Skip to main content
rob magazine

Blocks of unrefined gold nuggets.Alessia Pierdomenico/Bloomberg

Visit this year's Top 1000 rankings of Canada's most profitable companies and find more tables, multimedia and analysis in Report on Business's full Top 1000 section. The most comprehensive database of Canadian corporate financial information is available for purchase in spreadsheet format here.

Investors who like precious metals, but hate the grimy, risky business of actually digging them up, are turning to an alternative source: streaming companies.

Think of streamers as gold and silver producers that mine balance sheets instead of ore deposits. They provide miners with cash today in return for metals tomorrow. In a typical deal, a streamer agrees to pay large amounts—often hundreds of millions of dollars—to a miner for the right to purchase a future stream of production from one of the miner's properties at a cheap, fixed price for years to come.

The result, from the streamer's perspective, is a virtual gold or silver mine—a steady flow of metal but without any of the production hassles or operational risks that the actual miner has to confront. The miner, in turn, can use the cash to develop a property, pay down debt or take care of other current needs.

Silver Wheaton Corp. (No. 930) of Vancouver pioneered the streaming model in 2004. Today, publicly traded streamers include Silver Wheaton, Franco-Nevada Corp. (No. 190) of Toronto, Royal Gold Inc. of Denver and Sandstorm Gold Ltd. (No. 842) of Vancouver. In another recent deal, Elliott Management Corp., the big U.S. hedge fund, is throwing its muscle behind a new streamer, Triple Flag, based in Toronto.

Streaming's growth is the flip side of the mining industry's long ordeal. Since the commodity supercycle peaked in 2011 and metals prices turned down, miners have struggled. Deserted by many investors, they've found it difficult to raise capital. Streamers have rushed to fill the gap.

In theory, this works to everyone's advantage, because miners of base metals like copper or zinc tend to trade at lower valuations in the stock market than producers of precious metals like gold and silver.

The valuation gap opens up a potential win-win. Consider a copper miner that produces silver as a byproduct of its main operations. It could market the trickle of the precious metal itself, but the stock market won't give it a lot of credit for doing so and it has to wait for the money to come in.

If it sells the future stream to a streamer, however, it can receive cash immediately. The buyer can prosper, too, because investors will put a higher value on the silver out-put as part of a precious-metals streamer than as part of a base-metals producer.

That, at least, is the theory. But some critics charge that streamers have been getting too good a deal from cash-strapped base-metal miners. They worry streamers are buying up much of the industry's upside.

Streamers retort that no amount of financial engineering can get around the sector's fundamental logic: If precious metals prices go up, streamers will do exceptionally well. However, if gold and silver tumble, streamers will feel the pain, too.

Report an editorial error

Report a technical issue

Editorial code of conduct

Tickers mentioned in this story

Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 28/03/24 1:05pm EDT.

SymbolName% changeLast
FNV-N
Franco Nev Corp
+1.65%119.23
FNV-T
Franco-Nevada Corp
+1.23%161.08
RGLD-Q
Royal Gold Inc
+2.53%122.2
SSL-T
Sandstorm Gold Ltd
+1.86%7.12

Follow related authors and topics

Authors and topics you follow will be added to your personal news feed in Following.

Interact with The Globe