Streaming allows Wheaton to typically purchase by-products of precious metals or cobalt from a mine it does not own or operate in exchange for a down payment plus an additional payment on delivery of each ounce or pound. The operating costs wheaton supports for future production are pre-defined in agreements with a small inflation adjustment in most contracts. This amount offsets the typical costs of our partners for the production of silver, gold, palladium or cobalt. In 2004, Wheaton River Minerals Ltd. shareholders realized that the company had not achieved the same value as the primary producers for its by-product silver production, and were therefore created as an independent company of Silver Wheaton Corp. to maximize the revenues of the by-product2 through a business model derived in part from licensing agreements, which were then the main focus of complex transactions in the mining industry. In early 2015, KBL Mining Limited entered into a streaming agreement with Quintana Mineral Hill Streaming Co. LLC, in which Quintana agreed to award US$23 million to KBL in several tranches in exchange for the right to acquire a percentage of KBL`s base metals, gold and silver production. The central point associated with streaming agreements is that the mining company may inadvertently place too little price on the streaming product and therefore not benefit from a subsequent increase in its market value. If the mining company is unable to negotiate optional buybacks to purchase all or part of the electricity, the investor can make a significant wind without having to compensate the mining company for that benefit. This problem can be predominant when the streaming product market is particularly volatile. Electricity is purchased by the investor who makes a prepayment (or a number of payments) to the producer against an agreed fixed price (plus inflation) per unit of production for the life of the mine or a specified and probably long period.

Prepayment is often structured as a down payment. Indeed, the streaming agreement allows a mining company to monetize its future production before the start of production. Predictable costs reduce the risk of downtime for our shareholders while offering the upward trend of precious metals or the price of cobalt. Apart from the initial down payment, Wheaton generally does not contribute to the future investment or exploration costs that will be invested by the mine; however, it benefits from the growth in production and exploration resulting from these expenditures.