Financial Firm Recommends Royalty and Streaming Cos.

These companies are attractive now because, unlike mining operators, they are insulated from inflationary costs, noted a BMO Capital Markets report.

BMO Capital Markets recommends royalty and streaming companies as a way for investors to get into precious and base metals without the risk of 2022 capital and operating cost inflation that comes with metals mining companies, reported analyst Jackie Przybylowski.

“We expect that these [royalty and streaming] companies will benefit relative to other miners that will likely report higher effects of cost inflation,” wrote Przybylowski.

As for the miners, BMO expects them to “build inflation expectations into capex and opex guidance for the next one to three years to add some conservatism or cushion into targets,” the analyst relayed. Because operators Newmont and Barrick already have accounted for inflated costs in 2022, BMO rates them Outperform and recommends them now, too.

Regarding the current trend of rising investor interest in streaming and royalty companies, BMO expects it will continue as long as periods of inflation and volatility do, Przybylowski noted.

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Disclosures for BMO Capital Markets Corp., Jan. 7, 2022

Analyst’s Certification: I, Jackie Przybylowski, hereby certify that the views expressed in this report accurately reflect my personal views about the subject securities or issuers. I also certify that no part of my compensation was, is, or will be, directly or indirectly, related to the specific recommendations or views expressed in this report.
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