What you need to know: • Mining royalties and streams are low-risk alternatives to investing directly in mining companies and commodities • Royalties and streams have vastly outperformed gold miners over the last 20 years since they are not exposed to exploration risk, capex inflation, or dilution risk while boasting high EBITDA margins and ROIC • Recent trends include a focus on battery metals, large-scale M&A, and increasing popularity due to poor equity prices among miners What are Mining Royalties? Mining royalties are agreements between a mining operator and a government or royalty company where the mining operator makes payments to the royalty owner in exchange for a cash payment or the right to extract minerals from a specific area. Royalties are typically structured as a percentage of the total production or total sales (commodity agnostic). Royalties typically do not have any responsibility for the capex or opex of the mining operation, meaning royalties get all the upside of increased production without any of the costs. These deals are typically perpetual, thus if the mining company continues to develop its asset and produce more gold in the long-term, the royalty firm continues to get paid every quarter. What are Mining Streams? Mining streams are agreements between a mining operator and a streaming company that allows the streaming company to purchase a portion of future production at a predetermined price (usually a discount to spot) in exchange for an upfront cash payment. There is typically a maximum output received by the streaming company in these deals (capped upside). Streams provide mining companies with a source of financing to continue developing their properties while securing a future buyer for its production. These deals are typically for a byproduct commodity since the mining company is not necessarily valued in the public markets based on byproduct production, but its main commodity.