Fintech start-up ProspEx is opening its pilot Digital Syndicated Royalty (DSR) capital raise for an Australian mining developer in partnership with a boutique brokerage firm.
Following from the transaction, ProspEx will extend its technology infrastructure to traditional brokerage firms to conduct DSR capital raises for their own resources clients.
Early backers in the company include high-profile Western Australian names such as mining and resources lawyer Michael Hunt, Bellevue Gold (ASX:BGL) CEO Darren Stralow, Diggers & Dealers co-owner and Capricorn Metals (ASX:CMM) non-executive Director Myles Ertzen, and energy sector veteran Jon Stewart.
Boutique advisory firm RiseQ has backed ProspEx from early on, and firm Partner Ben Berthon-Jones will be joining the ProspEx Group board.
The ProspEx Group platform is being developed in partnership with Blockhead Technologies, led by CEO Greg Leach, another Perth-based innovator with experience in mining software systems.
Meanwhile, the Perth, Western Australia-based fintech has been conditionally selected to take part in a national initiative exploring how digital money can be deployed across the economy.
Led by the Reserve Bank of Australia and Digital Finance Cooperative Research Centre (CRC), Project Acacia is assessing how different forms of digital money and associated infrastructure could support the development of wholesale tokenised asset markets in Australia.
The company, which was created to address a major gap in mining finance, particularly for pre-production projects, is the only participant from Western Australia among those conditionally selected for Project Acacia.
ProspEx’s platform will operate on Ethereum, a global blockchain network. Its flagship instrument, the DSR, is a tokenised real-world asset, backed by a legally enforceable royalty agreement, developed in-house.
The platform enables the purchase of tokenised royalties using digital currency pegged to the Australian dollar, with fiat conversion facilitated through integrated third-party infrastructure.
These royalties are tied to individual mining projects and offer direct exposure, with holders receiving a share of revenue once production begins. Royalties can typically yield 15% to 35% annually, which exceeds traditional asset classes.
While royalty finance is common in global mining markets, access for smaller investors has been almost non-existent. Cofounder and CEO Kassia Kazmer says the ProspEx model brings transparency, liquidity and accessibility to this traditionally opaque and institutional space.
Royalty finance, alternative solutions
ProspEx is an Australian fintech developing alternative capital raising solutions for the resources sector, with a focus on providing miners with non-dilutionary and liquid alternatives during pre-revenue years.
The platform offers a new way for mining companies to raise capital through its innovative DSR instrument.
The fintech’s platform is being built to support the issuance and management of smart digital products, facilitation of a secondary market with integrated investor communication functionality, trading and clearing house and settlement solutions.
Through its purpose-built digital platform, which serves as an accessible investment ‘shopfront’, primary issuance and registry solution, ProspEx’s CEO says it is pioneering a new way for mining companies to raise capital, through the sale of digital fractionalised royalties.
An alternative fundraising mechanism to issuing new equity or debt, the ProspEx platform will enable resource companies to create royalties over mine revenue and offer these to multiple investors.
“There are outstanding Australian mining projects … that struggle to secure funding through traditional channels. Our platform was built to address that gap”
Kazmer adds that this approach gives companies access to funding without diluting shareholders, while inviting participants – including their existing sophisticated shareholder base – to gain direct exposure to production-linked income through royalties; an asset class traditionally reserved for large institutions or private owners.
“Mining companies are often forced to raise money during periods of both commodity price strength and decline, which can dilute loyal shareholders and delay development,” she says.
“Our model allows them to raise non-dilutive funding and at the same time gives sophisticated investors – and eventually, everyday Australians – access to quality, passive income-producing investments that have been off-limits up until now.
“There are outstanding Australian mining projects, particularly in critical and battery minerals, that struggle to secure funding through traditional channels. Our platform was built to address that gap.”
Write to Adam Orlando at Mining.com.au
Images: Unsplash
