Streaming and royalty companies as a potential investment
Metal streaming and royalty contracts are transactions in which mining companies usually sell future production or even revenues. In return, they receive an upfront cash payment. Streaming involves a specific project, such as a gold project. In streaming deals, metal is transferred in physical form. Royalties, on the other hand, are usually independent of the commodity and they are based on the revenues of the overall project. The royalty company receives a portion of the revenues generated, the royalty, thus cash. However, it may also be agreed that raw materials are to be delivered physically.
The royalty revenue business model emerged in mining in the mid-1980s with the Franco-Nevada royalty company. In oil, this existed earlier. In precious metals streaming, the beginning is often credited to Wheaton River. Silver Wheaton first bought silver yet to be produced from Wheaton River. In return, Wheaton River received an upfront payment and additional payments upon delivery of the silver.
This company tried to raise funds in 2004. The great advantage of streaming and licensing is that when the price of gold rises or is high, the pre-determined price applies. High costs and many risks, on the other hand, remain with the mining company that gets the metal out of the ground. About 80 percent of today's total value in royalty and streaming is held by three major companies, Wheaton Precious Metals focuses on streaming, while Franco-Nevada Corporation and Royal Gold are royalty companies.
In addition, there are various other noteworthy companies such as Osisko Gold Royalties or Gold Royalty Corp. founded by GoldMining.
Osisko Gold Royalties - https://www.youtube.com/watch?v=_4xaZFu97bU - achieved record sales last year from its approximately 140 projects.
GoldMining - https://www.youtube.com/watch?v=7iPpGTIht2U, equipped with a rich portfolio of gold and copper-gold projects, has created a second leg for itself with its subsidiary Gold Royalty Corp.
Current corporate information and press releases from Osisko Gold Royalties (https://www.resource-capital.ch/en/companies/osisko-gold-royalties-ltd/) and GoldMining (https://www.resource-capital.ch/en/companies/goldmining-inc/).
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