Streaming deals are an attractive form of financing for owners, as they offer a form of capitalless financing that brings money into a project. The advance payment (down payment) made by the buyer is usually used by the mining company for the construction or rehabilitation of the mining project. For buyers, flows are attractive because they offer potential upside potential as commodity prices rise and secure the long-term supply of minerals. The buyer also reaps the benefits of growing production and exploration without having ongoing investment commitments. The parties to the streaming agreements generally agree to maintain confidentiality and not to disclose the terms of the agreement and any information they have received or reviewed in this regard, (i) except with the prior authorization of the disclosing party, (ii) to auditors, legal advisors, lenders and, in general, to any person to whom the confidential information would be relevant, or (iii) if the information has already been made available to the public, except in the event of a breach of the confidentiality provisions of the Agreement, or if it was known to the parties prior to the conclusion of the Agreement or obtained independently. You also agree to comply with applicable laws or court order. In addition to restrictions on the sale of shares or capital rights through the operator, which the buyer may require from the operator`s shareholders or parent companies as an additional guarantee, streaming agreements typically contain restrictions on the change of control over the parties. While traditional debt and equity financing is still available to large mining companies with strong financial histories, exploration and junior mining companies have had to look for other financing mechanisms. The applicable tax on payments and deliveries of metals under streaming agreements depends on the tax laws of the parties` relevant jurisdictions and, if different, on the entry into force of double taxation treaties.
In any case, streaming agreements generally provide that all streaming metal deliveries or payments made by a party will be without deduction, withholding tax or fees due to taxes levied by the competent authorities. Originally, streaming contracts were used against a mine`s by-products (for example.B. gold is often a by-product of copper mining), but they tend to be undervalued by traditional sources of funding. Initially focused on precious metals markets, streaming has expanded to base metals such as copper, nickel, and zinc; energy opportunities, including oil, gas and coal; and even rare earth metals and diamonds. Streaming agreements can provide a buyback option that provides some protection to the resource company in the event of a loss of production. A typical buyback option would allow the resource company to buy back a percentage of the production promised to the streaming company at a fixed price, usually in the form of a refund of a portion of the initial payment if the project does not reach a target production level. This option is usually exercisable only once and in very specific circumstances. From the buyer`s perspective, streaming agreements ensure long-term metal deliveries (whether in the form of real concentrates or credits on metal accounts) below the market price without bearing operating costs and risks. Similarly, the Buyer may be granted a right of first refusal, which may be exercised if the Operator receives an offer from a third party to purchase available quantities of circulating metal, as well as a right of first refusal in respect of the additional quantities of circulating metal that the Operator wishes to sell, allowing the Buyer to increase the amount of deliveries of metal in flow without significant deviations from the fixed price already agreed. The operator, in turn, will be reluctant to make an initial offer given the long-term duration of the agreement and unpredictable fluctuations in market prices and production costs. Due to their flexibility and the emergence of non-traditional specialized investors, streaming agreements play a predominant role in the financing of mining projects, as they are accessible to any mining company regardless of their size and the level of development of their projects.
As a result, streaming agreements and transactions are continually evolving towards more sophisticated non-traditional financing instruments and a relevant trend in the mining industry worldwide. One of the most important issues to consider in relation to the ordinary judiciary when choosing the laws governing convention and arbitration is that the applicable laws and arbitration rules are compatible with those of the jurisdiction in which the secured assets are located, so that there are no obstacles to the local applicability of the securities on the basis of a judgment of an Arbitrator. .