Mining Prefinancing Explained
How prepayment financing works for gold and silver producers, and what to prepare.
This article is for general information only. It is not an offer, financial or legal advice, and no outcome or return is guaranteed.
What is prefinancing?
In mining, prefinancing (or prepayment) means a buyer or financier advances funds to a producer against future deliveries of metal. The advance is repaid through delivered production over an agreed period rather than in cash.
How it connects to offtake
Prefinancing is often combined with an offtake agreement, in which the buyer commits to purchase part of future production on agreed terms, usually with pricing linked to a market benchmark.
Typical stages
- Initial project presentation
- Non-disclosure agreement and data room
- Due diligence by the financing party
- Term sheet, if the financier decides to proceed
- Legal documentation and conditions precedent
- Disbursement and delivery schedule
What financiers typically review
- Corporate documents and beneficial ownership
- Mining titles, concessions and permits
- Production history and technical reports
- Financial statements
- Environmental and social documentation
- KYC and sanctions screening of all parties
Risks to understand
Prepayment creates delivery obligations. Producers carry risks such as metal price movements, production shortfalls, operational delays and legal or regulatory changes. Independent legal and financial advice is essential before signing.
Our role
We connect established gold and silver producers with financing partners: we help prepare and present the opportunity, coordinate documentation and introduce the parties. All financing decisions, terms and structures are made solely by the financing party after its own due diligence. We do not charge producers upfront fees.