Matador/MATA

Just after announcing it was proposing a change of business to focus on a broader investment strategy of cryptocurrencies and precious metals, Matador Technologies Inc. said it had arranged a non-brokered private placement of up to CA$4 million.

The offering of 6,451,613 units at CA$0.62 per unit gives the company an option to increase it by up to 15%.

The proceeds will be divided about 1/3 each between buying Bitcoin, advancing the company's gold acquisition and Grammies business initiatives, and general corporate purposes, the company said in a release.

Matador is making a play for the investors who might buy physical gold and store it in vaults or under mattresses, wrote Don Tapscott, executive chairman of the Blockchain Research Institute and one of the world's leading authorities on technology's impact on business and society.

"The gold industry has missed out on the digitally native and newly affluent class of investors who love Bitcoin (and would perhaps love gold if given the chance)," wrote the author, who has penned 16 books, including Blockchain Revolution: How the Technology Behind Bitcoin and Other Cryptocurrencies is Changing the World, with his son, Alex Tapscott. "So, gold needs to play a little catch-up."

Matador "wants to be one of the first public companies focused on tokenizing real-world assets by leveraging the Bitcoin blockchain, starting with gold," he said.

Offering Details

Each unit of the offering will consist of one common share and 1/2 of one common share purchase warrant, the release said. Each warrant will entitle the holder to acquire one additional common share of the company at a price of CA$0.77 cents for a period of 12 months.

"The warrants will be subject to an acceleration clause: in the event that the closing price of the company's common shares on the TSX Venture Exchange is equal to or exceeds CA$1.15 for five consecutive trading days at any time following the date which is four months and one day after the closing date, the company may accelerate the expiry date of the warrants to the date that is 30 days following the dissemination of a press release announcing such acceleration," it said.

The shares of the offering will be subject to a hold period of four months in accordance with Canadian securities laws.

A 'Natural Evolution'

Earlier this month, the company said it was proposing a change of business from a Tier 2 Technology Issuer to a Tier 2 Technology/Investment Issuer, calling it a "natural evolution" for the company as it expands from pure technology to investment strategies involving cryptocurrencies, precious metals and blockchain-based assets. The move needs to be approved by the TSX V Venture Exchange and a majority of shareholders.

"It will provide greater flexibility for the Company to not only enhance its core products — such as combining precious metals with Bitcoin Ordinals and NFTs — but also to pursue a wide range of potential investments, including cryptocurrencies, staking activities, DeFi protocols, tokenized real-world assets, and digital asset lending and borrowing, to generate income and strategic growth," Matador said in a release at the time.

The policy change would allow for broad flexibility to incorporate a wide range of future investments, including acquiring more Bitcoin, acquiring other digital assets or cryptocurrencies, buying tokenized real-world assets and non-fungible tokens (NFTs), Bitcoin-based assets such as Ordinals, and purchasing precious metals such as gold and silver and assets backed by them.

The company is preparing to launch its digital gold product soon as gold continues in a bull market. Matador's digital asset platform will begin with a gold-based product on the bitcoin network in the next couple of months and will feature "Grammies," 1-gram units of physical gold linked to digital inscriptions using bitcoin ordinals.

Matador said it expects the Grammies product to be the first of multiple offerings centered on precious metals and digital inscription, with silver and other metals under consideration for future phases.

The company also noted that as a part of asset diversification approach, it continues to accumulate both bitcoin and physical gold.

Matador's technology pairs its digital gold product with digital art on the Bitcoin blockchain. The gold is sourced through the Royal Canadian Mint through a partnership with Kitco and physical gold holdings are stored at the Mint.

 The Catalyst: Gold Down, Not Out

According to a report by Sarah Qureshi for Reuters on Thursday, gold lost some after the U.S. dollar strengthened.

Spot gold was down 0.6% to US$3,295.21 an ounce on Thursday afternoon, after prices reached their highest level since May 9 earlier in the session before falling more than 1%. Gold had recorded gains in the previous three sessions.

"We're seeing some profit taking pressure from recent gains and a firmer U.S. dollar index is another bearish factor," Jim Wycoff, senior analyst at Kitco Metals, told Reuters. "The specter of a shaky global bond market is going to be a bullish underlying factor for the gold market that's going to limit the downside."

Gold is considered a safe store of value during times of political and financial uncertainty.

Many experts have said the bull market is not expected to shrink away, however. Garth Friesen wrote for Forbes on March 15 that DoubleLine Chief Executive Officer Jeffrey Gundlach said, "I think gold will make it to US$4,000. I'm not sure that'll happen this year, but I feel like that's the measured move anticipated by the long consolidation at around US$1,800 on gold."

And according to an April 10 post on Goldfix, Goldman Sachs has revised raised the upper boundary of its forecast range for the end of the year to US$3,520 an ounce and even introduced a "tall-risk scenario" as high as US$4,500 an ounce.

Ownership and Share Structure

According to the company, 65% is owned by management and insiders, including Founder and Director Donato Sferra, Vice President of Finance Geoff St. Clair, Director Richard Murphy, Soni, a strategic investor (through UTXO Management, LLC and 210K Capital, LP), Director Tyler Evans (through UTXO Management, LLC and 210K Capital, LP), and Founder Trevor Koverko, among others. 

The rest, about 35%, is retail, and includes Hive Digital with 3%, Kitco Metals with 1%, and Gold Fields Ltd. with 4%, the company said.

It has about 92.22 million shares outstanding and has a market cap of CA$78.03 million at the time of writing. It trades in a 52-week range of CA$0.11 and CA$1.00.