London BTC Company Ltd (LSE:BTC, OTCQB:VINZF) announced it has signed a 30-day exclusive call option to acquire a 100% interest in the tenements containing the historic Chance gold mine, in Western Australia.
The company said the move forms “Stage One” of a hedging strategy aimed at reducing exposure to Bitcoin volatility, and, follows comments made in its interim results published in November.
The Chance Gold Mine is located about 4km south of the Copperhead Gold Mine near Bullfinch in the Western Australian Goldfields. The release cites historic production in the 1930s of ore grading 9.4 grams per tonne of gold. It also cites limited drilling by Troy Resources in the 1980s, including 2m grading 6.9 grams per tonne, with numerous drill holes reporting grades over 1 gram per tonne.
“We like Bitcoin and we like gold," said chair David Lenigas, adding: "linking the two we feel we could create a very exciting platform for growth and one that could see our Bitcoin operations grow faster.”
Under the transaction terms, London BTC paid A$5,000 for the call option over two granted tenements, P77/4569 and P77/4570. The option can be exercised within 30 days by paying a further A$5,000. The company said it will carry out due diligence during the option period to assess whether the project fits its objectives.
London BTC said it will undertake legal and geological due diligence on the ground during February and expects to report findings as results become available.
The company said it has a strong balance sheet, no external debt and 1,048 Bitcoin miners producing Bitcoin in North America, hosted at facilities in Indiana, Iowa, Nebraska and Texas in the US, and Labrador in Canada. It said revenues from mining and its balance sheet will be used to fund gold exploration with the intention that any realised increased value can be returned to its Bitcoin treasury and used to continue increasing its mining fleet.
It also said it is setting up a special purpose subsidiary in the US to explore the possibility of staking areas over prospective gold ground in known gold provinces. The company said potential US gold sites will also be assessed for suitability to host new stand-alone data centres to house Bitcoin mining operations.
Lenigas commented: "I believe that Gold is the hottest financial sector globally now, and our view is that holding exciting gold assets and, indeed, potentially holding physical gold in treasury, is a sound hedging strategy in these volatile times. I'm also very excited about the possibility of expanding this hedge into the US gold areas we are currently assessing.
"Great gold tenements can be run up the value curve and either developed or sold, and these funds could be used to make us bigger in Bitcoin much quicker."