Monday , 2 October 2023

Precious Metals Royalty and Streaming Companies: A Comparative Analysis

  • What are precious metals royalty and streaming companies?
  • How do they work?
  • What are their advantages?
  • What are their names?
  • How have they performed compared to each other?
  • How have they performed compared to that of gold, silver, and the mining segment as a whole?

The following are excerpts from an excellent article by Peter Arendas that has been slightly edited ([ ]) and abridged (…) where necessary to ensure a fast and easy read.

“Precious metals royalty and streaming companies represent a very interesting sub-industry of the precious metals mining industry.

  • They provide some leverage to the growing metals prices, similar to the typical mining companies; however, they are less risky in comparison to them.
  • Their incomes are derived from royalty and streaming agreements.
    • Under a metal streaming agreement, the streaming company provides an upfront payment to acquire the right to future deliveries of a predefined percentage of metal production of a mining operation.
    • They pay ongoing payments that are usually well below the market price of the metal. They can be set as a fixed sum (e.g., $300/toz gold) or as a percentage (e.g., 20% of the prevailing gold price), or a combination of both (e.g., the lower of a) $300/toz gold and b) 20% of the prevailing gold price).
    • The royalties usually apply to a small fraction of the mining project production (usually 1-3%), and they are not connected with ongoing payments. They can have various forms, but the most common is a small percentage of the net smelter return (“NSR”). The NSR is calculated as revenues from the sale of the mined products minus transportation and refining costs.

To better track the overall performance of the whole sub-industry, I created a capitalization-weighted index (the Precious Metals Royalty and Streaming Index) consisting of 13 companies as shown below…

Source: own processing

After an impressive July, the precious metals royalty & streaming sector did much worse in the month of August….

Source: own processing
[Below is a graph showing how the performance of the index compares with that of gold, silver and some mining company indices:]
Source: own processing
  • The gold price remained almost flat in August.
  • The share price of SPDR Gold Trust ETF (GLD) declined by 0.32%.
  • On the other hand, silver did much better and the iShares Silver Trust ETF (SLV) grew by 15.81%.
  • The precious metals mining industry remained almost flat.
    • The share price of the VanEck Vectors Gold Miners ETF (GDX) declined by 1.56% and
    • the share price of the VanEck Vectors Junior Gold Miners ETF (GDXJ) declined by 0.41%.
  • The precious metals royalty and streaming sector recorded negative returns.
    • The Precious Metals R&S Index declined by 3.36%.
    • The Precious Metals R&S Equally Weighted Index declined only by 0.5%, as Franco-Nevada’s 5.89% share price decline had a lower weight.

… All the important players, except for Sandstorm Gold (SAND), released their quarterly results in August” continue reading….

For an enlightening insight into the operations of the above mentioned royalty and streaming companies during their last quarters please refer to Peter Arendas’ original article “Precious Metals Royalty And Streaming Companies: The August Report” as it appeared on September 7 on

Editor’s Note:  The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article.  Furthermore, the views, conclusions and any recommendations offered in this article are not to be construed as an endorsement of such by the editor. Also note that this complete paragraph must be included in any re-posting to avoid copyright infringement.

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