For the last 12 years, the concept of “streaming” has taken mining and the precious metals sector by storm. We’ve all heard of big companies like Silver Wheaton, Royal Gold, and Franco-Nevada that employ this model, but how does it work, exactly?
Today’s infographic explains the precious metals streaming model, and the arbitrage opportunity that creates value for both the streamer and the miner seeking to acquire capital.
The comments above and below are excerpts from an article by Jeff Desjardins (VisualCapitalist.com) which have been enhanced – edited ([ ]) and abridged (…) – by munKNEE.com (Your Key to Making Money!) to provide you with a faster & easier read. The infographic is from Silver Wheaton.
For a traditional base metal miner, the majority of forecasted mine revenue may come from a metal like copper or nickel. However, along with those “target” metals, smaller amounts of gold and silver may be produced from the deposit as well. Investors would still value those by-product precious metals in a base metal miner’s portfolio, but the metals may be typically valued at an even higher multiple in a precious metal streamer’s portfolio. This allows the base metal miner to transfer these future “streams” to the streamer in exchange for up-front capital, which can be a win-win scenario for both parties.
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