Visualized: How a Mine is Financed to Production

Visualized: How a Mine is Financed to Production

Delivering a mine from discovery to production can be a complex journey. 

Securing the right funding at each stage of development, specifically, is critical to ensuring success. 

In this graphic, created in partnership with Appian Capital Advisory, we explore some of the most common mine finance vehicles developers leverage throughout a mine’s lifecycle, breaking down the risk and cost associated with each stage.

Mine Finance Vehicles, Explained

First, let’s cover the lifecycle of mines. 

Mining projects typically evolve through four key stages, with project risk and funding costs decreasing with each stage. 

1. Exploration: The initial phase focused on identifying potential mineral deposits. This stage involves high uncertainty but relatively low capital expenditure compared to later stages.
2. Evaluation & Development: Once a deposit is identified, feasibility studies and environmental assessments are conducted. This phase is crucial for understanding project viability and preparing for construction.
3. Construction: The most capital-intensive phase, construction involves building the mine infrastructure, including processing facilities and transport links. 
4. Operations: With the mine fully operational, production begins. This phase requires ongoing funding for maintenance and labor but offers the lowest risk and consistent returns. 

Financing Across the Stages of a Mine

As the risk and funding needs of a project evolve, so do the financing options available. Here are some common options.

Certain options, such as asset-linked financing, can provide companies with more flexible alternatives to traditional financing, such as loans and bonds. 

Asset-linked financing involves leveraging a mine’s future assets, such as production or revenue, through mechanisms like streaming or royalty agreements. 

By combining traditional methods with these innovative approaches, developers can tailor funding strategies to their project’s unique needs, balancing risk and cost in an effective manner.

Where Appian Capital Advisory Comes In 

Navigating the complexities of mine financing is no easy feat, especially when projects require a mix of capital solutions to progress efficiently. 

Partnering with industry experts to design optimal financing structures can allow companies to secure flexible and faster funding with fewer structural limitations.

Learn more at appiancapitaladvisory.com

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