Interest Rates Rise, Gold Valuation Falls-This Company Remains Profitable

by Wall Street Rebel - James DiGeorgia | 08/03/2022 1:41 PM
Interest Rates Rise, Gold Valuation Falls-This Company Remains Profitable

Thanks to a license from the Agencia Nacional de Mineria, Madre Tierra acquires gold from the Colombian countryside at a discount and sells it at market prices. By purchasing gold at a discount to the worldwide gold spot market price, they capture a spread that generates profits on every transaction.

 

 

By James DiGeorgia

Gold was sought for and dedicated to the glory of early civilization's gods and kings because of its close association with these deities and figures of authority. The Incas referred to gold as the "tears of the Sun," a fitting name for the precious metal.

Humans have always regarded gold as having a high financial worth, even before it was used as money. Obtaining it required an unusual amount of work. People all around the globe were already digging for gold thousands of years before the first gold coins in Lydia Asia Minor emerged about 600 B.C.

In the sixteenth century, tales circulated about a tribal chief who was so wealthy that he and his whole realm were coated in gold. He never had to worry about running out of one of the world's most valuable commodities since there was so much gold. The possibility of unfathomable wealth lured explorers. Conquistadors from Spain, Portugal, and Germany journeyed to modern-day Colombia in pursuit of El Dorado. No one was ultimately successful in locating the glittering El Dorado. For ages, the region of gold and wealth has remained a secret, up till now.

Madre Tierra is not your typical gold company. By combining the techniques of developing the promising gold deposit known as El Carnalita in Bolivar, Colombia, with the combined innovative idea of buying at a discount to the international gold price, they capture a spread that leads to profits for the company and their shareholders on each batch of gold purchased or traded. Madre Tierra will invest a percentage of their trading profit in developing El Carnalita, a prospective gold discovery in Bolivar, Colombia - our own version of the "Golden City."

  • Madre Tierra buys gold from small-scale and artisanal miners in Colombia and sells it on international markets. Madre Tierra avoids high-risk exploration and development and focuses on operating activities that bring in money from day one. They do this with a special gold-trading license in Colombia. This lets the company make money on each transaction, no matter how the market changes.
  • Madre Tierra is also concentrating on investigating its 90%-owned El Carlinita gold property, which is situated in Montecristo and Santa Rosa del Sur in Bolivar, Colombia. Madre Tierra provides shareholders with a unique potential to gain beyond the typical gold trading company, with a diverse asset base, a cash flow producing gold trading operation, and exposure to gold exploration upside.

According to Madre Tierra, the license enables the company to export gold to international gold refineries without going through local gold buyers, middlemen, or gold-buying houses. This could potentially give the company favorable gross margins of between 15 and 25 percent and generate rapid operational revenue and cash flow.

Advantages...

• Madre Tierra reports having one of Colombia's 24 gold-trading licenses, providing them a competitive edge over local firms.

• The company reports having obtained mineral rights for more than 18 years, with the opportunity to extend for another 30 years with no limits.

• The firm has complete support for its project from the Colombian government and local population.

• The company boasts a highly experienced management team with over 30 years of mining industry expertise.

This unique advantage allows Madre Tierra Mining Ltd. to accelerate its revenue path and immediately support its strategic and operational initiatives without long-term dependence on raising capital from investors.

By combining the sustainability of a gold trading business that generates cash flow with the promise of conventional exploration, they have adopted an innovative approach to the classic gold exploration strategy.

World Opportunity Investor's Editor James DiGeorgia sat down with the CEO of Sasha Kaplun and conducted a comprehensive and informative interview.

 

General Business:

  1. What kind of moat do you have? What prevents others from getting a license and trading?

The Colombian government has issued only twenty-four commercialization licenses. These licenses allow companies to purchase and export gold from Colombia. Due to the regulatory environment, we do not expect additional licenses to be issued by the government. Due to these factors, we have a wide moat and high barriers to entry that will protect our profit margins from increased competition. Further, gold is an international commodity, meaning we can always sell into the global market at the spot price. Because we purchase gold at a percentage discount to the international price, we have durable margins regardless of the competitive environment.

 

  1. How are we generating immediate cash?

We recognize that cash flow has always been the crux of a successful junior mining company and our model seeks to avoid that problem. We aim to prevent constantly returning to the capital markets where we could raise dilutive equity capital to finance our exploration. To prevent this, we aim to generate immediate cash flow by purchasing and aggregating gold from licensed artisanal miners at a discount to the international market price and selling it into the global markets at the market price. We can purchase at a discount on the market price because the local miners cannot mine a significant quantity and are not permitted to export from Colombia.

 

  1. What makes Madre Tierra unique amongst other junior mining companies?

We are a unique junior mining company because we combine the immediate cash flow generation of a gold-trading business with the upside potential of traditional exploration companies. What this means for the investor is that once we raise our initial capital and can fund our gold trading business, we will not need to dilute their ownership to continuously raise capital to fund exploration, building additional shareholder value.

 

  1. How do we protect ourselves against fluctuations in the price of gold?

We have signed several letters of intent to purchase gold at a percentage discount to the international market price, which allows us to buy gold at a discount of between 20% and 30%. The constant discount allows the company to generate between 15% and 25% in gross margin.

 

  1. Why Gold?

Through this most recent economic and market downturn, gold has proven to be a safe haven asset; the price has remained slightly positive throughout the year, outperforming every asset class apart from oil. During economic volatility, gold is viewed as a safe harbor where investors tend to flee to avoid the volatility in the stock market. Gold has also proven to be an excellent hedge against inflation.

 

Madre Tierra's Gold Exploration Business:

 

  1. What are our drilling and exploration plans?

Our current goal is to raise sufficient capital to adequately fund our gold trading business and provide the means to complete our initial 12,000m drilling program at our El Carnalita property in Bolivar, Colombia. We will engage an independent geological consulting firm to complete an N43-101 technical report following industry and capital markets' best practices.

 

  1. When do we expect to start the drilling program?

The timing for our drilling program will depend on our ability to raise capital and complete our geological analysis. We anticipate that we will begin drilling in early 2023.

 

  1. Why did we purchase the land that we did?

Our property is located in the Santa Rosa del Sur region in southern Bolivar state. This region is recognized for its high gold endowment. Its geological potential indicates gold grades between 2.4g/t and 48.1g/t. We purchased the property because the local and state governments highly support foreign investment through streamlining regulation, improving security and infrastructure, and helping manage relationships with local communities.

 

  1. What is the geological history there, and what mining operations in the area?

We have completed trenching, soil sampling, and aeromagnetic analysis, demonstrating very positive geological potential on the property and surrounding region. The region shows indicative gold grades ranging from 2.4g/t to 48.1g/t.

  1.  Can you explain the gold-trading business?

We possess one of the twenty-four commercialization licenses that allow us to purchase gold from local artisanal miners in small quantities, aggregate it, and then sell it into the global gold market. We have signed several LOIs with local gold miners to purchase gold at a discount to the international gold price, ranging from 20% – 30%. We will then aggregate the gold from several miners and sell it to a refinery in Colombia or internationally at a 2% - 5% discount to the global market price. If the international gold price is US$2,000/ounce, we can purchase it at US$1,400 and sell it at $1,960, generating a profit of $560 per ounce or a 40% gross margin.

 

Madre Tierra's Gold-Trading Business:

 

  1. How do we generate a profit?

We will purchase gold at a discount to the international gold price, aggregate the gold from several miners and sell it to a refinery in Colombia or internationally at a 2% - 5% discount to the global market price. If the international gold price is US$2,000/ounce, we can purchase it at US$1,400 and sell it at $1,960, generating a profit of $560 per ounce or a 40% gross margin.

 

  1. How do we purchase it at such a significant discount?

The local artisanal miners do not have sufficient quantity. They do not possess a Commercialization License, which permits the export of gold from Colombia, so they have to sell it to an aggregator and exporter. This makes us purchase it significantly because we take on the logistics and export burden.

 

  1. Why are we allowed to export the gold when others are not?

The Colombian government carefully monitors gold exports from the country and has regulated that only companies possessing commercialization licenses can purchase and export gold. Currently, there are only twenty-four licenses available, with sixteen conducting operations.

 

  1. What are the risks involved with our commercialization license?

The Commercialization License needs to be renewed annually.

 

  1. When do we anticipate being a wholesale production?

We anticipate our first operational shipment completed before September 2022, with wholesale operations commencing shortly after that.

 

  1. Who is purchasing the gold from us?

We will sell our gold to refineries, which will melt down the gold into bullion and sell it to the end-users.

 

  1. We saw that you issued a P.R. on securing gold supply; who was this procured from, and at what price?

We procured up to 120Kg of gold from about 30 artisanal miners. The average percentage discount to the market gold price was 20-25%.

 

  1. Colombia can be a troublesome region; how are you protecting shareholders' investment in the area?

Our gold shipments will be under armed guard from private security and members of the local and national police forces, similar to how armored trucks transport money in North America. We have also engaged Brinks, a global security transport company, to manage our shipments.

 

  1. How do we know that the gold is mined sustainably and responsibly?

While it is possible to generate a greater margin on our gold trades, we recognize that we play an essential role in building the communities where we operate. To that end, we have committed to purchasing gold at a 50% premium relative to other mining operators. We anticipate that this premium will result in an additional US$1 million being injected into the local economies of our communities.  

 

  1. Can you go into detail about your transparent trade policy? Why did you think that was required?

While it is possible to generate a greater margin on our gold trades, we recognize that we play an essential role in building the communities where we operate. To that end, we have committed to purchasing gold at a 50% premium relative to other mining operators. We anticipate that this premium will result in an additional US$1 million being injected into the local economies of our communities.  

 

 

                       Madre Tierra; 120 KGs of Gold from artisanal Miners

 

                      Madre Tierra: Diving into a New Business Model in the Gold Market

Latest News

Stay Up to Date With The Latest
News & Updates

Join Our Newsletter



GET THE NEWSLETTER

Rebel Yell Morning Market Report
Market Alerts
Offers from us
Offers from our trusted partners

Follow Us

Connect with us on social media

Facebook Twitter