gold mining equipment financing

gold mining equipment financing

Alternative financing for the mining industry: what are the ...

Production based financing whereby companies secure cash by selling rights to receive future production from their mines has become a common feature of the mining industry, particularly in connection with strategic metals such as lithium, nickel and cobalt. NQ Minerals, for example, entered into an offtake agreement with Traxys Europe in July last year. For 100% of zinc and lead production from its Hellyer project in Tasmania, the company will receive $10m secured prepayment facility. Its very helpful that off takers, users, and metals traders have entered and helped fill the equity gap, says Brad Isaac, partner, corporate, at Fieldfisher. But, he cautions, its not a cure all and providers of such funding are generally picky and choosy. Nevertheless, such arrangements have evolved over the last two years, becoming more flexible to accommodate individual mining projects. However, they have also, in turn, become more complicated. Firms considering this kind of financial ar...

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Another active part of the alternative finance market is the specialist mining private equity funds, such as Orion Mine Finance, Resource Capital Funds and Taurus. While most miners will normally consider raising equity on public markets, public bourses remain tough places for junior exploration and development miners to raise cash. Private equity offers cash in return for minority stakes in projects, and a say in how they are run, with the aim of eventually selling on their stake for a profit. In the last two years, some of these groups have started experimenting with new kinds of deal structure, with a shift towards specialist mining funds buying assets with an eye to permitting, building and operating them themselves. These groups offer a genuine alternative for mining companies, says Brooks, especially because they will typically put in money at exploration stage. For example, StrongBow Exploration, a Fieldfisher client, bought the South Crofty Tin mine in Cornwall, with the a...

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According to Fieldfisher, one of the striking trends in mining finance over the last two years due to its novelty, rather than the volume of transactions is the emergence of cryptocurrencies or crypto tokens as a form of funding. This type of financing, according to Isaac, is happening mostly in Canada and Australia. As explained in the Fieldfisher report, tokenised financing is based on the intrinsic value of a mineral deposit or its production. This differentiates such tokens from many established cryptocurrencies, such as Bitcoin and Ethereum, which are not backed by any kind of physical security. The tokens are distributed via an initial token or coin offering using blockchain technology. Once these tokens have been issued, they can be listed on third party exchanges to facilitate trading and liquidity. In October 2018, PCF Capital, an Australian corporate advisory firm focused on the resources sector, issued what it called the worlds first security token for financing go...

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Given the growing complexity in the market and the increased competition how should junior and exploration companies go about securing project financing? Firms should start by casting their net as widely as possible, and perhaps approach a specialist broker in the field, says Brooks. And by that, I mean not just a broker specialising in the AIM market, but people/brokers who have access to private funding, whether that be a high net worth individual or family or private equity or a wealth fund, he explains. And then, network like crazy, he says. Speak to the bigger companies, see what interests they have in funding exploration, because another trend is, once the majors are doing well, theyre doing MA deals, as they reducing their own exploration activities and relying upon juniors to find interesting projects for them, he adds. Furthermore, ask lawyers. We know the sector well enough and we dont charge for this but we can make introductions to help firms, says Bro...

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