Expert Analysis

Establishing Gold Exchange Ratios: Emphasis on Existence versus Extraction

Executive Summary

In an era where sustainability and environmental responsibility are paramount, the NatGold™ model introduces a groundbreaking approach to gold monetization that aligns with ESG principles. This white paper delves into the NatGold tokenization model, which leverages NI 43-101 certified gold resources—Measured, Indicated, and Inferred—to digitally mine gold without the need for physical extraction. By applying conservative probability discounts to each resource category, NatGold coins ensure stable, reliable value, positioning them as an innovative financial instrument in the commodity market.

About the Author

Larry Segerstrom is a bilingual senior mining professional with more than 37 years of exploration, operations, and business experience. He is currently consultant and Director for junior mining exploration companies in North and South America. His past positions include COO of Paramount Gold and Silver Corp. where he led the team in discovering new inferred resources of 750,000 ounces of gold and 60 million ounces of silver at the San Miguel project in Mexico, now a part of Coeur’s Palmarejo Mine. As Manager of Geology of the Grasberg mining district in Indonesia for Freeport McMoRan, he played a significant role in the development of new ore reserves of 3.4 billion pounds of copper and 3.6 million ounces of silver at Freeport-McMoRan’s at Grasberg. Mr. Segerstrom is a Qualified Person under the Canadian Institute of Mining (CIM) to write NI 43-101 technical reports, considered the gold standard for certifying gold resources.

Introduction

Pioneering a significant shift from conventional gold mining, the NatGold tokenization model employs the same certified data used globally by the geological and financial sectors for mine financing decisions. This ESG-friendly digital mining approach marks a fundamental transformation in the monetization of gold as both a monetary instrument and a reliable store of wealth. It preserves the environmental integrity of mining sites and offers a sustainable alternative to the traditional impacts of the gold industry on ecosystems and communities.

The NatGold Tokenization Process

Regulatory Framework: The foundation of the NatGold tokenization model is its strict adherence to the “National Instrument 43-101 Standards of Disclosure for Mineral Projects” (NI 43-101). Administered by the Canadian Securities Administrators, this framework ensures accurate, consistent, and transparent disclosure of mining-related information, developed under the guidance of the Canadian Institute of Mining, Metallurgy and Petroleum.

Integrity and Independence

Qualified Persons (QPs), as defined by NI 43-101, are professionals with a minimum of five years of experience in mineral exploration or project evaluation. Their independence is critical, upheld through stringent ethical codes and regulatory criteria to prevent conflicts of interest. This ensures that the assessments and reports they produce meet the highest standards of reliability and objectivity.

Why Certified Gold Resources Matter

NatGold’s valuation strategy is rooted in digital mining, emphasizing the intrinsic value of gold’s existence rather than focusing on its extraction feasibility. This innovative approach only focuses on certified gold resources and not on certified gold reserves. This ESG-friendly digital mining strategy redefines gold’s role as a store of wealth, showcasing the impracticality of traditional extraction methods.

Resource Categorization and Conversion Ratios

NatGold applies the NI 43-101 standard, classifying gold resources into three categories based on geological certainty:

Measured Resources: The highest certainty, converted at 0.80 NatGold coins per ounce.

Indicated Resources: Moderate certainty, converted at 0.40 NatGold coins per ounce.

Inferred Resources: Lowest certainty, converted at 0.20 NatGold coins per ounce.

These conservative ratios ensure that each NatGold coin is backed by a verified quantity of gold, contrasting sharply with traditional mining finance which often leads to environmental degradation.

Perpetual Protection of Gold Resources

Once a mining title containing NI 43-101 certified gold resources is exchanged for NatGold coins, the underlying gold is perpetually protected. No further exploration, development, or extraction activities can occur, ensuring the gold remains undisturbed and preserving its ecological and cultural landscapes.

Global Standards and the Primacy of NI 43-101

While other standards like SAMREC and JORC exist, NI 43-101 is the gold standard for mineral project reporting. Its rigorous requirements, the credibility of its Qualified Persons, and its robust mineral resource and reserve reporting standards make NI 43-101 technical reports accepted by all major global stock exchanges, more than any other reporting standard.

Probability Discounts in Traditional vs. NatGold Models

Unlike traditional mining, which applies probability discounts based on economic extraction potentials, the NatGold model applies discounts based solely on the existence and certified status of gold resources. This approach provides a stable and less speculative basis for financial modeling, enhancing the reliability of NatGold coins as a store of value.

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 resource monetization, propelling us towards a future where gold is valued for its existence, not its extractability.

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FAQs

Why is NatGold mining considered ESG-friendly?2024-04-21T15:42:57+00:00

NatGold mining is considered environmentally, socially, and governance (ESG)-friendly because it promotes the monetization of natural gold resources without the physical extraction of gold from the earth. This innovative approach involves the tokenization of National Instrument 43-101 (NI 43-101) certified gold resources, which are kept in their natural state underground. Unlike traditional gold mining, NatGold mining does not involve the environmentally and socially detrimental activities typically associated with the extraction and processing of physical gold, such as land degradation, water pollution, and the displacement of communities.

Furthermore, NatGold mining eliminates the need for the extensive security measures, transportation, storage, and insurance required for physical gold, thereby reducing the carbon footprint and enhancing the sustainability of gold as a financial asset. By leveraging digital tokenization, NatGold provides a stable, secure, and flexible supply of monetary assets that meets modern financial system demands without the negative environmental and social impacts of traditional gold mining practices. This positions NatGold as a pivotal component in sustainable finance, offering an ESG-friendly alternative to conventional methods of gold monetization.

Why are NI 43-101 Technical Reports automatically accepted by the U.S. Securities and Exchange Commission (SEC) under Regulation S-K 1300, whereas technical reports from other nations are not?2024-04-20T23:32:08+00:00

NI 43-101 Technical Reports are automatically accepted by the SEC under Regulation S-K 1300 due to their strict adherence to the regulation’s rigorous standards, which prioritize detailed, transparent, and reliable disclosures of mineral resources and reserves. These reports are developed by the Canadian Securities Administrators and set a high standard for the public disclosure of scientific and technical information concerning mineral projects. This includes stringent requirements for the qualifications and responsibilities of “Qualified Persons” who verify the reports, ensuring that the disclosed information is both accurate and verifiable.

In contrast, reports from other standards like JORC (Australia) or SAMREC (South Africa) might require additional reconciliation to align with S-K 1300. While these standards are internationally aligned to the CRIRSCO templates, which share common core definitions and guidelines with S-K 1300, they often have slight variations in definitions and reporting criteria. These differences mean that technical reports from these and other non-Canadian jurisdictions may need to demonstrate their compliance with S-K 1300’s specific requirements through detailed reconciliation, making them not automatically acceptable like NI 43-101 reports.

What is the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) and what role does it play in standardizing global mining reporting practices. 2024-04-20T23:31:27+00:00

The Committee for Mineral Reserves International Reporting Standards (CRIRSCO) is a pivotal non-profit organization dedicated to harmonizing global mining reporting practices. It comprises representatives from National Reporting Organizations (NROs) from various countries, including Australia, Brazil, Canada, Chile, and South Africa. CRIRSCO provides the International Reporting Template (IRT), a framework that aligns national and regional standards into a globally recognized guideline, ensuring consistency and comparability in the reporting of mineral estimates, resources, and reserves worldwide.

Although CRIRSCO doesn’t have a central physical headquarters, it operates through its member organizations spread across these countries. This template aids in maintaining transparency and reliability in public reporting, which is crucial for investor trust and regulatory effectiveness in the mining sector. CRIRSCO’s international collaborations and its endorsement by global entities underline its significant role in shaping mining standards globally.

What are U.S. Patented Land Claims?2024-04-21T13:06:18+00:00

U.S. Patented Land Claims are a unique type of property right established under the General Mining Act of 1872, designed to promote the exploration and extraction of mineral resources on public lands. These claims grant full ownership of both surface and subsurface rights to the claimant, allowing for comprehensive control over the mining and management of mineral resources. Originally issued by the General Land Office—now known as the Bureau of Land Management (BLM)—these claims provided a mechanism for individuals and companies to secure land for mining, playing a pivotal role in the development of the American West.

As privately held assets, U.S. Patented Land Claims include both the surface and subsurface mineral rights, distinguishing them from public lands where mining rights are typically leased or licensed. This ownership model facilitates complete autonomy in the exploration, development, and extraction processes, making these claims particularly valuable for the tokenization of physical gold resources into digital NatGold coins. Although the issuance of new mineral patents was significantly curtailed by a moratorium enacted in 1994, existing claims that met all the requirements before this enactment are still in effect, offering a vital pathway for the digital mining of gold through tokenization in the evolving landscape of the NatGold industry.

How is an ounce of NatGold different from a traditional ounce of gold?2024-05-03T15:18:34+00:00

An ounce of NatGold is not physically different from a traditional ounce of gold; both are essentially the same element, gold. The distinction lies in their extraction and storage methods. NatGold leverages a digital mining process that is ESG-friendly, allowing the gold to remain securely in the earth. This process unlocks the monetary value of gold without physical extraction, preserving the environmental, social, and economic landscape.

In contrast, a traditional ounce of gold is physically mined, requiring it to be dug out of the ground and brought to the surface. This conventional method captures the value of gold but often comes with significant environmental, social, and financial costs.