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PROJECT FINANCE WITH PUREPLAY® NOTES

A PurePlay Note is the instrument used to embody a sale of unmined minerals held in Reserves by a miner.

We’ll use gold as a proxy for minerals for the sake of simplicity but a PurePlay Note will be possible for virtually any minerals including oil and gas.

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PRUDENTIAL GUIDELINES

Inevitably, with a new and innovative product, the market takes some time to mature and reach a stage where issuers are comfortable with the level of PurePlays that they can handle without strain on their production resources, and Investors are comfortable with assessing the risk and reward balance of a particular issue.

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PurePlay® Case Study

Diversified Mining Corporation (“DMC”)

A Practical Case Study using PurePlay® Instruments to convert a highly indebted mining corporation into a secure debt free entity.

DMC has $4bn in debt and is paying an average interest rate of 5.75% on that debt.

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The PurePlay® Product is a unique design combining four anchoring components to achieve its design objectives. The result is a commodity investment vehicle of unmatched cost efficiency which simultaneously unlocks previously inaccessible exceptional value for commodity Producers. The four components are:

 

  • a tradable Bill of Sale of a specified quantity of gold (or any other fungible mineral) in the Proven and Probable Reserves of the Producer. It is a sale at or slightly above spot, payable upfront, and the price risk passes upon sale to the Investor.  No interest is payable on the PurePlay® Instrument, as it is a sale of the commodity in Reserves.  The Producer must of course calculate the saved interest at its cost of funds in order to measure the benefit of receiving significant payments years in advance of spending the costs of extracting and refining. Investors in commodities give up interest in exchange for the price movements in the commodity with the aim of making “capital” profits;
  • an obligation on the Producer to store that gold free of charge (usually in unmined form) for the Investor for a period of (say) 10 years from subscription. This is where the Investor achieves an unmatched cost efficiency relative to existing commodity exchange traded funds where the mineral is stored in a commercial vaulting system.  Gold ETFs run at average costs of about 1.5% per annum, or 15% over the 10 year lifespan of a PurePlay® Instrument.  ETF costs are met by selling underlying gold;
  • an obligation on the Producer to extract and refine the specified gold (or any other fungible mineral) on or before the delivery date (ie mining will probably take place just before redemption). The Investor must be satisfied that the Producer will honour this obligation and this risk would be judged with reference to the ability and track record of the miner to produce the mineral. Most of the envisaged issuers have excellent production track records stretching over many decades;
  • an obligation on the Producer to deliver the specified gold on the delivery date to the then holder of the Bill of Sale. The Investor must be satisfied that the Producer will honour this obligation. Producers deliver their product continuously and this will just be a very small extension of normal deliveries.

Patents and Trade Marks

The Intellectual Property of PurePlay Holdings (Pty) Ltd is protected by world-wide pending Patents.

Trademarks awaiting registration are PurePlay™, Nature’s Vault™, As Good as Gold™ and Sp☼t True Value™.

Contact Details

5 Jan Smuts Avenue,Winston Park
Durban, 3610,South Africa


Tel: +27 31 7670156
Cell: +27 82 4515864
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