Wheaton Precious Metals (NYSE: WPM) used to be known as Silver Wheaton, and that name reflected the fact that the precious-metals streaming company specialized in streaming arrangements that primarily involved silver. However, over the years, Wheaton chose to diversify its exposure, and the streaming giant found opportunities in other precious metals. The name change to jettison the word "silver" in its name reflected that strategic shift, but make no mistake: Silver is still a key part of the moneymaking power of Wheaton's business model.

How Wheaton's mix of revenue has evolved over time

Silver Wheaton was founded in 2004 specifically because of the opportunity that silver presented in the precious-metals markets. According to the company, the fact that 70% of silver production comes as a byproduct of mining for gold as well as for base metals. At the same time, the outlook for silver prices 13 years ago was extremely bullish, and that combination made creating a silver-focused streaming company look like a smart move. The ensuing bull market in silver proved out that investing thesis, leading to large profits for Silver Wheaton.

However, the end of the bull market in gold and silver in the early 2010s changed the dynamics for precious-metals streaming. By 2013, Wheaton started to see more opportunities in the market to do streaming deals involving gold production. For instance, in early 2013, Wheaton entered into an arrangement with Vale (VALE -0.09%) under which it paid $1.9 billion in cash plus warrants for 10 million Wheaton shares in exchange for percentages of gold production from Vale's Salobo and Sudbury mines at a cost of $400 per ounce. The move added expected gold production of 110,000 ounces per year over the next 20 years, and by itself took Wheaton's exposure to gold from 12% to about 25%. Subsequent agreements expanded Wheaton's exposure to Salobo from 25% to 75%.

Gold and silver bars.

Image source: Getty Images.

How Wheaton makes money now

Currently, revenue is roughly evenly balanced between gold and silver, with the recent success of the Salobo mine in particular going well beyond the company's original hopes and leading Wheaton to expect about 45% of its average production to come from gold. That prompted Silver Wheaton to ask its shareholders for permission to change its name to Wheaton Precious Metals, and that change was approved earlier this year.

Wheaton's current stance seems to be agnostic about whether deals involve silver or gold as long as they come with attractive, predictable streams of precious metals at attractive prices. By widening its universe of potential financing partners, Wheaton has been able to add agreements with major players in the mining space that wouldn't have done business with the streaming company if it had remained solely concentrated on silver streams.

Moreover, gold has been more lucrative than silver. In the first quarter, the company noted that while gold production rose sharply, a strike at the San Dimas mine weighed on silver volume. Rising prices for silver offset some of the drop in production, but without its gold success, Wheaton wouldn't have enjoyed revenue growth for the quarter.

How Wheaton will make money in the future

Going forward, the thing to keep in mind is that Wheaton's agreements are structured in whatever way works best for both the mining company and Wheaton. If a mining company wants to focus on byproduct metals rather than subjecting its primary objective from a mine to a streaming arrangement, then Wheaton now has the ability to do so with both silver miners and gold miners. On the other hand, if a company is willing to do a multimetal deal, then Wheaton has the capacity to accommodate that need as well.

What's certain, though, is that the conditions of the precious-metals industry will continue to shift back and forth over time. Sometimes, silver will be in the ascendancy, while gold will also have its share of moments in the sun. Now, no matter which direction the precious-metals markets go, Wheaton Precious Metals will have the ability to do business and make the most profitable deals available.