RE:RE:Two Companies,Two Headlines, Two MetalsGlencore did this deal for one reason: smelter fees.
Yesterday in another post i highlighted the following: 'Glencore will enter into a number of net smelter royalty agreements each at 1.5% in respect of the Bolivian mining business with Santa Cruz'.
This is a confusing statement. 1.5% of what? Smelter royalties are NOT commonly known as smelter fees. Two different things. Apples and oranges.
Smelter fees are the product of a yearly industry wide negotiation between miners and smelter owners. 2021 smelter fees are just under $200 a ton. They were $300 in 2020.
Mining royalties resemble a dividend..
So, what looks like a sweet Santacruz deal now can go bad next March if 2022 smelter fees increase. They may be higher. Count on it If zinc remains stratopheric. Santacruz costs will rise.
Santacruz just paid off Zimapam and now to do this deal has maxed out its credit card for the next four years with 'Big Buck Capital'..
So i sincerely hope that 'smelter royalties of 1.5%' and smelter fees are one and the same thing...unnecessary obsfucation of the real costs by Santacruz management.
I don't really care right now. Silver's waking up. Zinc is flying. The stock should fly too when trading resumes.
But next year? Look out.