#MiningIndaba: Alternative financing is the new frontier for Africa

He highlights that many of these alternatives, previously considered “exotic,” are now playing a pivotal role in funding African mining projects. However, Du Plessis cautions miners to carefully evaluate whether these options truly meet their needs.

Du Plessis lead a panel discussion on this topic at the Investing in African Mining Indaba 2025 in Cape Town that focused on the viability and implications of these funding models for African miners, particularly in emerging markets such as South Africa.

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Miners are turning to non-banking structures to overcome hurdles like stringent banking regulations, high operational costs, and political uncertainty.

Here are some key alternatives that junior miners can consider:

1. Private equity and venture capital: Private equity offers significant capital infusions, often in exchange for equity or partial control.

While traditionally a go-to for early-stage projects, private equity investors are increasingly favouring established mines and critical minerals.

In South Africa, several firms specialise in resource-based investments, offering opportunities for projects aligned with social and environmental impact goals.

2. Streaming and royalty financing: This model involves upfront payments in exchange for a share of the mine’s future revenue or output.

Streaming is particularly appealing as it avoids equity dilution and traditional debt.

However, analysts like Arnold van Graan from Nedbank warn of the high costs associated with these deals, which can outweigh the benefits in some cases.

3. Export Credit Agencies (ECAs) and Development Finance Institutions (DFIs): ECAs and DFIs offer funding with favourable terms, such as low interest rates and extended repayment periods.

For instance, South Africa’s Industrial Development Corporation (IDC) supports projects that promote local economic development and job creation.

However, these mechanisms often require strong alignment with sustainability and socio-economic goals.

4. Sustainability funds: Green or ESG-focused funds provide financing for environmentally and socially responsible projects.

While these funds can enhance regulatory compliance and attract further investment, they remain less accessible to smaller miners due to strict ESG requirements and lengthy approval processes.

5. Prepaid financing: Prepaid agreements provide upfront capital in exchange for future delivery of mined products.

These structures can unlock immediate cash flow and hedge against market volatility, though they come with risks such as fixed pricing and potential delivery challenges.

6. Joint ventures and strategic partnerships: Collaborating with established industry players offers access to both funding and expertise.

In South Africa, such partnerships can also support compliance with the Mining Charter, promoting inclusivity within the sector.

Major considerations for junior miners

While alternative funding mechanisms offer critical benefits like upfront cash flow and reduced equity dilution, they come with challenges.

These include stringent contractual obligations, fixed pricing risks, and complex regulatory landscapes.

Smaller miners may also face high costs and lengthy timelines when negotiating and managing these agreements.

“Non-traditional funding must not only bridge financial gaps but also align with South Africa’s policy objectives, including transformation and sustainability,” says Morné van der Merwe, a partner at Alchemy.

Junior miners navigating Africa’s evolving mining landscape should assess their project needs and risks carefully before committing to alternative funding structures.

While these mechanisms hold significant potential, their success depends on stable production, robust operations, and the ability to navigate market and regulatory complexities.