Real World Assets (RWAs)

Objective: Create wealth and shared prosperity without the early limitations usual to the mining industry.

Principle: Maximize liquidity from resources as early as possible using asset tokenization on Lux Network.

Mineral Resources Example

Requirements

• Obtain a high level, independent assessment of underground resources acceptable by local or international experts in mining exploration. There are different stages in exploration studies: pre-feasibility, feasibility, bankability.

• NI 43-101 Bankable Feasibility reports, being the most advanced, typically justify bank and investor deployment of capital.

• Based on the stage of resources assessment from the study, the probability of finding accurate estimates of assets increases and therefore the incentive to finance.

• The earlier the stage stage/nature of study, the higher the discount is applied on the value of the mine. Discounts applied at pre-feasibility could be as high as 80-90% of estimated reserves.

• High level valuations are possible given the volume of estimated reserves and current market price and estimated discount based on exploration stage.

This determines the proposed market price of concession (generally negotiated and negotiable as its high level estimate).

Supply

On that basis go to market based on reported supply, from which tokenization process based on volume to extract may begin.

Example: if estimated reserves are estimated at $10 billion, the issuer could issue 10 billion tokens at one dollar onto the market.

Decentralization

Decentralized access to capital democratizes ownership at local and international level, provides early capital to fund further exploration and increase the market value of the asset as the exploration and research deepens, keeps the initial owners in control of the process without having to highly dilute their ownership too early in the process.

Issuance Options

It’s possible to structure the issuance according to various options:

• Mining concession as an NFT

• Security Token

We recommend NFT to avoid the long and tedious process of related regulatory hurdles. That said, we do support fractional stock trading in mobile wallet and security tokens may be more appropriate for some projects.

Asset-backed NFTs

Lux would tokenize the mine as NFTs with fractionalized ownership possible via ownership of various denominations of asset.

NFT increases in value over time as proceeds of fundraising are allocated for further and deeper exploration increasing the accuracy of the estimate of ressources underground.

Lending

Liquidity of assets allows usage as collateral for lending via Lux platform. Advantage for NFT owners is no need to sell NFT to get liquidity as cheap interest loans could be granted via Lux DeFi platform. No tax on capital gains as the NFT is collateralized and not sold.

Trading

It is always possible to P2P sell the NFTs to key investors, mining partners, institutional investors or list on Lux Market, which makes these assets available to the general public.

Valuation

NFT value is enhanced over time as extraction proceeds and continues to increase intrinsic value with liquidity from the sale and/or tokenization of the extracted minerals.

Redemption

Option to redeem NFTs with extracted gold will increase the market value and trigger larger demand based on the high liquidity of assets involved and real market value. This is in contrast to most NFTs, which are valued by subjective rarity and market manipulation.

Promotion

Project promoters have various options to structure investment opportunities either by creating SPVs and keeping a more flexible approach with concession registration and tokenizing actual mining assets through a digitization platform and only selling a portion of the asset to the market.

Market Outlook

Major advantages of the model: rarity and value increase remain under the control of the initial consortium and is much less subject to the volatility of the crypto industry as it is backed by real assets that have acknowledged trading value in the commodity sector.

Future enhancements

Other methods of assessment can be involved such as satellite estimates based on JV model that allow early much higher valuation based on advanced technology although not yet fully recognized by traditional mining environnement still very attached to 43.101 certification for bankability.

Sustainability

Enhancing mechanisms of NFT are possible by creating smart projects on portions of the land (energy, Ecotourism) allowing NFT to generate additional revenue while introducing community and utility aspects to the NFT through community and systems based on land usage.

Challenges

Challenges include ESG impact analysis, regulatory considerations, infancy of the Industry (although case studies exist), local communities involvement (important), local mining code constraints, currency mobility and foreign exchange control (although tokenization helps bypass some of those issues).

Team

Lux has an advanced multidisciplinary team with high level expertise in physical asset tokenization, mining, financial markets and technology necessary to tokenize and bring real world assets on chain.

Our Advantage

Lux will utilize the latest technology in enterprise-grade geospatial data software for the physical world to accurately assess underground value and accelerate access to liquidity across the entire mining process.