By Nelson Bennett
Business Vancouver
Historically, mining companies have been limited to either borrowing or selling equity to raise the millions needed to build a new mine — something that has become increasingly difficult for many of the sector’s smaller players.
But there’s a third option that has developed in recent years, and it started in Vancouver: precious-metals streaming.
Conceived 10 years ago by Silver Wheaton Corp. (TSX:SLW), streaming is a kind of arbitrage in which the company puts up large amounts of capital (up to $1.9 billion, in Silver Wheaton’s case) for the right to buy a percentage of a mine’s future gold or silver output. It’s becoming an increasingly important source of capital for junior miners.
“It’s an emerging method of mine financing,” said Silver Wheaton CEO Randy Smallwood. “Some of the majors are doing OK, but the mid-tiers and junior companies that have decent assets, they’re still hurting. They don’t have any equity support.”