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Silver Wheaton Corp. acknowledges that competition is growing in the red-hot business of funding cash-strapped miners, but says its size and experience will allow it to defend its turf against newer rivals.
So-called streaming companies such as Silver Wheaton provide mining companies with cash today in exchange for metal tomorrow. The streamers buy the right to purchase “streams” of a mine’s future production at a fixed, heavily discounted price. Silver Wheaton pioneered such transactions 12 years ago, but now faces a horde of rivals, including well-established firms such as Royal Gold Inc.
Newer entrants ranging from Sandstorm Gold Ltd. to private-equity firms have also shouldered their way into the space.
“I’ve always said the ultimate form of compliment is when someone copies you, and we are having a few people out there copy the business model,” Randy Smallwood, chief executive of Silver Wheaton, said in a conference call with analysts. “Fortunately, we have the advantage of 12 years of experience, plus a very strong technical team.”
In one sign of enthusiasm for the sector, Silver Wheaton tapped investors for $607-million (U.S.) through a stock offering a month ago. In another indication of streaming’s growing appeal, Elliott Management Corp. is backing a new Toronto-based company to be headed by Shaun Usmar, the former chief financial officer at Barrick Gold Corp.
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