Precious metals streaming

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Precious metals streaming is a term for when a company makes an agreement with a mining company to purchase all or part of their precious metals production at a predetermined discounted price to which both parties agree. In return, streaming companies provide upfront financing for mining companies looking for capital. The precious metals defined by the agreement are usually a by-product of what the mining company's business is based on, typically base metals such as copper. [1] The first known example of precious metals streaming was in 1987, relating to gold at the Goldstrike mine. [2]

Wheaton Precious Metals, Franco-Nevada, Royal Gold, Osisko Mining and Sandstorm Gold are the largest precious metals streaming companies. [3] These streaming companies have no control over the mines that produce these materials, meaning that when production falls short of expectations or is affected by political instability, the streaming companies must incur the losses themselves. On the other hand, their investment is limited and the operation of a mine as well as its cost are the responsibility of the corresponding mining company. Earnings of the streaming companies are based on the market price of the minerals.

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Lundin Mining Corporation is a Canadian company that owns and operates mines in Sweden, United States, Chile, Portugal and Brazil that produce base metals such as copper, zinc, and nickel. Headquartered in Toronto, the company was founded by Adolf Lundin and operated by Lukas Lundin. While it was incorporated to pursue an interest in a diamond mine in Brazil, the company re-structured and raised funds to develop the Storliden mine in Sweden. It purchased the Swedish Zinkgruvan Mine from Rio Tinto and then merged with Arcon International Resources for its Galmoy Mine in Ireland and Eurozinc for its Neves-Corvo mine in Portugal. The company subsequently purchased and operated the Eagle mine, Candelaria mine, and Chapada mine.

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Sandstorm Gold Ltd. is a Canadian company that provides funding to mining companies in exchange for royalties, principally in the form of net smelter returns and streams. The company focuses on precious metals but did spin off Sandstorm Metals & Energy Ltd. in 2010 as a separate TSX Venture Exchange-listed company to make volumetric production payment transactions in the base metal and fossil fuel sectors, then bought it back in 2014. Sandstorm Gold graduated from the TSX Venture Exchange to the Toronto Stock Exchange and began listing shares on the New York Stock Exchange in 2012.

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References

  1. Gregg Brewer, Reuben (2018-05-04). "What Is Gold Streaming?". The Motley Fool . Retrieved 2020-02-16.
  2. "David Harquil on the gold streaming model and raising capital for miners". Mining.com. Glacier Media. 2014-10-27. Retrieved 2021-02-16.
  3. "4 Choices For Precious Metal Streaming Companies". Seeking Alpha . 2013-03-18. Retrieved 2020-02-16.