Royalty: share of revenue or production paid to the royalty holder from a mining project.
Royalties are a simple, scalable, and resilient way to invest in the world’s essential resources, providing high-margin exposure to upside without the risks of owning and operating a mine.
No Operating Burden
Royalty holders don’t manage mines or take on operational risks. Returns depend on production and metal prices, not cost inflation or delays.
Resilient Through the Cycle
As royalties are typically based on gross revenue, they continue to generate income as long as the mine operates, even when profits are tight.
Built-in Diversification
Royalty portfolios often include interests across multiple commodities, countries, and operators, spreading geological and jurisdictional risk.
Exploration Upside
If new discoveries or expansions occur within the specified royalty area, value from increased production is delivered organically, and at no extra cost.
Non-Dilutive Financing
For mining companies, royalties provide capital without issuing new shares or taking on traditional debt, keeping balance sheets stronger and shareholders aligned.
Different types of Royalties
There many different types of royalty, and contracts can be structured in different ways dependent on the project stage and risk profile.
| Type | Description |
| Net Smelter Return (NSR) | A percentage of the value of metal sold, after basic refining and transport costs. The most common form. |
| Gross Revenue Royalty (GRR) | Paid on total revenue before deductions; simple and transparent. |
| Net Profit Interest (NPI) | Based on mine profits after costs; more variable, less common. |
| Milestone Payments | These are built into a royalty agreement ensuring that revenue is delivered at key moments in the project development timeline. |
| Option Payments | These often part of a royalty agreement and are generally delivered on an annual basis until production. |
Royalties vs. Streams
What’s the difference between a royalty and a stream? Both royalties and streaming give exposure to future mine output, but in different ways:
| Royalty | Streaming | |
| What is received | A share of revenue or production | The right to purchase metal at a fixed, discounted price |
| When payment is made | One-time upfront payment | Upfront + ongoing purchase price per ounce/pound |
| Exposure | Price of the metal | Spread between fixed price and market price |
Streaming arrangements can complement royalties, offering flexibility and additional leverage to commodity prices.