Securing debt funding for mining projects can be a difficult task as there can be many issues and red tape. Large-scale mining can involve appreciable political risk as major mining projects are frequently located in countries perceived as carrying an element of political instability. They can also be environmentally and socially sensitive, subject by its nature to increasingly stringent planning laws and implementation requirements.
Financing Mining Projects
Considerations for funding mining projects include the amount of debt on account, poor infrastructure and safety factors. These factors serve to limit the interest of international commercial banks, thus project directors looking elsewhere for the main source of mining funding. Issues of concern to potential lenders can include:
- completion risk
- security arrangements
- foreign exchange availability
Some global coal mine businesses are closing operations as countries are becoming more engaged in using greener, natural resources to power the planet. As the world’s population increases there’s more demand for the extraction of precious rare earth metals and minerals. Their value increases as they are manufactured for use of everyday items such as in mobile phone and computer technology and other green tech inventions. In saying that, lenders are still happy to fund viable mining projects which need significant investment over long period of time.
Many measures are put in place to lessen funder risks. They can put payments in escrow accounts, utilize hedging programs, project backing with debt instruments and political risk insurance. Each case is looked at individually as every mining project have different needs. At Prestige Capital Partners we as a company place our emphasis on specialised financial institutions which are active in lending in this type of market. We align ourselves with lenders who are experienced in lending arena within the mining industry who know and recognize the perceived risks as well as difficulties which may occur when assessing the projects needs.
Please note that the Assay Report will probably be required along with your project submission.