Funding Alternatives for for the mining Industry: Recommended Options
Reports has it that six years on from the global commodities crash and many junior and exploratory mining companies are still struggling to secure project financing and investment. In fact, as noted in recent Funding alternatives for mining industry 2.0 report, many lower-tier miners missed out completely on the 2017 mining boom, despite a surge in demand for metals and minerals like copper, zinc, nickel, cobalt and lithium.
Funding deals are increasingly the best option for cash-strapped miners. In fact, around half of the billion dollars of mining deals Fieldfisher conducted last year came from alternative sources. Havelet Finance Limited Provide funding and investment loan for the implementation of mining industries with up to US$100 MILLION and above for the period of 15 years.
The underneath remains the most popular and recommended funding alternatives for mining industries:
Private equity as Alternative funding for mining Industry
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. Funding alternatives for mining industry that is mostly pronounced and popular is private equity funds which is the most rising in the market. 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.
Crowdfunding for Mining Industry
This type of financing, according to Isaac, is happening mostly in Canada and Australia 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. This area of alternative financing is an interesting development; people have raised money using tokens and blockchain, but there are more popular ways of finding funds – it’s a bit of a ‘watch this space’ area
Venture capital for funding a Mining Projects
The main goal of venture capital for mining industry is to promote a new project, bring it to a mature stage and sell it to another investor.
Venture capital is a promising alternative source of funding for innovative enterprises associated with above average risk with an appropriate level of profitability. The expression “venture capital” is usually associated with investments in unlisted companies, which are characterized by increased investment risk.
Some institutions use this term only to describe investments in enterprises at the beginning of the business cycle, and all subsequent investments are called “development capital”. Essentially, venture capital is associated with long-term investments in companies that offer potentially high profit opportunities. A feature of this method of financing long-term investments is the fact that investors are waiting for business growth to maximize profits.
Venture capital provides unlimited opportunities for external funding, but from a practical point of view, it is difficult to find a partner willing to take risks with your team. In this context, enterprises that have concluded agreements with large players and enjoy the confidence of the market have an advantage.
Contract Financing as Alternative Funding for Mining industry
Contracts Financing as an alternative source of funding for mining industry are guarantees between two parties that they’ll consummate both their ends of the bargain. The commitment is a great asset to pledge against financing. This is because the presence of the contract assures the lender that the borrower will have a steady revenue stream that can support its financial obligations.
The contract also accelerates the approval process. This document contains everything about the project, from the expected costs to the expected revenues that the contractor will periodically receive. Lenders can quickly decide how much they can let the applicant borrow since the financing can only cover a specific percentage of the total contract.
Revenue-Based Loans
Revenue-based loans are an alternative source of funding for mining industry that requires you to pledge a percentage of future income as repayment for the debt. Construction contractors can take advantage of this because a contract guarantees them a steady revenue of income throughout the validity of the contract.
When applying for revenue-based loans, borrowers present documents to the lender that shows the future income that they’ll be earning. This helps the financial institution gauge the creditworthiness of the borrower and their eligibility for this type of financing.
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• Loan guarantees and much more.
We support the financing of large projects develop advanced financial models for our clients and offer professional advisory services.
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