Creative financing solutions evolve in the mining sector

By Michael Pickersgill and Peter Danner, Torys LLP

As challenging financing markets persist in the mining sector, miners are using increasingly creative combinations of financing options to fund project development and acquisitions. It is now common for transactions to feature multiple financing sources, with equity and debt being raised in conjunction with streaming, off-take and/or royalty financing.

No longer confined to junior and mid-tier transactions, stream and royalty financing is playing a key role in high-profile transactions, and streams and royalties are evolving to suit the needs of both mining companies and their financiers.

In a stream transaction, a streamer agrees to purchase, at a pre-agreed price or formula, future deliveries of minerals from an identified property in exchange for an up-front payment, called a deposit, which is applied against those deliveries. The streamer normally takes security over the project assets to protect its deposit and secure the performance of the delivery obligations.

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Torys LLP is an international business law firm that works with clients who expect the best advice and service. Michael Pickersgill is a partner and Peter Danner is an associate at the firm.


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