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PurePlay® Instruments for Producers

PurePlay® Instruments cut out the middle man and bring commodity Investors and commodity Producers together in a symbiotic relationship to the advantage of both. Producers also develop a beneficial new Investor take-off for commodities, particularly in those commodities where Investor markets could not develop because of the logistical and storage constraints often associated with commodities other than Gold and Platinum.

The PurePlay® Product directly unlocks the mineral value of Reserves and creates a value chain from mineral Reserves at the spot cash value of Reserves right into the bank account of the commodity Producer.

Unlocking the value of Reserves has its greatest direct benefit for Producers in the “cash upfront” characteristic of the PurePlay® Instrument, coupled with recognition of the interest saved as a result of accessing this new source of funds.

The PurePlay® Instrument issuance funding program design is driven by a desire to enhance the direct cash benefits with compound interest saved for the Producer while simultaneously mitigating price risks and delivery risks. The result is greatly enhanced benefits and reduced risks.

Historical Back Testing for Gold, Platinum, Palladium, Copper and Oil (WTI).

Historical Back Testing for Gold:

The first major element for evaluation is the price differential between the spot issuance price and the maturity spot price of PurePlay® Instruments issued, representing an opportunity cost to the Producer if the commodity price has risen or an opportunity benefit where the commodity price has dropped. Evaluation against the spot price of a commodity avoids any debate surrounding the type of cost measurement to be used to establish a gross profit margin.

The Accounting treatment of PurePlay® Instruments is straight forward. The Sales of Proven and Probable Reserves must be deducted from the Proven and Probable Reserves and each sale must be reported in Sales at the spot price at which the sale took place. The cash received for sales goes to the Bank Account.

The versatility of the PurePlay® Instrument is demonstrated when the design objectives change to incorporate a shift from maximising compound interest receipts to hedging commodity price risks while still achieving most of the compound interest benefits. The needs and management techniques of Producers differ across Producers, across minerals and across by-products. Some Producers will follow a no hedging or very reserved hedging strategy while other will hedge not only production but also the major input cost components.

PurePlay® Instruments are not reserved for only the super commodity Producers. The PurePlay® research team has designed structures customised for the smaller commodity Producer to gain full access to the value creation properties of PurePlay® Instruments. These structures often include some form of credit enhancement or underwriting.

The ETF arbitrage opportunity for PurePlay® Instrument Issuers in commodities where there are certain types of ETFs is a valuable resource for Issuing Producers, particularly Producers of gold, platinum and palladium where the ETFs are well-established. As with all scarce resources this advantage will yield highest benefits to the early birds.

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. This model will keep all variables equal over the period to ensure that the results are entirely due to the PurePlay® Instrument Issuance Program and all measurements relate directly to it.

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