Blockchain brings advantages of tokenisation to the global mining sector. Digital Asset Live Editor-in-Chief talked to Rohan Cavaliero, Managing Director of MetalStream. The firm has just announced launch of own security tokens backed by gold.
Q1: Your mission says MetalStream seeks to transform financing within the junior mining space. What exactly do you mean?
A1: Mine financing is becoming harder for junior miners. Traditionally options for mine financing were limited to diluting a miner’s equity or interest-bearing loans.
At MetalStream we are able to offer miners finance through our MSGLD security tokens based on a portion of their identified but as yet unmined resources.
This liquidity allows miners to complete their extraction process without eroding the equity for shareholders.
Consumers are able to purchase gold at a discount to spot price with the liquidity and safety of a security token.
Q2: Tokenization is especially popular in precious metals, especially gold. What makes your project stand out?
A2: MSGLD security tokens are backed by and redeemable for gold bullion.
MSGLD is sold at a significant discount to the spot price of gold (approximately 30% at the moment).
MSGLD security tokens do not have an expiry date.
MSGLD tokens are sold as securities, not a currency or a utility, and are therefore fully regulated, can be re-issued if lost, and represent legal ownership of the gold.
Q3: What will MSGLD security tokens holders be entitled to?
A3: As MSGLD represent tokenized gold available for purchase globally they are inherently more liquid than the physical metal itself.
MSGLD can be traded directly, and are planned to be listed on multiple secondary exchanges, offering 24-hour liquidity for token holders. MSGLD security tokens can be redeemed in lots of 2,000 for a 10 oz gold bar after the minimum holding period as stipulated by the regulatory authorities, and after a bullion delivery date has been declared.
Around 25% of proceeds for the sale of MSGLD will be used to acquire bullion for early redemption.
Q4: What do you aim to achieve with MSGLD tokens?
A4: Our goal is to deliver liquidity, value and safety to all parties using MSGLD. Our mining partners are able to raise liquidity for their projects without eroding their value. Subscribers to MSGLD are able to purchase gold at a significant discount to the spot price which are inherently more liquid and secure than holding physical gold.
Q5: You have stated that each MSGLD token is redeemable for a certified gold bullion. How in practice it can be done?
A5: Gold can be redeemed at an authorized and certified bullion vault. 2,000 MSGLD tokens entitle the holders to redeem one 10oz gold bar from the vault. Once the gold is redeemed the tokens are destroyed.
Q6: You have entered into strategic partnerships to launch this project. Please tell us more about them. What roles does each side play in these partnerships?
Our gold mining partners are currently all publicly listed Canadian companies, thereby mitigating counterparty risk. They provide us with refined gold at metal streaming prices. MetalStream issues the tokens and manages the subscriber interaction.
Together we provide a turnkey solution delivering gold from the mine to the consumer at a significant discount to the spot price of gold.
Q7: What is your attitutude to gold backed stablecoins, such as Tether’s new project? Do you plan to use your security tokens as stablecoins, afterall they are pegged to gold?
A7: MSGLD tokens are not currency, they are a security, and therefore fully regulated. Tether’s new project is a gold-backed digital currency.
Entry levels are hight at USD75K and redemption is even bulkier at approx USD600K. The stablecoins are purchased at the spot price of gold, and the whole project is unregulated as it isn’t a security.
We don’t disparage Tether’s project, but MSGLD is very different and should appeal to investors from across the size spectrum.