International Mining Conference and Exhibition of Cameroon
4th Edition – May 22-24, 2024
Round Table No. 2: Challenges and Constraints for the Sustainable Exploitation of Mineral Resources
Serge Bakoa, Esq. – Attorney at Law, Cameroon and Paris Bars
Summary of the topic of Financing Mining Projects
The mineral development process generally unfolds in five main phases, each further broken down into several stages, ranging from site reconnaissance (stage 1) to site closure or restoration (stage 11 or 12). Increasingly, the infrastructure and value chain required for the project are also included.
Thus, the financing of a mining project depends on the economic model and the capital intensity (low, medium, high, maximum) of the phase, stage, or even the entire project. Financing needs vary considerably from one stage to the next and are dependent on the availability of different types of equity investors or lenders (banks, investment funds) active in project financing, the level of risk they are willing to take, and the potential returns they expect.
The financing of a mining project depends on (i) characteristics common to mining operations, but also (ii) the specific characteristics of the ore in question, (iii) the financing options or techniques chosen (equity financing, debt financing, hybrid or structured financing, specific financing), (iv) the sources of financing, (v) the financing actors, (vi) the environment and feasibility of the mining project, (vii) the technical and financial capacity of all actors involved in the project, (viii) the competence of the team responsible for its execution, (ix) whether the project is integrated or not, and (x) the Environmental, Social, and Governance (ESG) criteria or Corporate Social Responsibility of mining companies.
“Bankability” is therefore the essential determinant of a mining project.