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Crypto for Empowering Artisanal Gold Miners

Francois Dumont - GoldFinX


Alejandro Ehrenberg By Alejandro Ehrenberg | Journalist and Industry Analyst - Tue, 04/14/2020 - 09:43

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Q: What problem does GoldFinX solve and how does it solve it?

A: We work with artisanal, small-scale gold miners, of which there are 45 million worldwide. Because most operate under the radar, they find it impossible to obtain any kind of capital. Illegality and instability make the world of small artisanal miners perilous and violent. Children and pregnant women are often forced to work in the mines. Harmful chemicals are used for processing ore, the nastiest of which is mercury, a highly-polluting element. Thousands of tons of mercury are released into the environment annually. Moreover, illegality impedes tax collection, which hampers the development of the wider society. It also makes it impossible to sell gold at reliable prices, and artisanal miners find themselves at the mercy of informal buyers that are often abusive.

Our idea is to marry the old world and the new world. When we speak of the latter, we are referring to cryptocurrency, which is how we raise funds. Traditional sources of finance are not applicable to artisanal mining activities. In 2017, the team that would become GoldFinX looked for alternative sources and realized that cryptocurrency could be viable. The capital we raise is used to finance cooperatives of artisanal miners. These are independent people associated together and linked to an exclusive territory. We help them legalize and formalize themselves as a group. We fund them and bolster their operations with our technical expertise. Procuring capital for them results in enormously beneficial consequences. It translates into tools to formalize their existence. Capital also enables them to make better choices. Thanks to the equipment they can now afford, the need for manual labor is reduced, thereby increasing safety and bolstering the rights of women and children. Their environment is gradually transformed into a much healthier and safer place.

Q: How do cryptocurrency and gold fit together in GoldFinX’s business model?

A: How we use money is very particular. We do not provide miners with a loan or invest in equity related to their projects. Rather, we do a pre-payment for a quantity of gold that we will be purchasing. The amount is coincident with the CAPEX and OPEX they will need until they are cash positive. We look into the mine, study it to make sure there is enough gold and devise a viable plan to legalize and formalize the operation. We build a business plan based on the advice of our mining engineers and geologists. As an example, let us say that it is judged that they need US$1 million to fund the operation. This amount becomes the advance purchase agreement. Once they start extracting, they have to return what we paid originally. When that obligation is fulfilled, they start giving us 20 percent of their production, in gold, for the remainder of the mine’s life. GoldFinX’s responsibility begins the moment the mineral is out of the ground. From that point on, we create a documented supply chain all the way to the refinery. The refinery will buy 100 percent of the gold if you are able to demonstrate that it has been sourced legally. It will buy it at the daily price at the London Bullion Marketing Association. Their share — 80 percent of the gold mined — is liquified into US dollars and wire-transferred to the cooperative.

Of the 20 percent of the gold that comes to us, 5 percent is sold and used to finance the company. The remaining 15 percent is stored permanently in a vault, along with the initial purchase agreement. The amount of gold in the vault progressively increases over time. This is to the benefit of GIX holders. If for any reason our cryptocurrency fails, the gold in the reserve will be sold and distributed to GIX holders.

Q: What are the characteristics of your cryptocurrency?

A: Our coins are called GIX. They are backed by gold and by a real business model. Their price can go above the initial amount paid for them. But it can never go below the value of the gold in our vault. We finance something that generates gold and thus ensures the value of the GIX. In GoldFinX’s business model, everyone makes money: the investors, the miners and the company. This is fair-trade crypto financing.

Furthermore, GIX is considered a utility token, as opposed to security tokens. If you are considered a utility token, you do not have to be regulated in the financial framework of any given country. Thus, we can sell our currency almost everywhere in the world. GIX will soon be trading on exchanges like Coinsbit and p2pb2b. We are using cryptocurrency exclusively in our capital raising. We have raised a considerable amount so far and will continue to do so for the next 10 years.

GoldFinX is a fintech 2.0 company that provides financing to small artisanal gold miners worldwide. It receives a share of production in exchange. GoldFinX raises funds via an Initial Coin Offering (ICO), selling up to 250 million GiX coins at €2 per GiX.

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