In-Ground Assets are assets that a company or individual owns that are in the ground such as: oil and gas, coal, gold, silver, platinum, silica, kaolin, diamonds, copper, aluminum, nickel, liquid traded metals, and other minerals. Many companies, even some enormously large multi-million and multi-billion dollar companies do not know there are ways to monetize their in-ground assets even before they sell them through conventional methods or they do not know where to go to do so. Others need cash to make their mines operational and profitable. All it takes is for you to provide us with an Assay/Geological Report of your in-ground assets (and some other minor documentation), which we will submit to one of our private lenders or investors for compliance evaluation, hopefully followed by acceptance and then monetization.
Mining financing has changed dramatically over the past few years but mining capital is still available in substantial quantities if a client has a good project and they are committed to completing the funding process. A common mistake many mine owners make is prejudging what is possible and not investigating all types of financing. There have been many mining projects financed from new sources of capital that did not even exist before 2015.
Types of Projects
We will consider all types of mining projects but most clients have the following types of ventures:
The Current State of Mine Financing
Most traditional mining lenders are, for all intents and purposes, out of the business right now. Equity capital is also harder to source but it can still be done if the project is exceptional. We are in the funding business; we want good projects even in these hard times. If you have a good project and are willing to follow the rules you can get funded.
Why We Are Unique
Unlike banks, factoring companies and traditional hard asset lenders, we are active in specialized areas of corporate finance that lend themselves well to mining financing. These specialized types of mining financing also have two advantages over traditional funders First, strong mining projects are actually being funded instead of shunted to the side “until things improve”. And second, the terms of the fundings are attractive even when other forms of funding are demanding terms that would never be considered in normal times.
Alternative Capital Financing
In some situations, a new mining client may request funding in a program we normally offer only to our existing clients. The strength of the client's project is a major factor in determining if this option is available. The funding is non-recourse and in most situations repayment may be made before maturity.
We work with several investors who specialize in gold mines. Our investors are usually open to equity, debt, or a combination of both and will structure the terms to meet the needs of the borrower. Often deals are structured to allow investors to purchase gold from the mine at a predetermined and discounted rate. Our gold mine investors are knowledgeable about mining and usually meet with principals and visit the mine before funding is finalized.
When reviewing gold mine investment opportunities, our investors want to know whether your mine is currently producing, and if so how much. If the mine is producing, how much increased production can be expected by utilizing the invested capital. Please have geo reports, assay reports and third party 43-101 reports available as well as information on claims and permits.
Please also be prepared to answer questions about how much capital has been invested in the mine to date, liquidity of borrowers, and be able to show proof of funds upon request. Our investors want to know that borrowers have skin in the game and the ability to help make the deal work. Some investors will require 10% proof of funds, while for others 1 – 2% liquidity to help with due diligence is acceptable.
Investors in energy and mining generally like coal mine projects. Investors want to know whether the mine and the land are owned or whether the mine is on a lease. It is helpful if the mine is currently operational and if there is product above the ground. Please be specific on what type of mine it is, whether it is a surface mine or deep underground, and what methods of extraction are being utilized.
Investors prefer coal mines that are currently producing. They will want to know production rate and will want to see how much that rate will increase when their capital is invested. If the mine is not currently producing, how much time and money will it take to begin production? Investors will look at funding mines held by owners as well as opportunities for new principals to purchase existing mines.
Borrowers will be asked about liquidity, capital invested in the project to date, cash flows on producing mines and whether equipment or land can be used as collateral. Debt and equity options will be discussed and the best arrangement for investor and borrower will be determined.
Oil well investors have several criteria they utilize to determine project viability and their interest level in capital investment. Initially they will want to know if permits are in place and whether the land is owned or leased. They will also want to know if there are existing wells and if they are currently producing, and if producing what is the rate. If the wells are not currently producing, how much capital and how much time will it take to begin production?
Investors understand the potential of oil fields and want to know about proven reserves and short and long-term project plans to realize the field’s potential. They will want to know how many wells a field can support, how deep the wells will need to go, and whether horizontal drilling will be required. Please be as descriptive as possible about depths, formations and other pertinent geologic information.
Like other investment opportunities, the questions of capital invested to date, liquidity and collateral are important. Investors want to know if borrowers have liquidity and whether they can show proof of funds. Does the borrower own any equipment? Are there cash flows from producing wells, and what is the value of the land? These are all questions investors will have.
Investors interested in natural gas projects want to know several things about the wells and the geology of the site. Please be prepared to discuss the formation to be drilled, what the subsurface geology will be like, and how large and deep the target deposit is. Please also be prepared with proper permits for drilling and land lease or ownership records.
Another question and focus of due diligence is the plan behind extracting and selling the natural gas. Investors will need to know how the well will be connected to pipelines in the area and who the eventual buyer of the natural gas will be. Questions about mineral rights, leases, piping and royalties will be discussed between the well principal and the investor.
Financial considerations from the investor will include borrower liquidity, cash invested in the project to date, as well as land and equipment ownership to be used as collateral. Investors look for borrowers who can continue to contribute to the viability of the project, both operationally and financially.
Other Types of Projects
We consider projects in the following energy sectors:
As always, our success fees are only paid upon successful funding of your project.