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Mineral Royalty Stream Financing

37 Pages Posted: 13 Feb 2014  

Aaron M. Careaga

WealthMark, LLC.

Date Written: September 2012

Abstract

Resource streaming, also known as volumetric production payments (VPP) or metal purchase agreements, provides commodity exploration and production companies the necessary financing to bring projects into production. This has become an attractive financing option due to the fact that VPP’s are cheaper than equity (no shareholder dilution) and safer than debt, making this a “win-win” for both the mine operator and financing company. Streaming agreements allow the mining company to capitalize on proven reserves before the operation becomes productive.

These diverse agreements are crafted to emphasize each party’s strengths and protect against the others weaknesses. The underwriting financier enjoys the resource upside while avoiding the downside risk associated from operations. Stream financing allows the mine operator to leverage proven reserves to fund production or expansion, while avoiding many negative side effects associated with traditional financing methods.

Keywords: Royalty, Stream, Finance

Suggested Citation

Careaga, Aaron M., Mineral Royalty Stream Financing (September 2012). Available at SSRN: https://ssrn.com/abstract=2395057 or http://dx.doi.org/10.2139/ssrn.2395057

Aaron M. Careaga (Contact Author)

WealthMark, LLC. ( email )

1329 North State Street
Suite 206
Bellingham, WA 98225
United States

HOME PAGE: http://www.wealthmarkllc.com

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