Francois Dumont
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Cryptocurrency: An Alternative for Artisanal Gold Mining

By Paloma Duran | Mon, 05/31/2021 - 17:29

Q: Why is access to capital extremely difficult for artisanal miners and how is GoldFinX helping close that gap?

A: There is a lack of information and a high-risk perception on the part of traditional funders. They have limited capital to invest and as a result, they avoid anything that is perceived risky in their investment options.  Some funds, as part of their mandate, exclude any potential participation with the artisanal segment of mining. Unfortunately, there is a great deal of unknown information in regard to artisanal mining. We created this successful funding platform because of the opportunities cryptocurrencies have recently offered and allowed   for a fairtrade way of transferring value to the ASGM community.  Today, representatives from traditional funds look at us and believe that our proposal is interesting and sustainable. Each segment of our work process has been carefully engineered to create a risk mitigation mechanism in selecting our ASGM partners, efficiently operating the mines, and legally refining gold. I believe that if GoldFinX did not exist, it would be almost impossible to finance the artisanal world in an organized and efficient manner.

Q: What are the company’s key pillars to ensure a fair trade crypto-finance model?

A: We do not invest in equity or provide loans to the young mining company. Rather, we sign a partnership agreement that includes an advance-purchase agreement component. This type of agreement has been sponsored by the World Bank and the UN for many years in relation to the agricultural world, where they basically provide money in advance to farmers to acquire the right machinery, and properly train miners in a way it will deliver the quality of results that stakeholders are looking for. This “contract farming“ legal mechanism has been around for years and we have taken this concept and adjusted it to our mining industry segment and our funding platform. So, we provide the mines our on-site management, and control the capital and working capital until they reach cash-flow positive. After all equipment has been delivered, and the proper training and coaching has taken place, they start extracting gold. They need to deliver the portion of the gold we purchased in advance. When they have fully delivered that amount “invested”, from that point on, we will retain 20 percent of the gold production for the lifetime of the mine.

This, we believe, provides a fair way of transferring wealth in a mitigated-risk and sustainable way to a segment of the mining industry that up to today has never been able to organize themselves financially.

In addition, GoldFinX is using cryptocurrencies as a means to raise money to fund our partners. The additional benefit is for the normal retail investors as they be involved with a gold extraction investment opportunity without having to mortgage their house to do it. Anyone can buy coins from us in a very democratic, uncomplicated, and unrestricted way. 

Q: How does the company guarantee that its cryptocurrency is safe and considered a valuable option?

A: We created our own crypto called GiX, which is the digital token we are selling to raise the money required to fund the ASGM communities. A sort of Bitcoin but supported by an accumulating amount of pure gold stored in a secured vault. There is a value transfer mechanism linked to the gold accumulating in a vault to the financial beneficiary, the GiX token purchasers. A mechanism mimicking the concept of the stock exchange. This essentially allows everyday people to invest in a continuously increasing gold extraction mechanism and benefiting from the fluctuating price of the GiX token.

Hence, people are investing in gold in a different and more convenient way than if they had invested in a mining property where they have no visibility or control. In addition, this GoldFinX transaction has an environmental and humanitarian benefit.

It is important that people understand our business model and its concept of risk mitigation. For example, we allocate US$1 million to a partnership operation. When the mining partner delivers that US$1 million, the amount purchased in advance as part of contractual mechanism, 100 percent of that US$1 million worth of gold goes into the secured vault. Once the $1 million is fully delivered we will remit 80 percent of all future production to the partner and keep 20 percent for GoldFinX. From our share of 20 percent, 15 percent is kept in pure gold and accumulates in the reserve (secured vault), and the remaining 5 percent is GoldFinX’s operational revenue. The notion of the accumulation of the gold reserve each month serves as justification of the financial benefit for cryptocurrency owners. This assurance comes via the perceived reassurance of the accumulating gold protecting their investment.

Q: How well are miners accepting your cryptocurrency and what is your short-term and long-term outlook?

A: When we decided to enter the alternative financing environment, we found that many financial consultants were really impressed with our crypto and sustainable business model and we started having a great deal of sales support and financial success.

We started in Europe and later entered the Asian market, which loves our crypto concept and the favorable impacts we have of the elimination of the toxic mercury in the extraction of gold, and the elevation of the quality of life of the ASGM communities. Since January, Canadian funds and specialized mining funds have started to show an interest in us. In addition, we have garnered interest from many who have never thought would be possible to benefit from this untapped $Billion opportunity within this forgotten mining segment. We have been successful thus far, and we believe that we are going to sell our GiX token for the next 10 to 15 years, and every time we have enough money, we will allocate this capital to another future mining partner.

Q: How is the company's cryptocurrency affected by the current market environment?

A: Gold pricing does not really affect us much in the short term because there is no elasticity in what we do and its price. When you see a big jump in gold, people are happy, but that does not mean that there are more or fewer sales in our business model. On the other hand, cryptocurrencies affect us. When bitcoin prices go up, all other cryptocurrencies follow suit in gaining in awareness as an investment alternative. There are people who understand this type of financing but there are also many crypto projects that are very obscure in the way they work. However, our model is one of the simplest businesses that crypto can support.

We finance mining operations that extract gold from the ground in a safer and more sustainable way. Essentially offering a very democratic method of transferring wealth for investors and mining partners who never thought it was possible before the advent blockchain technology supporting digital token (cryptocurrency).

Q: What impact has the Heart of Mine Foundation had on communities and ecosystems, especially those affected by irresponsible mining?

A: The Heart of Mine Foundation was created to accelerate the benefits that our financing platform and GoldFinX provide to the ASGM mining communities and even in areas in which we are not directly involved.

The foundation is partnering with large NGOs and potentially the likes of the United Nations Global Environment Fund and other agencies.  These NGOs have a similar focus of helping the forgotten segment of the mining industry. One of the main desired positive impacts is the elimination of the pervasive uses of toxic chemicals (especially Mercury), usually an integral part of the daily extracting activities of ASGM miners, which our Fintech platform through its operating protocols and technology completely eliminates.

So, the Heart of Mine Foundation (HoM) aligns itself with our first mandate, which is the eradication of mercury and the uplifting of the quality of life of the ASGM mining communities. HoM has two main activities: a program we call "Drs on Wheels against Hg,” which sends nurses and doctors to villages to raise awareness about mercury and its long-term harm on the human body and the environment as well as monitor the toxicity of the people living in those mining communities. We believe that awareness is extremely important, but it is useless if you do not provide an alternative to the use of these harmful chemicals. We offer our own GFX method to isolate gold flakes by using our “Lab-Separators,” which can separate the gold from the concentrate without using mercury.

Institutions and even NGOs are supporting our concept and main goal. However, we also have secondary objectives or specific entrepreneurial opportunities that are tailored to our communities. For example, in one of the villages where we work, there is a great deal of cocoa growing but they do not have the means to boost their production or revenues. We want to provide them, in partnership with NGOs specializing in those fields, with the ability and knowhow of transforming the cacao beans into end-products instead of simply selling the raw beans. This will boost the employment, entrepreneurial spirit, and ultimately generate an economic stimulus benefiting the area.

Furthermore, we are working to empower women and provide a springboard to foster an ecosystem for female entrepreneurship.

Q: What opportunities has GoldFinX identified in Mexico and what are its development goals here?

A: If COVID-19 had not delayed our geographical expansion plans, we would be at the forefront of the industrial sector and we would be operating in Mexico. There are many opportunities here. Our model is an opportunity to help miners and investors, as well as being profitable and sustainable in the short and long term. I hope that the impact of COVID-19 will fade so that we can return to our priority future countries, which Mexico is at the top of our list. Last year via your magazine we were introduced to an opportunity to help the large industrial gold extracting operators in Mexico that struggle with illegal artisanal operations on their permitted industrial territory. The GoldFinX funding platform and modus operandi would address those situations in a sustainable way.

I strongly believe we will re-engage with that opportunity as soon as Covid allows us.

I know there is a great future for GoldFinX and the Heart of Mine Foundation in Mexico.

GoldFinX is a fintech company that provides capital to artisanal and small-scale gold miners (ASGM) in exchange for a share of their production. GoldFinX has created a cryptocurrency (GiX) and a funding platform that is listed on several crypto exchanges.

Paloma Duran Paloma Duran Junior Journalist and Industry Analyst