Red-hot rally in gold and silver cools streaming deal bonanza
By Nicole Mordant and Susan Taylor
VANCOUVER/TORONTO, July 15 (Reuters) - Soaring gold and silver prices have clipped a deal-making spree for metals streaming companies - the mining financiers that provided a lifeline to the cash-strapped industry in recent years.
With bullion up 25 percent since January, precious metals miners are once again able to raise money in the equity markets, reducing the need to obtain funds in exchange for a portion of future mine output at discounted prices.
"Streaming companies were almost the savior of the industry," said John Ing, president of brokerage Maison Placements Canada, but the price rally has seen them "relegated to the back of the line."
Global gold companies have raised nearly $3.2 billion in equity, up 16.5 percent jump on the year, Thomson Reuters data shows.
Meanwhile, the value of top streaming deals fell nearly 40 percent to some $640 million in the first five months of 2016 versus 2015, Scotiabank estimates.
Higher metals prices mean miners have less need for new funds to repair debt-laden balance sheets. Last year, top global miners including Barrick Gold Corp and Glencore Plc did streaming deals.
Miners typically prefer equity over streaming deals to avoid giving up a portion of future output that becomes more valuable as metals prices rise.
The downturn in deals for the streaming industry, which evolved from niche to mainstream amid booming demand, coincides with a swathe of new competition. Continued...