Establishing Gold Exchange Ratios: Emphasis on Existence versus Extraction

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

What is the primary mission of the International NatGold Council?2024-04-20T23:27:01+00:00

The International NatGold Council’s primary mission is to develop legislative policies and set integrity standards for the NatGold industry, focusing on the comprehensive tokenization and monetization ecosystem. This mission is vital for cultivating a robust NatGold industry characterized by the utmost monetary integrity for NatGold coins.

In addition to its policy-making activities, the Council is committed to globally promoting the NatGold marketplace. Through strategic marketing and targeted media campaigns, it seeks to inform the worldwide community about the exceptional advantages of NatGold, establishing it as the leading asset-backed digital currency.

What are the distinct roles of the Canadian Securities Administrators (CSA) and the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) in relation to NI 43-101 reports?2024-04-20T23:31:01+00:00

The roles of the Canadian Securities Administrators (CSA) and the Canadian Institute of Mining, Metallurgy, and Petroleum (CIM) in the context of National Instrument 43-101 (NI 43-101) are distinct yet complementary:

1. Canadian Securities Administrators (CSA):

Regulatory Role: The CSA is responsible for regulating securities laws in Canada, including the enforcement of NI 43-101. Its primary function is to ensure compliance with the rules and standards set for the public disclosure of scientific and technical information on mineral projects.

Investor Protection: The CSA aims to protect investors by ensuring that the disclosures about mineral projects are truthful, complete, and comply with the regulations, thus helping investors make informed decisions.

2. Canadian Institute of Mining, Metallurgy, and Petroleum (CIM):

Standards Development: The CIM is instrumental in developing the definitions and standards that are incorporated into NI 43-101. They provide the framework and guidelines used to report on mineral resources and reserves.

Expertise and Guidance: CIM offers guidance based on the expertise of professionals in the mining industry. This includes best practices in documentation and reporting that companies must follow to align with NI 43-101 standards.Essentially, while the CIM provides the technical definitions and standards, the CSA enforces these standards within the legal framework of the Canadian securities market, ensuring that all public disclosures meet these established criteria. This system ensures that both the technical accuracy and regulatory compliance are maintained in the reporting of mineral projects.

Why is the elimination of fees and royalties crucial in NatGold legislation?2024-05-03T15:33:15+00:00

To ensure the NatGold industry’s integrity and sustainability, it’s critical to eliminate ongoing state fees and royalties tied to traditional mining titles. Such ongoing annual costs, if applied, necessitate the issuance of new NatGold coins to cover them, risking the one-to-one correspondence between NatGold coins and certified gold resources. This could potentially dilute NatGold coins’ monetary integrity by introducing the possibility of devaluation within the ecosystem. Therefore, abolishing these fees and royalties is paramount to preserving NatGold coins as a reliable and devaluation-resistant store of value, safeguarding against the depreciation that could arise from ongoing state-imposed costs.

Do mining claims on U.S. federal lands managed by the U.S. Bureau of Land Management (BLM) require the establishment of legislation in conformity with NatGold legislative policies before they can be tokenized in the NatGold ecosystem?2024-04-21T13:20:59+00:00

While U.S. Patented Land Claims offer a clear pathway for tokenization within the NatGold industry, given the presence of certified gold resources, the opportunity to obtain new Patented Land Claims was effectively closed in 1994. That year, the United States Congress enacted a moratorium that significantly restricted the issuance of new mineral patents, although it grandfathered existing claims that had fulfilled all requirements before its enactment.

To develop a truly global NatGold market, there is an urgent need for NatGold legislation that accommodates the digital mining of all certified gold resources. This legislation is critical not only at the federal and state levels in the United States but also internationally, aiming to establish a cohesive, globally recognized standard for the NatGold industry.

Do U.S. Patented Land Claims include both surface and subsurface rights, and can these rights be severed to eliminate property tax obligations? Why is this important for NatGold tokenization?2024-04-21T13:18:45+00:00

U.S. Patented Land Claims typically include both surface and subsurface rights, granting the owner full control over the entire property. However, it is possible for these rights to be severed, meaning that the surface rights and subsurface mineral rights can be owned separately. This process involves legally separating the ownership of the surface land from the mineral rights beneath it.

Once severed, the subsurface mineral rights can be sold, leased, or retained independently of the surface rights. This allows different parties to own and manage these distinct interests separately. Severing rights is a legal process that must comply with state and federal laws, and it often involves formal agreements and registrations to clearly define the split in ownership.

Severing the subsurface rights from the surface rights can be particularly advantageous for several reasons. For one, it allows the owner to retain the valuable subsurface mineral rights while potentially selling or leasing the surface land. More importantly, from a financial perspective, separating these rights can significantly impact the financial obligations associated with the property. In the context of U.S. Patented Land Claims, the only financial obligation typically tied to unified ownership is property taxes, which, though often minimal, still represent a recurring cost.

For tokenization purposes in the NatGold ecosystem, where no ongoing fees are acceptable to avoid devaluation of the NatGold coins from their 100% certified gold resource backing, it is imperative for owners to sever the subsurface rights containing the certified gold resources. By doing so, they effectively separate these rights from the surface rights, thus severing the title from any ongoing property taxes. This separation ensures that the subsurface rights, now free from the burden of property taxes, remain a pure asset backed solely by the certified resources they contain, ideal for use within the NatGold framework.