Inground Monetization Funding Procedures
The mining and processing of inground assets, such as coal, oil, gold and diamonds, is one of the largest industries in the United States. The total financial impact of the mining industry alone is valued at $1.9 trillion, according to the National Mining Association. However, inground assets require huge investments before they can be monetized. The importance and value of inground assets to the economy and their high-profit potential ensure there are no lack of funding sources for qualifying prospectors.
Private Equity Financing
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Private equity companies, also known as venture capital firms and angel investors, provide companies with inground assets funding in exchange for a share in the ownership of the company. According to a 2010 report by Reuters, private equity firms are stepping up to fill in the funding gap in the resources sector left by the credit crunch. This method of monetization funding is especially attractive for new businesses and entrepreneurs who lack the cash or collateral to obtain funding from traditional lenders.
Asset-Based Loans
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Asset-based loans are similar to traditional business lines of credit but with more stringent requirements for collateral. Asset-based lending provides loans that are secured by an asset --- just like a mortgage loan is secured by the property you buy with the loan. New companies struggle to receive approval for asset-based loans because they require the company to already have enough assets invested in the company to provide sufficient collateral for the loan. Eligible assets may include real estate, mining machinery, resources inventory, intellectual property and patents.
Government Funding
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The government provides incentives to qualifying inground asset holders who require funding to monetize on resources. For example, the Virginia Department of Mines, Minerals and Energy provides incentives to companies willing to start remining operations. These incentives include financial assistance, as well as help with permit and regulation issues.
Mineral Rights
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A creative method for funding the monetization costs of inground assets is to sell a share of the mineral rights to your operation. This method is similar to asset-based loans in that you provide collateral for the loan. However, in this case, mineral rights aren't an asset but the right to a share in future profits. This is also similar to private equity financing in that no assets are required to qualify for funding --- however, it has the added advantage that ownership and control over the company isn't transferred to the lender.
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Writer Bio
Andrew Latham has worked as a professional copywriter since 2005 and is the owner of LanguageVox, a Spanish and English language services provider. His work has been published in "Property News" and on the San Francisco Chronicle's website, SFGate. Latham holds a Bachelor of Science in English and a diploma in linguistics from Open University.