Fieldfisher, a European company with market-leading practices in many sectors globally, recently released its third-edition mining guide for alternative financing. The report looks into the finance landscape in mining, based on the experience of the metals and mining team working with lenders and borrowers in times that are changing rapidly for early-stage and junior-exploration mining firms.
The last report published by the firm was released in 2018. Since then, the company’s metals and mining team has counselled on metals and mining sector deals worth more than $2 billion. These include green-financings and complex-production-based financing deals, which are in compliance with lenders’ growing interest in environmental and social governance (ESG)
In the last five years, capital markets have been difficult environments for small-scale metals and mining firms to acquire cash. However, things improved this year, with more inventive deals being yielded in natural-resource sectors worldwide as firms ventured into new ways to fund projects.
The coronavirus’ arrival, which affected many industries worldwide, helped center attention on the security of supply chains in mining as well as various projects’ sustainability. This helped revive the interest in safe-haven gold mining investments and technology metals.
The Alternative Financing 2020 report by Fieldfisher includes an assessment on ESG, including aspects such as an increase in interest on Nordic bonds in the mining community, green loans growth, the advantages and disadvantages of crowd funding, and new markets taking equity stories.
Additionally, the report examines innovations in mining finance’s more established forms such as royalty deals and streaming. The report also provides an analysis of the potential pitfalls and pros of debt, private and equity financing. Jonathan Brooks, head of Metals and Mining at Fieldfisher, stated that the coronavirus and environmental and social governance had determined the direction the mining finance deals made in the last two years would head.
Brooks went on to say that environmental and social governance had for some years now been gaining pace in the natural resource industry, as its role shifted to financing opportunity from a compliance burden. He argued that, unlike many other sectors, the world’s mining industry had not incurred as many negative effects as a result of the pandemic, despite the disruptions in supply chains and the volatility observed in the capital markets.
Brooks added that many mid-tier and large mining firms were adequately capitalized to pull through the coronavirus storm, with banks being prepared to continue lending to firms with suitably de-risked projects and strong balance sheets.
Many mining sector players in North America are pressing ahead with their operations amid the pandemic. A shining example is Josemaria Resources Inc. (OTCQB: JOSMF) (TSX: JOSE), which is currently focused on its flagship project, the Josemaria Copper and Gold Project found in Argentina.
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