AXMIN Inc (TSXV: AXM)
AXMIN Inc. (TSXV:AXM) is a Canadian-based exploration and development company with a strong focus on central and West Africa.
Many investors wish to gain exposure to precious metals but prefer to avoid the higher risk of directly operating or developing mines. In such cases, royalty and streaming stocks for gold and silver can be an attractive option: They offer a relatively low-risk investment that generates steady, predictable revenue and typically have portfolios spanning multiple mines and projects, thus providing significant diversification.
This article dives into how royalties and streaming work, their benefits, and some of the key royalty and streaming stocks and ETFs.
Royalty companies usually provide funding in a mine’s early exploration or development phases; in return, they receive a share of the future revenue or royalties once the mine goes into production. These kinds of agreements date back hundreds of years to when miners paid “royalties” to the British Crown for the right to extract gold and silver from royal lands. Even today, many regions still require mining companies to share a portion of their revenue with the government in exchange for using public resources.
Example:
In 1986, Franco-Nevada (TSX:FNV, NYSE:FNV) paid US$2 million for a 4 percent royalty on Western States Minerals’ Goldstrike mine in Nevada, USA. Barrick Gold (TSX:ABX, NYSE:GOLD) later purchased Goldstrike and discovered a far larger resource, ultimately generating more than US$1 billion in royalties for Franco-Nevada. This deal became a landmark case in the royalty space.
Streaming is similar to the royalty model; however, the return to the streaming company often comes in the form of actual metals (e.g. gold or silver) rather than cash payments. Under a streaming agreement, the streaming company pays an up-front investment in exchange for the right to purchase all or a portion of the produced metal at a fixed, below-market price. If production costs increase, the streaming company generally does not shoulder additional expenses; if metal prices drop, it can sometimes hold onto its metal until market conditions improve.
Example:
Franco-Nevada’s largest source of revenue comes from the gold and silver streaming agreement with Lundin Mining’s (TSX:LUN) Candelaria copper mine in Chile. In 2014, Franco-Nevada provided US$648 million in up-front financing to help Lundin acquire Freeport-McMoRan’s (NYSE:FCX) stake in the mine. In return, Franco-Nevada received a sizable portion of the mine’s gold and silver production, with the purchase price for those metals set significantly below spot prices.
Key Differences Between Royalties and Streaming:
| Category | Payment Structure | Risk | Applicable Resources | Focus of Agreement |
| Royalties | Cash (proportionate to mine revenue) | Mining company bears price fluctuations | Various minerals (including non-metals) | A fee for the right to extract minerals |
| Streaming | Physical metals (purchased at a fixed price) | Streaming company can hold or sell the metals, bearing some price risk | Primarily precious metals or widely traded commodities | Long-term supply of metals at set terms |
(The following have market caps exceeding C$1 billion or US$1 billion, as of February 19, 2025.)
(The following have market caps above C$10 million or US$10 million, as of February 19, 2025.)
For investors who want exposure to gold or silver but do not want the direct risks of mining operations, royalty and streaming stocks are an attractive option. Large-cap companies with established portfolios provide comparatively stable and diversified holdings, while smaller-cap companies may offer greater growth potential with correspondingly higher risks.
Based on their own capital capacity and risk tolerance, investors can choose among major players, smaller up-and-coming firms, or ETFs to build a precious metals portfolio that meets their needs.
