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10 Pages

The cost of stream financing for copper miners


The cost of stream financing for copper miners

Report summary

Project financing through streaming and royalty contracts was fairly inconsequential in 2004. Since then, these contracts have cumulatively injected US$10.3 billion into the mining sector. When considering mines affected by a streaming or NSR contract (roughly 5% of our copper mine coverage, or 2Mlb) we conclude that at the C1 cash cost level, the inclusion of streaming contracts results in a 15c/lb paid Cu increase in costs due to the lower net revenue received from precious metals.

What's included?

This report includes 3 file(s)

  • The cost of stream financing for copper miners PDF - 449.77 KB 10 Pages, 4 Tables, 6 Figures
  • Price scenario analysis.xls XLS - 75.00 KB
  • List of major streams and royalties.xls XLS - 166.50 KB

Description

This Metals Insight report highlights the key issues surrounding this topic, and draws out the implications for those involved.

For industry participants and advisors who want to look at the trends, risks and issues surrounding this topic, this report gives you an expert point of view to help inform your decision making.

Our analysts are based in the markets they analyse and work with high-quality proprietary data to provide consistent and reliable insight.

We provide unique in-depth analysis of the metals supply industry so you can make confident strategic decisions.

  • Executive summary
    • Valuation and cost of stream and NSR financing
    • Streaming and NSR contracts have become less profitable for providers
    • Valuations suggest streaming is increasingly attractive for producers
      • A positive shift in the cost of capital for miners
    • The impact of stream finance is relatively small on the global cost curve
      • Copper Mine Cost Model (CuMAM) and adding stream/royalty contracts into a scenario
      • Sensitivity to the inclusion of an NSR royalty or streaming contract
    • Conclusions and outlook
    • Appendix
      • Background – Streams/royalty agreements, an alternative form of financing
      • A brief history of share price performance of streaming/royalty companies compared to copper and gold miners

In this report there are 10 tables or charts, including:

  • Executive summary
    • Base case metal price assumptions
    • Bear case metal price assumptions
    • Bull case metal price assumptions
    • Valuations for 31 streaming and royalty contracts – valued under our base case scenario
    • The cost of stream financing for copper miners: Image 1
    • Degree of contract leverage to metal price changes (Bull versus Bear case scenario)
    • Relationship between life of contract (LoC) yields and capital raised from 2004 until 2015
    • C1 cash cost sensitivity for mines affected by stream financing
    • C3 cost sensitivity for mines affected by streaming and royalty financing
    • Indexed price performance of the major stream/royalty financiers compared with copper and gold miners
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