In a 2012 interview with Daniela Cambone (then of Kitco News), Canadian investor and Shark Tank host Kevin O’Leary explained his philosophy on owning gold as a portfolio stabilizer, an insurance policy that should be no more than 5% of one’s portfolio.
Because managers of gold mining companies all too often are unable to control their costs, “If you want exposure in gold - buy the gold, not the miners.”
C3 Bullion co-founder and CEO Christopher Werner says that mine owners struggle with traditional pathways for injecting capital into gold mining companies for two primary reasons:
First, any venture capitalist investing in a gold mining company wants at least 50% of the profits, and streaming companies want a piece of the gold mined for the next several decades.
Second, publicly traded mining companies in need of capital are likely to have depressed stock prices that make it even harder to raise money and still make a profit.
When Werner started conversations with Luciano Duque, now C3’s chief investment officer, they came up with a radically different plan that connects gold seeking investors with gold mining companies.
Now C3 is on the verge of introducing its C3 Fund I, a revolutionary model that combines gold allocation with strong returns and recurring income.
Werner says this new fund is superior to the gold-backed ETF (SPDR Shares GLD), which transformed gold investment two decades ago, because investors will receive actual gold for their portfolios.
Werner and Duque gave a preview of their new 'C3 Fund I' at the recent iConnections Global Alt Summit in Miami in preparation for its formal launch. Werner said on the heels of iConnections that there has long been a huge need for gold mining companies to have access to developmental capital without having to compromise their equity.
Similarly, there is a huge desire by investors – and banks – to acquire physical gold.
What he was looking for then was a structure through which capital could be accessed to provide direct loans to mining companies who would repay those loans in gold bullion.
Werner and Duque surmised that through C3 Bullion, their company would thus be able to modernize and democratize how gold is processed and sold to consumers. And that was the genesis for C3 Bullion charting this new course.
According to Duque, C3 Bullion is building a product that acts as a bridge between active gold mines needing a capital infusion to grow, and investors who want physical gold but do not want to be involved with a mining company.
It has taken three years to put all the pieces together, because a fund must have two structures – the fund itself and the general partner of the fund that directs investments.
On January 22, C3 Bullion Inc., the Delaware company that is C3 Bullion’s fund manager, was qualified by the Securities and Exchange Commission (SEC) to raise capital from the public. C3 Bullion, Inc. has Regulation A tier 2 status with T-ZERO securities and a FINRA registered broker dealer, says Duque.
"We have had a very positive reception from prospective shareholders", he says, "...largely because of the credibility gained as an SEC reporting public company under Regulation A".
Duque explains that property, equipment, and the gold in the ground provides the security for the loans that are made only for operating mines. This enables C3 to close loans in 60 days, rather than six months to a year.
The typical agreement with a mining company is for a five-year period, during which the mine sacrifices a portion of its production in return for equipment, expertise, and capital that enables it to produce gold with no further payouts, long after the loan is repaid in bullion.
The capital infusion enables a mine, say, to double the ore crushed (and thus the gold extracted).
The mine then pays interest in fiat, repays the principal in bullion at a discount from the market price, and pays a royalty to C3 Bullion on its increased production.
"We anticipate a 20% to 25% return on our investment over the life of the loan," Werner suggested. "Our investors would be happy with a 10% return, though we hope it will be much higher. Then we are gone, and the mine is debt-free. Everybody wins".
"Our management team", continued Werner, "...has a long history in the mining industry. Peru’s minister of mines, for example, is a close friend of our consultant there. We have met with Ecuador’s minister and vice minister of mines, and we have also met with mining officials in Mexico. They all love the idea that their mines can expand and provide their governments with more tax revenue, without their mining companies having to sacrifice their equity".
While C3 Fund I is capped at $50 million, the company is already considering a second investor round, given the number of mines seeking capital. And C3 Bullion is partnering only in well-managed mines in the U.S., Canada, Peru, Mexico, and any other country with low political risk.
Investors, though, come from across the globe, notably India and the Middle East, where gold is especially revered.
“We are opening the door to pretty much anyone who wants to have a percentage of the company creating this business model,” says Duque. “This is super exciting, because there is no other product out there that lets the investor receive actual physical gold as a return on an investment in a gold mine.”
"We believe", Werner added, "that this is far superior to either investing directly in a mine in the hopes of receiving dividends or investing in a 'paper gold' GLD".
Moreover, the timing could not be better for the introduction of this revolutionary tool - According to State Street’s 2024 survey, over 60% of investors have increased their allocations to gold, citing its resilience during market volatility and its growing appeal as a safe haven.
By opening up investment with a near-guaranteed return, the C3 Fund I both enhances portfolio diversification and generates consistent monthly returns in physical gold.
One might call this a golden opportunity.
