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By M. Götze, P. Eysel

Over the last years, the importance of the assessment of environmental and social aspects as well as of issues of good governance has increased significantly in mining finance. For this, international standards as well as internal guidelines of the banks and other involved institutions have been established and continuously improved. Considering these standards and regulations, the banks can influence the sustainability of mining projects - and they have done so in the past -, mainly by implementing certain provisions and covenants in the loan documentation, binding the financing to the mining company’s adherence to the agreed sustainability standards. However, there are limits to the banks’ influence due to the competitive environment with other available means of financing. Nevertheless, the experience of the last years has shown that the standards and regulations bound to the financing by the banks help to lead the mining industry towards more sustainable projects.

Jan 1, 2011

By N. R. MacMillan

INTRODUCTION The Bullmoose Coal Project is part of a major development in northeastern British Columbia which comprises a new rail line, a new townsite, powerline, highway, the upgrading of the Canadian National Railway's main line, a new coal port at Prince Rupert and two new coal mines, the Bullmoose mine and the Quintette mine. The total investment by all parties is estimated to be in excess of $2.6 billion and made up approximately as follows : [Table No. 1 $ Millions - Quintette Coal Limited 950 Teck-Bullmoose Coal Inc. 275 Canadian National Railway Company 800 6 British Columbia Railway Company Port at Prince Rupert 280 Townsite, Roads 6- Power ] The new infrastructure is intended to serve not only the Bullmoose and Quintette coal projects but also eventually a number of other coal properties in northeastern British Columbia. The Bullmoose project is structured on a joint venture basis as follows : [Table No. 2 Teck Corporation 51% Lornex Mining Corporation Ltd. 39% Nissho Iwai Coal Development 1 0% (Canada) Ltd. -- 100% ] The mine has a capacity of 2.3 million tonnes of clean coal per year. In the initial years 1.7 million tonnes will be metallurgical coal and 0.6 million tonnes thermal coal. After the first three years of operations the annual production of metallurgical coal will increase to an average of approximately 2.1 million tonnes and the production of thermal coal will decrease to an average of approximately 0.2 million tonnes. At this level of 2.3 million tonnes annual production, the Bullmoose mine has sufficient reserves for at least 26 years of production. History Brameda Resources Ltd. commenced coal exploration in the Bullmoose-Sukunka area in 1969. Teck obtained an option on the Bullmoose coal licences in 1970 and started surface exploration and diamond drilling in 1971. Teck earned a 50% interest in the property, and thereafter expenses were jointly financed by Teck and Brameda. In 1981 Brameda merged with Teck making Teck the sole owner. The initial phase of the exploration program, which was completed in 1975, included 7,200 meters of diamond drilling in 35 holes. During 1976 and 1977, detailed exploration and test work were carried out on the South Fork and West Fork areas where multiple seams close to surfaces indicated the potential for large tonnages of strippable coal. In those two years, work included road construction, detailed mapping and trenching to outline the coal seam traces at the surface, 6,300 meters of diamond drilling in 80 holes, and 300 meters of underground bulk sampling from seven adits. Washability tests and analysis work were carried out on the drill cores and adit samples, and pilot plant washability studies were undertaken. In 1978 and 1979 Teck engineers prepared open pit mining plans and production schedules and Kaiser Engineering was retained to prepare a layout of the plant preparation facility. A feasibility study prepared by Teck's engineering group in January 1982 was the base document used by the Lenders in assessing the technical and economic viability of the project. Property Location The property lies some 650 kilometers northeast of Vancouver, and 87 kilometers south by road from the village of Chetwynd. The Sukunka property (British Petroleum) adjoins to the north, the Mount Spieker property (Ranger Oil Option) adjoins to the east, and the Quintette property is located to the southeast.

Jan 1, 1985

By Tomek Ulatowski

This article discusses four principal areas relevant to financing direct reduction facilities: (1) Lenders' differing requirements with respect to projected cash flows; (2) The impact of leveraging on project viability; (3) The importance of appropriate debt structure; (4) The significance of accurate and complete capital cost estimates. The overall findings emphasize the inseparable connection between the project economics and its financeability, and particularly how direcly intertwined they both are in the project planning.

Jan 1, 1978

By G. V. Campbell, O. T. Holdsworth, M. G. Nelson

A senior design project is required by all accredited mining engineering degree programs. Often referred to as the capstone of a student’s education, this project is expected to include all the important components of the preliminary economic assessment of a mineral prospect, including orebody modeling, grade and reserve estimation, selection of mining and processing methods, preliminary mine design, access and utilities, environmental compliance and reclamation, and financial analysis. Two of the authors (Campbell and Holdsworth) completed a senior project in 2021. They analyzed the Akie zinc deposit located in Canada. This paper summarizes the economic analysis portion of that project. The two primary objectives of this economic analysis were risk reduction and integration of economics and engineering. Addressing risk is important as risk is one of the primary concerns in mining investments. Risk reduction was the primary concern through the entirety of this economic analysis. Integration of financial analysis and engineering design was the first component of a risk reduction design. This allowed for financial and engineering design to be optimized in conjunction with one another. This produced benefits from both a financial and an engineering prospective. From a market, economic, and financial risk perspective, risk was reduced by forecasting multiple metal price scenarios, and then addressing the Akie project’s economic viability at each price point. Lastly, risk was address through consideration of nontraditional financing options. The project also sought to minimize financial and human capital risk, by proposing mutually beneficial cooperative social relationships and favorable work, schedules. Description of that work is not included in this paper.

Mar 2, 2022

By Parker JB

The Channar Iron Ore Mining Project (the Project) is a joint venture involving the Hamersley Holdings group (Hamersley) and the China Metallurgical Import and Export Corporation (CMIEC). The Project represents the first new iron ore mine development in Australia since 1971/72 and is the first major overseas mining investment by the People's Republic of China (PRC). The Channar mine is being constructed in the Pilbara region of Western Australia and will operate for more than 20 years supplying the PRC with 200 M tonne of high grade iron ore. The Project is configured to take advantage of Hamersley's existing production and support facilities. The Joint Venturers will invest A$280 million to achieve an initial production rate of 3 M tonne/yr and an additional A$120 million over the next 8 years to achieve full capacity of 10 M tonne/yr. Financing the Project to meet the requirements of both Hamersley and CMIEC, with the dependance of the Project on Hamersley's infrastructure, and in a depressed iron ore market, required an innovative financial structure to be arranged in a limited period. This paper describes both the financial structure and its implementation, and draws a number of conclusions regarding the financing of resource projects.

Jan 1, 1989

By Fred H. Brooks

INTRODUCTION The toughest job for any mining company, large or small, is to locate and identify a property which it feels has the potential for development and which can be tied up through location, lease or option under terms within their means. In the case of a small company, this precludes grass-roots exploration with its attendant high costs and the extended time required to develop a prospect to the point of being a project. The small mining company, therefore must limit its search to known properties which, for various reasons, have been shut down or were never thoroughly developed at the time of discovery. These types of prospects are located either through literature search, familiarity with many mining areas in general, or through contacts and submittals from a variety of sources. In order to develop a marketable presentation to any investor, the basic requirements are the same: - the property must demonstrate the potential to provide a satisfactory return on investment - the evaluation study must be thorough and professionally developed. In order to promote any mining property, it is first necessary to know what you have. INFORMATION DEVELOPMENT We normally begin with a detailed literature search of the district, assembling all available data on the basic geology, production records, and old reports of this or neighboring properties and any other information which can be found. This will aid in the general understanding of the basic geology and hopefully allow a fairly detailed knowledge of the specific occurrence. With this information one can begin to speculate on the reserve potential and develop some high and low figures for estimating purposes as to mining method, production rate, metallurgy and begin developing estimated capital and operating costs. Cashflow runs are developed for varying tonnages (high and low), estimated high and low grades of metal and at differing market prices for the product. FINANCE CONTACTS Brooks Minerals, from its inception, has been an operating company and we have been able to assemble a small but experienced operating staff. For this reason we try to put together projects and joint ventures where we can be the operator and maintain a certain degree of control. Whether due to familiarity with many colleagues in the mining industry or due to unfamiliarity with the banking houses and securities markets, the approach to raising finance has generally been to contact the established mining companies. This requires a familiarity with the corporate philosophies of these companies with respect to their development goals and financial capabilities. A common mistake is to shotgun the proposal to many companies of different sizes and goals in hopes that one might be interested. It is more beneficial, when possible, to tailor a proposal to each company, stressing the positive points where the specific proposal best meets their interests. One company may be more interested in a development program with fairly certain and conservative return potential. The property may well contain both possibilities but a lack of understanding of the individual company's method of operation could spoil the deal. In another instance, one company may look at a property as a moderate income producer over an extended life, yet a second may elect to high-grade the deposit over a shorter period in order to provide early cash flow or take advantage of a favorable market situation. MAKING THE DEAL There are as many types of deals as there

Jan 1, 1985

By Christian F. Baiz

INTRODUCTION Industrial minerals can have similar financing requirements to those needs of metaliferrous and coal mining projects. One of the outstanding differences is the understanding of the many different markets that these industrial minerals represent. There are in excess of 30 principal industrial minerals ranging in terms of annual production from the largest quantity such as sand and gravel, to possibly the smallest quantity of production of a legitimate industrial mineral which may be defined as industrial and rough gem diamond. (See Tables 1 and 2) Project finance techniques, analytical methods, and information requirements are covered elsewhere in this Chapter and Chapter 10. Some comments on equity finance aspects follow. EQUITY AMOUNT The amount of equity in a financing transaction provides a cushion to the lender in case the project runs into trouble. Generally speaking, the greater the amount of risk in a project, the more equity a lender will require. The amount of cash equity in a project financing transaction is between 25 and 40 percent. The amount of leverage (debt/equity) is negotiable based on such factors as the strength and extent of the sponsor's undertakings, of the project's economics, and the term of a strong sales contract. Naturally, a borrower seeks to obtain d loan with as little equity required as can be negotiated. Zero percent equity is usually associated with a take-or-pay contract (a hell-or-high- water unconditional commitment under which the purchaser must pay for the commodity as though it were shipped regardless of whether it is actually mined or shipped) with a financially strong corporate entity i.e., the parent company or an end user. As a take-or-pay contract is tantamount to a guarantee of payment, the banker views the credit basis of the loan as being other than the borrower's mining operation and therefore will analyze the creditworthiness of the institution purchasing the commodity on the basis of its corporate balance sheet. Do not confuse a take-or-pay contract with a take-if- tendered or take-and-pay contract. Another means in the United States of obtaining zero percent equity is the carved out production payment financing, typical of coal mine financing. This involves the sale, or conveyance, by the owner of the mineral property of a production payment to a nominally capitalized company. The nominally capitalized company is formed solely to buy the production payment and usually borrows 100 percent of the purchase price from a lender. Equity amounts of 10 to 20 percent generally are found in transactions which employ techniques such as an advance sale or a subordinated lease/loan. These agreements are viewed as quasi equity by most banks for several reasons. First, the proceeds represent a cash infusion early in the project's life - usually prior to the bank lending any funds. Thus, the repayment schedule is "behind" that of the bank debt. In the case of an advance sale, repayment is in the form of a long-term supply contract with favorable terms, usually priced close to the mining operation's costs. There is also usually a requirement that all costs of the project be paid for by the loan or equity, often making the sponsors financially responsible for any cost overruns. Cost overruns are a major risk in any project, large or small, and are often due to unforeseen factors such as wildcat strikes, a piece of faulty equipment, or any event which delays completion, e.g., remote location, weather, etc.. . The question of how overruns are covered can be negotiated. For example, in addition to the original debt/equity ratio of the project, there can also be a cost overrun ratio that will

Jan 1, 1985

By Christian F. Baiz

Industrial minerals can have similar financing requirements to those needs of metaliferrous and coal mining projects. Although, one may see many similarities in the fundamentals of the various risks that must be evaluated in lending to any specific project, one of the outstanding differences is the understanding of the many different markets that these industrial minerals represent. There are in excess of 30 principal industrial minerals ranging in terms of annual production from the largest quantity such as sand and gravel, to possibly the smallest quantity of production of a legitimate industrial mineral which may be defined as industrial and rough gem diamond. If we assume that it is necessary to finance independent projects of ore bodies of industrial minerals for development, the financing techniques are similar to the fundamentals that we would use for financing coal projects or metaliferrous deposits. Therefore, let's begin by redefining project financing in the traditional banking or private sector area, and then in the later development of this paper, we will apply these techniques to industrial minerals in general and cite it with several specific examples.

Jan 1, 1982

By Michael Chender

INTRODUCTION The project financing described elsewhere in this book is available to major mining companies on the basis of a strong balance sheet, a significant equity position in a project of proven feasibility, and a demonstrated ability to bring ore deposits into production. "Junior" mining companies, which are most active in Canada, Australia, the US, and South Africa, by definition do not meet these criteria. In many cases, junior companies will need to raise money simply to cover the costs of acquiring and exploring potential deposits. In what follows we will look primarily at junior financing practices in the US and Canada, although the same general principles will apply in Australia and South Africa. The principal vehicles for junior mine company financing are limited partnerships, the private placement of securities and debentures, and public offering of securities, and property deals with stronger companies, in the form of leases, earn-ins and co-ventures. The cost (in terms of dollars or equity) and, to some extent, the applicability of using these difficult approaches varies with the stage of development of the property and with the corresponding degree of risk to the investor. Much junior company fund raising is, in fact, "interim" financing in that it allows the company to improve its properties and develop its assets to the stage where more favorable financing arrangements may become available. Companies will therefore often use several of the approaches described above during the development life of a specific property. LIMITED PARTNERSHIPS Limited partnerships and syndications are a popular way of structuring the initial private financing of mine developments because of their attractive tax consequences for the well-to-do investor. Costs of exploration and development can in many countries be passed through as deductions to the limited partners, who are thus able to gamble on a possible windfall at little real cost. In addition to private Canadian funds, much German money flowed into Canadian exploration ventures on this basis, but stopped in 1982 due to economic conditions in West Germany. In the US, recent regulations have, in the great majority of cases, taken away the ability to "shelter" income in mining limited partnerships. Deductions taken by the individual investor cannot exceed the amount of money he actually has at risk. Nevertheless, the allowable deductions are still attractive and some of the major mining companies are now beginning to look at limited partnerships as a vehicle for attracting additional exploration funding. Ranchers Exploration and Development has successfully put together several drilling funds on this basis. THE PRIVATE PLACEMENT Initial funding for the acquisition and preliminary exploration of prospects is often accomplished through a private placement of unregistered securities or, where it is not a problem to carry debt on the statement, by a private placement sale of debentures. A fledgling company wishing to do a public offering may well be advised by an underwriter to accomplish a small private placement as a precondition of the larger offering. In this way, the sale of the registered securities is not inhibited by the company starting out with a debt-ridden balance sheet and no demonstrated ability to secure the additional financing generally necessary beyond the proceeds of that offering. In the US, the securities offered in a private placement are not registered with the Securities and Exchange Commission (S.E.C.) but are restricted as to their resale, and could be further restricted by a underwriting agreement

Jan 1, 1985

By William L. Young

I think I should let you in on one of Canada's best-kept secrets, if you will promise not to tell it all over the place. Believe it or not, good, honest, enterprising capitalism is still alive and flourishing north of our common border, and I am living proof that capitalism is still working for the little guy. My personal story of mining development in Canada isn't all that rare -- you've probably heard something like it from other areas and other days several times -- but my case brings it up-to-date. I would like to Tell you briefly the history of Northumberland Mines Limited, a contemporary case of individual enterprise getting a mining operation underway. And if I can do it you probably can too.

Jan 1, 1981

By Barrie A. Wigmore

There are two aspects of financing western coal development -- whether there is going to be enough money to finance the prospective large development of the industry, and the specific techniques of raising money for that development. To take the first question of whether there is going to be enough money around to finance your industry, I think it is quite clear that the restrictions on the development of western coal are going to be non- financial. Environmental impact problems are creating the greatest delay in coal mine development, at the moment; but getting enough personnel, mining equipment, railroad equipment, and failure of the Department of Interior to act on leasing federal coal lands all appear likely to create significant bottle- necks in the development of western coal -- larger bottlenecks than financing. Financing appears straightforward for the industry. There are many projections of the financing required to meet Project Independence goals. The National Academy of Engineers estimated that development of 500 million tons per annum of western coal would be necessary by 1985 to meet the Project Independence goals which might require $20 billion of capital spending. It is generally agreed that 500 million tons a year is not a realistic possibility. Carl Bagge?s estimate of production of 250 million tons a year by 1983 appears a more reasonable projection. Development

Jan 1, 1976

By M D. Rosengren, G Gregor, M F. Young

Over the last 15 years the silver/lead/zinc ore treated at Mount Isa became increasingly complex and lower grade. Metal recoveries dropped dramatically, causing a serious decline in profitability. The ætraditionalÆ response of increasing tonnage to reduce unit cost was unsuccessful, since the additional tonnage was even lower quality ore. A major technical and capital program in the 1990s restored metallurgical performance, but business return was still too low and ore quality continued to decline. In 1996 a new, holistic approach integrated the steps of geology, mining, concentrating, smelting, and refining. Previous assumptions about æfixedÆ and æmarginalÆ costs in mining and processing were shown to be wrong. Detailed analysis showed that some ore sources were reducing profit. This led to a fundamental redesign and downsizing of both Mount Isa and Hilton mines. The result was dramatic increases in head grades, metallurgical performance and plant stability without any capital expenditure. The business is now smaller, but more profitable.

Jan 1, 1998

By A Murphy, I Samsonova, N Eastwood, D Whittle

Part XI of the United Nations Convention on the Law of the Sea (UNCLOS or the Convention) (United Nations (UN) Division for Ocean Affairs and the Law of the Sea, 1982) establishes a comprehensive regulatory framework for the conduct of deep seabed mining (DSM) activities of mineral resources in the Area (defined in Article 1(1) of UNCLOS as ‘the seabed and ocean floor and subsoil thereof, beyond the limits of national jurisdiction’). Under that framework, DSM activities can only take place in the Area pursuant to an approved Plan of Work in the form of a contract with the International Seabed Authority (ISA) (the Authority), a 168-member international body created under UNCLOS to administer the Area. Private contractors can undertake DSM activities if they are sponsored by Member States of UNCLOS, providing a dual system of international and domestic regulatory control and oversight for activities in the Area.

Sep 1, 2024

By L. Clark

Despite near-record commodity prices, the mining industry continues to search for ways to maintain profits in these times of steadily increasing energy prices and steadily decreasing grades. The pressure is still on today’s miners to continuously improve their operations because they know that one day prices too will drop. Some, however, have seized the opportunity to employ systematic methods to reduce costs and increase the efficiency of their workforce and equipment. As a result, closer attention is being paid to scheduling and the value that could be added by defining the extraction sequence that maximizes the net present value [NPV] of a project. This paper will discuss the challenges faced by Newmont Mining Corporation [Newmont] at its operations and the application of sophisticated software tools and methods in its search of solutions to this problem.

Jan 1, 2007

By Julian Malnic

Various natural, commercial, engineering and operational factors govern the evolution of approaches taken in the exploration for Seafloor Massive Sulphides (SMS) and in delineating the resource. These stages are prerequisites to the proposed mining of SMS deposits. This paper presents and analyses these factors from the view of an SMS exploration company that is pioneering the exploration of this rich alternative source of zinc, copper and gold. Current exploration practices developed by Marine Scientific Research (MSR) workers for SMS deposits are expected to give way to industry-generated methods as the SMS exploration industry gathers momentum. The exploration process falls into three phases that are described below: Prospecting (locating targets), Indicating Resources, and Measuring Mineral Resources Considerable streamlining of the SMS exploration process will accelerate the rate of discovery. The economics of SMS mining are projected to be superior to comparable terrestrial mining operations in both operating cash cost and capital terms.

Jan 1, 2001

By Karen Munro

Importance of Aquatic Studies for Mining ?Aquatic habitat is usually the first area where a mine interacts with the ?real world? outside the mine footprint ?Water management is a key consideration for a mine?Effects on the aquatic environment often extend to wildlife and human uses ?There is a lot of regulatory focus on issues of water quality, fish and fish habitat

May 1, 2011

By Mark Vardy, Kate Dobson, Isobel Yeo, Paul Lusty, Bramley Murton

In response to anthropogenic climate change, the way in which we use and generate energy is changing. To facilitate these developments, it is essential that we increase and diversify the supply of ‘E-Tech’ elements essential for cleaner energy generation and more efficient usage. The vast majority of these materials (e.g. cobalt, lithium, niobium, platinum group metals, rare earth elements and indium) come almost exclusively from mining and new resources must be found and developed in order to secure supply and meet the demands of the future. Ferromanganese (FeMn) crusts are rich in cobalt, tellurium and rare earth metals, and are common on seafloor hard grounds at water depths over 1000 m. The mining of both FeMn crusts and nodules is potentially viable dependent of the balance of cobalt and nickle prices (Martino & Parson, 2012), however, crusts need to be at least 4 cm thick with cobalt contents of at least 0.8% (International Seabed Authority, 2008). The difficulty for those wishing to exploit these resources is firstly finding them, and secondly assessing their potential remotely. Such capability would not only save time and money, but also allow mining operations to be more focused, reducing needless destruction of seafloor habitats from exploratory mining or mining of noneconomically worthwhile deposits. In this contribution, we examine the distribution of crusts on a single Atlantic Gyot (Tropic Seamount), the morphology of FeMn crusts, their variable growth patterns and the characteristic geophysical response from crusts in various datasets, including ship based 60 m resolution multibeam and high resolution bathymetry, backscatter and sub-bottom profiler data acquired using an Autonomous Underwater Vehicle (AUV).

Jan 1, 2017

By N Power, A D. Costar

There has been significant growth in mining and energy exploration in South Australia, which has identified new major potential opportunities. This sector generates significant economic value to the state and their support remains a priority for the state government. The delivery of this economic and associated community value to the state is dependent on the mining and energy sector being able to access reliable water supplies.The vast majority of priority areas for the mining and energy sectors are located in areas that have traditionally been of low priority from a water-use perspective and hence, data and knowledge levels are generally low.Recent studies have identified a potential increase in demand for water in the mining and energy sector for potential developments from approximately 40 GL to over 170 GL over the next ten years. The studies found that water and water infrastructure is the second highest proportion of planned infrastructure capital investment by resource companies. The South Australian GovernmentÆs Plan for Accelerating Exploration (PACE) initiative (PACE 2020), also identifies addressing the issues of location, use and management of South AustraliaÆs water resources as a key priority for the growth of the mining and energy sector.The Department of Environment, Water and Natural Resources (DEWNR) has developed the facilitating long-term outback water solution (FLOWS) initiative. DEWNR is currently undertaking a suite of programs to provide groundwater information at the regional scale to better target water supply options for mining and energy developments and community water supplies.The Goyder Institute for Water Research has leveraged significant research investment of $3 M to develop methodologies to interpret airborne geophysics to map groundwater sources.The FLOWS Initiative will provide key content for the PACE Water Program and will also assist in the development of water supplies for remote far north communities by identifying alternate groundwater sources to improve water supply security.This paper will discuss how developing an appropriate science and knowledge base will encourage and secure development where appropriate, enable prudent decision-making and policies regarding water allocation, accounting and licensing, whilst ensuring the protection of environmental assets.CITATION:Power, N and Costar, A D, 2013. Finding long-term outback water solutions, in Proceedings Water in Mining 2013 , pp 191-196 (The Australasian Institute of Mining and Metallurgy: Melbourne).

Nov 26, 2013

The population and the per capila consumption of mineral resources have both grown dramatically during the century past. It is argued that growth will continue through the century ahead but that the magnitudes of undiscovered resources are probably adequate to meet demands. The challenge that the mineral explorer of the future will face is finding deposits beneath several kilometres of barren rock.It is further argued that the principal challenge that society will face in the century ahead is the amelioration of environmental stress.

Jan 1, 1993

By R Lewis

Drill hole magnetometric resistivity (DHMMR) is a relatively recent addition to the explorationistsÆ suite of techniques for finding further resources in the vicinity of a drill hole. The method relies on gathering of an applied current into zones which are less resistive than the country rocks and it was first applied to exploration programs looking for weakly conductive sulphides, such as, for example, carbonate-hosted zinc deposits. More recently, it has been applied to a wider range of deposit styles, including highly conductive nickel sulphides. It has been found that the technique is capable of not only detecting mineralisation not seen by conventional electromagnetic (EM) techniques, but it can detect at a greater distance. Also, whilst EM is superior at defining tabular-shaped conductors, DHMMR may be more effective at finding cigar shaped sulphides. This paper presents a number of examples illustrating these findings.

Jan 1, 2000