The future of exploration: tokenising pounds in the ground

A reader recently introduced me to an interesting idea: a firm in the US is looking to ‘tokenise’ unmined gold resources.

Here’s the pitch from the company ‘NatGold’, which is looking to kickstart the idea (emphasis added):

Globally, an estimated $5+ trillion in verified gold reserves remain locked underground—not because they lack value, but because the model that once funded discovery is dead.

And this:

You make a discovery. You publish a technical report. But then come the real challenges: permitting delays, environmental resistance, protests and legal battles from indigenous populations over land and mineral rights, soaring costs, shrinking capital, relentless dilution.

Even for those who succeed, the value often arrives too late—or at too high a cost. For most? The path ends before it ever truly begins.

That’s why we created NatGold. It’s not a theory. It’s a rigorously structured model—built with legal, engineering, and blockchain-grade security at every layer.

First of all, I have no affiliation with this US outfit.

I just thought their pitch was interesting as it reflects the common catch-cry from the junior mining sector: 'That the model that once funded discovery is dead.'

In other words, despite record gold prices and producers’ share prices reaching all-time highs, junior gold stocks aren’t feeling the love.

Much of this sector remains rangebound, near-record all-time lows.

Despite bullish conditions in the precious metals market, gold juniors aren’t gaining traction or investor interest.

That’s effectively starving them of the capital needed to continue exploration efforts or develop new deposits.

And if they can’t attract attention at record gold prices, when will they ever gain the devotion of investors?

So, here’s the thing…

With its tokenising strategy, Natgold is perhaps filling the long-lost void for the junior mining sector.

Pioneering a new funding model outside the traditional stock market.

There's perhaps a bit of irony here too...

You see, many in the mining industry have blamed the lack of interest in junior mining stocks on the overwhelming focus on new-age investment themes like crypto, meta, and AI.

According to them, the tech sector has sucked speculative capital AWAY from the junior mining sector.

That’s why they claim junior mining faces a ‘broken funding model’ made worse by the difficulties in gaining permitting to explore and develop new mines.

But NatGold has perhaps hit on something important here... 

It’s finding common ground between crypto speculators AND explorers who desperately need additional speculation capital.

Restoring a long-lost bond!

And that’s why this idea is worth watching… A very real source of capital injection for the junior mining sector.

So, how could it work?

The process of creating a digital token on a blockchain to represent value of a real-world asset, in this case ‘unmined gold’ sounds relatively straightforward.

But in this case we are not dealing with an easily ‘measurable’ asset.

Deposits sit below the surface, they’re hidden!

The big dilemma here is that the field of measuring mineral resources is an arcane and obscure discipline.

It’s also hidden behind a veiled curtain of industry jargon.

No two deposits are alike, so how do you value that as a token?

For example, resources fall into different categories depending on how well geologists perceive that hidden object below the surface, the deposit.

We call it resource estimation, a geological model that moves through different levels of confidence that’s built around the number of drill holes, ‘filling in the gaps.’

For example, imagine an early discovery made by an exploration company:

There might be five or six drill holes spaced over two or three hundred metres.

That leaves a lot of unknowns in the model.

At this early stage geologists can only make a vague guess as to how many ounces MIGHT sit below the surface.

They do that by ‘joining the dots.’

In other words, sketching in the gold from one drill hole to the next and assuming that it runs evenly from one point to the next.

But that obviously involves significant assumptions… A drill hole diameter averages about 5-10cm.

Its just a microcosm of data sitting in a universe of unknowns!

Plus, gold deposits rarely ‘drift’ evenly from one spot to the next.

Nature is inherently unpredictable. Faults, pinching and swelling, shear zones, or any number of geological ‘variations’ often trash early assumptions made by an exploration company.

It all boils down to this:

More drilling means fewer gaps… Fewer gaps mean less room for optimistic, sometimes creative assumptions on the size of a resource.

But as you can tell, it’s all very arbitrary.

That’s why the industry has designed standards, like the JORC code in Australia, categorising a deposit as either inferred, indicated, or measured.

That way, investors can at least gain some confidence in how many ounces, pounds or tonnes a company has ‘guessed’ it owns.

But it’s still tenuous. Even when a company claims it has ‘de-risked’ its project through ‘extensive infill drilling’ its still a long way from a certain outcome.

This is why financial analysts have such a dilemma in valuing junior mining stocks… It’s more art than science!

Resources are hard to define. No deposit is alike.

Even with extensive infill drilling, there’s no guarantee that what geologists have ‘measured’ reflects the reality of what the miners actually ‘find.’

Gold, especially, is inherently unpredictable.

So is tokening the solution?

In terms of introducing a new crowd of investors to the opaque world of exploration, then certainly.

That could unleash a wave of fresh capital for cash starved juniors.

But for investors, the ultimate prize remains just as allusive, valuing a junior mining stock won’t become any easier.

Whether speculating on a ‘token’ or buying a share in an explorer directly it won’t make an ounce of difference.

They only way you can bend the odds in your favour is to get at least some handle on the geology.

That way you can at least overly your own due diligence over company reports and that alone will put you ahead of most. 

It’s something I teach my paid readership group... Understanding geology but from an investors point of view.

The stuff that matters, not what they teach you at Uni!

And that’s come from working on the ground as an exploration geologist.

You can find out more here.