Glencore, Ontario Teachers’ Pension Plan launch mining royalty firm – by Niall McGee (Globe and Mail – December 6, 2017)

AngloSwiss mining giant Glencore PLC has struck a deal with the Ontario Teachers’ Pension Plan to create a private royalty and streaming business – one of the first of its kind in the base metals sector.

BaseCore Metals starts life with a portfolio of existing Glencore royalties in North and South America worth $300-million (U.S)., and includes a royalty on Highland Valley, a Teck Resources Ltd. copper mine in British Columbia.

According to a joint press release on Tuesday, Teachers paid cash to Glencore for its 50-per-cent share in the entity. The pension fund declined to comment further when asked by The Globe and Mail about the exact amount of its investment.

For decades, royalty and streaming has proven to be a successful business model in precious metals, but there are not many players of size in base metals. Under a royalty agreement, a mining company agrees to sell a percentage of its future revenue or profit from a resource in exchange for capital.

Streaming entails delivering a portion of physical metals production at a set price in exchange for capital. Deals are usually negotiated at levels significantly below market prices, which can make it a lucrative venture for the royalty and streaming companies.

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