Cryptocurrency company logic: Gratomic (GRAT.V) trades potential commodity for potential currency

Graphite explorer Gratomic (GRAT.V) agreed to supply fintech company Todaq Holdings with $25 million of graphite for its Namibia project to be paid in Toda Notes, the company’s proprietary cryptocurrency.

The news isn’t the graphite sale—they happen everyday—but it’s a rare occasion that they’re done for funny money.

Maybe it’s uncharitable to call Toda Notes funny money, but a quicky google search comes up with zero exchanges where they’re presently trading. And that won’t change until Nov. 1 when it’ll open on BitForex at $0.10.

But that’s not all.

“Building our long-term treasury and creating secure digital ownership of commodities that can carry an immutable history of its quality, amount, handling, testing and custody and which can move without friction through manufacturing chains or on trading platforms is where we need to be. As we move to production, this acquisition program creates the foundation to start that focused work,” said Sheldon Inwentwash, co-CEO of Gratomic Holdings.

The press release suggests that Inwentwash’s involvement is at arms length.

Let’s move away from that point for a moment and look at what they’re doing.

They’re effectively exchanging Toda for the commodity value of the graphite, but what does that have to do with mining? Aren’t they going to be looking for more graphite—in Africa?

Gratomic wishes to emphasize that the supply agreement is conditional on Gratomic being able to bring the Aukam project into a production phase and for any graphite being produced to meet certain technical and mineralization requirements.

The answer to the prior question is a conditional yes. They’ve made this investment in the graphite, exchanged the notes, without actually being sure as to whether or not this is going to happen.

Here’s where things get really funny, though.

Todaq Holdings has contracted Gratomic, which isn’t even sure that there’s any graphite in the ground in the first place, or if there is, if they’re going to be able to extract it.

The company advises that it has not based its production decision on even the existence of mineral resources, let alone on a feasibility study of mineral reserves, demonstrating economic and technical viability, and, as a result, there may be an increased uncertainty of achieving any particular level of recovery of minerals or the cost of such recovery, including increased risks associated with developing a commercially minable deposit.

That happens, and sometimes resource investors get screwed when they discover that the company they believed in doesn’t come up with a viable product—for various reasons. But normally real money is exchanged, which can end up in court. In this case, the exchange of funny money is for a product that might not even be there. Seems legit.

So the proposition here is:

You might have a product and our money might have value, but only if it’s tied to the product we paid for in money that doesn’t have value until your product gives it value.

That’s some ridiculous shit right there.

Anyone else have a headache?

—Joseph Morton

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