What innovative financing models can you use for mineral exploration projects?

1 Royalty and streaming agreements

One of the most popular financing models for mineral exploration is royalty and streaming agreements. These are contracts between an exploration company and a financier, where the financier provides upfront cash in exchange for a percentage of the future revenue or production from the project. Royalty agreements are based on revenue, while streaming agreements are based on physical delivery of a specific commodity at a fixed price. The advantage of this model is that it provides immediate funding without diluting the ownership or control of the project. The drawback is that it reduces the upside potential and exposes the exploration company to commodity price fluctuations.

2 Joint ventures and partnerships

Another common financing model for mineral exploration is joint ventures and partnerships. These are arrangements between two or more parties, where they agree to share the costs, risks, and rewards of developing a project. Joint ventures and partnerships can involve different levels of involvement and ownership, depending on the terms of the agreement. The benefit of this model is that it allows the exploration company to leverage the expertise, resources, and networks of the partner, and to diversify the risk and exposure of the project. The challenge is that it requires alignment of interests, goals, and strategies, and may entail giving up some decision-making power and flexibility.

4 Crowdfunding and tokenization

Crowdfunding and tokenization are emerging financing models for mineral exploration that leverage digital platforms and technologies to raise funds from a large number of small investors. Crowdfunding is a process where investors pledge money to support a project or a company in exchange for rewards, equity, or debt. Tokenization is a process where a project or a company issues digital tokens that represent a share of the value or the rights of the underlying asset. Crowdfunding and tokenization can offer access to a wider and more diverse pool of investors, lower barriers to entry, and increased transparency and engagement. However, they also face regulatory uncertainty, technical challenges, and reputational risks.

5 Grants and incentives

Grants and incentives are forms of financing that are provided by governments or other organizations to support mineral exploration activities that have social, environmental, or economic benefits. Grants and incentives can include tax credits, rebates, subsidies, loans, or guarantees, and are usually based on specific criteria and conditions. Grants and incentives can help reduce the financial burden and risk of mineral exploration, and encourage innovation and collaboration. However, they can also be limited, competitive, and unpredictable, and may require compliance with certain standards and reporting requirements.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?