How streaming precious metals is key to seeking capital
So what exactly is precious...
Finding new capital in the mining industry is crucial for the sustainability of a company, and of the industry as a whole.
So what exactly is precious metals streaming? Well, streaming in itself is when a funder makes an agreement with a mining company to purchase all or part of their precious metals production at a low, fixed, predetermined price.
The major benefit from the start comes from streaming companies offering capital before mine infrastructure is even built. This of course, allows the mine company to accelerate production or sales as it has the necessary capital to speed things along.
Silver Wheaton, the world’s largest precious metals streaming company, has streaming agreements with 22 operating mines and eight development stage products across the world.
The streaming model was pioneered and introduced just over 10 years ago and major mining companies such as Barrick Gold, Vale and Glencore all sold streams last year.
Lynas revenue jumps 21% as rare earth prices jump
Australian miner Lynas Rare Earths posted a 20.6% rise in revenue in the March quarter as selling prices for the key metals it mines hit record highs amid strong demand, particularly for neodymium and praseodymium (NdPr).
NdPr is used in magnets for electric vehicles and windfarms, in consumer goods like smartphones, and in military equipment such as jet engines and missile guidance systems.
The company said it plans to maintain production at 75% however, as it seeks to continue to meet covid-19 safety protocols and grapples with shipping difficulties. Shares in Lynas fell 6.1% after the results.
“They have faced a few logistics issues, and it would be good to know when they are going to start lifting their utilisation rates a bit,” said portfolio manager Andy Forster of Argo Investments in Sydney.
“Pricing has been pretty strong although it may have peeled back a bit recently. I still think the medium, long-term outlook is pretty good for their suite of products.”
Lynas post ed revenue of A$110mn ($85.37mn) for the three months to the end of March, up from A$91.2mn a year earlier as prices soared.
It said its full product range garnered average selling prices of A$35.5/kg during the March quarter, up from $23.7 in the first half of the financial year. “While the persistence of the covid crisis, especially in Europe, calls for careful forecasts for our business ahead, we see the rare earth market recovering very quickly,” said Lynas, the world’s largest rare earths producer outside China.
Freight demand has spiked during the pandemic, while the blockage of the Suez Canal in March delayed a shipment to April.
Lynas’ output of 4,463 tonnes of rare earth oxide (REO) during the quarter was marginally lower than 4,465 tonnes from a year earlier.