Sustainable project financing options for mining financial performance

Abstract

The aim of the study was to explore the sustainable project financing options for mining financial performance. There is a low level of mining financing in Zimbabwe, which is negatively impacting on the contribution of the sector towards GDP and economic development which s has motivated the researcher to carry out the study. Theoretical and empirical literature was reviewed. The research was carried out in the mining sector using a survey. Quantitative research methods were adopted. A total of 100 questionnaires were administered to 33 mining companies. The reliability of the instrument was tested for reliability using Cronbach alpha which very high at 0.913 after a pilot test. Data was analysed using SPSS. Descriptive statistics, factor analysis and the correlation analysis were mostly used to analyse that data. The funding options were therefore correlated with financial performance to analyse their relationship. A positive and significant correlation was identified on all funding mechanisms identified in the factor analysis. The study concluded that the sustainable funding options available in the mining sector of Zimbabwe are project finance, finance by private equity, public bonds, corporate bonds and loans from banks and other financial institutions. The availability of funding options results in increased total annual revenues and increase in profitability. The study concluded that factors that affect mining financing are Project finance, Financing from private equity funds, Convertible loans, Public bonds, Corporate bonds, Government bonds. The ability of the sector to attract financing require that the laws governing mining in the country be transparent and investor friendly. Other issues that would require attention include the current indigenization laws should be clarified; the Staff Monitored Programme adhered to, the mining supporting infrastructure e.g. railway lines attended to.