Deal flurry casts light on unconventional mine financing

Shaun Usmar inspects a dump truck during a mine site visit. Credit: Triple Flag Precious Metals

A lesser known corner of mine financing is having a moment in the sun, with two royalty and streaming deals announced on Thursday.

Shaun Usmar’s Triple Flag Precious Metals Corp. agreed to buy fellow Toronto-based Maverix Metals Inc. in a $606 million transaction. Separately, Vox Royalty Corp. said it will buy a Canadian royalty portfolio from First Quantum Minerals Ltd. for C$605,000 ($450,570).

Streaming gives lenders the right to buy future production at a discount. While two doesn’t make a trend, the deal activity reflects demand for such arrangements when inflation-fighting measures and China’s ongoing Covid restrictions are dimming economic outlooks and cooling conventional funding for mining.

Streaming deals are taking place in the wake of a battle to buy mid-sized miner Yamana Gold Inc. as the industry faces spiraling operating and development costs. Almost all metal prices — both precious and industrial — are down this year on slowdown concerns and dollar strength.

For Triple Flag, which Usmar founded in 2016 with the backing of billionaire Paul Singer’s Elliott Management Corp., Maverix is a chance to gain scale and unlock value.

“We’ll emerge from this with an enhanced platform,” Usmar said in an interview. “The streaming and royalties sector could really benefit from increased scale and relevance. My hope is that there will be more opportunities for consolidation in the space.”

To be sure, not everyone’s a royalty and streaming fan. This week, Newcrest Mining Ltd. labeled such an arrangement by SolGold Plc to develop a gold and copper mine in South America as “expensive” and “negative.”

(By James Attwood, with assistance from Jacob Lorinc)

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