Streams
A stream is an upfront payment for the right to buy a share of a mine's future metal at a low price. Streams help fund construction, usually on by-product metals.
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A stream is a large upfront payment in return for the right to buy part of a mine's future metal at a low, fixed price.
What it is
A holder pays a deposit, usually to help fund construction. Once the mine produces, the holder receives an agreed share of one metal and pays a small ongoing price for each unit delivered, far below the market price. The holder then sells the metal at the market price.
How it works
- Upfront deposit: paid before or during construction, often in instalments.
- Delivered share: a percentage of one metal's output, for example 50% of the gold from a copper mine.
- Ongoing payment: commonly 10–30% of the market price, or a fixed price per ounce.
- Step-down: the delivered share often falls after a set amount has been delivered.
Where streams are used
Streams are most common on by-product metals, such as gold or silver produced by a copper or zinc mine. The miner sells future output of a metal that is not its main business to fund the mine that produces its main metal. Streams on main metals and base metals also exist but are less common.
They are mainly a construction-stage financing, typically at or after a feasibility study, because the stream holder needs a clear production plan.
Streams compared with royalties
| Royalty | Stream | |
|---|---|---|
| What the holder receives | Cash: a % of revenue | Metal, bought at a low price |
| Typical size | Smaller, often a few to tens of millions | Larger, often $50M or more |
| Typical stage | Exploration to production | Mostly development and construction |
| Ongoing payment by holder | None | A price per unit delivered |
Advantages and disadvantages
| For the miner | |
|---|---|
| Advantages | Large sums without dilution; no fixed repayment schedule; can fill the gap between debt and equity |
| Disadvantages | Expensive over the mine's life; gives away by-product upside; the holder's claim ranks ahead of shareholders |
Terms and ranges are indicative and vary by market, jurisdiction and project. This is educational material, not investment advice.
Key terms
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Educational material only. Nothing here is investment advice or an offer to buy or sell any security or mineral interest.