Helping The ‘Miners’ Of 2024 Extract History’s Proven Real World Asset (RWA)
Former stockbroker, merchant banker, and gold exploration company CEO Christopher Werner spent two decades in the gold mining industry. He learned along the way that predominantly, far too many smaller mining companies run out of money before they can bring their gold to market.
Werner, now chairman and CEO of C3 Bullion, decided to create a precious metals hedge fund to provide short-term funding for mining companies entering the production stage that needed a new influx of capital to begin to cash in on their already long-term investment.
Meanwhile, former fintech CEO, Luciano Duque, now C3 Bullion’s chief investment officer, recounts watching Shark Tank’s Kevin O’Leary years ago telling an interviewer that, while he had included gold in his investment portfolio, he had no desire to invest in gold mines. He just wanted the gold.
Together, Werner and Duque devised a business plan to serve both gold-seeking investors and gold-producing mining companies.
They crafted the ‘C3 Fund’ as a precious metals mining fund that offered cash to mining companies in need of the capital and know-how to begin or increase production in return for physical gold. Investors in the fund get a return on investment and, at the end of a five-year term, investors can take delivery of their share of the physical gold that is held in storage.
Frankly, a gold fund investment with a five-year term and offering shipping of physical gold to investors is something not often seen in the industry.
The mission is quite simple and fairly low risk – Using proprietary software, decades of industry experience, and onsite management skills, C3 analyzes mining projects to determine their potential, assists in the capital formation strategies, lends capital for machinery and other equipment, trains miners, and streamlines and supervises the mining operation. You see, smaller mining companies are often skilled at exploration and production, but not in less tangible things – like due diligence, optimal execution strategies, risk management, business development, and collaboration.
With C3’s assistance, the mines can increase gold production, and often significantly.
They repay the loans with fiat and physical gold at a value discounted from the current market price. C3 also receives a percentage of the total production of the mine in physical gold during the duration of the loan. C3 then stores the gold with Brinks until the end of the contract period for the offering.
Once the loan is paid in full, C3’s involvement with the mine is over, and the now-profitable mine owns all of its future production.
Duque, upon first hearing Werner’s idea, remembered his young days as a tomato farm owner in Venezuela, where ketchup giant Heinz partnered with the farm, providing the tomato seedlings, agronomist support, know-how, agrochemicals and fertilizers, in return for buying the production below market price. The farmers made less, but they also had less risk – and lots of help.
The C3 Fund concept is in fact very similar – until the loan is fully repaid, the mines sacrifice a portion of their production in return for equipment, expertise, and capital, but gain what they need to produce gold long beyond the contract’s expiration date.
Smaller mines, mused Duque, love this business model – especially when they realize that C3 can close a loan within 60 days rather than 6 months to a year.
Duque also had learned another secret about investing in smaller mines – Their costs to produce gold bullion are lower than those for the larger mines, and with the gold price today breaking price records and at an all-time high, the profits for C3 Fund, its investors, and the mining companies can be significant.
At the outset of the contract periods, the mining company signs an asset-backed promissory note and begins to pay back the loan in gold. As the gold accumulates (again, partly based on production), fund investors have the option to get tokens that are essentially stablecoins. At the end of the contract period, however, they can either take delivery of their share of physical gold, sell it for fiat, or roll over their investment into a new offering.
Traditionally gold mine investment with the possibility of receiving physical gold was only available to highly specialized mining venture capital firms, with very high capital entry levels, with smaller investors often left out and with the only alternative options of getting into gold ETF and mining shares. None of these options gives the investors direct access to the gold produced in mines.
The C3 Fund concept ultimately opens the door to a wider audience of investors, those who are not traditionally gold mining investors, but who are looking to allocate a small percentage of their portfolio to gold, backed by gold, with revenues in gold, and with gold delivery – a unique combination.
Werner says that, while C3’s investors are typically from countries that do not use the U.S. dollar as their base currency (but know the value of gold in their portfolios,) C3 only lends money to mines in the U.S., Canada, Latin America, and other regions with low political risk.
As to the volatility of the gold price, Duque says that political instability increases peoples’ interest in adding gold to their portfolios.
He cites a recent Wirehouse study that found that over 70 percent of its client base on the wealth management side was “underweight” in gold, with less than 1 percent, as opposed to the 2.5 to 5 percent that most investment managers deem best.
Werner, who capped the initial investor offering at $50 million, is looking forward to a second fund, given the number of mines presently interested in doing business with C3 Bullion.
Meanwhile, he adds, central banks are buying gold at record rates at the same time there is considerable outflow from gold exchange-traded funds and even from gold-backed cryptocurrencies.
These may well be signals that the price of physical gold will continue to rise as long as there are wars, inflation, and of course, hotly contested, course-changing elections.
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