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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 value created by the PurePlay® Instrument for Investors in commodities and Producers of commodities is truly a win-win value proposition, where both parties gain from the transaction.

Investors are always faced with a long list of costs and risks when making an investment in commodities, when the investment objective is to gain the advantage of price movements and portfolio diversification.

Costs of storage, movement, insurance, delivery and other logistical costs all contribute to make commodity investments challenging for the specialist and almost inaccessible for the general Investor. Using commodity exchange traded funds, where they exist, can assist with mitigating some of these costs but not all.

Exchange traded funds have storage costs, structuring costs, promoter costs, trustee costs and marketing costs, to list only the most obvious. These costs differ significantly between the different exchange traded funds ranging from about 0.95% or 95 basis points to 1.85% or 185 basis points. In the case of a Pure Play™ Instrument, the Producer, when it agrees to a 10 year storage term, Reserves for the Investor between 9.5% to 18.5% of the quantity of physical gold over 10 years, which would be lost to costs if the same initial investment had been made in the exchange traded fund model. This saving is calculated from the existing exchange traded funds (high value, low bulk, low costs) and does not reflect the costs which exchange traded funds in bulk minerals would have to charge if they were created. The exchange traded fund will sell the mineral in storage to pay the costs and thereby continuously erode the Investor’s commodity investment quantity. An investment in a certain quantity in a PurePlay® Instrument will remain constant over the term of storage and will be delivered without any deduction to the Investor on the delivery date.

The Producer gains from receiving the spot value of the quantity of minerals sold under a PurePlay® Instrument on the day on which the PurePlay® Instrument is sold. The Producer will have the cash but can choose to delay the extraction costs until close to the expiry of the storage contract. This results in significant interest savings for the Producer.

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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