Gold and Silver Prefinancing and Offtake: A Guide for Producers
How offtake agreements and prepayment financing work, what financiers review, and the risks to understand.
This guide is for general information only. It is not an offer of financing or investment, and no returns are guaranteed.
What is an offtake agreement?
An offtake agreement is a contract in which a buyer commits to purchase part of a mine’s future gold or silver production on agreed terms, usually with pricing linked to a market benchmark. For a producer, it can provide a committed buyer for future output.
What is prepayment financing (prefinancing)?
In a prepayment, a buyer or financier advances funds against future deliveries of metal. The advance is repaid through the delivery of production over an agreed period rather than in cash. Prepayment is often combined with an offtake agreement.
Other financing structures
Other structures used in mining include project and corporate debt, equipment financing, streaming and royalty agreements, and equity. Which structure fits depends on the project and is decided by the financing party.
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 and offtake agreements create delivery obligations. Producers carry risks such as metal price movements, production shortfalls, operational delays and legal or regulatory changes. Producers should obtain independent legal and financial advice before signing any agreement.
Warning signs
- Requests for upfront fees before any financing is approved
- Promises of guaranteed returns or guaranteed approval
- Financiers who cannot be identified or verified
Our role
We connect established gold and silver producers with financing partners. Our role is to prepare and present the opportunity, coordinate documentation and introduce the parties. Financing decisions, terms and structures are determined solely by the financing party after its own due diligence.
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Tell us the product, specification and destination. Every enquiry is reviewed and screened before any introduction.