PDAC 2016: Silver Wheaton still sees plenty of deal flow, but in base metals rather than gold

Last year was the busiest ever for the silver and gold streaming companies. They acquired a staggering US$4.2 billion of precious metals, according to Financial Post data. The majority of it came from large miners that were desperate to raise cash and connect their balance sheets.

“Streaming truly became the dominant type of (mining) financing,” Randy Smallwood, chief executive of Silver Wheaton Corp., said within an interview.

There has been speculation the deal flow would decelerate this year, if perhaps since the streamers have more limited funds following their spending binge this past year. But Randy Smallwood, leader of Silver Wheaton Corp., said he still expects an active year.

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He noted that Silver Wheaton has more than US$500 million obtainable in a revolver, and it is generating vast sums of money flow. And when the company does have to tap the equity markets for more capital to do an acquisition, he’s confident investors would support that. He pointed to rival Franco-Nevada Corp.’s recent US$920-million bought deal financing as evidence that investors are fully behind the streamers.

But Smallwood said any streaming deals done this year may be with base metal miners rather than gold miners.

Thanks to the recent recovery in gold prices, the gold miners are enjoying bumps within their share prices and should have an easier time raising money from equity issues (when they are necessary). But market conditions remain very poor for base metal companies, plus they may well choose to sell a stream rather than issue equity while their share prices are so depressed.

“Streaming will not continually be the very best solution,” Smallwood said.