In Ted Butler's Archive


Silver streaming is a financial transaction in which the buyer pays an upfront amount of cash to gain ownership to future production of silver for the life of the mine. The concept was launched more than ten years ago by Silver Wheaton, still the leader in silver streaming.

In a significant recent deal Franco-Nevada paid Teck $610 million for a 3-million-ounce annual silver stream from Teck’s share (22.5%) of the Antamina copper mine in Peru. This is the first silver mining stream purchased by Franco-Nevada, founded by mining legends Seymour Schulich and Pierre Lassonde, who pioneered the concept of royalty arrangements in the gold mining industry.

Approximately 70% of the total silver mined in the world comes as a by-product of copper, lead, zinc and gold mine production. As such, silver accounts for only a portion of many mines’ total output. That makes it ideal for streaming. The seller of the silver stream gets an upfront payment and agrees to continue mining as before, but earmarks the silver to the buyer. The motivation for the buyer is a low cost stream of silver and potential price appreciation without the cost and trouble of actually mining the metal. The message is clear – Franco-Nevada sees silver as undervalued and put up $610 million of shareholder money backing its belief.

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