Natural resource and mining companies usually face a simple problem with a very expensive price tag: they need a lot of iron in the ground before the cash really starts flowing.
From a credit analyst’s perspective, here’s how specialized heavy machinery (drills, loaders, haul trucks, crushers, processing plants, etc.) is typically financed, and how to think about the options.
Core ways to finance specialized mining equipment
1. Equipment leases for mobile and redeployable assets
For big-ticket mobile gear—haul trucks, excavators, wheel loaders, drills, dozers—equipment leases are usually the first tool we look at.
How it works
- The lender or lessor buys the equipment.
- You make fixed monthly payments over a term (often 36–84 months).
- At the end, you buy it out (e.g., $10 OA / residual) or roll into new units.
Why miners and contractors like leasing
- Preserves cash for overburden removal, labour, fuel, and parts.
- Lets you refresh the fleet on a cycle that matches your mining contracts.
- Can be structured with:
- Seasonal payments (for winter road or seasonal operations),
- Step-up schedules while new pits ramp up,
- Residuals to lower near-term payments.
Leases are especially powerful for contract miners and earthworks contractors working under multi-year agreements with major producers—those contracts help underwrite the deal.
2. Term loans / chattel mortgages secured by the equipment
If you want ownership from day one, a term loan (sometimes called a chattel mortgage for equipment) can make more sense.
Typical use cases
- Long-life assets: large excavators, production drills, crushers, processing components.
- Mine operators or contractors who intend to use the asset for most of its economic life.
- Situations where balance sheet ownership and depreciation are strategic (for tax or reporting).
Key features
- Fixed amortization, often 4–7+ years depending on asset, hours, and usage.
- Equipment is primary collateral; lenders may also take a general security agreement and guarantees.
- You claim CCA (depreciation) and interest expense directly (confirm specifics with your accountant).
For many clients, we’ll model lease vs loan side by side to see which structure fits their tax position and cash flow profile better.
3. Refinancing and sale-leaseback on existing fleets
Mining fleets tie up a lot of equity. Once a company has paid down equipment—or purchased some units in cash—you can often unlock that value:
- Refinance the fleet (new loan secured by existing equipment).
- Or use a sale-leaseback:
- Lender buys the equipment at an agreed value.
- You lease it back over a term.
- The equity comes back into the business as cash.
That capital can fund:
- Additional units for a new pit or contract.
- Major component rebuilds (engines, transmissions, undercarriage).
- Infrastructure like crushers, screens, or mobile wash plants.
- Working capital to get through overburden and pre-production phases.
This is a common strategy when a contractor jumps from one or two projects into a larger, multi-year contract and needs to scale quickly without bringing in outside investors.
4. Financing used, rebuilt, or “second life” equipment
Mining and natural resource operations often run used or rebuilt iron—especially as backup or secondary units.
Good news: used and rebuilt machines can be financed, but lenders will look more closely at:
- Age, hours, and prior usage (e.g., hard rock vs sand & gravel).
- Recent work: documented rebuilds, major component replacements, oil samples.
- Independent appraisals or auction comparables.
Typically:
- Terms for older gear are shorter and sometimes require a bit more down payment.
- Rates may be slightly higher to reflect risk.
- Strong documentation (service records, photos, serial numbers) can materially improve approval odds and terms.
For many mid-market operators, a blend of new lead units + financed used support units gives a better ROI than going 100% brand new.
5. Asset-based lending and borrowing-base facilities
Once a miner or contractor has built a solid fleet, you can move beyond “one deal per machine” into asset-based lending (ABL):
- The lender looks at equipment, receivables, and sometimes inventory.
- They advance a percentage of orderly liquidation value (OLV) on the machinery plus a margin on receivables.
- You operate under a revolving or term borrowing-base facility.
This is most common with:
- Established contractors with multiple sites.
- Regional producers with stable offtake contracts.
- Groups rolling several pieces of equipment and contracts into a single, more flexible facility.
ABL is more complex than a straight lease, but it can give you ongoing access to growth capital instead of going back to market for every dozer or drill.
6. Working capital and “around the asset” solutions
Heavy machinery alone doesn’t move rock. You still need diesel, explosives, labour, transport, and maintenance.
That’s why equipment finance is often paired with:
- Working capital loans or lines of credit
To smooth fuel, payroll, and parts while waiting on project payments. - Invoice factoring (if you bill large, credit-worthy buyers)
You can monetize receivables from majors, utilities, or processors to create predictable cash flow while your fleet payments stay fixed.
General rule of thumb:
- Long-life assets → term debt or leases
- Short-term needs (fuel, payroll, consumables) → LOC, working capital, or factoring
Using expensive short-term money to fund a 7-year piece of iron usually ends badly.
What lenders focus on in mining and natural resources
Mining is inherently cyclical and technical, so underwriters lean heavily on cash flow durability and redeployability of the assets. The stronger your file on these points, the better your options.
They’ll typically look at:
- Stage of business
- Exploration: generally hard to finance equipment purely on project value.
- Development / construction: some appetite if equity is strong and permits are in place.
- Production with contracts: best case for equipment financing.
- Contracts and counterparties
- Are you a contractor with a signed multi-year agreement?
- Who is the counterparty (major, mid-tier, or junior)?
- How secure are volumes and pricing?
- Jurisdiction and permits
- Canadian, permitted operations with clear tenure usually test better than uncertain jurisdictions.
- Environmental approvals and mine plans matter for larger tickets.
- Equipment quality and redeployability
- Common brand, common class (easier to re-market) tends to get stronger support.
- Highly customized or site-specific gear may be harder to finance unless the credit is very strong.
- Owner strength and experience
- Track record running similar pits or projects.
- Personal net worth and guarantees, especially on earlier files.
Practical structuring tips for mining equipment deals
From the credit desk, here are a few tactics that often make the difference between “maybe later” and “approved with good terms”:
- Match term to reality
- Try not to finance a truck longer than its realistic productive life at your site.
- Align term with your core contracts (e.g., 5-year contract → 4–5-year amortization, not 7–8).
- Use staged equipment programs
- Instead of financing an entire fleet at once, phase units in as pits or contracts ramp.
- This proves cash flow and makes incremental approvals easier.
- Mix structures
- Lease newer, primary production units.
- Use shorter-term loans for used/rebuilt gear and major component upgrades.
- Layer in refinancing or sale-leaseback once you have more equity in the fleet.
- Present a clean, complete package
- Detailed equipment list with quotes/appraisals.
- Last 6–12 months of bank statements.
- Financials and a simple cash flow projection with new payments included.
- Contract summaries and mine plan overview (even 1–2 pages helps).
A well-packaged file shows you manage risk on site the same way lenders manage risk on paper—and that goes a long way.
How Mehmi can help
Mehmi Financial Group works with Canadian mining and resource contractors to:
- Finance or lease new and used heavy machinery.
- Refinance or use sale-leaseback on existing fleets to free up capital.
- Pair equipment facilities with working capital or receivable-based solutions where it makes sense.
If you’re planning a fleet upgrade, expanding to a new site, or bidding on a larger contract and want to understand what’s realistically financeable (and on what terms), feel free to contact our credit analysts. We can walk through your equipment list, contracts, and cash flow and help structure a financing plan that fits the mine plan—not just the next purchase order.
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