Expert Analysis

Calculating NatGold™’s Intrinsic Value – a New Paradigm in Gold Valuation

Executive Summary

In an era increasingly focused on sustainability and environmental stewardship, NatGold™ introduces a transformative approach to gold valuation that aligns with ESG principles. Authored by Jason Williams, an expert with extensive experience in finance and economics, this white paper explores the intrinsic value of NatGold. By comparing the cost structures and market prices of traditional gold production to the innovative model of NatGold, this analysis provides a rational basis for establishing a minimum intrinsic price valuation rooted in logical analysis and industry benchmarks. This document proposes a novel methodology that recalibrates the understanding of gold’s value, shifting focus from physical extraction to digital tokenization of certified gold resources.

About the Author

Jason Williams, in addition to post-graduate work at Harvard Business School, graduated cum laude from the University of Baltimore’s internationally accredited Merrick School of Business, where he studied finance and economics. Jason started his career working for the U.S. military, helping to design and analyze complex financial projects. Following that, he worked on Wall Street as an investment banking analyst for Morgan Stanley. Today, he works as an independent financial analyst with Angel Publishing, based in Baltimore.

Introduction to NatGold’s Valuation Framework

The traditional gold market, with its extensive environmental footprint and significant operational costs, is ripe for transformation. NatGold’s approach redefines the valuation of gold by emphasizing its certified existence rather than the feasibility of its extraction. This white paper outlines the methodological framework used to assess the intrinsic value of NatGold, leveraging industry standards and public data to contrast traditional production costs against the innovative model of digital mining.

Logical Intrinsic Value Analysis in the Context of Gold

The International NatGold Council has developed a methodology for intrinsic price valuation that utilizes public data and industry standards. This methodology hinges on a comparison between the average global cost of gold production and its market price, thus highlighting the intrinsic profitability—or inherent value—of gold still in the ground.

Calculating Production Costs

The All-In Sustaining Cost (AISC) is a comprehensive metric used to reflect the full cost encountered by gold mining companies to mine, refine, and market one Troy ounce of gold. Defined by the World Gold Council, the AISC includes costs necessary to maintain gold production, making it a crucial benchmark for assessing the economic sustainability of mining operations. Updated quarterly, the AISC provides a dynamic insight into the evolving expense landscape of gold production.

Above Ground Market Price Reference

This valuation metric is derived from the latest daily average price for a Troy ounce of gold, as sourced from the London Bullion Market Association and principal markets like the NYMEX spot gold price. This provides a real-time snapshot of gold’s market valuation, essential for comparative analysis.

Intrinsic Price Value Baseline: Redefining Gold Valuation

The traditional concept of intrinsic value in gold mining focuses on the profitability that remains after covering the costs of physical extraction. By employing the 90-day All-In Sustaining Cost (AISC) of US$1,342 for Q4, 2023, and contrasting it with a hypothetical market price of US$2,300 per ounce, we uncover an intrinsic profit of $958 per ounce. This figure traditionally represents the direct financial benefit of mining and processing each ounce of gold, which is contingent upon the extraction costs.

However, NatGold introduces a transformative perspective on this calculation. By eliminating the need for physical extraction, the entire concept of ‘cost’ is redefined. The $958 per ounce no longer represents mere profit after expenses but rather a baseline value of the gold still in the ground—free from the economic and environmental costs of mining. This baseline intrinsic value establishes a more genuine valuation for gold, reflecting its pure, unextracted worth.

NatGold’s Value Proposition: ESG Integration and Premium Potential

In the NatGold model, the intrinsic value of gold is not just a theoretical calculation—it is a practical, realizable value that does not necessitate the environmental and social disruptions typically associated with traditional gold mining. This ESG-friendly, digital approach to mining allows NatGold to position itself uniquely in the market as a sustainable alternative.

Given the growing global emphasis on sustainability, NatGold is poised to capture not only the intrinsic in-ground value of the gold but potentially command a significant ESG premium. This premium reflects the additional value that markets are increasingly willing to assign to commodities obtained in environmentally and socially responsible ways.

The intrinsic in-ground value serves as a stable baseline, but the potential market valuation of NatGold could far exceed this baseline due to its alignment with ESG principles. Investors and consumers are showing a marked preference for sustainable and ethically sourced products, which suggests that NatGold, as a ESG-friendly digital monetary asset could attract a premium well above traditional gold. 

Conclusion

The NatGold tokenization model redefines the value of gold, focusing on preservation over extraction. This approach not only aligns with global sustainability goals but also presents a stable and responsible investment alternative. By safeguarding the physical and social environments associated with gold resources, NatGold sets a new standard for unlocking gold’s monetary utility, propelling us towards a future where certified gold resources are digitally mined rather than physically extracted.

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FAQs

What is the NatGold Digital Vault?2024-04-21T19:41:01+00:00

The NatGold Digital Vault, operated by OroEx Corp., is a crucial component of the NatGold ecosystem, specifically engineered to tokenize, securely manage, and store NatGold Coins before their distribution, storage, and trading on the NatGold Multichain. These coins result from the tokenization of mining titles containing NI 43-101 certified gold resources. The vault utilizes ledger-based technology that incorporates some blockchain principles, such as ledgering and digital signatures. However, it remains a closed system to ensure controlled access and enhanced security, distinguishing it from public blockchains, which are accessible by the general public.

This Digital Vault is designed with a robust security architecture to safeguard sensitive information. It operates on a closed ledger system, which allows for stringent control over all transactions related to the creation and distribution of NatGold Coins. To maintain data integrity and prevent tampering, each transaction is securely hashed using advanced cryptographic algorithms. Additionally, comprehensive audit trails capture detailed logs of all operations, enhancing the vault’s compliance and auditability.

Access to the NatGold Digital Vault is tightly regulated through sophisticated authentication mechanisms, ensuring that only authorized personnel can interact with or access the system. This is further supported by role-based access control, which assigns different levels of permissions based on the specific roles of the participants. The physical and network security measures in place, including encryption of sensitive data and regular security audits, ensure that the vault remains not only compliant but also resilient against unauthorized access and data breaches. This combination of privacy, security, and transparency makes the NatGold Digital Vault a pivotal element in maintaining the integrity and trustworthiness of the NatGold ecosystem.

What is NatGold Legislation?2024-05-03T15:22:03+00:00

NatGold legislation, often referred to as natural gold or green gold legislation, is designed to amend and expand current mining laws to provide a sustainable alternative to the traditional, production-centric mining model. It enables entities within the conventional mining legal framework to convert their exploration or exploitation titles into NatGold titles. Once a title is transitioned into a NatGold mining title, it obtains a form of perpetual protection, making it exempt from production permits. Instead, these titles become eligible for tokenization, allowing them to be exchanged for NatGold coins. This innovative approach aims to preserve natural resources while still leveraging their economic value, aligning with modern environmental and sustainability goals.

Who are “Qualified Persons,” and how is their independence guaranteed?2024-04-20T23:30:49+00:00

“Qualified Persons” (QPs) are integral to the Canadian National Instrument 43-101 (NI 43-101) standards for mineral project reporting. These professionals must have a minimum of five years of experience in the area of mineral exploration, mining, or project evaluation related to the deposit type and activity being reported on. Importantly, QPs are required to be members in good standing of a recognized professional association, such as the Association of Professional Engineers and Geoscientists of British Columbia (APEGBC), among others across Canada and internationally that uphold similar professional standards and ethical codes.

The independence of QPs is critical to maintaining the credibility of NI 43-101 reports. To ensure impartiality:

Professional Ethics and Standards: As members of reputable professional associations, QPs adhere to strict ethical codes that mandate integrity and objectivity in their assessments.

Regulatory Criteria for Independence: NI 43-101 defines clear criteria to prevent conflicts of interest, ensuring that QPs do not have a vested interest in the projects they report on, beyond their professional fees for services rendered.

Mandatory Disclosure: QPs must disclose any potential conflicts of interest in their reports, including financial interests or any relationships with the company that could be perceived as compromising their independence.These measures guarantee that mineral resource estimates and technical evaluations are conducted following the highest standards of professional conduct, offering a reliable and unbiased perspective to investors and the public.

What is a NI 43-101 certified gold resource report?2024-04-20T23:30:24+00:00

A NI 43-101 certified gold resource report is a comprehensive document independently prepared by “Qualified Persons” who serve as auditors of gold resource estimates, adhering to the standards set by the Canadian National Instrument 43-101 (Standards of Disclosure for Mineral Projects). This regulatory framework ensures that the public disclosure of scientific and technical information about the existence of gold resources is accurate, reliable, and follows consistent standards.

The report provides detailed information on a mineral project’s geology, exploration results, drilling data, and gold resource estimation. Specifically for gold, the report outlines the quantity, grade (quality), and other geological characteristics of the gold deposits within a project. It categorizes the resources into Measured, Indicated, and Inferred resources based on the level of geological certainty of the gold’s existence.

NI 43-101 certified gold resource reports are essential for investors and stakeholders in the mining industry, providing a trusted basis for investment decisions and ensuring transparency and accountability in public disclosures about mineral properties.

With respect to NatGold, why is tokenization often referred to as “digital gold mining”?2024-04-20T23:36:49+00:00

Tokenization, in the context of NatGold, is aptly termed “digital gold mining” because it transforms the concept of mining by moving the process from the physical world to the digital sphere. This innovative approach represents certified gold resources as digital tokens, known as NatGold coins, on a blockchain. Unlike traditional gold, these digital tokens can be traded, sold, or held as investments, mirroring the functionality of physical gold but eliminating the environmental degradation associated with gold mining.

By enabling the virtual exchange and holding of gold resources, this method pioneers a sustainable, efficient, and ESG-friendly avenue for harnessing the monetary benefits of gold. It sidesteps the need for physical extraction, offering a contemporary solution that aligns with global sustainability goals. The term “digital gold mining” thus encapsulates this modern process, highlighting a shift towards a more responsible and innovative way to value and interact with gold in the digital economy.