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Capital markets are showing renewed interest in the mining sector after several tough years, according to an overview by two partners at the law firm Torys LLP. Michael Amm and Michael Pickersgill say in a new report that there are “gold shoots” at last for mining-sector financing following the rebound of precious metals prices during the first half of 2016.
The biggest beneficiaries to date have been precious metals royalty and streaming companies. These businesses advance money to gold and silver miners in exchange for rights to “streams” of metal that will be produced in the future.
So far this year, Franco-Nevada Corp., Silver Wheaton Corp. and Osisko Gold Royalties Ltd. have raised more than $1.6-billion (U.S.) of equity capital for their streaming businesses.
“This is the streamers’ heyday,” Mr. Amm said. “When you’ve got low commodity prices, when you’ve got other forms of financing drying up for miners … streamers have great opportunities.”
In exchange for providing cash-strapped miners with badly needed funds, streamers are typically able to negotiate rights to buy future streams of precious metals at extremely attractive prices, as well as getting a slice of new discoveries.
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