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Companies like Silver Wheaton rely on purchasing precious metal streams. It seems to make sense that, in addition to any precious metal or metal in general, a company could purchase streams for any commodity, especially commodities which are durable in nature.

Are there any companies like this?


For those who are not familiar with the concept, a precious metal stream is basically where a company gives a mine a certain amount of money and in return the mine agrees to sell that company a certain amount of the goods produced for a fixed price, often far below the regular selling price. I guess you could think of it as a hybrid between a loan and a long term purchase agreement.

  • Can you better define "precious metal streams"? I never heard this phrase. – JTP - Apologise to Monica Jun 29 '15 at 19:16
  • @JoeTaxpayer, I edited the original to include a basic explaination. Does that help? – Daniel Goldman Jun 29 '15 at 19:28
  • yes. Thank you. Never too old to learn something new. – JTP - Apologise to Monica Jun 29 '15 at 19:39
  • Sounds like cooperative farming, also known as "farm shares". Pay a fixed price up front, get a percentage of the farm's total yield. Usually done by farms that are growing a wide enough variety of stuff to deliver decently large and varied shares every week or every few weeks. In good_ years you get lots of veg cheap, in bad years you get less for your money; either way the farmer reduces their exposure to loans and risk so it can be a good deal all around... IF you trust the farmer. Or miner. – keshlam Jun 30 '15 at 0:15
  • It's different from cooperative farming. In a cooperative, you essentially share ownership in the farm and are entitled to a percentage of its production. That's not the case here. You are just entitled to be allowed to purchase a certain amount of the product at a price which is much lower than the going rate for a given length of time. – Daniel Goldman Jun 30 '15 at 12:47
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Not specifically a "stream", but there are royalty companies that operate based on a similar concept. With a royalty, a party will pay upfront to a another party, usually a product manufacturer, oil & gas producer, or miner, and in return they will receive a percentage of the proceeds from the sale of the goods.

For example, Company A owns 100 sections of land which carry mineral rights and they would like to drill on the land to produce oil & gas. However, Company A does not have the capital to produce the resource. Company B, a royalty company, agrees to provide upfront capital to Company A in return for a royalty, sometimes fixed, sometimes sliding scale based on other factors. The royalty is calculated based on a percentage of the sales proceeds that Company A receives from the sale of their oil & gas production.

In this way, royalty companies act similarly to streaming companies, where they provide upfront capital and in return receive a cash flow stream that is dependant on another party's actions. What is different is that the selling price is not fixed. Instead, it is the % of proceeds that is fixed, at least in the short term.

In Canada, PrairieSky Royalty and Freehold Royalties do exactly this.

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