The opportunity landscape for closing new precious metals streaming deals is growing faster than the competition, Wheaton Precious Metals (TSX: WPM; NYSE: WPM; LSE: WPM) CEO Randy Smallwood tells The Northern Miner.
On the back of the pioneering streamer’s success as a niche mine development finance provider since its inception in 2004, the market has been flooded by copycats all trying to get a foot in the door. The company specialises in providing upfront capital for base metals projects in return for a portion of the future production of by-product silver and gold units.
Yet, despite acute investor interest, a recent report by McKinsey & Company found streaming and royalty deals still only made up a fraction of overall debt and equity financing in the mining industry, accounting for just 1%-3% from 2017 through 2019. The data contrasts against the streamers having demonstrated their business model as delivering superior returns at substantially lower investment risk when compared with traditional mining equity investments.
Smallwood says more streaming and royalty firms continue to enter the market and are vying aggressively with each other to establish a foothold and finding that cornerstone asset around which to build a successful enterprise.
However, when it comes to the more substantial deals above the ~$300-million-plus bracket, the market continues to be dominated by the three leading Canadian players —Wheaton, Franco-Nevada (TSX: FNV), and Royal Gold (NASDAQ: RGLD). He says the three companies regularly bump up against each other to pursue deals and create a healthy competitive environment.