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By James H. Boettcher

In the second quarter of 1979, ASL Inc. inquired whether Crocker National Bank ("CNB") would provide $4 million in term loan financing to help ASL acquire the outstanding shares of the S&S Coal Company in West Virginia. ASL had, prior to approaching CNB, sought financing with the assistance of a financial advisor from a number of commercial banks without success. A summary of the initial terms requested by ASL is shown in Table I compared with the actual terms the transaction closed with. It is not difficult to note that the two sets of terms differ significantly. This is often the case when financing requests based on the expectations and vision of a mine developer are juxtaposed with more pragmatic requirements of a commercial bank. The "art" and fun of structuring financing plans for mining ventures (highly leveraged acquisitions or grass roots) comes in working with mine developers to arrive at a final financial structure that meets their objectives and constraints as well as those of the bank or other financial institution providing much of the financing. This article briefly describes the process we went through with ASL beginning with the terms they requested initially and ending with the ones on which the transaction was finally closed.

Jan 1, 1981

"Investment in diamond exploration has been declining over the past decade, in spite of positive long-term industry fundamentals and a growing interest in diamonds as an investment category. The lack of new significant discoveries in recent years has eroded investor confidence, yet no new discoveries are possible without investment in exploration. Junior ‘mine finders’ have been the hardest hit. Their agility, tenacity, and appetite for risk are not sufficient to attract the funding required, even at the greenfield stage. Developing new discoveries into mineral resources can be crippling without solid financial support. Junior incubators could play a crucial role, especially at the project evaluation stage – but where are they? Alternatives to traditional funding mechanisms have become available, many still untested in the junior diamond exploration space. Valuable lessons can be drawn from the past and used to inform emerging new strategies. IntroductionDiamonds are the ultimate expression of love. Their ancient and timeless allure continues to influence consumer emotions and behaviours across continents, cultures and age groups. Analysts are predicting a sustained supplydemand shortfall in the years ahead which will trend diamond prices generally upwards. With positive long-term industry fundamentals, one cannot help but wonder why funding for diamond exploration and development projects is so scarce.Investment in exploration across commodities – including diamonds – has been declining for a number of years, reaching a historic eleven-year low early in 2017. The lack of major diamond discoveries in recent years has done little to strengthen the case for investing in diamond projects, yet no new discoveries can be made without investment in exploration.Global estimates of known carats in the ground stand currently at 2.5 billion carats, which equates to around 18 years of production at current levels of 140 million carats (mct) per annum. Sustainable replenishment of depleting diamond resources is possible only through the development of new discoveries. This is what junior explorers are best at – but they need investors to fund their evaluation activities from early in the project development continuum."

Feb 1, 2019

By C. C. Bailey

Part I Problems of Mine Financing Directed primarily at the methods and problems of financing domestic mining ventures-projects involving one or more of the stages: exploration, development, commercial operation.

Jan 6, 1953

By C. C. Bailey

THE vendor seeking outside capital for his project has the following potential sources which may be approached; 1--private sources, 2-institutional funds, 3--government agencies, 4--established mining concerns, and 5-public financing.

Jan 7, 1953

By Robert B. Wickham

"American Barrick has always balanced its aggressive operating approach with a conservative financial strategy. In fact, what enables their mining team to pursue such aggressive plans with confidence is the conservative financial strategy adhered to by the company. These policies are built on a prudent mix of gold linked financings, equity and gold price hedging.This paper outlines these policies and focusses in particular on American Barrick's gold price hedging program.IntroductionThe company's balance sheet at the end of 1990 clearly shows the wisdom of its conservative policies. Total assets have grown to over US$1 billion; cash has grown to US$312 million and shareholders' equity to US$645 million. All amounts included in this paper are quoted in U.S. dollars. Increased gold production and an effective gold price hedging program also combined to produce record income from operations, earnings and cash flow in 1990.The first half of 1991 is also indicative of the benefits of the company's conservative financial policies. Increasing production, together with its comprehensive gold hedging program, has generated increased earnings, even in a period of falling gold prices.All year-over-year numbers for the first six months are up. Gold production was 36% higher; earnings of $40.2 million $ 0.30 per share - were 46% higher than 1990.Barricks revenue continued to increase despite gold prices remaining unchanged during 1990. Barrick's hedging policy protects the company from falling gold prices on the basis that the upside looks after itself. Their hedging program - including various goldlinked fmancings - enabled Barrick to realize an average price of $437 per ounce of gold sold in 1990, compared with the Comex average gold price for the year of $384 per ounce."

Jan 1, 1991

By Eric Low

Raising capital by issuing debt or equity is necessary in almost every corporation. In the field of corporate finance, the raising of capital is a heavily-studied topic. However, some of what is studied on this topic in corporate finance is not applicable in the mining industry. There are also many financing options that were created for the mining industry such as flow-through shares, prepaid forwards, and royalty sales. The cyclical nature of the industry makes the risk-return profile of financings more difficult to estimate than in other industries. Additionally, the methods used to assess firm value are different than other industries, as the values of orebodies are not included on balance sheets. For precious metals companies, which are a hedge against most other securities, there are additional complications with determining investor expectations and cost of equity. This thesis puts forth a decision-making framework to explain mine financing choices from the perspective of mining companies. The approach is threefold. First, all of the major equity and debt financing instruments available to mining companies are presented and analyzed. Each financing method is assessed on a wide range of criteria. Next, these concepts are applied in case studies of four companies: BHP Billiton, Barrick Gold, Teck Resources, and Noront Resources. For each company, the overall choice of financing methods is shown and analyzed. The effect of financing choices on the weighted average cost of capital (WACC) is calculated. The final section deals with case studies of individual mine finance decisions during the past two years.

May 1, 2011

By Wallace W. Wilson

It scarcely is possible to read a new issue of any of the principal mining trade journals without noting some mention of a major new overseas mining venture with which one or more domestic companies are involved. These projects follow a fairly consistent pattern; most are large open pit mines with relatively low grade orebodies but huge reserves; the total price tag is in nine significant figures and half or more of the total cost is for infrastructure. West' notes that nearly $7 billion is being invested annually for new mining projects and the expansion of existing mining ventures in the free world. He anticipates that by 1975 such investments will reach the $10-11 billion annual figure and that in the period 1972-76 total capital requirements can be expected to aggregate around $45 billion. West estimates that 75% of the total capital will come from internally generated funds. Conceivably, a substantially higher percentage could be attributable to external financing, especially if the trend of recent mineral development in Canada and Australia is any criterion, and including local sales of equity as a part of the package.

Jan 7, 1973

By Wallace W. Wilson

It scarcely 1s possible to read a new issue of any of the principal mining trade journals without noting some mention of a major new overseas mining venture with which one or more domestic companies are involved. These projects seem to follow a fairly consistant pattern; most are large open pit mines, with relatively low grade ore bodies but huge reserves; the total price tag will be in nine significant figures and around half or more of the total cost will be for infrastructure. West1 noted that nearly $7 billion is being invested annually for new mining projects and the expansion of existing mining ventures, in the free world. He anticipates that by the year 1975 such investments would reach the $10-11 billion annual figure, and that in the five year period 1972-76 total capital requirements can be expected to aggregate around $45 billion. The proportion of this total investment which will be financed in some manner is difficult to estimate because of the variety of available financing arrangements. West estimated that around 75% of the total capital would come from internally generated funds, with the balance from external sources. Conceivably a substantially higher percentage could be attributable to external financing, especially it the trend of recent mineral development in Canada and Australia is any criterion, and of course, including local sales of equity as a part of the package.

Jan 1, 1973

Abstract: ?The paper will review the perspective of Scotia Capital on financing mines, mining projects and mining companies in today's world of major increases in commodity prices, increases in capital and operating costs, shifts in foreign exchange rates, and increasing scrutiny of mining's social license ?Focus on debt financing alternatives Key Assumptions: ?Assume financing a mining asset (i.e. not an exploration play) ?Exploration is generally financed with equity ?private placements or public offerings on an idea

May 1, 2006

Exploration requires a lot of skill, technical knowhow, and money; the money is usually less painfully available when provided by a profitable cash flow of an existing organisation that has income against which exploration cost is deductible. Planning the financing for development of a proven resource should begin at the earliest stages even while the mining plan is being formed up. The character of the participants has a bearing on the nature of the financing "package" and the structure that is to be selected for the venture. The security for borrowers in a remote mining resource is no better than the capacity of the participants to bring that resource to profitability in line with the findings of a thorough feasibility study. Taxation considerations related to the structure selected and the timing of the cash flow are of vital importance. Sales contracts have generally been a basic requirement of institutions financing mineral mining projects. Clauses relating to price, price escalation, and currency var- iations, are key factors in those contracts. Initial contracts have generally been required to cover initial overall costs.

Jan 1, 1974

By P. Klaus

"KfW IPEX-Bank is the commercial arm of KfW Bankengruppe, responsible for international project and export finance.KfW was one of the first banks in Germany to promulgate environmental guidelines for its commercial business activities. These guidelines were first made public in 2000 and updated for the second time in 2004. They now include specific reference not only to environmental but also to social concerns. The guidelines specify the procedures to be followed in assessing credit risks related to environmental or social hazards.The bank considers sustainability as an interdependent framework of economic, ecological and social factors. In its efforts to contribute to sustainable development worldwide the bank uses its influence as far as possible to improve a project’s performance if such improvement is deemed necessary."

Jan 1, 2005

By Michael Chender

The current outlook for financing new copper production is not very encouraging. At a time when companies are slogging through a protracted period of low prices as well as having to accept lower profits due to more stringent tax and royalty schedules, banks are beginning to require companies to take a greater equity interest in new projects. Mineral resource financing, including copper, seems to have lost much of its appeal to the lending institutions, and loans of any kind to many of the developing countries -from which over half of new copper capacity could be expected to come-are being examined much more critically than they were in the late 1960's and early 1970's.

Jan 12, 1976

By M. Götze, P. Eysel

Over the last years, the importance of the assessment of environmental and social aspects as well as of issues of good governance has increased significantly in mining finance. For this, international standards as well as internal guidelines of the banks and other involved institutions have been established and continuously improved. Considering these standards and regulations, the banks can influence the sustainability of mining projects - and they have done so in the past -, mainly by implementing certain provisions and covenants in the loan documentation, binding the financing to the mining company’s adherence to the agreed sustainability standards. However, there are limits to the banks’ influence due to the competitive environment with other available means of financing. Nevertheless, the experience of the last years has shown that the standards and regulations bound to the financing by the banks help to lead the mining industry towards more sustainable projects.

Jan 1, 2011

By N. R. MacMillan

INTRODUCTION The Bullmoose Coal Project is part of a major development in northeastern British Columbia which comprises a new rail line, a new townsite, powerline, highway, the upgrading of the Canadian National Railway's main line, a new coal port at Prince Rupert and two new coal mines, the Bullmoose mine and the Quintette mine. The total investment by all parties is estimated to be in excess of $2.6 billion and made up approximately as follows : [Table No. 1 $ Millions - Quintette Coal Limited 950 Teck-Bullmoose Coal Inc. 275 Canadian National Railway Company 800 6 British Columbia Railway Company Port at Prince Rupert 280 Townsite, Roads 6- Power ] The new infrastructure is intended to serve not only the Bullmoose and Quintette coal projects but also eventually a number of other coal properties in northeastern British Columbia. The Bullmoose project is structured on a joint venture basis as follows : [Table No. 2 Teck Corporation 51% Lornex Mining Corporation Ltd. 39% Nissho Iwai Coal Development 1 0% (Canada) Ltd. -- 100% ] The mine has a capacity of 2.3 million tonnes of clean coal per year. In the initial years 1.7 million tonnes will be metallurgical coal and 0.6 million tonnes thermal coal. After the first three years of operations the annual production of metallurgical coal will increase to an average of approximately 2.1 million tonnes and the production of thermal coal will decrease to an average of approximately 0.2 million tonnes. At this level of 2.3 million tonnes annual production, the Bullmoose mine has sufficient reserves for at least 26 years of production. History Brameda Resources Ltd. commenced coal exploration in the Bullmoose-Sukunka area in 1969. Teck obtained an option on the Bullmoose coal licences in 1970 and started surface exploration and diamond drilling in 1971. Teck earned a 50% interest in the property, and thereafter expenses were jointly financed by Teck and Brameda. In 1981 Brameda merged with Teck making Teck the sole owner. The initial phase of the exploration program, which was completed in 1975, included 7,200 meters of diamond drilling in 35 holes. During 1976 and 1977, detailed exploration and test work were carried out on the South Fork and West Fork areas where multiple seams close to surfaces indicated the potential for large tonnages of strippable coal. In those two years, work included road construction, detailed mapping and trenching to outline the coal seam traces at the surface, 6,300 meters of diamond drilling in 80 holes, and 300 meters of underground bulk sampling from seven adits. Washability tests and analysis work were carried out on the drill cores and adit samples, and pilot plant washability studies were undertaken. In 1978 and 1979 Teck engineers prepared open pit mining plans and production schedules and Kaiser Engineering was retained to prepare a layout of the plant preparation facility. A feasibility study prepared by Teck's engineering group in January 1982 was the base document used by the Lenders in assessing the technical and economic viability of the project. Property Location The property lies some 650 kilometers northeast of Vancouver, and 87 kilometers south by road from the village of Chetwynd. The Sukunka property (British Petroleum) adjoins to the north, the Mount Spieker property (Ranger Oil Option) adjoins to the east, and the Quintette property is located to the southeast.

Jan 1, 1985

By Tomek Ulatowski

This article discusses four principal areas relevant to financing direct reduction facilities: (1) Lenders' differing requirements with respect to projected cash flows; (2) The impact of leveraging on project viability; (3) The importance of appropriate debt structure; (4) The significance of accurate and complete capital cost estimates. The overall findings emphasize the inseparable connection between the project economics and its financeability, and particularly how direcly intertwined they both are in the project planning.

Jan 1, 1978

By Miskelly N

Construction of the Ranger uranium project located 230 kiss east of Darwin in the Northern Territory commenced in January 1979. Energy Resources of Australia Ltd (ERA) was incorporated in February 1980 to acquire all the rights in the project. The total cost to ERA of these rights was $407 million, made up of $125 million in cash to the Federal Govern- ment and the issue of 125 million $1.00 shares at par, plus a payment of $16 million in cash to each of Peko-Wallsend Ltd (Peko) and EZ Industries Ltd (EZ).

Jan 1, 1983

By Georges Caraghiaur

INTRODUCTION A small, independent mining enterprise (SIME) is an independently owned and operated business concern engaged primarily in mineral development, from the exploration to the production stage. By definition, a SIME is not dominant in its field and has no long-term financial backing. It is not a major producer of minerals, nor is it a petroleum company, a government organization or a subsidiary of such organizations. A SIME may or may not be listed on stock exchanges. The SIME is also called small miner, junior mining company, speculative mining company, and penny-stock mining company. The survival and growth of a SIME is most often controlled by an independently minded entrepreneur, who not only conceives and carries out new projects, but is materially affected by the success or failure of these projects. Usually, a SIME does not have a large or constant cash flow. Such a lack of long-term financial backing forces the SIME to meet the challenge of finding capital for its activities on a step-by-step basis. Its survival strategy is thus based on finding funds at the right time, of the right type and in the right quantities. The purpose of this paper is to show that the type of venture in which a SIME is involved affects the difficulty of raising new capital and the choice of possible sources of funds. The Small, Independent Mining Enterprise (SIME) The SIME is not a figment of the imagination of financial speculators. In Canada, there are more than 1,800 small mineral enterprises which spend on the average less than $1,000,000 per year on activity which is directed at bringing forth new mineral supply. In the United States, 64% of the non-fuel mining operations are conducted by nine or fewer men, and the coal industry is characterized by several thousand smaller independent producers, still predominantly family owned or controlled. In Chile, 80% of the mines can be classified as small mines. In the Philippines, approximately 60% of metal mining operations are classified as small mines. The SIME is actively engaged in mining all over the world, and very much so in the Pacific Rim. The Mineral Supply Process The whole process of bringing forth new mineral supply involves a dynamic sequence of activities, ranging from the initial exploration for a mineral occurrence to the production of a marketable product. A typical sequence is outlined in Figure 1. At the grass-roots exploration stage, a series of geological, geophysical and geochemical tests is aimed at locating a mineral occurrence. Especially in the early phases of such activities, the uncertainty (risk) surrounding a venture is high, since only general geological information exists on which to base a judgement of the economic viability of the venture. Such risk is attractive to few investors. As the information-gathering process continues, uncertainty diminishes. Once exploration efforts result in the discovery of a mineral occurrence, i.e. when indications of mineralization and mineable widths are obtained by drilling, there is still uncertainty concerning the extent of mineralization and the probability of having located an economic mineral deposit. The expected return on investment at such a stage may well be negative but the slight possibility of a very high positive return will make a number of financial sources available to an exploration company. At the development stage, much of the uncertainty

Jan 1, 1985

By Georges Caraghiaur

INTRODUCTION A small, independent mining enterprise (SIME) is an independently owned and operated business concern engaged primarily in mineral development, from the exploration to the production stage. A SIME may or may not be listed on stock exchanges. By definition, a SIME is not dominant in its field and has no long-term financial backing. As such, it is not a major producer of minerals, nor is it a petroleum company, a government organization or a subsidiary of such organizations. The survival and growth of a SIME is most often controlled by an independently minded entrepreneur, who not only conceives and carries out new projects, but is materially affected by the success or failure of these projects. Usually, a SIME does not have a large or constant cash flow. Such a lack of long-term financial backing forces the SIME to meet the challenge of finding capital for its activities on a step-by-step basis. Its survival strategy is thus based on finding funds at the right time, of the right type and in the right quantities. The purpose of this paper is to show that the type of venture in which a SIME is involved affects the difficulty of raising new capital and the choice of possible sources of funds. The Small, Independent Mining Enterprise The SIME, also called small miner, junior mining company, speculative mining company, and pennystock mining company, is not a figment of the imagination of financial speculators. In Canada, there are more than 1,800 small mineral enterprises which spend on the average less than $1,000,000 per year on activity which is directed at bringing forth new mineral supply. In the United States, 64 percent of the non-fuel mining operations are conducted by nine or fewer men, and the coal industry is characterized by several thousand smaller independent producers, still predominantly family-owned or controlled. In Chile, 80 percent of the mines can be classified as small mines. In the Philipines, approximately 60 percent of metal mining operations are classified as small mines. The SIME is actively engaged in mining all over the world, and very much so in the Pacific Rim. The Mineral Supply Process The whole process of bringing forth new mineral supply involves a dynamic sequence of activities, ranging from the initial exploration for a mineral occurrence to the production of a marketable product. A typical sequence is outlined in Figure 1. At the grass-roots exploration stage, a series of geological, geophysical and geochemical tests is aimed at locating a mineral occurrence. Especially in the early phases of such activities, the uncertainty (risk) surrounding a venture is high, since only general geological information exists on which to base a judgement of the economic viability of the venture. Such risk is attractive to few investors.

Jan 1, 1982

By G. V. Campbell, O. T. Holdsworth, M. G. Nelson

A senior design project is required by all accredited mining engineering degree programs. Often referred to as the capstone of a student’s education, this project is expected to include all the important components of the preliminary economic assessment of a mineral prospect, including orebody modeling, grade and reserve estimation, selection of mining and processing methods, preliminary mine design, access and utilities, environmental compliance and reclamation, and financial analysis. Two of the authors (Campbell and Holdsworth) completed a senior project in 2021. They analyzed the Akie zinc deposit located in Canada. This paper summarizes the economic analysis portion of that project. The two primary objectives of this economic analysis were risk reduction and integration of economics and engineering. Addressing risk is important as risk is one of the primary concerns in mining investments. Risk reduction was the primary concern through the entirety of this economic analysis. Integration of financial analysis and engineering design was the first component of a risk reduction design. This allowed for financial and engineering design to be optimized in conjunction with one another. This produced benefits from both a financial and an engineering prospective. From a market, economic, and financial risk perspective, risk was reduced by forecasting multiple metal price scenarios, and then addressing the Akie project’s economic viability at each price point. Lastly, risk was address through consideration of nontraditional financing options. The project also sought to minimize financial and human capital risk, by proposing mutually beneficial cooperative social relationships and favorable work, schedules. Description of that work is not included in this paper.

Mar 2, 2022

By A. B. Parsons

Not so many years ago the interest of the average mining engineer in money matters-aside from his pay check or his consulting fees-was confined to the per-ton cost of mining and beneficiating ore and to the amount of capital that would be required to erect the plant necessary to carry out such operations on a prescribed scale. The so-called "business men" assumed that questions of marketing the products, of profits, and of dividends were in their exclusive sphere-matters too intricate or, perhaps, too practical for the mere engineer! In the case of a new enterprise, the promoter shouldered the entire responsibility for raising the necessary funds, and incidentally he got the lion's share of profits. In fact, he frequently profited handsomely even though the mine earned little or nothing. Occasionally the engineer turned promoter or entrepreneur--conspicuous examples are Herbert Hoover, D. C. Jackling, William Braden and F. W. Bradley- but by and large he remained in a sphere of his own. To what extent this condition of affairs has changed is difficult to say. It might be argued that it were better that it be not changed; and yet I cannot help feeling that in mine promotion lies a distinct opportunity for the

Jan 1, 1932