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A cryptocurrency that helps fund gold mines is the latest brainwave from an Aussie corporate advisor.

Perth-based mining industry advisor PCF Capital plans to start selling the gold mining cryptocurrency — known technically as a “security token” — under the name “FutureGold”.

Funds raised from sales of the token would be invested in gold mining projects in return for royalty streams or a share of production.

PCF Capital boss Liam Twigger sees FutureGold as an alternative to ASX-listed shares — and hopes to raise $250 million from sales of the token this quarter alone.

A “security token” is the next evolution of cryptocurrencies — where the value of regular cryptocoin or token isn’t necessarily based on anything, a security token is usually backed by an asset. Unlike a stock, however, they doesn’t confer ownership.

Security tokens are usually offered via a “Security Token Offering” which is like an initial public offering.

In Australia, such tokens and cryptocurrencies come under the gaze of the corporate regulator.

PCF will start with issuing 5 million tokens in the STO.

Perfect climate for new mining funding

Mr Twigger says mining juniors particularly in North America are suffering as investors move their money towards bitcoin and medicinal cannabis stocks. This “created a perfect storm for junior miners”, he says.

Mr Twigger says the ASX and other stockmarkets such as the Toronto stock exchange (TSX) are full of “shells and zombie-like companies” that have projects but no hope of getting them funded.

He says there are more than 300 juniors with projects containing 300 million ounces of gold listed on the ASX, TSX and London’s AIM, and all are looking for funding.

He believes the solution is by tapping the increasingly popular crypto markets.

“So far in 2018, $US20 billion has been raised in crypto offerings, up from $US6 billion in 2017,” he says. “The time is right for a legitimate mining industry cryptocurrency to enter the fray.”

Mr Twigger hopes that by using a cryptocurrency he might encourage younger investors, who are less inclined to invest in stocks, to put money into resources.

He told Stockhead that he believed some individual producers had tried to lunch tokens to fund their mines, but he thinks a single token covering a portfolio of companies is what will make it work.

Doing it right by ASIC

FutureGold would operate via “a registered managed investment scheme powered by blockchain technology”, PCF says.

The proposed cryptocurrency may be an alternative market to the ASX — but it will still be regulated as a security.

ASIC said last year that cryptocurrencies would be regulated under the Corporations Act if they behaved like existing financial products, such as shares, derivatives or funds — effectively a security token.

FutureGold’s Security Token Offering is likely to be a first in Australia.