Misc
How Royalty Companies Manage Risk for Superior Returns
The following content is sponsored by Nomad Royalty
Balancing Risk for Royalty Companies vs. Mining Companies
Risk is at the forefront of every company’s decision-making, especially for mining companies that operate large-scale mines in various jurisdictions.
While producing precious metals naturally carries a variety of risks, there is another way to get exposure to precious metals production with much lower risk: royalty companies.
Royalty companies provide up-front capital to miners in exchange for royalties on future mine production, providing a steady stream of revenue and precious metal exposure with far less risk attached to the company.
This graphic sponsored by Nomad Royalty looks at the risks royalty companies and mining companies face, and how royalty companies are able to mitigate and diversify with more flexibility to deliver stronger returns.
Trimming from the Top Line
By providing capital in exchange for a royalty or stream on a mine, royalty companies are an essential part of mine funding across the world. Along with competitively priced capital for mine developers, the lifetime royalties or streams received in return ensure royalty companies are invested in a mine’s lifelong success.
Mining royalty: A recurring percentage (typically between 0.5% to 3%) of revenue generated from a mine’s ore and mineral sales, paid out to the royalty holder.
Mining stream: An agreement for a recurring purchase of a percentage of a mine’s produced metals, at a previously agreed upon price (typically lower than the metal’s current market value). Typically mines will offer streams on metal by-products of the mine.
Royalties and streams are known as non-participating interests, meaning that the holders (royalty companies) have no obligation or expectation to further fund or assist with the mine’s production.
Along with this, royalties are from a mine’s top line revenue, meaning that the percentage given to royalty holders is calculated before operational expenses, sales costs, and other expenses are deducted. The difference between top line revenue and profit after expenses can be massive, changing the value of a royalty by millions of dollars.
Year | Veladero Mine Revenue | Profit after AISC Deducted | 2.5% Royalty of Revenue | 2.5% Royalty of Profit |
---|---|---|---|---|
2015 | $720M | $106M | $18M | $3.7M |
2016 | $685M | $252M | $17M | $6.3M |
2017 | $788M | $219M | $20M | $5.5M |
2018 | $732M | $90M | $18M | $2.3M |
2019 | $772M | $166M | $19M | $4.2M |
2020 | $666M | $62M | $17M | $1.5M |
Source: Mining Data Online
Both of these factors have a massive impact on the value of a royalty, as they ensure steady revenue shielded from the mine’s operational costs while requiring no maintenance or upkeep from the holder.
Sleeker Business, Lower Expenses
The nature of royalty companies naturally enables them to be lightweight businesses with incredibly low expenses. Compared to the many employees with varying skills needed to manage orebody exploration, project construction, and daily mine operations, royalty companies only require a tight team of specialized individuals.
While the top three gold mining companies (Newmont Goldcorp, Barrick Gold, and Newcrest Mining) have an average of around 15,500 employees each, the top three precious metals royalty companies (Franco-Nevada, Wheaton Precious Metals, and Royal Gold) each have less than 50 employees.
With minimal G&A expenses and no exposure to fluctuating operational costs, royalty companies skirt large amounts of operational risk compared to mining companies. Setting up a royalty agreement carries far less risk and takes much less time compared to developing a mine, meaning royalty companies can be much more nimble and lock down future revenue more easily.
This protection from operational risk allows for steadier revenue to ride out the bumpy market cycles commodities can have, and royalty companies typically have dividend policies to reflect this operational and financial stability.
More Freedom to Diversify Risk
The lightweight nature of royalty companies allows them more freedom and flexibility to diversify a variety of risks. By spreading out their capital properly, many of the risks mining companies struggle to avoid can be easily sidestepped by a royalty company.
While many mining companies tend to cluster their operations in single regions based on the assets they own or can purchase, royalty companies can more freely decide on which jurisdictions to set up royalty agreements. This also includes the perk of spreading out counterparty risk, as royalty companies can choose to work with a diverse selection of mine operators.
Along with diversifying royalties across jurisdictions and counterparties, royalty companies can carefully tune their portfolio’s exposure to specific commodities, unlike mining companies who cannot change what they find underground.
Royal Rewards for Reduced Risk
If having reduced exposure to this variety of risks wasn’t enough, royalty companies reap a variety of benefits compared to mine operators. Since royalty and stream agreements often last for the life of a mine, royalty holders receive the benefits of resource extension and mine expansion at no additional cost.
They also benefit from increases in precious metals prices, as increases in a mine’s revenue is reflected for royalty and stream holders as well. In times of metals price downturns, royalty companies are protected by their high margins and can use their cash reserves and credit to invest in royalties at a discount.
With far more freedom and flexibility in diversifying their risk, precious metals companies like Nomad Royalty provide investors exposure to gold and silver while protecting them from the many risks that plague the mining industry.
Misc
Why Copper Is Critical for Data Centers
Copper consumption for data centers in North America is estimated to jump from 197,000 tonnes in 2020 to 238,000 tonnes in 2030.

Why Copper Is Critical for Data Centers
Data centers are computer server hubs that collect, store, and process large amounts of data, requiring extensive network infrastructure and electric power supply.
As the North American data center market grows, copper will be a key building block in this infrastructure.
This infographic from the Copper Development Association illustrates the critical role of copper in data center development.
Copper in Technology
Much has been said about the growing demand for critical minerals like copper, nickel, and lithium for clean technologies such as batteries, EVs, solar, and wind power.
Copper, however, has a more extensive role in technology as it is used in wires that connect power grids and data centers around the planet.
As one of the best conductors of electricity, copper maximizes efficiency in the transmission and distribution of electricity. Its thermal conductivity also helps build efficient heat exchangers, which are vital for cooling in data centers.
The inherent ductility and malleability of copper make it ideal for shaping into compact system components, like electrical connectors. In addition, copper can be fully recycled without losing any beneficial properties, providing an excellent solution in a growing green economy.
Data centers use copper across various electrical applications, including:
- Power cables
- Busbars
- Electrical connectors
- Heat exchangers and sinks
- Power distribution strips
To put the demand into perspective, Microsoft’s $500 million data center in Chicago required 2,177 tonnes of copper for construction.
North America’s Growing Need for Copper
With the rise of cloud computing and the Internet of Things (IoT), the North American data center market is expanding.
North American data center infrastructure is expected to grow from a $33 billion business in 2020 to $70 billion in 2030 and $185 billion in 2040.
This, in turn, will amplify the demand for copper. Copper consumption for data centers is estimated to jump from 197,000 tonnes in 2020 to 238,000 tonnes in 2030 and 293,000 tonnes in 2040.
The Copper Development Association (CDA) brings the value of copper and its alloys to society to address the challenges of today and tomorrow. Visit www.copper.org to learn more about copper’s critical role in data centers.
Misc
From Lead to Copper: Replacing America’s Aging Water Infrastructure
Investing in the transition from lead to copper is crucial for providing safe water to millions of Americans.

From Lead to Copper: Replacing America’s Aging Water Infrastructure
Water service lines, crucial for connecting buildings to the public water supply, are often outdated and built from lead, presenting significant health risks to Americans.
As the government invests billions toward replacing lead service lines, copper pipelines offer a safe, reliable, resilient, and sustainable alternative.
This infographic from the Copper Development Association illustrates how investing in the transition from lead to copper is crucial for providing safe water to millions of Americans.
The Problem with Lead Service Lines
In the 20th century, lead was commonly used for water service lines and plumbing pipes.
However, lead pipes can degrade over time, leading to the release of lead particles into drinking water. Even at low-to-moderate levels, lead exposure can have severe negative health impacts, including:
- Hearing loss
- Anemia
- Kidney impairment
- Immune system dysfunction
Today, every state in America has lead service lines (LSLs) that the federal government is actively working to replace.
Besides LSLs, an additional 2.8 million galvanized water pipes also need replacing.
Delivering Safe Water
Copper tubing has become the primary material to replace old water service lines.
The red metal is an antimicrobial material that kills pathogens, and it is also highly corrosion-resistant, with a typical service life of over 50 years.
In addition, copper service lines are impermeable and prevent outside chemicals from leaking into water. Copper tubes can be fully recycled at the end of their useful lives without losing any beneficial properties.
Replacing Lead Service Lines with Copper
If America were to replace all 12 million of its lead and galvanized service lines, it would require more than 650 million feet of copper tubing, equivalent to 180,000 tonnes of metal. To compare, the U.S. produced 22 million tonnes of copper in 2022.
The U.S. has commissioned several large-scale copper recycling projects in recent years, creating opportunities to meet the demand with recycled and mined supply.
However, upgrading the nation’s water infrastructure will require over $56 billion, way more than the $15 billion currently provided by the Bipartisan Infrastructure Law.
Visit Copper Development Association to learn more about how copper is crucial for providing safe water to millions of Americans.
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