Financing of International Mining Projects.

As an industrial nation, Germany is obliged to safeguard its supplies of natural resources by obtaining a number of different raw materials that are not available, or cannot be supplied in sufficient quantities, on the domestic market. From a German perspective the development of overseas mineral deposits therefore plays a vital role when it comes to externally sourced commodities, and particularly energy resources, metals and/or metal ores and a number of industrial minerals. Although there are just a few German companies currently engaged directly in their own foreign mining operations, including AMG Mining AG (Graphit Kropfmühl), Cronimet Mining AG and K+S AG, it would not be possible to develop new mineral deposits without some form of financial backing. This applies equally to projects that contribute indirectly to the supply of raw materials through intermediaries or purchasing agreements. The following paper presents a brief outline of the different types of players currently involved in the commodity financing business and uses the life cycle of a natural-resources project to show the different forms of capital that can come into play for the various phases of the operation. Different forms of project development are depicted, based both on equity capital and on debt capital. When it comes to debt capital the focus is put on the different types of financing available for project companies (junior miners) on a non-recourse basis, as this form of mining project development ideally illustrates the challenges that can arise in the field of project funding. [ABSTRACT FROM AUTHOR]

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