A century ago, financing a trading voyage meant accepting an uncomfortable reality. The cargo might be enormously valuable, but getting it from one side of the world to the other required ships, crews, insurance, working capital and a willingness to absorb whatever happened along the way.
Some merchants took that operational risk themselves. Others provided the capital, insured voyages or financed cargoes in exchange for a contractual claim on the economics.
Both were essential to the trade, but their exposure to its risks was very different.
Building a mine is one of the most capital-intensive exercises in modern industry. A deposit must first be discovered, drilled, permitted, engineered, financed and constructed before the first commercial ounce or tonne is produced. Even then, the work continues. Mines require people, equipment, energy, sustaining capital and constant reinvestment.
Royalty and streaming companies provide some of the capital behind that process without attempting to replace the companies doing the mining.
In exchange, they receive a long-term claim on the production or revenue of an asset.
As the cost of developing the next generation of mines rises, those claims become more valuable.
