroparu		50	%		10	%	$	3.90		$	400			Life of Mine			11-Nov-13
Cotabambas		100	%¹⁷		25	% ¹⁷	$	5.90		$	450			Life of Mine			21-Mar-16
Kutcho		100	%¹⁸		100	% ¹⁸	$	variable	¹⁹		variable	¹⁹		Life of Mine			12-Dec-17

1)	Subject to an annual inflationary adjustment with the exception of Loma de La Plata and Sudbury.

Should the prevailing market price for silver or gold be lower than this amount, the per ounce cash payment will be reduced to the prevailing market price, with the exception of Yauliyacu where the per ounce cash payment will not be reduced below $4.30 per ounce, subject to an annual inflationary factor.

On January 12, 2018, the Company announced that the existing San Dimas SPA was being cancelled and that the Company had entered into a new San Dimas PMPA. Under the terms of the new agreement, which is expected to close before the end of April 2018, the Company will be committed to purchase an amount of gold equal to 25% of gold production from San Dimas plus an additional amount of gold equal to 25% of silver production from San Dimas converted to gold at a fixed gold to silver exchange ratio of 70:1. Note that if the average gold to silver price ratio decreases to less than 50:1 or increases to more than 90:1 for a period of 6 months or more, then the “70” shall be revised to “50” or “90”, as the case may be, until such time as the average gold to silver price ratio is between 50:1 to 90:1 for a period of 6 months or more in which event the “70” shall be reinstated.

4)	The Company is committed to pay Glencore 20% of the spot price of silver for each ounce of silver delivered under the Antamina silver purchase agreement.

5)	Gold recoveries will be set at 55% for the Constancia deposit and 70% for the Pampacancha deposit until 265,000 ounces of gold have been delivered to the Company.

6)	Subject to an increase to $9.90 per ounce of silver and $550 per ounce of gold after the initial 40 year term.

7)	Wheaton is committed to purchase from Glencore a per annum amount equal to the first 1.5 million ounces of payable silver produced at Yauliyacu and 50% of any excess.

Should the market price of silver exceed $20 per ounce, in addition to the $8.80 per ounce, the Company is committed to pay Glencore an additional amount for each ounce of silver delivered equal to 50% of the excess, to a maximum of $10 per ounce, such that when the market price of silver is $40 or above, the Company will pay Glencore $18.80 per ounce of silver delivered.

In October 2015, in order to incentivize additional exploration and potentially extend the limited remaining mine life of Stratoni, Wheaton and Eldorado Gold agreed to modify the Stratoni silver purchase agreement. The primary modification is to increase the production price per ounce of silver delivered to Wheaton over the current fixed price by one of the following amounts: (i) $2.50 per ounce of silver delivered if 10,000 meters of drilling is completed outside of the existing ore body and within Wheaton’s defined area of interest (“Expansion Drilling”); (ii) $5.00 per ounce of silver delivered if 20,000 meters of Expansion Drilling is completed; and (iii) $7.00 per ounce of silver delivered if 30,000 meters of Expansion Drilling is completed. Drilling in all three cases must be completed by December 31, 2020, in order for the agreed upon increase in production price to be initiated.

10)	The Company is committed to acquire 100% of the first 30,000 ounces of gold produced per annum and 50% thereafter.

11)

In October 2017, in order to incentivize Capstone Mining Corp. (Capstone) to extend the Minto mine life, the Company agreed to amend the Minto precious metal purchase agreement. The primary modification is to increase the production payment per ounce of gold delivered to Wheaton over the current fixed price in periods where the market price of copper is lower than $2.50 per pound. In consideration for this contract amendment and certain other agreements made between the Company and Capstone, Capstone issued 6.8 million shares to Wheaton with a value of $8 million.

12)	Wheaton only has the rights to silver contained in concentrate containing less than 15% copper at the Aljustrel mine.

13)	The production payment related to the Keno Hill silver interest is a function of the silver head grade and silver spot price in the month in which the silver is produced.

14)	As per Barrick’s disclosure, closure activities were initiated at Pierina in August 2013.

15)	Wheaton’s attributable silver production is subject to a maximum of 8% of the silver contained in the ore processed at Veladero during the period.

16)	Terms of the agreement not yet finalized.

17)	Once 90 million silver equivalent ounces attributable to Wheaton have been produced, the attributable production to be purchased will decrease to 66.67% of silver production and 16.67% of gold production for the life of mine.

18)	Once 51,000 ounces of gold and 5.6 million ounces of silver have been delivered to Wheaton, the stream will decrease to 66.67% of silver and gold production for the life of mine.

19)	The Company is committed to pay Kutcho 20% of the spot price of silver and gold for each ounce of silver and gold delivered under the Kutcho Early Deposit Agreement.

Other Contractual Obligations and Contingencies


	Obligations With Scheduled Payment Dates
(in thousands)	2018		2019 - 2021		2022 - 2023		After 2023		Sub-Total		Other Commitments		Total


Bank debt ¹	$	-	$	-	$	770,000	$	-	$	770,000	$	-	$	770,000
Interest ²		24,845		82,055		4,564		-		111,464		-		111,464
Silver and gold interest payments ³
Rosemont ⁴		-		-		-		-		-		231,150		231,150
Loma de La Plata		-		-		-		-		-		32,400		32,400
Toroparu		-		-		-		-		-		138,000		138,000
Cotabambas		1,500		4,500		2,500		-		8,500		126,000		134,500
Kutcho		7,000		-		-		-		7,000		58,000		65,000
Operating leases		1,303		3,381		1,808		1,206		7,698		-		7,698


Total contractual obligations	$	34,648	$	89,936	$	778,872	$	1,206	$	904,662	$	585,550	$	1,490,212

1)	At December 31, 2017, the Company had $770 million drawn and outstanding on the Revolving Facility.

As the applicable interest rates are floating in nature, the interest charges are estimated based on market-based forward interest rate curves at the end of the reporting period combined with the assumption that the principal balance outstanding at December 31, 2017 does not change until the debt maturity date.

3)	Does not reflect the contingent payment due related to the Salobo gold purchase agreement (see the Salobo section, below).

4)	Includes contingent transaction costs of $1 million.

Rosemont

In connection with the Rosemont precious metal purchase agreement, the Company is committed to pay Hudbay total upfront cash payments of $230 million on an installment basis to partially fund construction of the Rosemont mine once certain milestones are achieved, including the receipt of key permits and securing the necessary financing to complete construction of the mine.

Loma de La Plata

In connection with the Company’s election to convert the debenture with Pan American Silver Corp. (“Pan American”) into a silver purchase agreement, the Company is committed to pay Pan American total upfront cash payments of $32 million following the satisfaction of certain conditions, including Pan American receiving all necessary permits to proceed with the mine construction.

Toroparu

In connection with the Toroparu Early Deposit Agreement, the Company is committed to pay Sandspring an additional $138 million, payable on an installment basis to partially fund construction of the mine. Following the delivery of certain feasibility documentation or after December 31, 2018 if the feasibility documentation has not been delivered to Wheaton by such date, Wheaton may elect not to proceed with the agreement or not pay the balance of the upfront consideration and reduce the gold stream percentage from 10% to 0.909% and the silver stream percentage from 50% to nil. If Wheaton elects to terminate, Wheaton will be entitled to a return of the amounts advanced less $2 million which is non-refundable on the occurrence of certain events. If Wheaton elects to reduce the streams, Sandspring may return the amount of the deposit already advanced less $2 million to Wheaton and terminate the agreement.

Cotabambas

In connection with the Cotabambas Early Deposit Agreement, the Company is committed to pay Panoro a total cash consideration of $140 million, of which $6 million has been paid to date. Once certain conditions have been met, the Company will advance an additional $8 million to Panoro, spread over up to seven years. Following the delivery of a bankable definitive feasibility study, environmental study and impact assessment, and other related documents (collectively, the “Cotabambas Feasibility Documentation”), and receipt of permits and construction commencing, the Company may then advance the remaining deposit or elect to terminate the Cotabambas Early Deposit Agreement. If the Company elects to terminate, the Company will be entitled to a return of the portion of the amounts advanced less $2 million payable upon certain triggering events occurring. Until January 1, 2020, Panoro has a one-time option to repurchase 50% of the precious metal stream on a change of control for an amount based on a calculated rate of return for the Company.

Kutcho

In connection with the Kutcho Early Deposit Agreement, the Company is committed to pay Kutcho a total cash consideration of $65 million, of which $7 million will be advanced in two installments as an early deposit upon satisfaction of certain conditions and $58 million which will be advanced on an installment basis to partially fund construction of the mine once certain conditions have been satisfied.

The Company will be required to make an additional payment to Kutcho, of up to $20 million, if processing throughput is increased to 4,500 tonnes per day or more within 5 years of attaining commercial production.

Salobo

The Salobo mine currently has a mill throughput capacity of 24 million tonnes per annum (“Mtpa”). If actual throughput is expanded above 28 Mtpa within a predetermined period, and depending on the grade of material processed, Wheaton will be required to make an additional payment to Vale based on a set fee schedule ranging from $113 million if throughput is expanded beyond 28 Mtpa by January 1, 2036, up to $953 million if throughput is expanded beyond 40 Mtpa by January 1, 2021.

Primero Mining Corp. (“Primero”)

On March 30, 2017, Wheaton provided the Primero Guarantee to the lenders under the Primero Facility. On January 12, 2018, Primero announced that they had entered into a definitive agreement whereby First Majestic Silver Corp. (“First Majestic”) will acquire all of the issued and outstanding common shares of Primero (the “Arrangement”). In connection with the Arrangement, the Company has agreed to extend the Primero Guarantee to the earlier of April 30, 2018, and the completion or termination of the Arrangement. Primero is obligated to pay Wheaton a fee equal to a rate of approximately 5% per annum in connection with the Primero Guarantee and extensions of the Primero Guarantee. As of December 31, 2017, there was $30 million outstanding under the Primero Facility, excluding interest, fees and expenses.

Other

Due to the size, complexity and nature of the Company’s operations, various legal and tax matters are outstanding from time to time. By their nature, contingencies will only be resolved when one or more future events occur or fail to occur. The assessment of contingencies inherently involves the exercise of significant judgment and estimates of the outcome of future events. If the Company is unable to resolve any of these matters favorably, there may be a material adverse impact on the Company’s financial performance, cash flows or results of operations. In the event that management’s estimate of the future resolution of these matters changes, the Company will recognize the effects of the changes in its consolidated financial statements in the appropriate period relative to when such changes occur.

2005 – 2010 Taxation Years: Canada Revenue Agency Dispute

On September 24, 2015, the Company received Notices of Reassessment (the “Reassessments”) from the CRA totaling $282 million (Cdn$353 million) for federal and provincial tax, transfer pricing penalties, interest and other penalties for the 2005-2010 taxation years. The CRA’s position in the Reassessments is that the transfer pricing provisions of the Income Tax Act (Canada) (the “Act”) relating to income earned by the Company’s foreign subsidiaries outside of Canada should apply such that the income of Wheaton subject to tax in Canada should be increased by an amount equal to substantially all of the income earned outside of Canada by the Company’s foreign subsidiaries for the 2005-2010 taxation years. Management believes that the Company has filed its tax returns and paid applicable taxes in compliance with Canadian tax law, and as a result no amounts have been recorded for any potential liability arising from this matter. Wheaton is vigorously defending its tax filing positions.

On January 8, 2016, the Company commenced an appeal in the Tax Court of Canada. The Company was required to make a deposit of 50% of the reassessed amounts of tax, interest and penalties. Instead of making this deposit in cash, on March 15, 2016, the Company posted security in the form of a letter of guarantee in the amount of $153 million (Cdn$192 million), which included interest accrued to March 2016 plus estimated interest for the following year. In March 2017 and 2018, additional letters of guarantee in the amounts of $9 million (Cdn$11 million) and $8 million (Cdn$10 million), respectively, were delivered to the CRA as security for additional estimated interest for the respective following year. The Company is in the discovery phase of the appeal. The timing for the completion of the court process is uncertain.

2011 – 2015 Taxation Years: Audit of International Transactions

The CRA has also commenced an audit of the Company’s international transactions covering the 2011-2013 taxation years, which is currently ongoing. During the third quarter of 2017, the CRA expanded this audit to include the 2014-2015 taxation years. The Company has not received any proposal or notices of reassessment for the 2011-2015 taxation years in connection with this audit.

For ease of reference, the following provides an overview of the current status of CRA matters:



	CRA Position/Status	Potential Income Inclusion	Potential Income Tax Payable ⁽¹⁾	Payments Made	Timing
2005-2010 Taxation Years	Transfer pricing provisions of the Act should apply such that Wheaton’s income subject to tax in Canada should be increased by an amount equal to substantially all of the income earned outside of Canada by Wheaton’s foreign subsidiaries.	CRA has reassessed Wheaton and is seeking to increase Wheaton’s income subject to tax in Canada by Cdn$715 million.	CRA has reassessed Wheaton and is seeking to impose income tax of $161 million (Cdn$201 million).^(2),(3)	Wheaton has posted security in the form of letters of guarantee totaling $170 million (Cdn$213 million) reflecting 50% of all assessed tax, penalties and interest accrued to March 15, 2019.^(3),(4)	An appeal in the Tax Court of Canada commenced January 8, 2016. Timing of resolution of the matter in court is uncertain.
2011-2015 Taxation Years	CRA audit of 2011-2013 taxation years commenced January 19, 2016, with the 2014-2015 taxation years being added September 2017. CRA has not issued a proposal or reassessment.	If CRA were to reassess on a similar basis as 2005-2010 taxation years, CRA would seek to increase Wheaton’s income subject to tax in Canada by approximately $1.6 billion. ⁽⁵⁾	If CRA were to reassess on a similar basis as 2005-2010 taxation years, CRA would seek to impose income tax of approximately $347 million (Cdn$435 million).^{(5), (6)}	N/A	Time to complete CRA audit unknown.
2016-2017 Taxation Years	Remains open to audit by CRA.	If CRA were to audit and then reassess on a similar basis as 2005-2010 taxation years, CRA would seek to increase Wheaton’s income subject to tax in Canada by approximately $262 million. ⁽⁵⁾	If CRA were to audit and then reassess on a similar basis as 2005-2010 taxation years, CRA would seek to impose income tax of approximately $71 million (Cdn$89 million).^{(5), (7)}	N/A	N/A

For the taxation years ended after December 31, 2010, the Company files its Canadian tax returns in US dollars. However, taxes payable, if any, are payable in Canadian dollars based on the exchange rate applicable on the original payment due date. As a result, the US dollar amounts reflected in the table above are subject to fluctuations in the value of the Canadian dollar relative to the US dollar. Canadian dollar amounts in this table have been converted to US dollars at the exchange rate applicable at the balance sheet date as quoted by the Bank of Canada.

For the 2005-2010 taxation years, transfer pricing penalties of $57 million (Cdn$72 million) and interest and other penalties of $64 million (Cdn$81 million) were also assessed by the CRA. The total reassessment issued on September 24, 2015 was $282 million (Cdn$353 million). Additional interest accruing to December 31, 2017 on the total amount reassessed is estimated at $35 million (Cdn$45 million) for the 2005-2010 taxation years.

As a consequence of the CRA’s reassessment of the 2005-2010 taxation years, CRA has denied non-capital losses of $12 million and $14 million that the Company had carried forward and applied to the 2011 and 2012 taxation years, respectively. Accordingly, the Company has carried back non-capital losses from subsequent taxation years to eliminate the taxable income in the 2011 and 2012 taxation years. However, interest and penalties of $1 million (Cdn$1.3 million) remained owing, 50% of which has been paid as the Company filed Notices of Objection with respect to the reassessments of the 2011 and 2012 taxation years. The reassessments do not relate to the CRA international audit of the 2011-2015 taxation years.

4)	Estimates of interest given as of the date stated. Interest accrues until payment date.

For precious metal purchase agreements with upfront payments paid in the form of a deposit, the estimates of income inclusion and tax payable are computed on the basis that the cost of precious metal acquired under such precious metal purchase agreements is equal to the market value of such precious metal while the deposit is outstanding, and the cash cost thereafter.

If CRA were to reassess the 2011-2015 taxation years and continue to apply transfer pricing penalties, management estimates that transfer pricing penalties of approximately $161 million and interest (calculated to December 31, 2017) and other penalties of approximately $98 million may be applicable for the 2011-2015 taxation years.

If CRA were to reassess the 2016-2017 taxation years and continue to apply transfer pricing penalties, management estimates that transfer pricing penalties of approximately $26 million and interest (calculated to December 31, 2017) and other penalties of approximately $5 million may be applicable for the 2016-2017 taxation years.

U.S. Shareholder Class Action

During July 2015, after the Company disclosed that the CRA was proposing that they would issue the Reassessments, two putative securities class action lawsuits were filed against the Company in the U.S. District Court for the Central District of California in connection with the Proposal (the “Complaints”).

On October 19, 2015, the Complaints were consolidated into one action, In re Silver Wheaton Securities Litigation, as against the Company, Randy Smallwood, President & Chief Executive Officer, Gary Brown, Senior Vice President & Chief Financial Officer and Peter Barnes, former Chief Executive Officer (together the “Defendants”) and a lead plaintiff (the “Plaintiff”) was selected. On December 18, 2015, the Plaintiff filed a consolidated amended complaint (the “Amended Complaint”). The Amended Complaint alleges, among other things, that the Defendants made false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, prospects and performance in violation of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Specifically, the Amended Complaint focuses on the Reassessments. The Amended Complaint purports to be brought on behalf of persons who purchased or otherwise acquired the Company’s securities in the United States during an alleged class period of March 30, 2011 to July 6, 2015.

At a hearing on June 6, 2016, the Court denied the Defendants’ motion to dismiss. A denial of such a motion is not a ruling on the merits of the claims in the lawsuit. Certification of the class was granted by the Court on May 11, 2017. The Court has set a trial date of August 20, 2019.

The Company believes the allegations are without merit and intends to vigorously defend against this matter. No amounts have been recorded for any potential liability arising from this matter, as the original Complaints do not specify a quantum of damages and the Company cannot reasonably predict the outcome.

Canadian Shareholder Class Action

By Notice of Action dated August 10, 2016 (as amended September 2, 2016), proposed representative plaintiff Suzan Poirier commenced proceedings pursuant to the Class Proceedings Act (Ontario) in the Ontario Superior Court of Justice against Wheaton Precious Metals Corp., Randy Smallwood, President and Chief Executive Officer and Gary Brown, Senior Vice President & Chief Financial Officer. The statement of claim filed alleges, among other things, misrepresentation pursuant to primary and secondary market civil liability provisions under the Securities Act (Ontario), common law negligence and negligent misrepresentation. The claim focuses on the Reassessments. The statement of claim purports to be brought on behalf of persons who (i) acquired Wheaton common shares in Wheaton’s March 2015 public offering, and (ii) acquired Wheaton common shares in the secondary market, other than in the United States, during an alleged class period of August 14, 2013 to July 6, 2015 inclusive.

The Company believes that the allegations are without merit and intends to vigorously defend against this matter. No amounts have been recorded for potential liability arising from this claim as no value has been specified in the statement of claim and the Company cannot reasonably predict the outcome.