Gratomic Inc (TSXV: GRAT) announced this morning that it had secured a supply agreement worth US$25 million over the course of 39 months. The catch, however, is that the product Gratomic sells will solely be paid for in cryptocurrency. What’s more, is that that cryptocurrency is yet to be publicly traded, and Executive Chairman and Co-CEO Sheldon Inwentash is an advisor to the firm launching the currency.
Gratomic will be paid for these shipments with Toda Notes (TDN), with each TDN being appointed a value of US$0.10 per unit. The issue, however, is that there is currently no public market for TDN, and the value remaining consistent relative to USD is highly questionable. The cryptocurrency is expected to list on the BitForex exchange November 1, however it will only be traded against bitcoin (BTC) and tether (USDT).
Under the agreement, Gratomic is to supply Todaq Star Program Phase 1 Corp, a subsidiary of Todaq Holdings, with graphite mined from Gratomic’s Aukum project located in Namibia. The first shipment, which is to consist of 600 tonnes of graphite, is to be delivered in the next 90 days. The shipment is worth an estimated US$3.0 million, and the commodity will then be utilized to backstop the value of Toda Notes, the cryptocurrency in which Gratomic will be paid. Two additional orders of 600 tonnes will be ordered 30 and 60 days later, at a total value of US$9.0 million.
Subsequent monthly orders worth US$484,848.49 will then occur until the total order is complete. These subsequent shipments will have an adjustable exchange ratio based on TDN’s value relative to the US Dollar.
Aside from being paid in a brand new, untested cryptocurrency, several red flags related to the US$25 million transaction exist, including:
- Gratomic is “not in a position to demonstrate or disclose any capital and/or operating costs that may be associated with satisfying the terms of the Todaq Supply Agreement.”
- Gratomic’s Aukum project is not currently in a production phase, yet it needs to deliver 600 tonnes of product in the next 90 days.
- “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.”
- If Gratomic is not able to supply the graphite to Todaq, it is liable for any costs or expenses incurred with finding and supply substitute product.
The supply agreement is conditional upon Gratomic being capable of bringing the Aukum project to a production phase. It is unclear when the official start date of the supply agreement takes effect.
Gratomic Inc is currently trading at $0.02 on the TSX Venture Exchange, up 33.33% on today’s announcement.
Information for this briefing was found via Sedar and Gratomic Inc. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.
As the founder of The Deep Dive, Jay is focused on all aspects of the firm. This includes operations, as well as acting as the primary writer for The Deep Dive’s stock analysis. In addition to The Deep Dive, Jay performs freelance writing for a number of firms and has been published on Stockhouse.com and CannaInvestor Magazine among others.