Why we created DMX:
Over $2.7 trillion of physical metal is traded globally each year, while the London Metal Exchange (LME) estimates that trading in metal derivatives exceeds forty times that amount. The vast majority of these trades are made off-market in opaque, over-the-counter transactions that hide price signals and often involve multiple intermediaries. This means that only a small proportion of metals are traded on transparent markets with clear price signals. Many investors may like metal as investment but the current spectrum of what they can trade is narrow.
The broader context of the metals market is a complex paradox of increasing regulation and activism combined with resource depletion, all making new mine development increasingly difficult just as global mega-trends of sustainable development and amelioration of climate change are creating unprecedented demand for all metals. New development and trading technologies, novel processing techniques, extensive community engagement and revised regulatory approaches will all be needed to ensure that metal supply can economically and ethically meet the rising demand.
The Digital Metal Exchange (DMX) was created to enable transparent markets for any metal in any form and delivers programmes to help sustainable projects successfully reach their funding goals.
What is DMX?
DMX is an online asset issuance, investment and trading platform. It allows novel asset classes to be rapidly refined, deployed and traded. It is an institutional-grade, fully functional commodities platform aimed at making any form of metal readily tradable and solves key problems for mines, investors and traders.
Mines are able to access capital through a transparent forward sale mechanism, while investors and traders gain access to a new class of digital assets, best-in-class trading tools and security second to none.
The DMX platform features a sophisticated KYC/AML system suitable for wholesale and professional investors and different types of legal entities and a real-time, high-throughput/low-latency matching and trading platform. It uses best-of-breed, Swiss-based digital asset custody (that has recently been acquired by Deutsche Börse, operators of the Frankfurt Stock Exchange). Security is assured because assets are never moved out of custody and onto the exchange.
DMX provides a blockchain-based institutional-grade metals exchange, created by a multi-skilled international team of metal, trading and finance professionals supported by world-class design and communications. DMX is headquartered in Melbourne, Australia.
DMX Asset Monetisation Process™
The initial offerings available on DMX are fractionalised, discounted forward sales of gold from a number of mines in Australia and elsewhere. The mines (or recyclers or other asset owners) are generally near production or are seeking expansion capital. Traditionally, to secure such funding, they would list (or issue more shares if already listed), enter a streaming deal or obtain a gold loan. DMX offers such asset owners a new, refined way of obtaining their funding without diluting shareholders or committing to a life-of-mine royalty stream.
The DMX Asset Monetisation Process™ includes mine onboarding, internal and third-party due diligence, pricing of the risk discount, significant risk mitigation and full contractual documentation. Once this set-up process is completed, DMX fractionalises the forward sale into units of 100oz of gold (or gold equivalent) and offers these fractions for initial sale and secondary trading. The initial forward sale price is discounted from spot price at various rates, depending on the location of the mine, time to delivery and other factors. Gold offered for forward sale by DMX clients carries our Single Origin Gold™ certification of clear provenance.
The assets are represented on the platform as digital ‘tokens’, managed via smart contracts for transparency and immediate settlement. They are freely tradable on DMX between purchase and maturity, at which time the investors take delivery of the physical metal or are cash settled.
A key focus for the projects funded by the Asset Monetisation Process™ is to empower economically viable funding for mining activities oriented towards sustainable development. For example, early projects include the first commercial implementation of the Clean Gold process developed in conjunction with Australia’s CSIRO (federal research body.) We are also working with providers of acid mine drainage amelioration solutions that produce metals while cleaning up highly polluted water storage facilities. This supports our aim to empower mining operations with sustainable development processes and exemplary ESG goals.