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Crafting Multi-Source, Multi-Structure Financing Plans Post-2008: Lessons Learned

Cynthia Urda Kassis, 2015 International Mining and Oil & Gas Law, Development, and Investment

Six of the key non-traditional sources for funding greenfield mining and metals projects are the following: (1) streaming or royalty company financing, (2) high yield bonds, (3) private equity or hedge funds, (4) commodity trading companies, (5) strategic or industry investors and (6) construction contractors. There has been great fanfare over the last several years regarding the promise of a variety of the above sources of funding. In particular, numerous articles have been written about the significant sums of money which has been raised and is sitting in private equity and hedge funds looking to be invested in this sector. In addition, much ink has been spent on streaming and royalty finance as all sector participants seek to understand the nature of this new and innovative source of funding.

Like traditional sources and structures for financing mining and metals projects, these new sources and structures each have advantages as well as potential disadvantages. Whether any one of these new sources is a good fit for any particular project will depend on whether the particular characteristics of the project and objectives of the sponsors match the requirements and objectives of the financing source and structure. The challenge is that with traditional sources there exists decades of experience through boom and bust cycles of the sector and the full evolution of num