Canamex Gold Corp
Owner and developer of the prolific Bruner gold and silver project in Nye County, Nevada. Canamex is financing the development of Bruner via the sale of metal streams.
Listed company with a 30 year history
Canamex is a Canadian listed (CSE: CSQ) mining corporation originally incorporated in 1987 specifically to carry out gold and mineral exploration. The Company is fully regulatorily compliant, with a strong mining development pedigree and a leadership team with diverse but complementary skills.
Future focused and innovative
Canamex is using a metal stream financing structure to fund development of the Bruner project. This allows Canamex to progress development without diluting shareholders or incurring expenses via debt financing.
Industry News & Views
29 January 2020
Blockchain — dismantling predatory pricing within the mining industry
Blockchain — dismantling predatory pricing within the mining industry
Technology is delivering miners innovative and independent finance options
Financing options for junior miners have traditionally been predatory, benefiting financiers at the expense of smaller miners and the wider society. The current situation did not occur by chance but rather represents a logical response from a finance industry for whom enormous profits create control paradigms that deliver even greater profits.
Fortunately, in 2020 there are now innovative opportunities changing the way miners can raise finance. Before we look at solutions it’s important to understand where we stand and why there are so many problems with the existing situation.
Oligopoly: a state of limited competition, in which a market is shared by a small number of producers or sellers.
Some participants view the mining industry as an oligopoly where a few large operators have the resources and finance to control the majority of the market. Access to finance is a key factor in defining who is accepted by the “club” of miners. It is conceivable that the actual shareholding of both the miners and the financiers is controlled by an even smaller group of private individuals, but that is beyond the scope of this article. However, it is evident that members of all oligopolistic markets remember the famous quotation:
“Competition is a sin.” — John D Rockefeller
There is no money in healthy competition and the throttling of finance has helped consolidate the mining industry into fewer and fewer hands. Traditionally there were two primary routes to raise financing for junior miners: issuing stock in the company or taking debt finance (loans). Neither of these options represents the best interests of junior miners shareholders, and both assist in consolidating the industry for the big players.
As in the traditional banking system, if a mine operator wishes to raise finance they are at liberty to search for a loan. Like all loans, collateral needs to be provided and interest paid on the principle. However, access to loans is becoming increasingly restricted and the interest payments are cost-prohibitive. If the loans are not carefully managed they have the potential to cripple miners in interest repayments which cannot be met.
The other traditional method for raising mine financing is through the issuance of more shares in the company, effectively diluting the existing ownership. If a miner dilutes their shareholding enough they become a prime target for absorption into the wider oligopolistic system. Both methods of traditional mine financing are precarious operations exposing junior miners to the risks of being targeted by market predators.
These two traditional paths to mine financing have adversely impacted the industry for all but the biggest miners and financiers. Through the throttling of finance options, the industry has been consolidated into fewer and fewer hands, creating the oligopolistic market characteristics we see today.
However, now we are beginning to see change happening within the industry, bringing a third and innovative financing option to junior miners. The development of blockchain-based security tokens that are asset-backed by future metal streams, has the potential to impact the entire financial landscape of the sector, and halt the consolidation of the industry into a true oligopoly.
Canamex Gold Corp. has recently signed a forward purchasing agreement with MetalStream Ltd, which is the issuer of the innovative MSGLD tokens. The value of MSGLD is derived from the future gold metal stream from its Bruner gold project, in Nevada USA. This model delivers value, security and liquidity for all market participants.
Security tokens represent physical assets on the blockchain and offer an immutable record of ownership. The ability to realize liquidity on gold resources and reserves, which are yet to be mined, brings vital financing needed for miners to undertake mining operations. Safety is intrinsic within the security token architecture as tokens can be reissued in the event of hacking or loss of access. These value propositions are ultimately enhanced by the fact that MetalStream Ltd is able to deliver gold to market at a minimum discount of 30% to the current spot price of gold. In addition, the model delivers value to all market participants circumventing the problems discussed above, associated with traditional mine financing.
Technology is bringing opportunities to junior miners which have not been available before. Gold is a vital ingredient in our economic systems and irreplaceable for numerous manufacturing and health applications. Access to this precious resource should not be restricted to only a few players profiting from an oligopoly. As the market begins to utilize the value proposition of gold metal stream backed security tokens. we can expect a more competitive future market where the opportunity to own gold is available for a wider segment of our economy, whilst providing a more cost-effective financing solution to junior miners.
Blockchain — dismantling predatory pricing within the mining industry was originally published in Canamex Gold Corp on Medium, where people are continuing the conversation by highlighting and responding to this story.
27 January 2020
CANAMEX GOLD CORP. NEWS RELEASE 2020.01.27
USD$ 35 Million Gold Forward Purchase Agreement
January 27th, 2020 — Vancouver, Canada — Canamex Gold Corp. (the “Company” or “Canamex”) (CSE:CSQ) is pleased to announce that Canamex Resources U.S. Inc. (the “Supplier”) a wholly owned subsidiary of the Company, has entered into a definitive gold forward purchase agreement (the “Agreement”) with an arms-length third-party investor (the “Buyer”), for proceeds of up to USD$ 35 Million (CAD$ 46 Million). The proceeds will be allocated to the further development of the Bruner Gold Project (the “Project”) located in Nevada, USA.
General Terms of the Sale
Subject to the terms and conditions of the Agreement, the Supplier has agreed to sell to the Buyer, a metal stream of 50,000 ounces of gold. All deliveries to the Buyer of gold are in the form of certified bullion with a fineness grade of greater than 99.50% at a minimum of 5,000 ounces per year, commencing on the earlier of (i) 120 days after commercial production at the Project is declared by the Supplier and (ii) 36 months after the Completion Date, being April 14th, 2020.
Subject to the terms and conditions of the Agreement, the Buyer will pay to the Supplier the following purchase price with respect to the gold that is sold and delivered by the Supplier to the Buyer:
1. Fixed price of USD$ 700.00 for each ounce of gold sold and delivered under the Agreement for an aggregate of USD$ 35,000,000; and
2. An aggregate of 9,900,000 equity securities, representing 9.9% of the fully diluted equity of the Buyer, to be paid and issued to the Company.
The Cash Payment will be advanced to the Supplier as follows:
A. USD $5,000,000 on or before April 14th, 2020, to discharge debentures and debenture security pledge, and registration of a 12.5% NSR on the Project in the name of the Buyer; and
B. USD $5,000,000 after the Supplier provides evidence to the Buyer of the registration of the 12.5% NSR in the name of the Buyer and discharge of the debenture security pledge; and
C. USD $25,000,000 after initial construction permitting is completed.
The Supplier will register to the Buyer up to a 12.5% NSR over the Project, to be registered in the State of Nevada (the “Royalty”). The Buyer will not enforce payments against the Royalty, provided that the terms of the Agreement relating to the delivery of gold purchased under the Agreement are being met by the Supplier. The Royalty evidenced by the NSR filing will expire and be released against the Project upon the date all Purchased Gold has been delivered to the Buyer. If the Agreement is terminated for any reason prior to delivery of all gold purchased under the Agreement, then the Royalty shall survive such termination.
Right of First Refusal
The Buyer also has a right of first refusal to enter into a financing arrangement with the Supplier, after an initial 400,000 ounces of total production has been achieved, to purchase an additional gold metal stream from the Project of 12.5% of any future gold production, but limited to 50,000 ounces in total from additional resources, and deliverable at a minimum of 5,000 ounces per year commencing 120 days after commercial production is declared for additional resources, that have been placed into production. In the event that the Buyer exercises the right of first refusal, the Buyer shall pay to the Supplier a purchase price with respect to the gold of 60% of the prevailing gold spot price in effect as of the date on which the right is exercised. The right cannot be exercised before a Preliminary Economic Assessment that establishes the existence and the economic viability of additional resources at the Project is completed and released.
The Company website has been updated to a new user-friendly and modern format. The Company website can be accessed at https://www.canamexgold.com/
Canamex is a public listed company registered in British Columbia, Canada, trading on the Canadian Securities Exchange (CSE:CSQ), and is engaged in pre-development of the Bruner gold and silver project in the prolific gold jurisdiction of Nye County, Nevada. The region is home to several producing and past-producing mines along the Walker Lane Trend. Canamex completed a positive Preliminary Economic Assessment (PEA) on the Bruner project in 2016. Based on additional drilling conducted on the property, the company completed an updated PEA in 2018, which increased the resources and improved the economics of the project. Canamex is now moving the Bruner project forward into permitting and development on the strength of this positive updated PEA. Further information is available at https://www.canamexgold.com/
Greg Hahn, Vice President, and a Certified Professional Geologist (#7122) is the Qualified Person under NI43–101 responsible for preparing and reviewing the data contained in this press release.
On Behalf of the Board
President and CEO
The Canadian Securities Exchange accepts no responsibility for the adequacy or accuracy of this release.
FORWARD LOOKING INFORMATION
This news release includes certain forward-looking statements or information. All statements other than statements of historical fact included in this release are forward-looking statements that involve various risks and uncertainties. Forward-looking statements in this release include statements with respect to future services to be provided to the Company, and other future plans, objectives or expectations of the Company. There can be no assurance that such statements will prove to be accurate and actual results and future events could differ materially from those anticipated in such statements. Important factors that could cause actual results to differ materially from the Company’s plans or expectations include the availability of capital and financing required to continue the Company’s operations; uncertainty regarding the performance by other entities of contractual obligations; general economic, market or business conditions; competition and loss of key employees; regulatory changes and restrictions; timeliness of government or regulatory approvals; and other risks detailed herein and from time to time in the filings made by the Company with securities regulators. In connection with the forward-looking information contained in this release, the Company has made numerous assumptions. The Company expressly disclaims any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise, except as otherwise required by applicable securities legislation.
To download a PDF version of this press release please click here.
21 January 2020
Gold & Bitcoin — A Growing Relationship?
Gold & Bitcoin — A Growing Relationship?
A combination of Blockchain & Gold could deliver the best of both worlds.
As an asset class, how does Bitcoin compare to physical gold mined from the ground? Is Bitcoin more like a commodity or a currency, does it represent an effective investment vehicle or is it an unpredictable trend?
Investors are always looking for asset classes to help maintain value and diversify their portfolios. Throughout history, gold has been seen as a strong investment to hedge with. As Bitcoin matures is there an opportunity that it could end up as an asset that could be compared to gold as a safe store of value?
The recent tensions between the United States and Iran saw both the prices of gold and bitcoin rise as investors sought to move their investments into safer assets. The tensions and concerns over escalating conflict helped to push gold to a seven-year peak and Bitcoin rose about 10%. Regardless of what regulators try to dictate these reactionary results are an indication that investors really do see both gold and Bitcoin as effective investment hedges in times of uncertainty.
Are gold and Bitcoin correlated? Analysists have computed the correlations between gold and Bitcoin from April 2013 until the present and it appears that the argument for a correlation between the two is not unfounded. One analysis showed that the two prices were correlated at 46.5%, where 0% represents uncorrelated and 100% is fully correlated. This correlation seems to have increased to 60.3% in 2018 and 70.8% in 2019 and the current trend is moving towards full correlation. It is important to note that this correlation was only for prices and does not represent the relationship between returns between the two asset classes.
Considering that the Bitcoin market is extremely new in comparison to the market for gold, could we see the Bitcoin market beginning to resemble more traditional asset classes in the future? Certainly, the Bitcoin market has plenty of scope for maturation. Some analysts are predicting that in the near term we could see Bitcoin testing its old highs at around $18,000. If this scenario is correct then the future of Bitcoin and other digital securities as an institutional asset class looks good.
The recent tensions between Iran and the United States have highlighted another emerging character of Bitcoin. In times of crisis having physical gold on hand is valuable as a liquid form of barter. Now with Bitcoin and other cryptocurrencies, the risk of holding physical gold during a crisis is reduced and replaced with digital transactions, which are however necessarily predicated upon having a working internet connection.
During the recent tensions, Goole Trends identified a surge in the search term “Bitcoin Iran”, which surged by 4,450%. Some commentators saw this boom in searches related to “Bitcoin Iran” as driving the rise in Bitcoin prices themselves. Although others felt this was a self-fulfilling prophecy based upon the narrative that Bitcoin was a safe haven.
Primarily the question of how similar Bitcoin and gold will become as asset classes for investment is based around the intrinsic properties they exhibit. Gold has always been an investment hedge against market volatility and geopolitical unrest. Bitcoin brings fast transaction speeds, the accountability of the blockchain and the security of distributed ledger. Both assets have strengths that are self-evident but what if it were possible to combine the two and deliver the benefits of both to the marketplace. The rapid development of security tokens is about to deliver hybridized products that may bridge the gap between gold and Bitcoin.
Security tokens are digital products but they can be backed by physical goods. Innovations are about to change the way we think about gold by using the precious metal as a way to back security tokens that are redeemable for bullion. Not only will these products further blur the line between precious metals and digital products as asset classes they will embody improvements that bring benefits from both camps.
A digital asset that is backed by gold is a strong starting point but this concept really begins to make sense when that gold can be redeemed in physical bullion. This process brings the inherent value of owning physical gold to the security tokens. However additional benefits are delivered through the digital nature of the security tokens. They can be traded continuously on a global market so they are extremely liquid. Additional security is afforded by the ability to reallocate tokens in the case that they are hacked or lost.
Perhaps in the near future technology will allow us to have the best of both worlds to strengthen our financial security. If we are to maximize our opportunities in this developing space it may be prudent to remember the words of Benjamin Franklin:
“An investment in knowledge pays the best interest.”