Norwegian miner Intex is the first company to announce its intention to issue asset-backed tokens which are backed by the Company’s metal reserves, and which will be exchangeable into the physical product, either Iron Ore or Nickel.
While the world debates whether blockchain-based Initial Coin Offerings are a fraudulent pyramid scheme, meant to take advantage of gullible investors who are desperate to get rich quick, or a revolutionary “post-equity” way of raising capital, a Norwegian mining company, Intex Resources ASA, has taken the next step in the latter, and last week announced it was issuing the world’s first asset-backed Initial Coin Offering, with the resulting tokens being exchangeable for the physical collateral.
Although Intex is not the first corporation to approach ICOs as a means of raising capital, with Overstock revealing last week that it will launch an ICO on Nov. 1 using its proprietary tZERO platform, a strategy that will allow Overstock to raise capital without diluting its common equity float, Intex approach is somewhat different: the Company intends to issue asset-backed tokens which are backed by the Company’s metal reserves; currently Iron Ore and Nickel Ore.
Where Intex’ approach is unique, is that the newly issued Tokens will be based on blockchain technology and will be exchangeable into the physical product, i.e. Iron Ore, Nickel or products derived thereof. As a result, the company’s Tokens are being pitched as an alternative tool for investors who are looking for Iron Ore or Nickel exposure/hedging or investors who simply want exposure in digital Tokens which have the security of underlying value assets (as opposed to Bitcoin and other unsecured and un-asset backed crypto currencies).
Commenting on the new capital raise, Lars Beitnes, Chairman of the Company, said the “the new world of secure digital currencies and tokens opens up a whole new way for listed companies to raise capital. We believe our ICO would be the first of many to come from other companies in Norway and internationally.”
While it remains to be seen how accepted it is, by effectively pledging collateral behind the ICO, the company eliminates of the biggest concerns the rightfully skeptical investing public has regarding ICOs: the fact that they have no “fair value.” However, once pegged to an underlying asset, that argument loses much of its potency.
What exactly is the collateral behind the new ICO? The answer, according to the press release, are the iron ore assets in the company’s Ambershaw mine in Canada: