Matador Technologies Inc. (MATA:TSX.V; MATAF:OTCQB; IU3:FSE), The Bitcoin Ecosystem Company™, has announced plans to spin out its fully-owned subsidiary, GODL Corp., according to a March 2 release.
This subsidiary is dedicated to a strategy that focuses on generating yield from a gold treasury and the tokenization of gold. The execution of this spinout is subject to the approval of the TSX Venture Exchange Inc., along with other regulatory and shareholder approvals.
“GODL is a pure-play gold treasury company with a simple mandate to maximize gold ounces per share,” the release said.
Its strategy includes investing 100% of its capital, minus operating costs, into physical and tokenized gold. These assets are held in LBMA-certified vaults and secured institutional cryptocurrency custody services. To enhance its gold holdings, GODL plans to utilize financial instruments such as at-the-market offerings and convertible debt, particularly when its market capitalization exceeds its net asset value. The proceeds from these activities will be directed towards purchasing more gold, pending regulatory consent.
Additionally, GODL aims to generate annual yields from its managed assets through conventional and tokenized gold yield strategies. However, it’s important to note that these yields and the resultant net income are projections and could be subject to market fluctuations and operational risks.
GODL’s strategic approach involves using secondary offerings, convertible debt, and asset swaps to increase gold ounces per share, setting it apart from typical gold mining stocks. This strategy focuses on enhancing shareholder value per share and leveraging financial tactics to potentially amplify returns, Matador said.
Unlike traditional gold mining operations, GODL’s business model minimizes risks related to mine development, geography, and exploration. However, the use of leverage and active capital management strategies introduces its own set of risks, including market volatility and liquidity issues, the company noted.
Benefits to Shareholders
GODL presents an innovative gold investment opportunity that aims to increase gold ounces per share through sophisticated financial engineering and yield-generating mechanisms, Matador said. These strategies are designed to compound returns and enhance both the gold ounces and net asset value per share. The potential for these operations to trade at a premium is anticipated due to the yield-generation capabilities, limited shareholder dilution, and the prospects offered by tokenization. However, there is no assurance that this premium will be realized, and actual market performance could vary.
The yield overlay strategy employed by GODL provides a continual internal funding mechanism, setting it apart from static exchange-traded funds. This allows GODL to expand its holdings of physical and tokenized gold organically, without heavily relying on external capital that could dilute shareholder value.
Thomson stated that the stock is currently priced at CA$0.13 and is rated as a speculative buy with technical price targets set at CA$0.50 and CA$0.90 to CA$1.00.
By spinning out GODL, Matador aims to segregate its Bitcoin-related activities from GODL’s gold-centric operations.
This separation is intended to eliminate conglomerate drag, enabling the market to value each entity based on its specific asset-acquisition focus independently.
The backdrop for this spinout includes record-high gold prices, bolstered by factors such as inflation, rising government debt, central bank demand, and geopolitical tensions.
The market for gold-backed tokens, which has surged from negligible amounts in 2020 to over USD$5 billion today, represents just about 1% of the real-world-asset tokenization market. This suggests a substantial growth opportunity for GODL in this emerging field.
Details of the Transaction
Matador Technologies Inc. is set to execute the spinout of GODL, which is currently a fully-owned subsidiary without any assets. As part of its strategic plan, GODL is arranging to license tokenization technology from Matador. In conjunction with the spinout, GODL plans to raise equity capital and aims to be listed on a Canadian stock exchange. It is also intended that GODL will become a reporting issuer in Canada, the release said.
Once the spinout is complete, GODL will function as an independent entity with its own management team and advisory board, both of which will be dedicated to implementing GODL’s gold treasury strategy and achieving its business goals.
Matador’s CEO, Deven Soni, shared his enthusiasm about the new venture, saying, “Building on Matador’s growing presence in the Bitcoin ecosystem, our blockchain technology expertise, and success of our Bitcoin treasury strategy, we’re excited to launch GODL as a gold investment vehicle focused on generating yield from gold holdings and tokenization opportunities. While subject to market volatility and downside risks, GODL provides investors with a differentiated and accretive way to gain exposure to gold at a time when prices are at all-time highs. By combining blockchain innovation and tokenization technology with physical gold backing, GODL offers a modern, efficient, and globally compliant alternative to traditional gold investments.”
Donato Sferra, the incoming chief executive officer of GODL, also commented on the strategic direction of the new company: “Gold has served as a reliable store of value for millennia and is increasingly relevant in today’s environment of rising sovereign debt, weakening fiat confidence, and persistent inflation. GODL is an innovative gold investment platform, focusing on increasing gold ounces per share through active capital strategies, while integrating tokenization technology to bring greater transparency, lower friction, and broader accessibility to gold ownership.”
Analyst: ‘A Next Generation Treasury Co.’
1Matador Technologies currently focuses on integrating Bitcoin into its core operations, holding it as its primary treasury asset, and developing products that enhance the Bitcoin network, according to a review of the stock on February 17 by Technical Analyst Stewart Thomson.
The company also positions itself as a launchpad and investment hub for innovative gold products aimed at traditional investors, merging the realms of digital and physical assets.
According to the technical review, recent trading activity suggests a shift in market dynamics, with a notable increase in trading volume indicating a potential transition from weak to strong hands.
The analysis reveals a triple bottom pattern with a target price of about CA$0.50, which could represent a significant increase from the current price of CA$0.13. Technical indicators such as an oversold stochastic measure, a rising MACD, and a positive divergence in the RSI oscillator further support a bullish outlook. A move above CA$0.50 could signal a breakout, potentially reaching targets of CA$0.90 to CA$1.00.
According to Thomson, investors are encouraged to review the company’s corporate presentation for more detailed insights into its strategy and market positioning. Thomson stated that the stock is currently priced at CA$0.13 and is rated as a speculative buy with technical price targets set at CA$0.50 and CA$0.90 to CA$1.00.
A Strategic Treasury Asset
Matador’s Bitcoin-focused strategy aligns with a broader trend where institutional investors increasingly view Bitcoin not just as a speculative asset but as a strategic treasury asset, according to a report for CoinCentral by Kelvin Munene on December 23.
Many companies are incorporating Bitcoin into their balance sheets as a hedge against inflation and to diversify their portfolios, the article stated. Bitcoin is also seen as a digital alternative to gold, offering protection against currency devaluation.
“The company is positioning itself as a forward-thinking player in the crypto space, signaling confidence to shareholders and attracting institutional investors looking for exposure to Bitcoin,” Munene wrote.
The Catalyst: Investors Keyed in on Gold Prices
Gold, traditionally a dynamic asset, is currently experiencing a surge that is capturing the attention of even the most seasoned investors, according to a March 2 report by Angelica Leicht for CBS News MoneyWatch. Historically fluctuating between US$1,200 and US$2,000 per ounce over the last decade, gold prices have recently shattered these boundaries, continuing to rise without signs of abatement. This remarkable increase is not just a product of market speculation but is driven by substantial structural factors.
Central banks globally are accelerating their gold purchases, strategically reducing their reliance on dollar-denominated assets. This shift coincides with rising geopolitical tensions, prompting investors to seek refuge in gold, widely regarded as a reliable safe-haven asset during times of uncertainty. Additionally, ongoing concerns about inflation and complex policies from the Federal Reserve are further fueling the demand for gold.
This sustained upward trend in gold prices is drawing increased interest from investors, though the current high prices also prompt a practical consideration of the actual costs of acquiring gold, particularly the price of a gram of 24 karat gold in today’s market.
On Monday, gold prices saw a notable increase as investors turned to the metal as a safe haven following significant military actions by the U.S. and Israel against Iran, as reported by Peter Nurse for Investing.com on March 2. This military escalation, including the impactful event of the killing of Iran’s Supreme Leader, Ayatollah Ali Khamenei, has sparked concerns about a potential wider conflict in the region, particularly affecting the Strait of Hormuz, a vital artery for global oil supplies.
At 08:55 a.m. ET, spot gold had risen by 2.2% to US$5,394.26 an ounce, reaching a session high earlier at US$5,419.32/oz — the highest since late January. Simultaneously, U.S. Gold Futures increased by 3.1% to US$5,410.34/oz. The growing conflict has led to a classic risk-off reaction in financial markets, with stocks falling and crude oil prices surging, which in turn has enhanced gold’s status as a dependable store of value.
Analysts from ING have noted that the conflict could significantly impact gold prices through higher oil prices, increased inflation expectations, and contained real yields. Michael Brown, Senior Research Strategist at Pepperstone, emphasized the need for markets to account for the risk of escalation and the broad range of potential outcomes now in play, advocating a “de-risk now, ask questions later” strategy due to the complexities of accurately assessing risks in such volatile conditions.
Looking forward, Brown highlighted that the US$5,400/oz level and the late-January high of US$5,595/oz are key indicators for future increases in gold prices. He also suggested that gold could potentially reach as high as US$6,000/oz by year-end, driven by ongoing geopolitical uncertainties, strong demand from retail and reserve sectors, and a fundamentally bullish outlook for the metal. Gold’s price has already surged nearly 25% this year, fueled by geopolitical risks, central bank purchases, and expectations of policy easing by the Federal Reserve.
Ownership and Share Structure2
About 20% is owned by management and insiders, including Founder and Director Donato Sferra, Vice President of Finance Geoff St. Clair, Director Richard Murphy, and the CEO Soni, Koverko, among others.
The rest is retail, and includes Hive Digital, Kitco Metals, Bitcoin Opportunity Fund, Arrington Capital, and Gold Fields Ltd.
It has about 109.37 million shares outstanding and has a market cap of CA$10.94 million. It trades in a 52-week range of CA$0.10 and CA$2.02.
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The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.
