Billion-Dollar Streams, 35% Growth, and a Royalty Repricing | Brett Heath

Key Concepts

• Royalty & Streaming Companies: Businesses that provide upfront capital to mining companies in exchange for the right to a percentage of future metal production (royalties) or a fixed amount of metal at a predetermined price (streams).
• Net Asset Value (NAV): A valuation metric representing the present value of a company’s assets, often used in the mining sector.
• Capital Expenditure (CAPEX): Funds used by a company to acquire, upgrade, and maintain physical assets such as property, plants, buildings, and equipment.
• Byproduct Metal: A metal recovered as a secondary product during the mining of a primary metal (e.g., silver from a copper mine).
• Stablecoins: Cryptocurrencies designed to maintain a stable value relative to a reference asset, such as the US dollar or gold.
• Tether Gold: A digital token backed by physical gold, allowing for fractional ownership and easier trading of gold.
• Compound Annual Growth Rate (CAGR): The average annual growth rate of an investment over a specified period.
• NPV (Net Present Value): The difference between the present value of cash inflows and the present value of cash outflows over a period of time.

Royalty & Streaming Sector Activity and Trends

The royalty and streaming sector is experiencing a surge in activity driven by higher metal prices, particularly gold and silver. Recent transactions include a $4.3 billion copper stream by Wheaton on the Antina asset, a $690 million silver stream paid in stock (with dividends to shareholders), and a $170 million Australian royalty deal. This activity is largely due to mining companies seeking to capitalize on favorable market conditions and monetize assets. Brett Heath of Metalla Royalty and Streaming attributes this to sellers wanting to “crystallize the opportunity on higher metal prices.”

The Rise of Copper Streams & Future Potential

The $4.3 billion copper stream by Wheaton on the Antina asset was surprising in its magnitude and signals a potential shift towards increased financing of base metal projects through streams. The need for increased copper production, driven by supply and demand forecasts, coupled with the high CAPEX required for new mines (often in the billions of dollars), makes royalty and streaming a more attractive cost of capital for mining companies. Heath predicts a “new copper build cycle” and anticipates “mega deals” of $1-3 billion over the next 5 years. The Vikunia project in Argentina, requiring $7.1 billion in capital for its first stage (with a higher silver content than Antina), could potentially raise half of its initial funding through a stream, mirroring the Antina deal.

Tether’s Involvement and Industry Impact

The emergence of Tether, a stablecoin company, as a significant investor in the royalty and streaming space is a key development. Tether has become a substantial shareholder in four royalty streaming companies, including Metalla (approximately 8% ownership). Tether’s large purchases have been made directly on the market. Tether’s primary objective is to expand its gold stablecoin business, and the royalty sector aligns with this goal. Heath believes Tether’s presence has “changed the view of the rest of the industry participants” and brought more attention to the sector. While the long-term impact of Tether’s involvement is uncertain, Heath acknowledges its potential to drive change. Elemental Royalty, Tether’s largest holding, recently announced a maiden dividend payable in Tether Gold stablecoins, potentially prompting other companies to explore alternative capital return mechanisms.

Metalla Royalty & Streaming: Performance and Growth Strategy

Metalla Royalty & Streaming achieved a record revenue of just under $12 million USD in 2025, marking a “step change” in its business from a cash flow perspective. The company has seven production assets primarily located in North America, South America, and Australia. Metalla projects a compound annual growth rate (CAGR) of approximately 35% in gold equivalent production over the next four years, driven by four key assets: Goslin & Cotay, Castle Mountain, Takataka, and Copper World.

• Copper World: Expected to reach a construction decision in 2026 with a 44-year reserve life.
• Castle Mountain: Equinox is expected to receive final permits by the end of 2026, potentially leading to a financing package and production around 2029.
• Takataka: First Quantum is expected to receive final permits in Q2 of 2026, with a timeline to production following regulatory approval.

Higher metal prices are significantly increasing the value of Metalla’s assets, extending mine lives by 50-200% and potentially generating returns equivalent to the initial investment annually for the next 5-20 years. Heath notes that the increased metal prices are leading to reclassification of previously considered waste material as economically viable, increasing production and benefiting royalty holders. Exploration activities, fueled by increased producer cash flow, will further contribute to resource growth.

Valuation and Deal Flow Challenges

Metalla currently trades at approximately 1.15 times its net asset value (NAV), a discount compared to peers. Heath attributes this discount to conservative market valuations using gold prices around $3,000/oz, while spot prices are higher. He believes catalysts like the advancement of key projects will close the valuation gap.

The current financing environment, with readily available capital, presents challenges to deal flow. Mining companies have easier access to funding, reducing the need for royalty and streaming deals. Metalla is focusing on acquiring existing royalties rather than financing new projects, leveraging its credit to reduce dilution and scale its business. Heath points to a gap in the market between smaller and larger royalty companies, positioning Metalla to potentially fill that space. Consolidation within the sector has also contributed to this gap.

Conclusion

The royalty and streaming sector is poised for continued growth, driven by high metal prices, the need for capital in base metal projects, and the emergence of new investors like Tether. Metalla Royalty & Streaming is well-positioned to benefit from these trends, with a growing portfolio of assets and a focus on maximizing value through strategic acquisitions and project development. The company’s success hinges on realizing the potential of its key projects and closing the valuation gap with its peers. The industry is experiencing a shift towards larger deals and increased institutional investment, signaling a maturing and increasingly attractive investment landscape.