Poor Price Environment Not a Problem for Streaming Companies

Speaking to Mining Weekly, Randy Smallwood, CEO of Silver Wheaton Corp. (TSX:SLW,NYSE:SLW), commented that the current price environment is serving precious metals streaming companies well.

Smallwood said:

Companies are, these days, much more capital conservative and are demanding a much higher rate of return when they make investments and streaming satisfies both those objectives. These are good times for streaming companies.

The market news also states:

The metals-streaming model had been outperforming the gold producers on a per-share basis in recent years. Smallwood ascribed this phenomenon to Silver Wheaton’s risk profile being completely different than that of miners. ‘We simply don’t have the cost risk that is traditionally found in the mining space,’ he noted.

Smallwood explained that in the flat-to-downward environment, the profits of streaming companies were much more secure than producers, because all the lower prices did was to cut into margins. ‘In having to deal with cost inflation and price deflation, it is tough to be a mining producer right now, but streaming companies still maintain very healthy margins,’ he pointed out.

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