How To Finance Mine Exploration And Development

For many years large mining companies were able to finance nearly all of their capital requirements from internally generated funds. However, during the last decade, funds needed for capital expenditures, dividends, and scheduled debt retirement have grown faster than cash flow. As a result the minerals industry has had to rely increasingly on other sources of funds. Getting the capital for new mining projects is a challenge, particularly for smaller companies. New methods of financing and new variations to old methods have been developed and more are needed. Commercial banks are short-term lenders. By policy their loans are limited to low risk loans-those made solely on the borrower's general credit, and secured loans where cash flow is sufficient to provide repayment within a comparatively short term. To maintain liquidity, banks prefer to make loans of less than seven years' term. If a longer loan is needed an insurance company or pension trust may take the long-term part.