Mining finance
How mines are paid for, from the first drill hole to production: the types of financing, who provides them, and how projects are valued.
- EquitySelling shares is the main way exploration is funded. It needs no repayment, but every raise dilutes existing shareholders.2 min read
- Earn-ins, options and joint venturesA partner can fund exploration in return for a share of a project rather than shares in the company. Options, earn-ins, joint ventures and carried interests are the main forms.2 min read
- RoyaltiesA royalty is a right to a share of a mine's revenue, paid for its whole life. It is a common way to fund exploration and development without selling shares.3 min read
- StreamsA stream is an upfront payment for the right to buy a share of a mine's future metal at a low price. Streams help fund construction, usually on by-product metals.2 min read
- DebtLoans are cheaper than equity but must be repaid. Project finance funds mine construction; juniors use convertible and bridge loans.2 min read
- Offtake and prepaymentsAn offtake agreement secures a buyer for a mine's product. A prepayment is cash paid upfront by that buyer, repaid in future deliveries.2 min read
- Government supportGovernments fund exploration through grants and tax incentives, and increasingly fund critical-minerals projects through loans and equity.2 min read
- The capital stack: how a mine's build is fundedBuilding a mine usually takes several kinds of financing at once. The capital stack shows the typical mix, and who gets paid first.2 min read
- Valuing a project: NPV, discount rate, IRR and paybackHow a mine's future cash is turned into a value today, and the measures studies use to judge whether a project is worth building.2 min read