One of the most difficult things to plan for effectively in any joint venture is conflict resolution and decision deadlock between the joint venture partners. Joint venture agreements in the mining industry can be voluminous documents. Pages are devoted to calculating partner dilution, setting out partner rights, outlining how and by whom JV operations will be managed. At the same time, little thought is often given to how the partners will deal with a deadlock over an operational decision.
In a way it is not surprising that mechanics dealing with decision deadlock can be an afterthought – most CEOs want … Continue Reading
On July 17, 2014, Moody’s Investors Service (Moody’s) released a report on metal streaming transactions, in which it discusses the impact of streaming transactions on the credit profiles of mining companies. Generally, Moody’s views metal streaming transactions as a form of equity investment, rather than debt financing. This is in contrast to criteria released by Standard & Poor’s (S&P) in 2013, which characterize the upfront payment aspect of metal streaming transactions as debt. … Continue Reading
As the next installment in our series on alternative financing methods for mining companies, we look to a relatively new form of financing: the metal streaming transaction.
A metal streaming transaction is essentially a long-term agreement between an investor and a mining company for the purchase and sale of metal, calculated by reference to the production from one or more mines. Under this agreement, the investor makes an upfront capital payment (or a series of payments based on development milestones) to the mining company in exchange for the right to purchase from the mining company an amount of metal calculated … Continue Reading
Management Buy Outs (“MBOs”) became popular in the United States in the late eighties and early nineties. Though MBOs have many potential benefits, they also bring with them difficulties as they may place the board and management of a corporation in positions of potential conflicts of interest.
It is important to be clear on what exactly a MBO is and how it differs from other going private transactions such as leveraged buyouts (“LBOs”) or a regular sale of the corporation to an arm’s length third party. A MBO is a transaction in which the ownership of a business … Continue Reading