With critical minerals central to Australia's energy transition, the Critical Minerals Strategy 2023–2030 released earlier this year discusses the Federal Government's vision to grow the critical minerals sector in Australia. In support of this strategy, the Northern Australia Infrastructure Facility, along with the recent expansion of the Critical Minerals Facility, recognises the key role that financing for critical minerals projects plays in achieving that vision.

Debt financing for mining projects is likely to become a lot more complex with multiple layers of debt, many more intercreditor issues, and the need for access to a range of funding solutions.

Various financing options are available to mining companies to develop their projects and choosing the right one depends on a project's scale, stage of development and the company's financial requirements. Some financing solutions for developing mining projects include:

• Joint ventures: Mining companies can partner with other companies or investors to share the costs, risks and benefits of a project;
• Bank loans: Commercial banks or development banks can provide loans with varying terms and interest rates based on the company's creditworthiness and financial health;
• Project finance: This is a long-term financing solution where the loan is repaid from the project's future cash flows. Lenders assess the project's viability, risks and potential returns before providing financing;
• Equipment financing: Companies can obtain loans specifically for purchasing equipment, often using the equipment as collateral for the loan;
• Royalties: Investors provide upfront capital in exchange for a percentage of the future revenue generated by the project. This model allows companies to access funding without diluting ownership or taking on excessive debt;
• Streaming agreements: In this arrangement, investors provide upfront capital in exchange for the right to purchase a portion of the future mineral production at a predetermined price. This model is common for precious metals projects;
• Government grants and incentives: Federal and State governments may offer grants, tax incentives, or other financial support to encourage investment in the mining sector. These programs can help reduce the overall cost of developing projects;
• Offtake agreements: Companies can secure funding by signing contracts with customers who agree to purchase a portion of the future mineral production at a fixed price or market price. These agreements provide the company with a guaranteed revenue stream, which can be used to secure financing from lenders; and
• Vendor financing: Equipment suppliers or contractors may offer financing solutions to companies, often in the form of deferred payments or extended payment terms. This can help reduce the upfront capital required for projects.

At the 2023 International Mining and Resources Conference (IMARC), MinterEllison's Project Finance Partner, Gemey Visscher, joined a panel to discuss the topic "How do we get Critical Minerals to Market Quicker". In that session, Gemey discussed how companies seeking financing can make their company more attractive to lenders.

Gemey shared ten tips for companies to put themselves in a stronger position to attract investment for their next project:

1. Strong management team: Assemble a management team with a successful track record in critical minerals projects. This will instil confidence in investors and demonstrate the company's ability to develop the project effectively.
2. Technical expertise: Build a team of technical experts with experience in the exploration, extraction and processing of critical minerals. This expertise will help the company overcome potential challenges and navigate the complexities of the industry.
3. Niche focus: Focus on a specific segment of the critical minerals market where the company can excel. This can include targeting specific minerals, regional markets or innovative technologies that offer a competitive advantage.
4. Innovative and sustainable technologies: Adopt and showcase the use of innovative and sustainable technologies in exploration, extraction and processing. This can help reduce costs, improve efficiency and minimise environmental impact, making the project more attractive to investors.
5. Strategic partnerships: Form strategic partnerships with other industry players, such as technology providers, end-users and established companies. These partnerships can provide additional resources, expertise and market access, giving the company a competitive edge.
6. Robust project pipeline: Develop a pipeline of high-quality projects with strong resource potential and favourable economics. This will demonstrate the company's growth potential and long-term value proposition.
7. Stakeholder engagement: Foster strong relationships with local communities and stakeholders by prioritising their needs and concerns, supporting local development initiatives and ensuring transparent communication. This can help build trust, reduce potential conflicts and contribute to the company's positive reputation.
8. ESG commitment: Demonstrate a strong commitment to ESG principles by implementing responsible mining practices, minimising environmental impact and prioritising the well-being of employees and local communities. This can attract environmentally and socially conscious investors.
9. Comprehensive risk management: Develop and implement a robust risk management strategy that identifies, assesses and mitigates potential risks, including market, operational and regulatory risks. This will demonstrate the company's preparedness and resilience, making it more attractive to investors.
10. Effective communication and marketing: Communicate the company's unique value proposition, achievements and milestones to potential investors and the broader market through various channels, such as press releases, presentations and social media. This can help raise the company's profile and attract investment interest.

Please contact us for assistance in navigating the requirements to secure investment for your project.