Collateral
COLLATERAL STRUCTURE
Security that grows with the mine.
The guarantee value is determined upfront by the DMR and revised as mining progresses. MRUM structures the security in four deliberate steps engineered to reach 100% of the exposure within three to five years of issuance.
STEP 01
Upfront deposit
An upfront cash deposit of 10–50%, either as a money-market investment or cash lodged with the insurer or a reputable investment house.
STEP 02
Recurring contributions
A monthly recurring amount paid into the investment, calculated against the upfront deposit and estimated interest over an agreed period.
STEP 03
Path to 100%
The structure is engineered so that the security reaches 100% of the exposure within three to five years of guarantee issuance.
STEP 04
Contingency wrap
The mine can take out a Contingency Policy Structure that encapsulates the deposits made above adding a further layer of certainty.
Collateral Requirements
Mining Rehabilitation Guarantees are long-term financial commitments designed to ensure that adequate funds are available to rehabilitate mining operations should a mine fail to meet its environmental rehabilitation obligations. As a result, the provision of appropriate collateral forms a critical component of the underwriting process.
Why is Collateral Required?
Collateral serves as security for the Guarantor and helps ensure that rehabilitation obligations can be fulfilled in the event of a default by the mining company. Given the potentially significant environmental liabilities associated with mining activities, collateral provides an additional layer of financial protection and supports the long-term sustainability of the guarantee facility.
Our Risk-Based Approach
We adopt a comprehensive, risk-based approach when determining collateral requirements. Each application is assessed individually, taking into account factors such as:
- The financial strength and creditworthiness of the mining company.
- The size and duration of the rehabilitation obligation.
- The stage of the mine’s life cycle.
- Commodity and market exposure.
- Operational performance and management experience.
- Environmental, Social and Governance (ESG) considerations.
- The quality and liquidity of available security.
Our objective is to structure collateral requirements that are appropriate, commercially practical, and aligned with the underlying risk profile of each client.
Types of Acceptable Collateral
Depending on the circumstances, collateral may be provided in various forms, including:
- Cash deposits.
- Bank guarantees.
- Letters of credit.
- Listed investments.
- Cession of approved financial assets.
- Mortgage bonds over immovable property.
- Corporate guarantees from financially strong parent companies.
- Other security structures acceptable to the Guarantor.
The type and level of collateral required will vary according to the specific characteristics of each mining operation and the associated rehabilitation liability.
Ongoing Monitoring
Collateral requirements are not static and are reviewed regularly throughout the life of the guarantee. Changes in rehabilitation liabilities, financial performance, operational conditions, or regulatory requirements may result in adjustments to collateral levels.
Regular monitoring ensures that the guarantee remains appropriately secured while providing clients with the flexibility to adapt to changing business circumstances.
Partnership Approach
We recognise that access to capital is essential for mining operations. Our philosophy is to work collaboratively with clients, brokers, and financial institutions to develop collateral solutions that balance security requirements with operational and funding needs.
Through prudent underwriting, ongoing engagement, and flexible security structures, we strive to provide sustainable guarantee capacity that supports responsible mining and environmental stewardship.
