Introduction

Mining projects are among the most capital-intensive investments in the global economy. Exploration may continue for years before commercial feasibility is established, while mine construction frequently requires hundreds of millions—or several billions—of dollars before meaningful production revenue is generated.

Historically, mining companies have relied primarily on equity, corporate debt and conventional project finance. Over the last two decades, however, royalties, metal streaming arrangements, offtake-backed financing, prepaid purchase structures and other forms of alternative capital have become increasingly important components of international mining finance.

These structures are no longer confined to junior mining companies unable to obtain bank financing. They are now used in major transactions involving some of the world’s largest mining groups.

A striking recent example is the February 2026 agreement under which BHP agreed to enter into a long-term silver streaming arrangement relating to its interest in Peru’s Antamina mine. Under the transaction, Wheaton Precious Metals agreed to provide USD 4.3 billion in upfront consideration, together with ongoing payments linked to the spot price of silver, in return for specified percentages of future silver production.

The transaction illustrates an important development in mining finance:

royalty and streaming arrangements have evolved from niche financing tools into sophisticated sources of multi-billion-dollar project capital.

Their legal structure, however, differs fundamentally from conventional lending.

A lender generally expects repayment of principal and interest. A royalty holder expects a contractual or proprietary participation in the economic output of the mine. A streaming company generally provides capital today in exchange for the right to acquire a percentage of future mineral production at an agreed price.

Understanding these distinctions is essential because the legal characterisation of the financing affects:

• property rights;
• security;
• insolvency treatment;
• taxation;
• licensing;
• intercreditor relations;
• transferability;
• enforcement;
• environmental exposure;
• change-of-control transactions; and
• the allocation of commodity-price and operational risk.

1. Why Mining Projects Need Alternative Financing

A mining project typically passes through several capital-intensive phases:

exploration,

resource definition,

feasibility studies,

permitting,

land acquisition,

infrastructure development,

construction,

commissioning,

production expansion,

and eventual rehabilitation and closure.

Traditional lenders may hesitate to finance projects before reserves, permits, engineering studies and construction arrangements reach a sufficiently advanced stage.

Equity financing avoids repayment obligations but causes shareholder dilution.

Alternative mining finance attempts to bridge this gap.

Instead of taking conventional credit risk, the financier acquires an economic interest connected directly to future mineral production.

This may enable a mining company to obtain substantial capital while:

• avoiding immediate equity dilution;
• reducing conventional financial indebtedness;
• preserving debt capacity;
• financing construction before full project debt is available; and
• allocating commodity exposure to specialised investors.

But the price of this capital should not be underestimated.

A royalty or stream can remain attached economically to a mine for decades and may transfer considerable future commodity-price upside away from the mine owner.

2. What Is a Mining Royalty?

A private mining royalty generally gives the royalty holder the right to receive payments calculated by reference to mineral production, sales revenue, profits or another agreed economic metric.

The royalty holder normally does not participate in mine operations.

Common structures include:

Net Smelter Return Royalty – NSR

A Net Smelter Return royalty is typically calculated as a percentage of the revenue derived from mineral sales after deducting specifically agreed costs, usually relating to processing, transportation, refining or similar downstream expenses.

A mine may, for example, grant:

a 2% NSR royalty over all gold produced from a specified mining area.

The contractual definition of “Net Smelter Return” is extremely important.

Disputes frequently arise over which expenses may be deducted before calculating the royalty.

3. Gross Revenue and Gross Proceeds Royalties

A gross revenue royalty is calculated with fewer deductions than an NSR royalty.

For the royalty holder, this generally provides greater certainty because the mine operator has less ability to reduce the royalty through operating or processing costs.

The economic burden on the mine owner can consequently be greater.

The precise contract should establish:

• the relevant commodity;
• valuation date;
• benchmark price;
• permitted deductions;
• treatment and refining charges;
• transport expenses;
• insurance;
• hedging adjustments;
• related-party sales; and
• non-cash consideration.

The formula is therefore not simply a financial matter.

It is a central contractual provision.

4. Net Profits Interests

A Net Profits Interest, commonly known as an NPI, entitles the holder to a percentage of project profits rather than gross mineral revenue.

From the operator’s perspective, this may be attractive because no payment is generally required until the mine becomes profitable.

From the investor’s perspective, however, an NPI creates greater exposure to:

capital expenditure,

operating expenditure,

accounting policies,

cost allocations,

management fees,

related-party charges,

and expansion expenditure.

Consequently, NPI agreements often require highly detailed accounting provisions and extensive audit rights.

The distinction between an NSR and an NPI can therefore produce dramatically different economic results over the life of the same mine.

5. Other Royalty Structures

International mining transactions may also use:

• gross proceeds royalties;
• production royalties;
• fixed-dollar-per-tonne royalties;
• sliding-scale royalties;
• price-linked royalties;
• volume-linked royalties; or
• hybrid mechanisms combining several calculations.

A sliding-scale royalty might, for example, increase from 1% to 3% where the market price of the relevant commodity exceeds specified thresholds.

This allows the mine owner to retain greater cash flow during periods of low commodity prices while giving the royalty holder greater participation during commodity-price increases.

6. Private Royalties Must Be Distinguished from Government Mining Royalties

The expression “mining royalty” can create confusion because it may describe two legally different obligations.

The first is a government royalty, mining tax, state right or similar payment imposed by legislation as a condition of exploiting mineral resources.

The second is a private contractual royalty created between commercial parties.

The two should not be confused.

Government royalties arise from public law and the mineral regime of the host state.

Private royalties arise primarily from contract and, depending on the relevant jurisdiction, may also acquire proprietary characteristics.

A project may therefore simultaneously be required to pay:

government royalties,

taxes,

surface or landowner royalties,

and private financing royalties.

The total royalty burden should be examined during project finance modelling because excessive royalty burdens may affect the project’s ability to service senior debt.

7. What Is Metal Streaming?

A metal stream has a different legal and economic structure.

Under a typical streaming arrangement, the streaming company provides the mining company with a substantial upfront payment.

In return, the streaming company obtains the right to purchase a specified percentage of future production of a particular commodity.

When each unit of metal is delivered, the streaming company normally pays an additional predetermined amount or a specified percentage of the prevailing market price.

A simplified example would be:

A streaming company advances USD 200 million for mine construction.

In return, it receives the right to purchase:

8% of payable gold production

at:

20% of the prevailing spot gold price

for the agreed duration of the stream.

The difference between the market price and the ongoing purchase price represents the streamer’s economic return.

Public disclosures from major streaming companies show this structure clearly. Wheaton Precious Metals describes its mineral purchase agreements as arrangements under which it acquires production in return for an initial upfront payment plus an additional payment on delivery, generally fixed at or below the prevailing market price.

8. Streaming Is Not Simply a Royalty

Although royalties and streams are frequently discussed together, they should be distinguished legally.

A royalty usually creates a right to payment calculated by reference to production or revenues.

A stream generally creates a contractual right to purchase or receive specified mineral production on agreed commercial terms.

The distinction may affect:

title to minerals,

sales law,

insolvency,

security,

tax,

accounting,

delivery obligations,

transfer of risk,

and remedies for breach.

The legal characterisation should therefore be analysed under the governing law rather than inferred from the commercial label given to the agreement.

Calling an agreement a “streaming agreement” does not itself determine how a court, tax authority or insolvency administrator will classify it.

9. Physical Delivery Is Not Always Necessary

A metal stream does not necessarily require trucks containing gold or silver to be physically delivered to the streaming company.

Settlement mechanisms may involve:

metal accounts,

refinery credits,

book-entry transfers,

cash-equivalent mechanisms,

or other contractual settlement arrangements.

For example, the 2026 Antamina streaming transaction provides for settlement through metals credits rather than physical delivery of silver.

This contractual flexibility is particularly important for international projects where production may be concentrated, processed, refined and sold through several jurisdictions.

10. Why By-Product Streaming Is Particularly Attractive

Streaming has historically been especially common where one commodity is produced as a by-product of another.

Consider a copper mine producing significant quantities of silver.

The mining company may regard copper as its core commercial exposure while using future silver production to raise construction financing.

The operator therefore monetises part of an ancillary commodity without surrendering ownership of the entire project.

This can be commercially attractive because it effectively separates different commodity cash flows generated by the same orebody.

However, if too large a percentage of valuable by-product production is streamed, senior lenders may become concerned about the amount of future project revenue that has already been transferred to another financier.

11. Royalty Financing Compared with Traditional Debt

Traditional project debt usually involves:

principal,

interest,

fixed repayment schedules,

financial covenants,

security,

events of default,

and acceleration rights.

A royalty generally has no conventional principal repayment schedule.

Instead, payment varies with mineral production.

If production increases, royalty payments increase.

If production stops, royalty revenue may also stop.

This gives the royalty holder substantial exposure to the performance of the underlying mining asset.

At the same time, unlike an equity investor, the royalty holder generally does not:

operate the mine,

fund ordinary cost overruns,

contribute continuing capital,

or bear operating expenses directly.

Public disclosures by mining royalty companies describe royalties and streams as non-operating interests where the holder generally does not contribute to capital or operating expenditure but benefits from mine-life extensions, production growth and exploration success within the covered area.

12. Streaming Compared with Equity Financing

Equity investment provides capital to the company in exchange for shares.

Streaming avoids direct shareholder dilution.

This can be particularly attractive where management considers the company’s shares undervalued.

However, the economic cost must be examined over the mine’s entire life.

If commodity prices increase dramatically or reserves expand, the value transferred under a perpetual royalty or life-of-mine stream may ultimately exceed the amount that would have been lost through an equity issuance.

The correct comparison is therefore not simply:

“streaming versus debt today.”

It is:

“what portion of the project’s future economics is being transferred in exchange for today’s capital?”

13. Offtake Financing

Another important alternative structure is offtake-backed financing.

Under an offtake agreement, the purchaser obtains the right or obligation to purchase future mineral production.

The purchaser may provide:

an advance payment,

a loan,

working capital,

construction funding,

or another form of financial support.

Offtake financing is particularly common in commodities where securing long-term supply has strategic value.

This includes minerals such as:

copper,

lithium,

nickel,

cobalt,

graphite,

rare earth elements,

and other critical minerals.

An offtake agreement may therefore have both a financing function and a supply-chain function.

14. Prepaid Offtake and Pre-Export Financing

A purchaser may pay for commodities before they are produced.

The mining company receives immediate liquidity and repays the financing through future deliveries.

The structure may therefore economically resemble debt while legally appearing as a forward sale.

This creates an important legal question:

Is the transaction genuinely a sale of future production, or is it in substance secured financing?

The answer may have consequences under:

insolvency law,

tax law,

financial-services regulation,

accounting rules,

security legislation,

and potentially rules applicable to disguised lending.

Transaction documents should therefore be designed according to the legal substance of the arrangement.

15. Early Deposit Structures

Streaming financings can also be provided before construction has fully commenced.

An investor may make smaller initial payments to support:

exploration,

permitting,

engineering,

feasibility studies,

or early development.

Additional amounts become available after specified project milestones.

This reduces the streamer’s exposure to a project that may never reach production.

Milestones may include:

completion of feasibility studies,

receipt of environmental approval,

grant of mining licences,

completion of project financing,

construction commencement,

or satisfaction of technical conditions.

For example, publicly disclosed streaming arrangements have provided construction funding in staged instalments subject to customary conditions and project milestones.

16. The Most Important Legal Question: Contractual Right or Property Interest?

One of the most significant legal issues in royalty transactions is whether the royalty is merely a contractual right against the mine owner or whether it constitutes an interest capable of binding successors in title.

This issue is intensely jurisdiction-specific.

In some mining jurisdictions, properly structured and registered royalties may possess characteristics allowing them to continue following a transfer of the mining property.

In other jurisdictions, a royalty may remain merely a personal contractual obligation.

The difference is critical.

Suppose Company A grants a royalty to Investor R and later sells the mine to Company B.

If the royalty constitutes an enforceable proprietary interest binding successors, Investor R may continue to receive payments.

If the royalty is merely contractual, Investor R may instead have a claim only against Company A unless Company B expressly assumes the obligation.

International royalty agreements should therefore examine:

local property law,

mining legislation,

registration systems,

land-title rules,

licence-transfer rules,

and the law governing assignments.

17. Mining Licences Are Not Ordinary Real Estate

A mining project often depends upon rights granted by the state.

Those rights may include:

exploration licences,

mining licences,

exploitation concessions,

surface rights,

environmental permits,

water rights,

forestry permissions,

and infrastructure authorisations.

A private agreement cannot automatically create rights over a mining licence in violation of the host state’s mining legislation.

Certain jurisdictions restrict:

assignments,

mortgages,

pledges,

foreign ownership,

change of control,

or other encumbrances over mining rights.

Regulatory approval may therefore be required before a royalty or stream can be secured against the project.

The validity of the commercial contract should always be tested against the lex situs and mining legislation of the host state.

18. Security Packages for Streaming Transactions

Because a streamer often advances substantial capital before production begins, contractual delivery rights alone may provide insufficient protection.

Large transactions may therefore include security such as:

• share pledges;
• mortgages;
• charges over project assets;
• assignments of project agreements;
• security over bank accounts;
• guarantees from parent companies;
• guarantees from operating subsidiaries; and
• security over mining-project interests where legally permitted.

Recent public mining transactions illustrate the importance of these protections. Wheaton’s disclosures concerning several projects refer to corporate guarantees and security over project assets, sometimes expressly subordinated to senior project debt.

Security must nevertheless be perfected locally.

A security agreement governed by New York or English law cannot necessarily create an effective mortgage over mining rights situated in another country.

Local-law security documents may also be required.

19. Senior Lenders and Streamers May Compete for the Same Asset

Mining projects frequently combine several financing sources.

A capital structure may contain:

senior project debt,

streaming finance,

equipment finance,

government financing,

shareholder loans,

royalties,

and equity.

The senior lenders and streamer may all seek protection against the same project assets.

This gives rise to complex questions of priority.

For example:

Can the senior lender enforce its security and sell the mine free of the stream?

Does the stream survive foreclosure?

Can the streamer accelerate or terminate before the banks enforce?

Can the streamer receive metal while senior debt is in default?

Can the banks cure a default under the stream?

These questions are usually addressed through an intercreditor agreement.

Mining-finance practitioners recognise that combining secured project debt with royalties or streams commonly requires intercreditor arrangements governing competing rights and priorities, potentially for the entire life of the mine.

20. Intercreditor Agreements

A carefully drafted intercreditor agreement may regulate:

priority of security,

subordination,

payment blockage,

standstill periods,

enforcement rights,

default notices,

cure rights,

distribution of enforcement proceeds,

sale of the project,

release of security,

transfer restrictions,

and treatment of the stream following foreclosure.

The senior lender will often seek the ability to enforce security without a competing financier disrupting the restructuring.

The streamer, in contrast, will generally seek to preserve its long-term production rights even if ownership of the mine changes.

This conflict can become one of the most complex negotiations in a mining project financing.

21. Insolvency Risk

Royalty and streaming structures must be stress-tested against insolvency.

Questions may include:

Is the streamer’s right proprietary or contractual?

Has security been perfected?

Can the insolvency administrator disclaim or terminate the agreement?

Does the agreement constitute an executory contract?

Can future mineral deliveries continue?

Can the streamer recover its upfront payment?

Does it rank as a secured creditor or unsecured creditor?

Can a purchaser acquire the mine free of the stream?

These questions depend on the insolvency law of the relevant jurisdiction.

The risk is not theoretical.

Public mining-stream disclosures have recorded historical cases in which mine operators entered bankruptcy proceedings and stream rights were subsequently affected through restructuring and asset-sale arrangements.

A streaming investor should therefore conduct insolvency analysis before advancing funds, not only after default.

22. Definition of the Covered Mining Area

Royalty and streaming agreements must precisely identify the property to which the economic interest applies.

This may be more complex than identifying a mining-licence number.

Mining operations expand.

New licences may be granted adjacent to the original concession.

Ore from several deposits may be processed through the same plant.

Companies may restructure project ownership.

The agreement should therefore address whether the royalty or stream applies to:

current licences,

renewals,

replacement licences,

extensions,

adjacent properties,

area-of-interest acquisitions,

stockpiles,

tailings,

reprocessed material,

and minerals processed through common facilities.

Some major stream agreements expressly cover both the existing mining licence and defined surrounding areas for specified periods or production thresholds.

23. The “Area of Interest” Concept

An Area of Interest (“AOI”) clause protects a financier from strategic restructuring.

Without such a clause, a mining company might theoretically discover an extension of the same mineral deposit immediately outside the original licence and acquire the adjacent ground through another subsidiary.

An appropriately drafted AOI provision may extend royalty or streaming rights to interests subsequently acquired within a defined geographical radius.

However, excessively broad AOI provisions may interfere with:

future financing,

joint ventures,

acquisitions,

and third-party rights.

Their geographical and temporal scope therefore requires careful negotiation.

24. Production Accounting and Audit Rights

A royalty is only valuable if the holder can verify the amount payable.

A streaming right is only valuable if the holder can verify production and delivery volumes.

Agreements should therefore establish detailed reporting requirements concerning:

ore mined,

ore processed,

head grade,

recoveries,

concentrate production,

payable metal,

smelter settlements,

inventory,

sales,

stockpiles,

and deductions.

The financier should generally receive:

periodic production reports,

annual budgets,

mine plans,

reserve/resource information,

and audit rights.

Independent inspection or audit mechanisms may also be required.

25. Related-Party Sales and Transfer Pricing

Mining groups frequently sell minerals to affiliated companies.

This can create significant concerns for royalty calculations.

If a royalty is based on sale proceeds and the operator sells minerals to a related company at an artificially low price, royalty revenue may be reduced.

Royalty agreements should therefore contain arm’s-length pricing mechanisms.

Possible protections include:

reference to internationally recognised commodity prices,

quotational periods,

benchmark pricing,

independent expert determination,

deemed sale prices,

and related-party transaction adjustments.

The issue also has a public-law dimension. The OECD and the Intergovernmental Forum on Mining have highlighted the importance of arm’s-length mineral pricing and transfer-pricing controls in extractive industries, particularly where related-party mineral sales affect the tax base.

26. Tax Characterisation

Tax is one of the most jurisdiction-sensitive aspects of alternative mining finance.

Payments may potentially be characterised as:

royalty income,

sale proceeds,

interest,

financing income,

capital gains,

or another category depending on the applicable system.

The characterisation may affect:

corporate income tax,

withholding tax,

VAT or similar indirect taxes,

transfer pricing,

deductibility,

permanent-establishment exposure,

and treaty relief.

Cross-border transactions also require analysis of double-tax treaties.

A payment characterised as a “royalty” for contractual purposes is not necessarily treated as a royalty under a tax treaty.

Likewise, a stream documented as a purchase agreement may contain financing characteristics relevant for accounting or tax purposes.

For international projects, tax structuring should therefore be undertaken at the same time as legal structuring.

27. Withholding Taxes Can Change the Economics

Assume a mine must pay USD 10 million annually under a private royalty.

If local law imposes withholding tax on payments to the foreign royalty holder, a crucial contractual question arises:

Who bears the tax?

The agreement should address:

gross-up obligations,

tax deductions,

treaty relief,

tax documentation,

residence certificates,

and cooperation with tax authorities.

A financing model that appears attractive on a pre-tax basis may become materially more expensive after withholding taxes are incorporated.

28. Foreign Investment and Exchange-Control Rules

Some mining jurisdictions impose restrictions on:

foreign ownership,

repatriation of foreign currency,

foreign loans,

royalty payments abroad,

registration of foreign investment,

or cross-border payments.

A foreign stream or royalty investor should therefore examine whether it can legally receive funds or metal outside the host country.

Government approval may also be necessary for:

foreign investment,

security interests,

change of control,

assignment of mining rights,

or long-term commodity-export arrangements.

The financing agreement should not assume unlimited convertibility and transferability where local law provides otherwise.

29. Resource Nationalism and Political Risk

Royalties and streams may continue for decades.

During that period, governments may change:

mining taxes,

royalty rates,

export restrictions,

foreign-exchange rules,

ownership requirements,

environmental standards,

or domestic processing obligations.

This creates political risk.

A private royalty agreement does not normally prevent a sovereign state from changing its mining legislation.

The project structure should therefore consider:

investment treaties,

stabilisation protections where legally available,

political-risk insurance,

international arbitration,

and contractual change-in-law mechanisms.

Where the financier makes a substantial cross-border investment, it may also be appropriate to assess whether the investment structure potentially benefits from protections under an applicable bilateral or multilateral investment treaty.

30. Environmental and Closure Liability

One of the attractions of royalties and streams is that the financier generally remains a non-operating participant.

The operator retains responsibility for:

mining,

employment,

health and safety,

environmental compliance,

tailings,

rehabilitation,

and mine closure.

However, financing documents frequently contain extensive oversight rights.

The investor may receive:

information rights,

inspection rights,

consent rights,

technical review rights,

and default remedies.

These protections must be carefully structured.

The financier normally wants sufficient contractual control to protect its investment without becoming so operationally involved that it creates arguments concerning operator responsibility, partnership, agency or environmental liability.

31. ESG Covenants in Modern Streaming Transactions

Modern streaming and royalty investors increasingly review:

environmental performance,

community relations,

indigenous rights,

human rights,

tailings management,

anti-corruption,

sanctions,

and supply-chain integrity.

Financing agreements may consequently contain undertakings requiring compliance with:

environmental licences,

anti-bribery legislation,

sanctions regimes,

human-rights standards,

and defined responsible-mining frameworks.

Serious breaches may trigger:

information rights,

remedial action,

suspension of future advances,

or events of default.

This reflects a wider transformation in mining finance: alternative capital providers are increasingly concerned not only with ore grades and commodity prices but also with the project’s social licence to operate.

32. Change of Control

A stream or royalty may survive many changes in ownership during the life of a mine.

A sophisticated agreement should therefore regulate:

direct transfers,

indirect changes of control,

corporate reorganisations,

mergers,

asset sales,

and transfers of mining licences.

The investor may seek:

consent rights,

assumption agreements,

guarantees from the purchaser,

or termination/buyback rights.

Conversely, the mine owner will generally resist provisions that make future acquisitions or project sales unnecessarily difficult.

33. Buyback Rights

Some royalty and stream transactions allow the mine owner to repurchase part or all of the financier’s interest.

The buyback price might be:

a fixed amount,

a multiple of the original investment,

fair market value,

or an amount designed to provide the financier with an agreed internal rate of return.

Current market transactions demonstrate the use of these mechanisms. Publicly disclosed Wheaton arrangements include rights permitting mine owners, in defined circumstances, to repurchase portions of streams based on formulas designed to produce specified investment returns.

Buyback rights can significantly affect valuation and should therefore be modelled from the beginning of the transaction.

34. Rights of First Refusal and Restrictions on Future Financing

A streaming investor may seek protection against additional royalties or streams that could dilute project economics.

Agreements sometimes contain:

rights of first refusal,

rights of first offer,

negative pledges,

limits on additional streams,

and restrictions on future royalties.

Wheaton’s public disclosures show numerous transactions in which the streamer obtained rights of first refusal over future streaming, royalty, prepayment or similar financing arrangements relating to specified project production.

These rights protect the existing investor but may also reduce the mining company’s future financing flexibility.

35. Step-Down Mechanisms

Streams do not always remain at the same percentage throughout the mine’s life.

A common structure provides that the streamer receives a higher percentage until a specified quantity of metal has been delivered, after which the percentage decreases.

For example:

10% of gold production until 200,000 ounces have been delivered,

followed by

5% for the remaining life of the mine.

The 2026 Antamina transaction similarly provides for an initial streaming percentage that decreases after a specified volume of silver has been delivered.

Step-down mechanisms allow the financier to recover its capital more rapidly while leaving the mine owner with a greater share of long-term production.

36. Production Shortfalls

Mining projects rarely perform precisely according to feasibility models.

Grades may be lower.

Recoveries may decline.

Construction may be delayed.

Permits may be challenged.

A pit may need redesign.

A tailings facility may fail to receive approval.

The stream agreement must determine who bears these risks.

Unlike conventional debt, a genuine stream may not require the mine owner to deliver a fixed minimum amount regardless of actual production.

However, agreements may contain:

delivery schedules,

make-up provisions,

default mechanisms,

minimum delivery obligations,

or remedies for production diverted outside the agreement.

Care must be taken because excessive fixed repayment obligations may strengthen an argument that the arrangement is economically closer to debt.

37. No Guarantee of Production

A financier should understand a fundamental aspect of mining economics:

mineral resources are not equivalent to guaranteed cash flow.

A project may never reach production.

A producing mine may suspend operations.

Commodity prices may make extraction uneconomic.

Permits may be withdrawn.

Orebody assumptions may prove incorrect.

Accordingly, technical due diligence is as important as legal due diligence.

The financier must review:

geology,

reserves and resources,

metallurgy,

mine plan,

processing,

capital expenditure,

operating expenditure,

infrastructure,

environmental approvals,

and permitting.

Legal documentation cannot compensate for a fundamentally uneconomic mine.

38. Alternative Finance and Disclosure Obligations

Where a mining company or royalty company is publicly listed, a material streaming or royalty transaction may create securities-law disclosure obligations.

The agreement may materially affect:

project economics,

reserves,

cash flow,

financing,

or the value of a material mineral property.

Recent SEC filings illustrate the level of detail publicly traded mining and streaming companies disclose concerning:

upfront consideration,

stream percentages,

production thresholds,

ongoing purchase prices,

security,

guarantees,

and project-specific risks.

Mining companies should therefore coordinate financing documentation with applicable securities-disclosure requirements.

39. Governing Law

Cross-border mining financing may involve several legal systems simultaneously.

For example:

the mining project may be located in Peru;

the operating company may be incorporated locally;

the parent company may be Australian;

the streaming company may be Canadian;

the financing agreement may be governed by English law;

and security may exist in several jurisdictions.

The governing-law clause cannot resolve every question.

Contractual obligations may be governed by the chosen law, while:

mining-title issues,

property interests,

security perfection,

insolvency,

regulatory approvals,

and certain tax matters

remain subject to mandatory local law.

A complete legal analysis therefore requires coordination between international transaction counsel and counsel in the host jurisdiction.

40. International Arbitration

International arbitration is frequently appropriate for large royalty and streaming agreements because the transaction may involve parties and assets in several jurisdictions.

Typical disputes may concern:

royalty calculations,

permitted deductions,

production reporting,

metal deliveries,

reserve calculations,

change of control,

related-party sales,

failure to obtain permits,

termination,

security enforcement,

and buyback valuation.

Parties should determine whether disputes will be submitted to institutions such as:

ICC,

LCIA,

SIAC,

HKIAC,

or another agreed forum.

However, certain disputes involving mining titles, property registration, insolvency or administrative licences may remain subject to mandatory local procedures.

The arbitration clause should therefore be coordinated with the wider enforcement structure.

41. Turkey and International Mining Finance

Türkiye is an important jurisdiction for international mineral investment and has significant resources including gold, copper, chrome, boron and other industrial and strategic minerals.

Projects are principally governed by Mining Law No. 3213 and related secondary legislation.

International investors considering royalty or streaming finance for a Turkish mining project should distinguish carefully between:

contractual rights against the project company,

rights affecting the mining licence,

security over project assets,

share security,

regulatory approvals,

and statutory payments owed to the state.

The continuing legal validity of the underlying mining licence is particularly important.

MAPEG’s June 2026 guidance, for example, reminded licence holders that following recent legislative amendments, both licence fees and separately assessed rehabilitation payments must be paid within the statutory period, with licence cancellation consequences for non-payment.

For a royalty or streaming investor, this illustrates a broader principle:

the economic value of the financing agreement ultimately depends on the continued legal validity of the mining right from which production will arise.

Where the mine is located in Türkiye but the financier is foreign, additional consideration should also be given to:

foreign-currency payments,

tax treatment,

withholding,

security perfection,

foreign investment rules,

international arbitration,

and enforcement of foreign judgments or awards.

42. Legal Due Diligence for a Royalty or Streaming Investment

Before committing capital, the investor should generally investigate at least:

Mining Title

Are the licences valid?

Who legally owns them?

Are they transferable?

Are there competing claims?

Have all licence fees and statutory obligations been satisfied?

Permitting

Are environmental, forestry, land, water and operating permissions in place?

Corporate Structure

Which company owns the mine?

Which entity receives sale proceeds?

Which entity will guarantee the stream?

Existing Financing

Are assets already pledged to banks?

Are there negative pledges?

Does existing debt documentation permit the proposed royalty or stream?

Royalty Burden

What government and private royalties already apply?

Technical Position

Are the reserves and expected production sufficient to support the financing assumptions?

Tax

Will payments attract withholding or other taxes?

Foreign Investment

Are approvals required for foreign ownership or payments?

Security

Can effective local security be created and perfected?

Insolvency

What happens to the royalty or stream if the operator becomes insolvent?

Dispute Resolution

Can contractual rights and arbitral awards be effectively enforced where the project and assets are located?

43. Legal Due Diligence for the Mining Company

The mine owner must conduct its own analysis before accepting alternative capital.

It should determine:

how much future commodity upside is being transferred;

whether the royalty survives mine expansion;

whether adjacent deposits become subject to the agreement;

whether the stream restricts additional financing;

whether banks will accept the stream;

whether change-of-control restrictions could affect a future sale;

whether the royalty calculation allows sufficient cost deductions;

whether tax gross-up obligations increase the effective financing cost;

and whether security granted to the streamer will interfere with project finance.

Alternative financing should not be treated as “free money” merely because there is no conventional interest coupon.

Its economic cost may remain embedded in the mine for decades.

44. A Typical International Mining Financing Structure

A sophisticated project may ultimately combine:

Sponsor Equity

to demonstrate sponsor commitment;

Senior Project Finance Debt

to finance a major portion of construction;

A Precious-Metal Stream

to monetise future by-product production;

Equipment Financing

for major machinery;

An Offtake Agreement

to secure long-term commodity sales;

and

Government or Development-Finance Support

where available.

This hybrid approach may optimise the cost of capital.

But each additional financing layer creates new legal relationships.

The finance documents must therefore operate as an integrated system rather than as unrelated contracts.

45. Key Provisions of a Streaming Agreement

A comprehensive streaming agreement may contain provisions addressing:

1. upfront consideration;
2. conditions precedent;
3. future funding instalments;
4. covered mineral;
5. stream percentage;
6. step-down thresholds;
7. ongoing purchase price;
8. pricing benchmark;
9. delivery mechanism;
10. refining arrangements;
11. payable factors;
12. project area;
13. area of interest;
14. reserve reporting;
15. production forecasts;
16. audit rights;
17. security;
18. guarantees;
19. senior debt;
20. intercreditor arrangements;
21. additional financing;
22. change of control;
23. buyback rights;
24. force majeure;
25. prolonged suspension;
26. mine closure;
27. taxes;
28. sanctions;
29. anti-corruption;
30. environmental compliance;
31. assignment;
32. confidentiality;
33. governing law; and
34. dispute resolution.

Each provision may materially affect the economic value of the transaction.

46. Key Provisions of a Royalty Agreement

A royalty agreement should particularly define:

the royalty formula,

the covered minerals,

the covered land,

the duration,

permitted deductions,

related-party sales,

valuation of non-arm’s-length transactions,

hedging treatment,

stockpiles,

processing at third-party facilities,

commingled ore,

audit rights,

reporting,

taxes,

transfer of the project,

registration,

security,

successors and assigns,

and dispute resolution.

Ambiguous royalty drafting can generate disputes decades after the original financing has been spent.

Precision at execution is therefore essential.

47. Why Alternative Mining Finance Is Growing

Several structural factors support continued use of royalties and streams.

Mining projects increasingly require enormous capital investment.

Critical-mineral supply chains require new mines.

Traditional lenders may have limited risk appetite for development-stage projects.

Equity markets can be volatile.

Commodity purchasers increasingly seek secure long-term supply.

Specialised royalty and streaming companies possess substantial capital.

The scale of current transactions confirms the institutional maturity of the sector. Wheaton’s reported portfolio at the end of 2025 included 42 long-term agreements with 34 mining companies across projects in 18 countries, while the 2026 Antamina agreement alone involved USD 4.3 billion in upfront capital.

Alternative mining finance should therefore be viewed not as an exception to traditional project finance but as a permanent component of the modern mining capital structure.

Conclusion: The Legal Structure Determines the Economic Value

Royalties, streaming arrangements and alternative financing models can provide mining companies with access to significant capital without the immediate dilution associated with equity financing or the fixed repayment obligations of conventional debt.

Their flexibility, however, creates legal complexity.

A successful transaction requires much more than agreeing on:

an upfront payment and a percentage of future production.

The parties must determine:

whether the financier receives a contractual or proprietary right;

whether that right survives a transfer of the mine;

whether security can be perfected;

how the arrangement ranks against senior lenders;

what happens in insolvency;

how production and commodity prices will be calculated;

whether government approval is required;

how taxes and withholding are allocated;

whether the arrangement survives a change of control;

and whether the rights can ultimately be enforced across borders.

For mining companies, a royalty or stream can unlock capital that might otherwise be unavailable.

For investors, it can provide long-term exposure to valuable mineral production without assuming direct mine-operating responsibility.

But both sides must recognise the fundamental trade-off.

The mining company receives capital today by transferring part of the mine’s future economic value tomorrow.

The central task of legal structuring is therefore to ensure that this transfer is precisely defined, properly secured and capable of surviving the many events that may occur during the life of an international mining project—from construction delays and commodity-price cycles to corporate takeovers, regulatory changes and insolvency.

In international mining finance, the quality of the legal architecture can ultimately be as important as the quality of the orebody itself.