A $55mn royalty agreement between Spanish Mountain Gold and Wheaton Precious Metals underscores the growing importance of streaming and royalty financing in funding large-scale gold projects, as developers seek capital without diluting ownership.
The deal, tied to Spanish Mountain’s flagship project in British Columbia, gives Wheaton a 1.5 per cent net smelter return (NSR) royalty on future gold and silver production. Payments will be made in stages, linked to drilling progress and regulatory approvals, reflecting a broader industry trend towards milestone-based funding structures.
A shift in how mines are financed
The transaction illustrates how mining finance has evolved beyond traditional equity and debt models. Royalty and streaming agreements now offer developers access to non-dilutive capital, while allowing investors to participate in long-term production revenues.
Under an NSR structure, payments are calculated on revenue from metal sales after refining costs, providing predictable cash flow for investors while leaving operators responsible for costs and execution.
For Spanish Mountain, the upfront funding provides immediate liquidity to advance a feasibility study targeted for completion within 18 months, with a potential construction decision by 2028.
Funding tied to execution milestones
The agreement’s three-stage payment structure reflects increasing sophistication in mining finance:
- an initial payment on signing, providing near-term working capital
- a second tranche linked to completion of 60,000 metres of drilling
- a final payment contingent on key environmental and operating approvals
Such structures allow capital to be deployed in line with project de-risking, balancing investor protection with developer funding needs.
For companies such as Wheaton, royalty agreements provide exposure to large resource bases without the operational risks of mine ownership. For developers, they offer a way to retain control while securing capital in an environment where equity financing can be costly. The model has gained traction as project costs rise and timelines extend, particularly in jurisdictions with stringent environmental and permitting requirements.
The Spanish Mountain project sits in the Cariboo region of British Columbia, a jurisdiction regarded as relatively stable, with established regulatory frameworks and infrastructure. Such “Tier 1” locations continue to attract institutional investment, despite higher costs compared with emerging markets, as investors prioritise political stability and permitting clarity.
Scale and resource underpin valuation
Large, long-life deposits remain key to securing streaming finance. Spanish Mountain’s resource base—measured in millions of ounces—offers the scale needed to support long-term royalty returns, making it attractive to institutional investors. This reflects a broader market dynamic: capital is increasingly concentrated in sizeable, advanced-stage projects capable of delivering predictable production over extended periods.
Balancing risk and flexibility
The agreement also includes provisions allowing partial buybacks of the royalty under certain conditions, giving Spanish Mountain strategic flexibility while preserving Wheaton’s exposure. Such mechanisms have become standard in modern deals, enabling developers to adjust financing structures as projects evolve.
Beyond the project itself, the transaction highlights continued investor appetite for gold assets in stable jurisdictions, as well as confidence in the long-term outlook for precious metals. It also reflects a broader shift in mining finance, where capital is increasingly tied to performance milestones, regulatory progress and project scale, rather than being deployed upfront.
