What Is A Stream Agreement

This streaming agreement was then amended on December 30, 2015 to allow an additional down payment of $15 million with a streaming option, subject to certain conditions by Golden Star`s access to an additional $5 million (this option was not exercised and expired). Similarly, a pre-emption right may be granted to the purchaser, which may be exercised to the operator who receives an offer from a third party to acquire available quantities of metal in electricity, as well as an initial offer for additional quantities of current metals that the operator wishes to sell, allowing the buyer to increase the amount of metal supplies in streaming without substantial modification of the fixed price already agreed. The operator, on the other hand, will refrain from granting an initial offer given the long-term duration of the agreement and unpredictable fluctuations in market prices and production costs. In 2004, Wheaton River Minerals Ltd. shareholders acknowledged that the company did not receive the same value for its by-product silver production as primary producers, and were therefore created as an independent company of Silver Wheaton Corp. to maximize revenues from such by-product production2, through a business model derived in part from licensing agreements , which were then the main focus of complex transactions in the mining industry. Because of their flexibility and the emergence of specialized non-traditional investors, streaming agreements play a major role in financing mining projects, as they are accessible by any mining company, regardless of their size and the stage of development of their projects. This is why streaming agreements and transactions are constantly evolving towards more sophisticated non-traditional financial instruments and a significant trend in the mining sector globally. Streaming agreements allow, among other things, sufficient flexibility to take into account the interests of both parties, so that risks are distributed more or less equitably, unlike other types of agreements and financing mechanisms.

In addition, as explained below, streaming agreements do not participate in the mining industry and are not dilutive to the operator`s shareholders, unlike equity financing. It is therefore an attractive source of financing, particularly for exploration mining and junior mining companies. But small and medium-sized enterprises and large companies have also entered into such agreements to diversify their investment and credit portfolios. In a standard streaming agreement, current payments correspond to the lower fixed price and the market price in effect at the time of delivery. The streaming company pays in cash up to the fixed price and if the market price is higher than the fixed price, the balance is credited to the deposit. Therefore, if the metal price is higher than the fixed price, the advance (or down payment) is depreciated by the difference between the fixed price and the market price. If the market price of the metal is low, the down payment will be reduced more slowly and can never be reduced to zero. If the advance has not been reduced to zero until the end of the agreement, the resource company may be required to pay an amount equivalent to the remaining balance to the streaming company. As a general rule, the operator will not be required to allocate the security deposit to cover certain expenses, but, if necessary, to use it. As a result, mining companies have used these agreements for construction work, development of day-to-day operations and even obtaining funds to repay unpaid debts from official lenders. In 2012, there were a series of streaming transactions, including Franco-Nevada`s $1 billion precious metal streaming agreement on Inmet`s Cobre Panama copper project (see above) and Hudbay`s $750 million precious metal electricity transaction with Silver Wheaton in connection with Deminbays copper, the zinc mine , gold and silver and the Constancia copper project.

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