Masterclass A

Financing mining projects
30 March 2007

led by:

Drawing upon the class leaders’ experiences with recent domestic and international project financings in the mining sector, this Masterclass will focus on project finance as a source of funding available to junior miners looking to develop greenfield projects, with particular attention to miners making the transition from explorer to producer for the first time.

The masterclass will critically examine project finance compared with other sources of finance from both the perspective of the borrower and the lender, providing insights into the entire financing process starting from initial contact, term sheet negotiations and loan structuring, risk analysis, financial modelling, due diligence, loan documentation and security package and finally to financial close.

Agenda:

1. Evaluating various financing options
• Project financing vs corporate financing
• Non recourse vs limited recourse financing
• When is project financing appropriate?

2. Financing Process
• From initial contact to financial close

3. Structuring Elements
• Building blocks
• Debt sizing techniques

4. Key Risks and mitigants
• Greenfields risk (eg. construction, completion, schedule delays)
• Sponsor risk
• Country risk and PRI cover
• Commodities risk
• Financial risk and hedging
• Environmental & social risks

5. Financial Modelling
• Agreeing key assumptions between lenders and borrowers
• LLCR and DSCR measures
• Example of a financial model

6. Documentation
• Standard financing documents and what they do
• Intercreditor agreements and subordination deeds
• Tripartite agreements

7. Security Package
• Project accounts structure
• Typical project financing security package

8. Key Covenants / Financial Ratios
• Cash lockups, cash sweeps and events of default
• Project undertakings and information requirements

9. Transaction Costs
• How much does it cost to put a project financing facility inplace?

10. Case Study