Understanding Streaming Agreements and Royalty Agreements: Alternatives to Traditional Financing

This paper discusses royalty agreements in general and, in particular, unit, gross overriding, net smelter return and net profits interest royalties.

Some common royalty provisions are introduced – “taking in kind”, advance royalties, minimum royalties, capped royalties, buyback rights, and hedging.  The paper goes on to discuss the structure and purpose of streaming agreements, which are usually more robust commercial agreements than royalty agreements.  Provisions that may be found in both royalty and streaming agreements are also discussed, specifically, security, periodic reporting and site visits, operator control over decisions, commingling and unitization, confidentiality, rights of first refusal, the obligation to bind transferees to the agreement,  and dispute resolution.

This paper was originally published in the Rocky Mountain Mineral Law Foundation Journal [Vo. 51, No. 1, 2014 at p. 1]

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