FYI: What is a metal stream? Metal streams
What is a metal stream?
A metal stream is essentially a financing technique structured as a commercial arrangement, namely a long-term contract for the purchase and sale of production from an identified mineral property. As such, in some ways it resembles an offtake arrangement, while in other ways it can be likened to a royalty with some additional features of a debtor/creditor relationship.
Under a stream, the purchaser (typically a specialised streaming company) is granted the right to purchase from time to time a quantity of metal representing a percentage of production from the mine at a significant discount to the spot market price of the metal, all in exchange for an up-front cash payment that constitutes a deposit against purchases to be made under the stream. As the reference mine produces, the purchaser pays the mining company the discounted cash price for metal purchased (ie, per pound or ounce of product). In the early years of the stream, the difference between the prevailing spot price and this discounted cash price is applied to reduce the amount of the upfront cash deposit; once the deposit is exhausted, the purchaser only pays the discounted cash price for the remaining life of the stream. The stream generally is intended to be a long-term obligation of the mining company, often life-of-mine or for a term of 25 years or more.
Streams are a relatively recent innovation in the industry, with the first such transaction having been entered into in 2004. The majority of deals have traditionally been done by a handful of specialised royalty and streaming companies that have built their business models around this type of financing. However, given the substantial number of large, high-value transactions that have been completed in the past five years, the market has seen a number of new entrants. To date, most streams have been in relation to mines in Canada, the United States and Latin America, although in recent years there have been a limited number of deals completed on assets in Africa, Europe and other jurisdictions.