Listed royalty companies provide investors with exposure to the value created through the discovery, extraction and sale of natural resources, typically without full exposure to some of the key operating risks of mining businesses...

The royalty business model typical consists of:
  • Royalties: contractual agreements that involve a one-time up-front payment (or asset transfer) in return for future payments, typically based on a percentage of revenue or profit from a specific project or set of tenements.
  • Streams: contractual agreements whereby the holder purchases a percentage of the production from an identified mine, for an upfront payment plus an additional payment when the product is delivered. Royalty companies that hold revenue based royalties typically have an advantaged position in a mining company’s capital structure, accessing cash flows ahead of debt and equity capital providers.

Notes: (1) Based on increase in market capitalisation from 31 July 2010 to 31 July 2020 of the following major royalty companies: Franco-Nevada, Wheaton Precious Metals, Royal Gold Inc, Osisko Gold Royalties, Sandstorm Gold, Altius Minerals Corporation, Maverix Metals Inc, Nomad Royalty Company, Anglo Pacific Group and Labrador Iron Ore Corporation. (2) Total shareholder returns with dividends reinvested. Royalties index weighted by market capitalisation in US dollars. Note: Royalty companies included in the Royalties Index are exposed to various different commodities to Deterra and interests are typically held within a portfolio of royalty and / or streaming interests. (3) Typically recurring income is by way of dividends associated with the business performance compared to holding the physical commodity. (4) Risk is limited to extent that the mine or project is not closed due to one of these risk factors.

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