Mining Services

The seminar featured a distinguished panel of experts who discussed a range of issues and opportunities within the construction and mining industries.

Recently, a mining services business dealing with the wet & dry hire of equipment encountered setbacks in the mobilisation of large contracts, after the fleet had been largely either mothballed or retrenched. Despite the long-standing business being historically successful, recent financial data indicated a lack of serviceability – bringing the business to a standstill. The need for funding new equipment, re-certification of mothballed equipment and further working capital was apparent, with a total funding requirement estimated for $1M.

In December, Hermes was asked to fund a mining services business with a funding requirement of $6 million, comprising $4 million in term debt and $2 million in debtor finance, for a 12-month period over which time the business would be “turned around”. Hermes applies three key criteria when assessing a funding opportunity, as this month’s case study illustrates. The three criteria can be summed up in three words: wheelhouse, security and runway.

An air services business operating in the mining and energy sectors needed to fund the purchase of a new aircraft. The upturn in the mining sector meant increased demand for charter flights from large mining, civil and energy companies operating in the region.

A business specialising in earthworks in the mining and infrastructure sectors suffered when a developer the client had worked for failed.  As a result the client booked a substantial loss.