1. Moving projects along the development curve
 7th April 2015
Mining companies seeking to access capital in the current market are operating in a
particularly challenging environment. While precious metal prices remain at reasonable
levels, there is a distinct lack of capital (particularly exploration capital) as equity investors
continue to be risk-conscious and highly selective.
However, there are pockets of liquidity available in the market from sovereign wealth funds,
family offices, and hedge and resource funds that are, albeit selectively, willing to take
longer-term views and make investments. The Endeavour Financial advisory team works
with companies to identify alternatives to public markets with a common aim of moving
projects along the development curve.
Debt for project development is available. In addition to the conventional debt sources
(commercial lenders, export credit agencies, development banks and multi-lateral agencies)
there are streams and royalties, equipment financiers and trading houses to add to the
financing mix. With increasing competition for product in the precious metals space, offtake
has become increasingly relevant in funding discussions.

2. In addition to the financial challenges, many companies are operating in what are seen as
difficult jurisdictions; countries without a fully developed mining code or a strong fiscal
regime. Companies and investors often have to take a view on whether the host country’s
mining code tax and royalty structure is equitable, which stabilisation clauses are available
and, of course, the track record to date.
Endeavour Financial works alongside mining companies in negotiations with funding sources
as well as respective governments and governmental bodies around mineral rights, mineral
licenses, investment and direct agreements. Political risks such as expropriation and
nationalisation will always exist but these can be minimised by engaging with the appropriate
stakeholders, running a transparent and iterative process, and adhering to the conditions of
licence. Notwithstanding the usual commercial political risk insurance (PRI), the involvement
of multi-lateral bodies such as MIGA, the international finance corporation and other export
credit agencies/government entities can also lend support to mining companies and bring
some comfort to investors and lenders alike.
While junior gold companies can control certain factors and inputs, variables such as the
underlying resource quality and macroeconomic factors e.g. metal prices, exchange rates and
credit markets, are largely uncontrollable. Accordingly, in the current market only those with
all-in cash costs in the lowest quartiles have been able to advance. When the market does
turn, however, those companies in optimisation or cash-conservation mode should be able to
move forward relatively quickly. Indeed, even in remote locations, gold projects do not face
the same infrastructure constraints as bulk commodity projects.
While the majority of single-asset developers would welcome a move back towards the
$1,300/oz level and the potential equity support/investment that comes with it, what remains
unchanged is the complexity of financing these projects. Having an experienced mining
finance and advisory skillset on-call to source, negotiate and close financings enables
executive teams to focus on project development and managing their businesses. For the last
25 years, Endeavour Financial has been at the vanguard in successfully advising numerous
global precious metals companies, getting projects funded and into production.
Paul Stevens, pictured above, is director of Endeavour Financial
+44 (0)20 7590 2720
www.endeavourfinancial.com