COLORADO SPRINGS, Colo. (Reuters) - With big mine financing deals off their blistering pace of last year, financier Silver Wheaton SLW.TO is eager to do more transactions with small mining exploration companies, its chief executive said on Tuesday.
Silver Wheaton pioneered the concept of “streaming” in the mining industry in 2004, a type of finance where miners receive cash upfront to build mines or reduce debt in exchange for future production at a discounted, fixed price.
Most of Silver Wheaton’s deals have been $100 million-plus transactions with big global miners, such as Brazil’s Vale (VALE5.SA). But three years ago, it branched out into providing funding to “junior” miners, which do most of the industry’s exploration. It is keen to do more of these deals.
“I’d be happy if we have three or four more done in the next few months, but I don’t know if we have seen that many good ones yet,” CEO Randy Smallwood said in an interview at the Denver Gold Forum.
“I would love to get some more on the books just because of the optionality they provide,” he said, referring to the potential for big financial gains for Silver Wheaton, from a small investment of typically less than $20 million, if the exploration company finds a big mineral deposit.
Exploration companies owning base metal deposits with precious metal by-products are Silver Wheaton’s preferred investment. With base metals prices, such as copper, remaining at weaker levels, those companies are finding it hard to raise funds, making stream financing more attractive.
Silver Wheaton already has two “early deposit streaming” partnerships - one with Sandspring Resources (SSP.V), which is developing a gold deposit in Guyana, and another with Panoro Minerals Ltd (PML.V), which has a copper deposit in Peru.
Turning to large deals, Smallwood said there was about $2 billion worth of streaming transactions up for grabs in the market.
That is down from as much as $5 billion a year ago as a rally in precious metals prices this year has cooled miners’ appetite for streaming finance as other forms of funding, like share issues, have once again become available. [nL1N19X1WM]
The deals available are also smaller in size - around $300 million to $500 million - compared with transactions close to $1 billion last year, he said.
Reporting by Nicole Mordant; Editing by Peter Cooney