Alternative financing in the mining industry

3 things you need to know

Total state-backed investment nearly doubled from 2009 to 2012. State-backed investors have the cash reserves and the investment time horizon to invest at low points in the cycle.

The rise in state-backed investment is predominantly flowing from Asia with 74% of total state-backed acquisition and investment coming from the region

In our experience strategic and financial investors have very high information demands during the due diligence process to help them understand risks.

The major financing rule remains to plan your financing needs earlier than you imagine you should and evaluate for as long as possible.

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With mining stocks lagging the world share indices and bank financing still difficult to achieve, conventional funding routes for mining companies are closed or problematic for now. Because of this, the current high levels of interest from the global mining community in sources of alternative funding is no surprise, but what are the options and risks, the opportunities and experiences of those seeking alternative funding?

From our findings and experience we have identified:

  1. The rise of South Korea as a source of investment
  2. The likelihood of convertible bonds becoming mainstream in the UK in the near term
  3. The relative importance royalty & streaming has to raising finance today

The due diligence requirements for alternative finance sources differ from those of a pure equity raise. We examine the information requirements of major alternative finance sources and the level of intrusion on management.