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Theta Gold dips its toes into bullion Asset management with latest investment

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Summary

  • Theta Gold makes an equity investment in Bullion Asset Management Services based out of Singapore.
  • The Bullion Asset Management is backed by Jaggards Trading Pty Ltd, Aura Group and DigitalX Limited.
  • The investment will allow TGM to have digital ownership of physical bullion and their management.

ASX-listed gold explorer Theta Gold Mines Limited (ASX:TGM, OTCQB:TGMGF) has announced an equity investment in Bullion Asset Management Services Pte Ltd (BAM). TGM has made an initial investment of A$700,000, making it the owner of 5% stake in BAM.

BAM is a Singapore-based technology company engaged in financing and tokenising physical bullion trading. The company boasts of strong founders and technology partners. BAM was co-founded by Decentralised Capital Pte Ltd and DigitalX Ltd (ASX:DCC). Decentralised Capital is an expert in blockchain assets and is a related to Aura Group. The DigitalX is a tech-based asset management company. 

BAM is also backed by Australia’s oldest bullion and coin merchant group - Jaggards Trading Pty Ltd.

Image Source: Kalkine Group Image, Data Source: ASX Update, 20 January 2021

Also Read: Theta Gold Mines eyes huge gold production from its South African mines

Investment Details

Theta Gold has made an initial investment of A$700,000 in BAM. The investment will make Theta Gold one of the top five shareholders of BAM. TGM will subscribe shares worth of initial investment value at a price of US$1 per share.

TGM will issue its shares of equal value in lieu of payment for the subscribed shares of BAM. The issue price of TGM shares will be VWAP price of shares during 30 trading sessions on ASX.

Apart from TGM, Decentralised Capital, DigitalX Ltd and Jaggards are other major shareholders in the top five shareholders’ list of BAM.

Image Source - ©Kalkine Group 2020

Theta Gold will also have further options in the Deal

  1. TGM will have an option to acquire further 10% shareholding in 2 tranches in BAM prior to 17 January 2022.
  • The first option will include the same investment value and payment method as per the ongoing deal. The voluntary escrow period will be for 9 months, and the deal has to be completed prior to 17 April 2021.
  • The second option will require to be used prior to 17 January 2022. TGM will have to acquire shares worth A$700,000 @ US$1.25. The payment for subscription will be again through shares issue.
  1. Total holding will be 15% if TGM subscribes for a further 10% stake.
  2. TGM will also have an option of appointing a non-Australian resident to the Board of BAM as the director if its shareholding increases to 10%.
  3. TGM will get an opportunity to invest up to 50% in any future gold mining projects along with BAM. The option is valid till the end of the year 2025.

Informative Read: Gold price loses sheen as US govt bond yields shoot up

 

Significance of the Strategic Investment

The investment of A$700,000 by TGM is made strategically to gain leverage in bullion and precious metal market.

  • BAM core operations include financing, trading and tokenisation of bullion. The technology-driven operations of BAM provide digital ownership of physical bullion.
  • BAM provides a low-cost solution for the management of bullion and also looks after the liquid storage solution.
  • The bullion is securely vaulted and insured by BAM. The services also include audit, transfer of ownership instantly and allocation of the bullion.
  • BAM caters to the decentralised finance sector and serves precious metal miners/developers and professionals engaged in fund management and asset investment.

TGM will get an opportunity to invest alongside BAM in gold projects all around the globe. The gold produced by the TGM from its mine in South Africa will be better managed by the asset management firm. Apart from gold projects, TGM will also get exposure to service bullion traders, fund managers, and digital asset investors.

Share Price Movement

The shares of the Company closed at A$0.400 on 20 January 2021.

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