What Is A Streaming Agreement

That`s why investors should consider gold streaming companies like Franco-Nevada, Wheaton, and Royal Gold. Streamers` costs are limited to their initial investment, they avoid mining operations (and the risks involved), they have widely diversified streaming portfolios, they benefit from production growth at the mining facilities in which they invest, and they still offer exposure to gold. Add in the dividends offered by the biggest streamers, and streaming seems to be the best way to invest in gold. Streaming typically allows Wheaton to purchase by-products of precious metal or cobalt production from a mine that does not own or operate it, in exchange for an upfront payment plus an additional payment upon delivery of each ounce or pound. The operating costs that Wheaton pays for future production are predetermined in agreements with a small inflationary adjustment in most contracts. This amount offsets the typical costs of our partners for the production of silver, gold, palladium or cobalt. In the case of streaming contracts, the consideration to be paid or the purchase price of the broadcast metal is paid in advance by the buyer; Therefore, in practice, such an initial payment is treated as a deposit that can be structured as a full initial payment or as a series of installments that depend on the completion of predetermined sequential steps or a combination of both. Depending on the stage of development of the mining project, these milestones may be related to the completion of pre-feasibility or feasibility studies, obtaining operating permits and licenses, the start or completion of construction, and the start of commercial operations. The applicable tax on payments and supplies of metals under streaming agreements depends on the tax laws of the parties` relevant jurisdictions and, if different, whether or not double taxation treaties are applied.

In any case, streaming agreements generally provide that all deliveries of streaming metals or payments made by a party are made without deduction, withholding tax or fees due to taxes levied by the competent authorities. It`s a common cause that volatility in the commodities sector has made it harder for mining companies to access traditional forms of debt and equity, and as a result, streaming had gone from around $20 to around $19 in 2016 in the licensing/streaming sector. Indeed, it is considered a good way to raise funds when market conditions are unstable and debt financing is difficult to obtain. While each streaming deal is unique and subject to certain conditions, the basic approach is pretty much the same across the industry. .