Novice and junior miners struggle to raise traditional debt capital when acquiring or developing a mine. However, the successful implementation of a variation on the streaming contract theme provides an interesting alternative for miners lacking the requisite balance sheet capacity to attract traditional debt finance. This form of alternative financing can ensure that junior miners have sufficient cash upfront to acquire, operate and generate profit from a mine. As such, the possibility arises that the ideals laid out in the Preamble of the Mineral and Petroleum Resources Development Act can be realized, specifically that the minerals of South Africa can be used as vehicle for socio-economic upliftment.
Alistair Collins is a senior associate in Baker McKenzie's Banking and Finance Practice Group in Johannesburg.