Mine Finance: Funding Options From Licence to Mill

Mine finance is the mix of equity, debt, royalties, streams and offtake prepayments that carries a mineral project from a licence to a producing mill. No single source pays for the whole journey. Exploration runs on equity from investors who accept a high chance of loss, studies on larger raises or partners, and construction on a structured package that banks only lend against once a feasibility study, permits and a financial model are in place. Senior bank debt is commonly 40% to 60% of total funding, according to Skillings Mining Review (accessed 5 November 2026), with the remainder coming from the sources below.

This guide is written for licence owners, consultants and investors who need to see how mining project finance fits together: which funder is available at each stage, what each one costs you, how lenders size a loan, and what a royalty or stream really takes. It covers mining financing in Australia, Canada and the United States, where the public programmes are best documented, and it includes a debt-capacity calculator you can run on your own numbers. It is general information, not advice, and it names no lender or fund as a recommendation.

Mine finance by stage: who pays for what

The cost of capital falls as risk falls. At the start only investors who can afford to lose everything will fund a project, and they want a large share of it in return. By construction, lenders will advance debt at a lower cost than equity, because the deposit, the mine plan and the economics have been tested. Good planning means raising the right kind of money at each step and no more of the expensive kind than needed.

Time matters too. An S&P Global Market Intelligence study found an average of 15.7 years from discovery to production across 127 mines that came online from 2002 onward (data compiled in April 2023), with almost 12 of those years spent in discovery, exploration and studies. The report also puts the United States at almost 29 years from discovery to first production, a figure that assumes projects not yet operating start producing by 2030, and shows gold mines in the 127-mine sample at about 15 years. A financing plan has to cover that long gap, usually through several metal price cycles.

Title comes first at every stage, because no funder will lend against ground you cannot show you hold. Our mining cadastre portal guide by country lists where to check a licence on the official register, and our guide to types of ore deposits explains the grade and tonnage ranges funders compare a target with.

Exploration funding: equity, flow-through shares and earn-ins

Equity is money invested in exchange for ownership. It pays for almost all early work. There is no repayment, but every share issued dilutes the holders already on the register. The common forms are these.

Chart

Money raised versus money spent on exploration

US$ billion; S&P Global figures for different company groups

• Private placements: shares, often with warrants, sold to a small group of investors. This is the usual route for a junior company between drilling programmes.
• Public listings and follow-on offerings: raising from the market under the listing rules and reporting code of the exchange.
• Strategic equity: a larger miner takes a stake, often with rights to more of the project later.
• Earn-ins: a partner pays for exploration or studies in exchange for a share of the project, so the licence owner spends less cash and keeps less of the asset.
• Private equity and resource funds: larger cheques at the development stage, usually with board seats and tighter terms. Our guide to how mining private equity and venture funds pick projects explains what they ask for, and our guide on how to find mining investors covers where to meet them.

Canadian flow-through shares

Canada has an exploration-specific tool. A flow-through share lets a company renounce eligible exploration expenses to the investors who buy the shares. On top of that, the Department of Finance proposed in March 2025 to extend the 15% Mineral Exploration Tax Credit, which goes to individual investors who buy flow-through shares, until 31 March 2027. The separate 30% Critical Mineral Exploration Tax Credit already existed for a list of critical minerals. Budget 2025 proposed adding twelve more minerals to it, for flow-through agreements entered into after 4 November 2025 and on or before 31 March 2027, according to the law firm Lavery. Both measures were proposals when those pages were written. Bill C-15, the Budget 2025 implementation act, received Royal Assent on 26 March 2026, according to EY, and its final list adds thirteen minerals, including phosphate. Check the Canada Revenue Agency for the rates in force before you price a raise.

How hard early money is to raise

The market moves in cycles. S&P Global data reported by Mining.com showed funds raised by junior and intermediate miners falling 12% in 2024 to US$10.3 billion, the lowest in five years. A year later, Crux Investor, citing S&P Global, reported that these companies raised US$21.43 billion in 2025, up 109%, while junior exploration budgets fell 13% to US$4.39 billion and grassroots work dropped to a record-low 21% of global budgets. Capital came back, but it went mostly to building and extending known deposits. The chart shows the gap.

For a licence owner the lesson is practical. Money is available for projects with a resource and a route to a mine, and scarcer for ground that is still a concept. Narrowing the first programme to the best targets reduces how much dilution the first raise costs you.

Mining project finance: how lenders size the debt

In mining project finance, lenders lend to a project company, often a special-purpose vehicle, and are repaid mainly from the mine’s own cash flow. They take security over the assets and contracts. Because repayment depends on the mine performing, they need a bankable feasibility study, permits, an environmental and social impact assessment, construction contracts and, in most cases, offtake agreements. Our guide to the seven steps of a bankable feasibility study shows what that document must contain.

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Coverage ratios lenders cite for mining loans

Times (x); indicative markers, not rules

The loan is sized from cash flow, not from the capital bill. Lenders take the cash flow available for debt service (CFADS), divide it by the minimum debt service coverage ratio (DSCR) they will accept, and find the loan that the resulting annual payment can repay over the tenor. Anything the loan does not cover must come from equity, streams, royalties or subordinated debt. Two coverage tests matter: the DSCR, which compares each year’s cash flow with that year’s debt payments, and the loan life coverage ratio (LLCR), which compares the present value of cash flow over the loan life with the debt outstanding.

Skillings Mining Review describes the traditional minimum DSCR for mining project finance as 1.2 to 1.4 times, with recent market commentary pointing to 1.5 to 1.7 times in downside cases, and greenfield LLCR benchmarks of roughly 1.7 to 2.0 times. It calls these indicative markers, not rules. Lenders also size against a conservative price deck rather than the sponsor’s upside case, and the same article says a long-term price assumption should not simply extend today’s spot price. The chart below plots the ranges.

The calculator then shows what that does to a loan. Enter your own cash flow, coverage ratio, interest rate and tenor, and see how large an equity gap is left. Push the DSCR from 1.5 to 1.8, or cut the tenor by two years, and watch the gap grow. That is why grade and operating cost matter so much to financing: a higher-margin mine carries more cheap debt, and a marginal one leans on dearer capital.

Environmental and social standards

Many banks and export credit agencies apply the Equator Principles. They apply to project finance and project finance advisory services where total project capital costs are US$10 million or more, and to project-related corporate loans when the loan is at least US$50 million for both the total and the bank’s own commitment and the tenor is at least two years. Bridge loans under two years that are meant to be refinanced by project finance also fall in scope. In practice that means meeting the IFC Performance Standards on environmental and social sustainability, so build the assessments into the schedule early.

Mezzanine, convertibles and bridge loans

Mezzanine debt and convertible notes sit between senior debt and equity: dearer than bank debt, less dilutive than shares. Bridge loans cover a gap, often between the end of the feasibility study and financial close. All three are negotiated against the senior lenders’ terms, so they need to be planned as part of one package.

Royalties and streams: how they are priced

A royalty holder pays cash for a percentage of a mine’s future revenue or production, such as a net smelter return (NSR) royalty, which is a share of revenue after smelting and refining costs. A streaming company pays an upfront deposit for the right to buy part of a mine’s metal at a low contract price. Neither dilutes your shares or has to be repaid like a loan, but both take a permanent slice of the project’s economics. Wheaton Precious Metals describes the structure in its business model as an upfront payment, then a set payment per unit delivered that is generally below the market price, with the metal sold at spot.

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Share of the sale price a stream holder pays

Average cash paid per unit as % of average sale price, 2025

The 2025 annual report of a listed streaming company shows how that works in numbers. Across its agreements, Wheaton’s 2025 annual report reports that it paid an average of US$479 for each gold ounce it received, against an average realised sale price of US$3,494, and US$6.58 for each silver ounce against US$42.26. The chart converts these into the share of the sale price paid per ounce delivered. The upfront payment comes on top of that, so this is not the total the mine owner receives for the metal. Wheaton also reported 42 long-term agreements with 34 mining companies at 31 December 2025, so the model is common among producers. Franco-Nevada, a large royalty and streaming company, reported record 2025 revenue of US$1,822.8 million.

A large recent deal shows the shape of one. Wheaton paid BHP US$4.3 billion upfront for the equivalent of BHP’s 33.75% share of payable silver from the Antamina mine in Peru until 100 million ounces are delivered, then 22.5% for the life of the mine, plus ongoing payments equal to 20% of the spot silver price on each ounce delivered. The deal took effect on 1 April 2026, according to Wheaton’s annual report. BHP receives the upfront cash to use as it chooses, and then receives 20% of the spot price for each ounce delivered. A developer’s deal will be far smaller, but the structure is the same.

The trade-off is cost over the life of the mine. A stream or royalty looks cheap on the day cash arrives, and it is permanent. Stack several and the project may be left with too little margin to service debt or reward equity, which is why lenders model them together. For a plain-language guide to selling or buying these interests, see our guide to how to sell a mine, which covers deal types and valuation.

Offtake, export credit and government lenders

Commodity traders and end users sometimes prepay for future production, or lend against an offtake agreement. It is an efficient source of mine finance for base metals and concentrates, and the price, penalty and delivery terms need careful review. Development banks and export credit agencies can lend where commercial banks will not, or lend for longer. Commercial lenders are often more comfortable alongside a development institution, and political-risk insurance can cover risks the banks decline.

Australia

For mining financing in Australia, the main public route for critical minerals is Export Finance Australia, which says it manages the government’s A$5 billion Critical Minerals Facility. It was set up with A$2 billion in 2021 and expanded by a further A$2 billion in October 2023, according to the IEA policy database, and the IEA entry records the A$5 billion total as of February 2026, without itemising the extra A$1 billion. Since April 2026 the agency has also supported delivery of the A$1.2 billion Critical Minerals Strategic Reserve, which focuses first on antimony, gallium and rare earths. The agency lists what it considers: Australian benefit, an eligible mineral, a completed comprehensive feasibility study, a buyer commitment for the production, proven processing technology and a proponent with the financial, technical and commercial capacity. It also runs a single point of entry with the United States Export-Import Bank for joint financing of eligible critical mineral deals.

The criteria are a useful checklist even if you never apply. They show the same things any lender asks for, in the same order.

Canada and the United States

In Canada the main public lever is the tax system, described above. In the United States, Export Finance Australia says businesses can approach it or the US Export-Import Bank for coordinated feedback and joint financing of eligible critical minerals deals. Other schemes change often, so check the agencies active in your jurisdiction and in the countries that supply your equipment, because export credit is often tied to where equipment is bought.

A mine finance model in seven steps

Every funder will ask for the model. It converts geology, engineering and market assumptions into cash flows and shows lenders and investors how their money is repaid under different scenarios. A typical model is built in seven linked steps, each on its own labelled sheet.

1. Project scope and resource. Start with the orebody: tonnes, grade, geometry and the mine plan. Inputs come from a resource estimate reported under a code such as JORC, NI 43-101, SAMREC or S-K 1300, all aligned with the CRIRSCO template and signed by a Competent or Qualified Person. Errors here flow through every later step. Our guide to how to read a JORC resource table explains the categories.
2. Capital and operating costs. Estimate initial capital (mine, plant, infrastructure, owner’s costs and contingency), sustaining capital and operating cost per tonne. For gold, compare the result with all-in sustaining cost (AISC), a measure the World Gold Council’s guidance note asks companies to report with a reconciliation to their accounts.
3. Processing and recovery. Model throughput, head grade, metallurgical recovery and ramp-up. Recovery assumptions should come from test work, not from analogue mines.
4. Financing structure. Lay out equity, senior debt, subordinated debt, royalties and streams, with drawdown schedules, interest, fees and repayment. The order in which cash is paid out is fixed in the financing agreements.
5. Revenue and offtake. Apply price decks, payable terms, treatment and refining charges, and royalty and stream deductions. Lenders usually run the model on conservative prices, not spot.
6. Sensitivities and scenarios. Test lower prices, lower grade, lower recovery, higher costs, construction delays and currency moves. The result shows which variables the project is most exposed to, which is often price and grade.
7. Outputs and covenants. Report net present value (NPV), internal rate of return (IRR), payback, peak funding need and the DSCR and LLCR. Lenders set covenants on these ratios, and the model must show headroom in the downside cases.

Keep the sheets separate and version every change. Lenders’ advisers will rebuild the logic line by line, and a model with hard-coded numbers or circular references slows the review.

Structuring the package: gearing, tax and currency

Knowing the sources is half the job. The other half is combining them so the project survives construction, ramp-up and a weak price cycle. Packages are negotiated over many months, and each funder’s terms affect the others.

How much debt can the project carry?

Debt capacity is set by cash flow, as the calculator shows. Lenders size the loan so the DSCR stays above their minimum in the base case with headroom in downside cases, and so the loan is repaid well before reserves run out, leaving a reserve tail. A high-grade, low-cost project carries more debt and a marginal one relies more on equity.

Completion tests and cost-overrun cover

Lenders usually take construction risk only with protection. Sponsors may be asked to guarantee the debt until the mine passes a completion test, such as producing at a set rate, recovery and cost for a defined period. Cost-overrun facilities or standby equity commitments cover budget blowouts. These terms matter as much as the interest rate.

Tax, royalties and currency

The model must reflect the host country’s royalty rates, corporate tax, capital allowances, withholding taxes and any state participation or local-ownership rules. Fiscal stability agreements, where they exist, protect the project from later changes. Many mines sell in US dollars and pay costs in local currency, so exchange-rate sensitivities belong in the model. Some lenders require partial hedging during the loan period. Hedging protects lenders but limits upside for shareholders, so the balance is a negotiation. Take local tax advice: small differences in how capital is depreciated can move NPV a long way.

Four mistakes to avoid:

• Over-gearing: taking the maximum debt offered, then having no room when ramp-up is slower than planned.
• Stacking royalties and streams: each looks affordable alone, but together they can leave too little margin.
• Optimistic ramp-up: assuming nameplate throughput and recovery from month one.
• Ignoring working capital: first sales can come months after first production, so the package must fund that gap.

What lenders check before they commit

Lenders and large investors run a structured due-diligence process, usually with independent technical, legal, insurance and environmental advisers. The questions are predictable, and answering them early shortens the path to financial close.

Title deserves special attention for claim owners. Holding a claim is not always the same as owning the land, a point our video below explains for US claims, so confirm exactly what your right allows before a lender’s lawyers do.

▶ Why owning a gold claim is not owning the land, and how to check the ground first · 3:19

Funding a gold project: what differs

Funding for gold mining projects follows the same ladder, with a few gold-specific features. Precious metals dominate streaming: gold brought in US$1,436 million and silver US$837 million of Wheaton’s US$2,315 million 2025 revenue, so a gold developer can weigh a stream or royalty alongside senior debt. Cost discipline is central. Lenders compare a project’s expected AISC with the industry, because margin, not only ounces, decides how much debt a gold mine can carry.

The margin is also why the price deck matters so much. A gold project financed at a high spot price can look comfortable on paper and thin at a conservative long-term price, and lenders will test the lower case. If you are weighing gold projects as an investor rather than a borrower, our overview of gold mining investment routes sets out the checks to run first, and our guide to mining margins and AISC by metal shows how cost levels compare across producers.

Where satellite screening fits in early funding

The first rung of the ladder is the hardest to fund and the most dilutive. Ground surveys, trenching, sampling and drilling are slow and costly. Satellite-based mineral detection moves the first screen from the ground to space: Farmonaut analyses multispectral and hyperspectral imagery for the spectral signatures of minerals and alteration, and flags likely mineralised zones, alteration halos and structures before field teams deploy. Farmonaut states that this can cut early-exploration cost by up to 80 to 85% and reduce timelines from months to days, with reports delivered in 5 to 20 business days.

Satellite results are exploration targets. They guide where to sample and drill; they are not a resource or reserve and cannot support debt on their own. What they can do is help a licence owner focus the first programme, so the first equity raise funds the best ground. Send a licence boundary as coordinates, a KML or KMZ file or a polygon, with the country and target mineral, through mining.farmonaut.com or the mining query form, and see our overview of satellite-based mineral detection for a typical deliverable.

▶ What AI and satellite tools can and cannot do in mineral exploration · 4:37

A step-by-step funding plan

1. Secure clean title and confirm it on the official cadastre.
2. Screen the ground cheaply first, so the first raise funds only the strongest targets.
3. Raise exploration equity in tranches tied to milestones: targets confirmed, first drilling, maiden resource.
4. Bring in a strategic or royalty partner when a code-compliant resource makes the project easier to value.
5. Fund studies in sequence (scoping, pre-feasibility, feasibility) and build the financial model as you go.
6. Talk to lenders before the feasibility study is finished, so it meets their standard, including the Equator Principles and IFC Performance Standards.
7. Negotiate the construction package as a whole, testing every term against the downside cases in your model.

Each step makes the next one cheaper. Skipping one usually means paying for it later, in dilution or in a failed financing.

Frequently asked questions

What is mine finance?

Mine finance is the combination of equity, debt and hybrid funding such as royalties, streams and offtake prepayments used to take a mineral project from exploration to production. Different sources fund different stages, and the cheapest capital arrives only after the main risks have been removed.

How is mining project finance different from a normal business loan?

In mining project finance the borrower is usually a project company, and repayment comes mainly from the mine’s own cash flow, secured over its assets and contracts. A normal business loan relies on the whole company’s balance sheet. Project lenders therefore insist on a bankable feasibility study, permits, an environmental and social assessment and coverage-ratio covenants.

How is mining exploration funded?

Exploration is mostly funded with equity: founder capital, angel investors, private placements, strategic investors and, in Canada, flow-through shares. Earn-in partners and small royalties are other routes. Debt is rarely available until a feasibility study and permits are in place.

What are the mining industry funding options for a project with a resource but no mine plan?

Typical options are larger equity raises, a strategic investor, a royalty sold against the project, or an earn-in partner who pays for the studies. Debt usually waits until a feasibility study exists. The table of stages above shows how the mix changes as the project advances.

How much debt can a mine carry?

Debt is sized from cash flow. Skillings Mining Review gives senior debt as commonly 40% to 60% of total funding and indicative minimum DSCRs of 1.2 to 1.4 times traditionally, with 1.5 to 1.7 times cited for downside cases. Your lender’s model sets the actual figure, and the calculator above shows the arithmetic.

What is the difference between a royalty and a stream?

A royalty gives the holder a percentage of a mine’s revenue or production in return for an upfront payment. A stream gives the holder the right to buy a share of the mine’s metal at a low contract price in return for an upfront deposit. Both are non-dilutive funding for the miner, and both are permanent claims on the mine’s output.

How do I secure funding for an Australian mining project?

Equity usually comes first, and project debt follows once a feasibility study is complete. Critical minerals projects can also approach Export Finance Australia, which assesses Australian benefit, the mineral, a completed feasibility study, a buyer commitment, proven processing technology and the sponsor’s capacity.

What do lenders need to see before funding a gold mine?

A code-compliant reserve with enough life beyond the loan term, a bankable feasibility study, permits, a competitive AISC, a credible construction plan, a strong sponsor and compliance with environmental and social standards such as the Equator Principles and IFC Performance Standards.

Can a small claim owner get mining loans or investment?

Small owners often start with equity from partners or a joint venture, because lenders want a study and permits first. An option or joint venture with a larger company can bring in drilling money without selling the claim outright. Seek legal advice before signing any option or royalty.

Is Farmonaut a lender or financial adviser?

No. Farmonaut is not a lender, broker or financial adviser. It provides satellite-based mineral detection, which helps focus the early work that equity raises pay for.