Royalty and streaming business
The returns for royalty and streaming companies in 2017 have surpassed the actual miners (GDX) by a huge margin. In royalty and streaming, companies don’t actually dig metals out of the ground like their mining peers; they provide upfront financing to these miners in exchange for rights to production streams. While royalty companies provide exposure to precious metals, they do so at considerably lower risk than if they mined the metals.
Returns for RGLD
Royal Gold (RGLD) has returned 33.6% YTD (year-to-date) as of December 18, 2017, which is the highest among the major royalty and streaming plays. This year has turned out to be Royal Gold’s best year. It achieved record levels of revenue, net earnings, and operating cash flow, causing the company to increase its dividend payout.
Best is yet to come
While 2017 has turned out to be great for Royal Gold, 2018 could be even better. Some of its investments are expected to pay off at the beginning of 2018. It currently has interest in 38 operating mines and 194 total properties. Some of these projects are expected to come online next year. Rainy River, owned by New Gold (NGD), is one of those projects that could provide significant returns to RGLD in 2018 and beyond. That could help the company with much-needed diversification from gold to silver. Other important projects include Cortez Crossroads owned by Barrick Gold (ABX) and Peñasquito owned by Goldcorp (GG).