Today’s challenging financing environment has resulted in a lack of mining finance meaning that there is a major opportunity to enter into lucrative streaming agreements with mining companies in need of finance to either, increase production, lower cost of production or, bring assets into production. Miners are turning to commodity streaming companies to fill the funding gap. Commodity streaming is a hybrid between debt and equity and gives the mining company up-front capital in exchange for selling a percentage of future production at cost.
Commodity streaming gives investors in commodity streaming companies, like PTM Technology Metals, exposure to metal profits, without the risk associated with mining. The current lack of financing in the mining industry creates, PTM Technology Metals believes, a window of opportunity to establish a substantial commodity streaming company that is focused on strategic metals.
Commodity Streaming companies:
- are sometimes described as non-operating mining companies.
- have low operational and fixed costs.
- have no exploration costs, but typically enjoy significant exploration upside. Operational risk is minimal as are environmental and other associated risks.
- offers a transaction structure that is mutually beneficial with strategic advantages for both parties.
The streaming model allows the commodity streaming company to look at the long-term fundamentals and investment merits of commodities in which it is investing, rather than focusing on near term conditions.
When evaluating investment opportunities PTM Technology Metals looks at the following;
- the commodity price including the supply and demand
- ease of extraction
- the cost of production
- the grade of mineral
- the required infrastructure development as well as the local and governmental environment.
- individual stream risks such as credit and market risk are also considered alongside wider portfolio risk considerations, such as concentration risk.
Major, mid-tier and junior miners are all looking to extract value from assets that are considered non-core or underperforming. Streaming is a viable and attractive alternative way to finance these assets. The streaming market is lucrative and underserved – currently only four major public streaming companies – market leader and innovator of the streaming model, Silver Wheaton has created billions of dollars of value in the precious metals space since commencing operations ten years ago.
The long-term outlook for technology focused metals is very positive. The current marketplace environment could not be better for this strategic metals streaming finance model.