Last year was the busiest ever for the gold and silver streaming companies. They acquired an astounding US$4.2 billion of precious metals, based on Financial Post data. Most of it originated from large miners that were eager to raise cash and connect their balance sheets.
“Streaming truly had become the dominant type of (mining) financing,” Randy Smallwood, leader of Silver Wheaton Corp., said in an interview.
There has been speculation the deal flow would slow down this season, if perhaps since the streamers have more limited funds following their spending binge last year. But Randy Smallwood, chief executive of Silver Wheaton Corp., said he still expects a busy year.
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He noted that Silver Wheaton has more than US$500 million obtainable in a revolver, and it is generating hundreds of millions of money flow. And if the organization does have to tap the equity markets for additional capital to do an acquisition, he’s confident investors would support that. He pointed to rival Franco-Nevada Corp.’s recent US$920-million bought deal financing as evidence that investors are fully behind the streamers.
But Smallwood said any streaming deals carried this out year may be with base metal miners instead of gold miners.
Thanks towards the recent recovery in gold prices, the gold miners are enjoying bumps within their share prices and should come with an easier time raising money from equity issues (should they be necessary). But market conditions remain very poor for base metal companies, and they might choose to sell a stream rather than issue equity while their share prices are so depressed.
“Streaming won’t continually be the best solution,” Smallwood said.
