Canamex launches GoldUSA, SilverUSA offerings

Jan 22, 2019

2019-01-21 12:45 ET – News Release

Mr. David Vincent reports

GOLDUSA AND SILVERUSA SECURITY TOKEN OFFERINGS

Canamex Gold Corp. has launched a non-brokered private placement to accredited investors of GoldUSA Ethereum ERC20 tokens via a security token offering. Further general details of this offering are as follows:

GoldUSA tokens offered at about 30-per-cent discount to the current spot gold price;
Exposure to gold-backed ERC20 cryptotokens on the Ethereum blockchain;
Each token is an interest in one/200th ounce of gold at offer price of $4.50 (U.S.) per token;
This is about 30-per-cent discount to $6.50 (U.S.) value per token, based on $1,300 (U.S.)/oz gold price;
Minimum subscription: 500 GoldUSA tokens or $2,250 (U.S.);
Purchase methods accepted: United States-dollar or Canadian-dollar fiat, Ethereum (ETH) or Bitcoin (BTC).

In addition, further to the company’s news release of Oct. 3, 2018, the non-brokered private placement to accredited investors of SilverUSA Ethereum ERC20 tokens via a security token offering, remains open to subscription.

Further general details of this offering are as follows:

SilverUSA tokens offered at about 35-per-cent discount to the current spot silver price;
Exposure to silver-backed ERC20 cryptotokens on the Ethereum blockchain;
Each token is an interest in one-half ounce of silver at offer price of $5 (U.S.) per token;
This is about 35-per-cent discount to $7.80 (U.S.) value per token, based on $15.60 (U.S.)/oz silver spot price;
Minimum subscription: 500 SilverUSA tokens or $2,500 (U.S.);
Purchase methods accepted: U.S.-dollar or Canadian-dollar fiat, Ethereum or Bitcoin.

Other considerations

The company reserves the right to increase the subscription offer price, if gold or silver prices increase during the offer period. It is anticipated that these STOs will provide additional financing to complete mine permitting and development work to a shovel-ready stage (production decision and construction financing) at the Bruner gold and silver project in Nevada.

The amount being targeted by the company for these offerings is up to $10-million (U.S.).

The risks associated with the issuance of the GoldUSA and SilverUSA tokens is summarized herein.

Risk disclosure

Accounting

Companies continue to look to alternative sources of finance and creative deal structures for growth and financing. These have included joint arrangements, divestments, mergers, streaming, royalty deals and offtake-linked prefinancing. New investment vehicles have emerged in this alternative finance space to take advantage of investor demand for commodity exposures and the companies’ demand for financing. Alternative finance, by its nature innovative and deal specific, does not find a natural home in IFRS (international financial reporting standards). Each arrangement is unique and there is no one size fits all. There is no industry guidance in IFRS that sets out the accounting for these structures. The legal form of the GoldUSA token offering is a contract to buy a non-financial item, the specified commodity, which in this case is gold. Contracts to buy or sell non-financial items are normally considered executory contracts and are outside the scope of the financial instruments guidance.

The settlement is in gold bullion but is contingent on successful commercial production from the Bruner gold project, and there is no compensation if development is unsuccessful. Therefore, this is like a royalty model, but different in that there is no percentage of production acquired via a royalty arrangement, but a fixed volume of production that is acquired, via the GoldUSA tokens. A GoldUSA tokenholder’s right to delivery is dependent on successful development of the mine and extraction of minerals specific to the property, like a royalty.

The company in such an arrangement does not record an obligation for future payments. Since there is no unconditional obligation to deliver cash or other monetary payment, no financial obligation arises.

The company can be deemed to sell a proportion of resources because a defined quantity of resources will be transferred to the GoldUSA tokenholder from the Bruner gold project. Settlement is based on gold bullion delivery and not net income, so the GoldUSA tokenholder’s entitlement basically represents a portion of volume of production.

A GoldUSA tokenholder has no contractual right to enforce development of the mine. A GoldUSA tokenholder has no contractual rights if the other party fails to develop the mine and does not start production. Therefore, the GoldUSA tokenholder is exposed to risks that would not be typical in a financial instrument.

Equity interest

The GoldUSA tokens do not give the GoldUSA token holder any equity or other interest in the company equivalent to a holder of common shares including, for greater certainty, a right to participate in the profits or the distribution of assets of the company, nor any voting rights in any meeting of the security holders of the company. A holder of a GoldUSA token is only entitled to delivery of gold, on request, pursuant to the terms of the GoldUSA token offering. The company will receive cash for this GoldUSA token offering, and will have an obligation to meet gold delivery requests, but only after commercial production is achieved.

The Bruner gold project

As the company is still in the development phase with its Bruner gold project in Nevada, it has yet to produce any gold or other resources. The company has not yet made a production decision and is raising capital to advance the project through permitting and feasibility, the results of which are anticipated to support a production decision upon completion. While the 2018 updated PEA (preliminary economic assessment) is positive and recommends advancing the project through permitting and feasibility, it is based upon mineral resources only and not mineral reserves. The results of a feasibility study may differ from the results of the PEA. Therefore, a GoldUSA token linked to the production of such mineral resources is speculative, as there is no definitive time horizon in which commercial production of such resources could commence, given that there is no definitive feasibility study demonstrating economic production.

Equityholders

The GoldUSA token effectively will be a long-term royalty interest on the Bruner gold project, which will require the delivery of gold if or when commercial production is achieved. Holders or potential purchasers of common shares of the company should be aware that a GoldUSA tokenholder will receive gold, if or when commercial production is achieved, and after redemptions of gold are satisfied, the company could sell any remaining resources available.

About Canamex Gold Corp.

Canamex is a publicly listed company registered in British Columbia, Canada, trading on the Canadian Securities Exchange, and is engaged in predevelopment of the Bruner gold and silver project in the prolific gold jurisdiction of Nye county in Nevada. The region is home to several producing and past-producing mines along the Walker Lane trend. Canamex completed a positive preliminary economic assessment on the Bruner project in 2016. Based on additional drilling conducted on the property, the company completed an updated PEA in 2018, which increased the resources and improved the economics of the project.

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https://canamexgold.com/news/