Evaluating the Kemess Stream sold by Centerra Gold in 2018

In a streaming contract, a mining company sells future revenues derived from a mine. Typically, the mining company sells the revenue for a secondary metal rather than the primary economic driver of the project. This paper considers a particular stream known as the “Kemess Stream”, where a public company called Centerra Gold Inc. sold future silver production from the Kemess Project to a private financial company. The Kemess Stream represents a typical streaming contract and provides an instructive example as a modelling exercise. This paper shows how to calculate the economics of the stream in detail based on economic reports published by Centerra Gold and discusses general principles reflected in the deal terms.