The cost of stream financing for copper miners

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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.

Table of contents

    • 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

Tables and charts

This report includes 10 images and tables including:

  • 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

What's included

This report contains:

  • Document

    Price scenario analysis.xls

    XLS 75.00 KB

  • Document

    List of major streams and royalties.xls

    XLS 166.50 KB

  • Document

    The cost of stream financing for copper miners

    PDF 449.77 KB

  • Document

    The cost of stream financing for copper miners

    ZIP 517.21 KB