Some Golden Signs
From Junior Mining Network–a great resource for Junior Mining News!
Baru Gold Corp (TSX.V: BARU) (OTCQB: BARUF) announces that it has entered into an arm’s length binding preliminary collaboration agreement with Quantum Metal Thailand Co., Ltd. (“QMT”) on May 15, 2025, contemplating the investment of USD$100 million by QMT to enhance the Company’s gold production and refining capacity of gold up to a purity rate of 99.99%.
The purpose of the Preliminary Collaboration Agreement is to establish an understanding between the parties for the development of a gold off take and funding collaboration, including pricing terms and equity participation by QMT in Baru.
Who is QMT?
QMT is a next-generation gold e-commerce platform that has established interests in both the supply and distribution of gold. QMT’s has multiple offtake agreements for gold mines in several countries and is a major shareholder in an operating gold mine in Malaysia.
QMT’s e-commerce platform specializes in the trading of digital gold and redemption of physical gold bars, and it is one of the largest distributors of 99.99% gold bars in Asia that operates in over 13 countries across the globe. QMT’s e-commerce gold exchange platform has over 1 million active members thus far and has built strong partnerships with several reputable financial technology firms and banking institutions such as Perth Mint Australia, Brinks Singapore Pte Ltd, ABC Bullion (Australia), Wipay Payment Solutions Limited and Sou Seng Heng Gold Shop.
A large, significant e-commerce gold company in Asia is shoring up their gold supply by investing in nearby deposits BEFORE the banks & large institutions. Is the race to the top just beginning?
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Company
Baru Gold Corporation is a dynamic junior gold developer with NI 43-101 gold resources in Indonesia, one of the top ten gold producing countries in the world. Based in Indonesia, Baru’s team boasts extensive experience in starting and operating small-scale gold assets and taking them to the next stage of readiness.
I haven’t gone over the company in any great depth, but it looks to have an interesting property, very high grades at surface, a tiny market cap, great government and intellectual backing and low-costs into extraction and production.
The Sangihe Gold Project is located on the Indonesian island of Sangihe, off the northern coast of Sulawesi with a gold bearing area of approximately 25,000 ha. Sangihe has an existing National Instrument 43-101 report suitable for mining planning and production schedules for an area within the 65-ha area targeted for initial production. So far, it’s estimated that only 5-10% of the gold bearing area has been explored with the possibility of expanding the original deposit size.
Three other gold-copper assets not owned by Baru surround their deposit. A 30% working interest is held by other Indonesian holding companies.
Deal (if interested)
The Definitive Agreement, over a period of three years from the acceptance date of the Definitive Agreement by the TSX Venture Exchange, shall facilitate an aggregate investment of up to USD $100 million by QMT (the “Investment”) in the mining projects of the Company in tranches of not less than USD $10 million per tranche, where each tranche shall be considered a distinct funding investment (each, an “Investment Tranche”). QMT shall fund the initial Investment Tranche for an aggregate amount of up to USD $30 million (the “Initial Investment Tranche”). The proceeds of the Investment shall be used to enhance the Company’s gold production and refining capacity in its mining projects in Indonesia.
For each Investment Tranche, QMT shall receive equity shares equivalent to 1.5% of the Company’s issued capital which equity interested shall increase by 1.5% with each Investment Tranche being completed on the terms of the Definitive Agreement, subject to a maximum holdings interest of no more than 19.0% of the Company’s issued capital.
The Company shall repay the Initial Investment Tranche with the Refined Gold equal to the value of the Initial Investment Tranche at a price ounce of the Refined Gold as quoted on the London Bullion Market Association (“LMBA”) on the date of such repayment less a 30% discount and each subsequent Investment Tranche shall be fully repaid with the Refined Gold at the rate of the then current LMBA price per ounce less a 20% discount.
QMT shall also receive 20% of the Company’s monthly Refined Gold production until the entire Investment funding is repaid in full over a period of three years commencing on the date of production, subject to the applicable discount on the repayment of the Initial Investment and the subsequent Investments.
Essentially
QMT is seeking to secure their physical gold supply for the generation their own bars as well as profiting from the gold mining operations themselves. To do so, they intend to provide a series of tranches of funding as the company approaches final stages a long the lassonde curve.
Why this is significant
- Junior’s raising potentially HUGE sums of capital
- Gold industry looking confident that their industry is solid for the foreseeable future AND;
- Supplies are not exactly the surest matter, especially if capital restrictions and tariff are dominant–better to acquire what you can NOW
First of all, it’s nice to hear that some serious capital figures are not only going into gold projects, but projects that are less than senior-size gold producing operations. As far as I can tell, a merger and acquisition phase for the gold equities has yet to commence, despite it’s promising macroeconomic forces and cheap valuations relative to the gain in the underlying commodity.
Despite big institutional money not pouring into this niche sector, it’s reassuring to know that you and I are not the only ones interesting in gold mining equities and that we are seeing matters in a correct fashion. It’s only a matter of time before these huge funds allocate segments of their clients capital into these developmental projects which are trading for peanuts compared to the grand buffet they’re normally allocated towards.
Second of all, 100M, whether dealing with gold or not–is a lot of money! Especially for an e-commerce company. It would seem that in recent years, Asian countries have demonstrated a higher appreciation for the shiny metal than those in the West, despite most of the serious capital being in the West
Lastly,
From the World Gold Council Quarterly Report:
Total Q1 gold demand (inclusive of OTC investment) was 1% higher y/y at 1,206t – the highest for a first quarter since 2016.
Central banks bought 244t of gold in Q1, a slowdown from the previous quarter but comfortably within the quarterly range of the last three years.
A sharp revival in gold ETF inflows fuelled a more-than-doubling of total investment demand to 552t (+170% y/y); its highest since Q1’22.
Bar and coin demand remained elevated at 325t – 15% above the five-year quarterly average. China drove much of this increase, posting its second-highest quarter of retail investment.
The supply-demand fluctuates, but it is quite tight when everything is netted down to it. Here are the last 5 quarters of the gold markets for demand and supply.
Final add-on for Baru investors
As for the property itself, a Contract of Work is the “Gold Standard” in concession rights in Indonesia which Baru already holds. It is a legally-binding contract with the President of Indonesia that provides exclusive production rights for 30 years after starting production, with a 20-year extension
Moreover, this designation goes beyond simply securing active mine life, they are granted an official government representative tasked with securing, protecting and resolving any disruption to operations. The police are obligated to provide security assistance.
Currently, they’re estimated to have 1Moz of Gold and 16Moz of silver. Chief Geologist Frank Rocca (formerly of Barrick Gold) estimates at least another 4 Moz should be identified after completion of planned drilling program. Amazingly, their plan for first production is expected to do so at a tiny price of $653 USD/oz–with the rise in gold price, this offers substantial margins.
Closing
This stock is very interesting. They’re holding a small market cap despite their drilling rights, government protection and privileges, upside in new targets, high-grade finds and huge exploration still available despite ramping up stages of production.
The central point of this read however has been the magnitude of investment from a important e-commerce company for Asian investors. Contracts like this show their desire to secure their supply of gold for the foreseeable future, something that I’m not sure you are seeing with all industries right now. Buy WHAT, IN THE WORLD? for more.
Baru, while being in a unique position, is still very much a junior mining company and therefore this should serve as a reminder that we are in the early innings before large amounts of capital touch the micro-cap mining stocks (now is the time to be buying them!)
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