Expert Analysis

The Ironic Economic Potential Behind NatGold™ 

Executive Summary

The purpose of this analysis is to highlight a critical aspect of the NatGold™ tokenization model: it is backed not just by any gold resources, but specifically by those within the categories of inferred, indicated, and measured that have been certified as having reasonable prospects for eventual economic extraction. This is a key distinction, reinforcing the value and reliability of NatGold as an asset.

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

The legal framework and standards set by the Canadian Institute of Mining, Metallurgy and Petroleum (CIM) are foundational to the certification of gold resources in a National Instrument 43-101 (NI 43-101) mineral resource report. These standards ensure that the resources have not only been identified but also evaluated by Qualified Persons with a judgment on their economic extraction prospects.

Understanding NI 43-101 Reports: Important Definitions

The CIM Definition Standards for Mineral Resources & Mineral Reserves provide crucial definitions that underpin the assessment and reporting of mineral deposits. According to these standards:

“A Mineral Resource is a concentration or occurrence of solid material of economic interest in or on the earth’s crust in such form, grade or quality and quantity that there are reasonable prospects for eventual economic extraction.”

This definition underscores the need for a mineral resource to not only be of sufficient concentration but also to have the potential for profitable extraction, reflecting the economic relevance of the resource.

Further elaborating on this, the document specifies:

“The phrase ‘reasonable prospects for eventual economic extraction’ implies a judgment by the Qualified Person in respect of the technical and economic factors likely to influence the prospect of economic extraction.”

This indicates that the determination of what constitutes ‘reasonable prospects’ involves a comprehensive evaluation by a Qualified Person, who must consider a range of technical and economic factors that could impact the feasibility of mining the resource.

Additionally, the CIM document clarifies:

“Interpretation of the word ‘eventual’ in this context may vary depending on the commodity or mineral involved. However, for many gold deposits, application of the concept would normally be restricted to perhaps 10 to 15 years, and frequently to much shorter periods of time.”

This part of the definition highlights that the timeframe for considering whether mining is economically viable can differ greatly, particularly for gold, where the expected timeline for extraction might be relatively short due to the specific characteristics and market conditions related to the metal. Of course in the NatGold digital mining model the timeline for extraction is of no pertinence whatsoever.

The Irony of NatGold’s Paradoxical Approach to Gold Extraction

One of the key reasons this tokenization model is so compelling from an analyst’s perspective is the robust methodology of analysis that underpins these ‘gold standard’ NI 43-101 reports. 

Traditionally, the mining industry has focused solely on the physical extraction of resources. Consequently, all the policies and standards governing resource certification—such as the Canadian NI 43-101, the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code), or the South African Code for the Reporting of Exploration Results, Mineral Resources and Mineral Reserves (SAMREC Code)—are designed with this goal in mind.

These standards serve a common purpose: to quantify gold resources and reserves for their economic extraction potential. This “production or bust” model typically defines the endgame of such reports, emphasizing the certification of gold resources and moving them up the probability ladder towards ultimate extraction of the gold resources.

In contrast, the NatGold digital mining model revolutionizes this approach by capturing the value of gold in an ESG-friendly manner that brings the economic value to the surface while leaving the physical gold undisturbed in its natural state. This is a novel approach in the formal geological and financial world, which has traditionally recognized only physical extraction as the means to realize value from mineral resources.

The integrity of the NatGold model is supported not just by any gold resources but by those independently certified under NI 43-101, categorized according to their reasonable economic probability of eventual extraction. This ironic twist—that the tokens derive their robustness and appeal from the theoretical extractability of the gold, while simultaneously pledging never to follow through on that extraction—adds a unique layer of reliability and allure to the NatGold tokens.

Probability Exchange Ratios

The NatGold digital mining model has established specific value exchange ratios for the three categories of gold resources when tokenizing them into NatGold.

  • Inferred Gold Resources: As the category with the lowest degree of probability of eventual economic extraction, inferred resources receive a 20% conversion into NatGold coins. This means every NI 43-101 certified ounce of inferred resources is equivalent to 0.20 of a NatGold coin.
  • Indicated Resources: With a higher degree of probability of eventual economic extraction, indicated resources convert into 0.40 of a NatGold coin for each ounce.
  • Measured Resources: Representing the highest probability of eventual economic extraction, measured resources receive an 80% conversion rate, meaning every ounce of measured gold resources converts into 0.80 of a NatGold coin.

These ratios reflect the varying levels of confidence and economic viability associated with each resource category, ensuring that the tokenization process accurately reflects their categorical probability differences on a general basis.

The Iron Clad Credibility of NI 43-101

Those that care to challenge the validity of the NatGold model cannot do so without attacking the underlying credibility upon which the entire world’s geological and financial industry has been built. And the Canadian NI 43-101 mineral resource reports are the international ‘gold standard’ among the offering. For that reason, only NI 43-101 certified gold resources are permissible for tokenization in the NatGold ecosystem. Meaning the highest degree of internationally recognized mineral certification is utilized.

Conclusion

Mining titles digitally converted into NatGold do not alter the fact that the underlying resources were certified as having reasonable prospects for eventual economic extraction. Instead, the NatGold ESG-friendly digital mining model ensures that mountains remain intact and rivers undredged. This model prevents the traditional disruption of extracting gold only to have it processed and stored away in vaults. Instead, it leverages the known probability of the gold’s existence and its economic viability through digital mining, allowing gold to fulfill its ancient role as a circulating medium of natural money. This sustainable approach aligns with modern environmental values while preserving the intrinsic value of gold.

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FAQs

Isn’t silver considered to have monetary utility, similar to gold? What happens when there are certified silver resources in addition to the primary deposit of certified gold resources? Is the silver given any gold equivalent value?2024-05-01T17:22:10+00:00

It’s extremely common for a gold deposit to include significant amounts of other metals—both precious and otherwise—alongside the gold. Silver is one such metal that frequently occurs with gold and has a rich monetary tradition alongside its “big monetary brother.”

Silver has always played an important monetary role throughout history. Sometimes referred to as the “common man’s gold,” silver was historically used for more routine commercial transactions of a smaller nature, whereas gold fulfilled larger transactions. The true monetary history of the world is bimetallic: gold and silver.

One significant difference between gold and silver is that over time, the monetary utility of silver became overshadowed by industrial usage, which accounts for about 60% of its utility. Thus, its monetary utility is no longer its primary utility, whereas with gold, its store of wealth utility remains its primary function.

Because silver plays an important role in the global investment world, with as much as 40% of its demand for investment and store of wealth purposes, it is important to recognize their value. Therefore, in models like NatGold, certified silver resources are valued on their gold equivalent ratio basis. This means that the NI 43-101 certified silver resource is converted into its gold equivalent value within the same resource category; inferred, indicated, or measured resources.

It is important to note that NatGold’s legislative policies are focused on gold as the primary element of tokenization. The silver resources to which we are referring would be a by-product resource that occurs along with the primary certified gold resource.

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.

Who is OroEx Corp., and what is their role within the NatGold ecosystem?2024-04-21T19:10:09+00:00

OroEx Corp., based in New York, NY, is the founder and exclusive operator of the NatGold ecosystem, a comprehensive hybrid ledger/blockchain-based platform that facilitates the tokenization, storage, distribution, and global trading of NatGold coins within a DeFi framework. OroEx ensures that all components of its operations are fully auditable, transparent, and strategically managed.

The NatGold ecosystem encompasses several key components:

NatGold Digital Vault: Actively facilitates the tokenization process and safeguards all related documentation by securely recording and managing tokenized assets.

NatGold Bilateral Bridge: Facilitates seamless interactions between the ledger system and blockchain networks.

NatGold Multichain: Supports the global distribution, storage, and trading of NatGold coins.

NatGold Media DApp: Delivers continuous communication and updates on the NatGold industry within the DeFi universe, keeping stakeholders informed and engaged.

Each component works in concert to ensure a secure, transparent, and regulatory compliant environment, making the NatGold ecosystem the essence of the global NatGold industry.

What is the NatGold Public Accountability Vault?2024-04-21T19:45:42+00:00

The NatGold Public Accountability Vault, operated by OroEx Corp., is an innovative transparency initiative within the NatGold ecosystem. Designed as a fully visible and inspectable online resource, this public vault houses all key due diligence documents supporting the NatGold tokenization process. It serves as a cornerstone for accountability and public trust in the NatGold coin system. The vault includes digital copies of critical documents such as the mining title registered in the name of the NatGold Integrity Trust, NI 43-101 Technical Reports, and other important due diligence materials. These documents are made publicly available to ensure that any interested parties can inspect and verify the accuracy and authenticity of the information provided during the tokenization process.

Key features of the Public Vault include real-time data on the total number of NatGold coins minted, distribution statistics, and the verification that all minted coins are 100% backed by NI 43-101 certified gold resources. Utilizing the NatGold Bilateral Bridge between the NatGold Digital Vault and the NatGold Multichain, the vault updates an ecosystem audit every 24 hours. This audit verifies that the total amounts of NatGold coins in circulation on the NatGold MultiChain are equivalent to the amount historically distributed from the NatGold Digital Vault, enhancing security and trust in the system.

The primary goal of the NatGold Public Accountability Vault is to foster unparalleled transparency and trust across all aspects of the tokenization and distribution processes. By providing open access to critical documentation and real-time data, the system ensures that stakeholders can continually verify the integrity and backing of the NatGold coins. This open vault allows for ongoing public oversight, inviting users, investors, and regulators to engage directly with the operational and financial details of the NatGold ecosystem. It empowers them to conduct independent verifications, promoting an inclusive and transparent digital asset environment.

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.