A mineral resource is not yet a financing case

A promising resource can attract attention before the commercial project around it has been established. The financing case must bridge that distance.

AFC’s published project-development approach includes work with Nigeria’s Solid Minerals Development Fund on mining-project preparation. The relevance is the development process: technical, commercial and other studies help determine whether an opportunity can progress towards finance.

Follow the material to market

A sponsor needs a credible account of what can be extracted, at what cost and to which specification. Processing, transport and the intended buyer can change the economics substantially. Resource potential and saleable output are different points in the chain.

Specialist technical assessments are central. The financial model should reflect their findings rather than substitute for them. Where evidence is preliminary, that status should be visible.

Include the obligations around the site

Rights, approvals, environmental and social risks, community relationships and operating capability can affect both timing and viability. IFC’s Performance Standards provide useful context for the types of risk management institutional investors may examine.

The development budget should fund the work needed to resolve the most important uncertainties in a sensible order. Spending heavily on a presentation while key technical or commercial questions remain open is unlikely to improve the underlying case.

B&A’s assessment is that mining origination becomes more useful when sponsors distinguish the resource story from the transaction they are asking investors to support.

The immediate objective may be financing further preparation rather than funding full construction. Naming that stage accurately helps identify the appropriate capital and the evidence required to advance.