Mining Equipment Leases

The mining industry has some unique risks that many traditional lenders are uncomfortable with. Some of these risks include the borrowing needed for exploration, regulation changes, and the inherent risks of operating equipment underground. In some cases, mining companies will seek loan or lease funds to build the infrastructure of their operation. These financing requests are particularly difficult because the mine is technically in a pre-revenue stage. Many lenders will not look at a deal until it can cash flow at a 1:25 debt service ratio.

The mining industry requires some creativity to finance. We have found success in putting together mining equipment leases for pre-revenue operations. Currently we are working with an operation that has a 15-18 month window remaining of infrastructure build out before they will reach a revenue stage. For this reason, the CFO would like to hold onto as much cash as possible to ensure they reach the revenue phase. A lease can be a great option to preserve cash and build infrastructure under these conditions.

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