Mineral Project Financing
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Innovative ways to invest in mining projects
Mining Project Financing offers a range of investment opportunities in mining projects by accepting payment in unit currencies. Investment options range from participation in unit offerings to more traditional funding mechanisms such as royalty contracts, streaming contracts and IPOs. Mining projects seeking finance are assessed for suitability, and if accepted, will be positioned to our extensive database of potential investors.
Mining project owners get the benefit of financing options that can be structured to their particular needs such as off-book unit offerings that do not dilute company equity. At the same time, unit currency holders get the opportunity to diversify into other asset classes, thus broadening their portfolios and reducing risk in their investments.
MA Financing uses its extensive database of unit holders to connect investors with new and existing mining projects. Each project has its own risk profile and investors are able to select projects that match their risk appetites. Each project typically has its own investment time-frame which enables investors to select projects that meet their investment expectations.
Each financing project is managed under the investment framework issued by the Monetary Authority of Singapore. This includes the use of unit offerings.
Metal Streaming: an Innovative New Funding Model
What is Streaming?
Metal streaming is a specific non-equity / non-debt funding instrument, that is implemented as a contract for the sale of future mine production.
An amount of capital is paid up front by an investor to the miner to secure the contract. The contract is essentially a pre-sale arrangement. The miner can use this capital immediately, either in production of the specified output for a new mine, or for any other agreed purpose such as mine expansion.
The terms of the contract can vary for example, funding for new mines is more favourable to the investor due to the higher risks involved compared with, say, mine expansion funding. The contract is often taken out over the secondary production of the mine, eg gold that is produced by a copper mine.
Streaming contracts are highly detailed and specific, with almost endless variations.
Streaming Benefits to Investors
- Returns can be realised as soon as production commences, no need to wait on dividends
- Investors can participate in mining upsides with minimal overheads and risks
- Investors may be shielded from market price fluctuations through their privileged pricing guarantees
Streaming Benefits to Miners
- Cash can be unlocked quickly with very low impact on other factors
- Streaming funds do not dilute equity
- As a non-debt instrument, streaming does not impact credit rating or borrowing capability
- An improved cash position can attract further equity or debt funding
- Although streaming is innovative, established International Financial Reporting Standards ensure that compliant accounting practices can be met
- Cash flow planning can include income from streaming contract purchases
Risks and Downsides
- An investor is exposed to delays or failure to reach productive output
- Mine failure to deliver the nominated metal must be managed through the contract
- An investor will normally have no input into operational decisions
- A miner must meet sales obligations to investors regardless of other factors, including loss of upside on some proportion of mine production
The Unit Offering Model for Metal Streaming Contracts
The use of units in combination with metal streaming contracts create yet further advantages for funding mining projects.
Mineral Assurance, a mining data and fundraising platform specialises in using unit offerings as a fundraising mechanism. Unit offerings have been used successfully to raise significant funds for various types of projects. The major difference is that the unit offering model in combination with the streaming contract provides for tight coupling to a fully legal and “real-world” contract. This may not be the case for most unit offerings.
The typical process of a mining-related Unit Offering is as follows:
- MA Mineral Project Financing takes the unit offer to the unit contract community.
- KYC and DD is required of all applicants.
- MA Mineral Project Financing (along with its mining industry partners) manages the fundraising process
- MA provides a unit backup and recovery service for all customers who require it
- MA manages the trades required to convert unit currency funds received to fiat
- The mine owner receives all funds in fiat form and all streaming payments are made by the mine owner in fiat
- Payments to investors are made in whichever currency they made their original contribution.
- MA will list the units on a number of prominent unit exchanges after metal delivery commences
- Investors may wish to sell units and other investors may wish to buy units.
- Unit trading may lead to unit price fluctuations.
World First Opportunity
This cutting-edge technology for the mining industry is currently in its early raising stage. Take advantage of this early opportunity now.
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