Canadian Madison Metals announced on Tuesday, October 4, 2022, the appointment of Ryan Thompson as Chief Strategy Officer. He will lead the miner’s new project to sell NFT to finance the development of his uranium portfolio in Namibia.
Recall that Namibia, the Canadian junior mining company, Madison Metals, announced on Tuesday 13 September 2022 its entry into the capital of the local mining company Namibia Nuclear Corporation (NNC), which holds a portfolio of uranium exploration.
Indeed, the financing of mining projects is one of the explanations usually given to justify the weak presence of local actors in the African mining sector. While accessing the world’s major equity markets can be difficult, the use of new technologies is within everyone’s reach, Emiliano Tossou told Ecofin Agency.
That’s why, in collaboration with blockchain technology firm Lux Partners, Madison has in fact decided to sell 20 million pounds of uranium from its projects in Namibia over a five-year period once it reaches the commercial production stage, Tossou clarified. .
Part of these future deliveries, 7.65 million pounds of uranium, will be immediately “tokenized”, that is, reduced to small non-fungible tokens (NFTs) that could be retailed. From 15 October it will therefore be possible to buy these Lux Uranium NFT “at the lowest possible price”. The rest of the uranium, 12.35 million pounds, should then arrive on the market depending on the evolution of demand.
Atypical financing method in the sector
Forward sale of a mine’s future production is not an innovation in the mining sector, although it is more common in energy markets where oil and gas are financial assets like any other, traded by traders who have no intention of taking delivery of one. the contract has expired.
The Ecofin Agency adds that by associating this futures contract with blockchain and non-fungible tokens, Madison is instead opting for an atypical financing method in the mining sector. The funds obtained through the partnership with Lux will in fact be reserved for the exploration and therefore the exploitation of uranium deposits in Namibia.
This contrasts with the usual methods which consist in particular either in increasing capital by raising funds on the stock exchange, or in borrowing funds or even in pre-selling future production to large buyers in exchange for immediate financing.
“Having the ability to potentially monetize our uranium resources at a premium using innovative technology provided by industry leaders demonstrates our forward-thinking strategy to create shareholder value,” said Duane Parnham, Junior CEO.
While funding is a major obstacle to national interests (local mining companies or state-owned companies) developing African mining projects, this innovative funding method could inspire others, if successful. It could also allow small savers in the country of origin of the mining project to directly finance its development, in total transparency, Emiliano Tossou also noted.
However, it should be emphasized that the limited information available on the economic viability of Madison Metals’ uranium projects is likely not unrelated to the choice of this funding method. In fact, no economic evaluation or estimate of mineral resources in line with industry standards has yet been carried out on any of them.
We recall that the exploration portfolio of the company in Namibia currently consists of an exploration license on which it holds the exclusive rights and three other licenses for which the company has concluded two different agreements to acquire 24% of a stake in one of them and the 85% of the other two.
Moctar FICOU / VivAfrik