Cunningham's funding mechanism A question - is anyone concerned about the funding mechanism that Cunningham Mining is using to acquire American Creek Resources? According to Cunningham, "Cunningham Mining Ltd is pleased to announce that it has executed a token subscription facility with GEM Digital Limited (“GEM Digital”) for the amount of $153 million USD. The funding from this financing facility will be used specifically for the proposed acquisition of American Creek Resources Ltd, a resources company listed on the TSX-V exchange".
I have limited knowledge of what a token in a financing context is. A brief perusal on the internet yielded the following :-
Digital tokens are either intrinsic or created by software and assigned a certain utility. Examples of intrinsic digital tokens are Bitcoin and Ether . The other type of digital token is asset-backed, which is issued to represent a claim on a redeemable asset, such as legal tender or precious metals.
Tokens or digital assets, also known as crypto tokens, are units of value that represent an asset or provide unique utility within its native blockchain network .
"crypto" and "blockchain" in my mind raises questions about risk, as this mechanism has recently been shown shown to be very volatile. $200+ million seems to be a small price for American Creek's 20% interest in Treaty Creek. It appears that American Creek had no intention of
holding this asset until the full value is realized, and is grabbing the first opportunity to make some money and run, without due regard
to the potential risk in this offer.
Can someone enlighten me as to whether my fears are justified, or is this funding mechanism fine?