Canada's BitGold raises C$21M to fund gold storage, wallet platform

BitGold Inc. (TSXV: XAU) provides a platform that brings some of the attributes of virtual currency to the management of physical gold. Clients can open an account that allows them to trade gold from a secure repository and obtain the proceeds from sales, immediately and securely.

The company raised $17 million (C$21 million) in a bought deal that started out as a $14.8 million offering.
Toronto-based BitGold has only been trading publicly since mid-May, around the time it acquired vault operator GoldMoney Network Ltd. in a stock deal valued at $42.1 million.
Raising further capital in the U.S. looks likely.
"Post our acquisition of GoldMoney and the institutional raise, we are taking steps for both main board listing on the TSX as well as a U.S. listing strategy," co-founder and chief strategy officer Joshua Crumb said. "We would like to be listed and offering services in the U.S. later in the year."
Crumb said the company could have remained private and benefited from the money flowing into venture capital, but management decided that the transparency required by public markets was crucial for a company providing financial services.
BitGold formed through a merger with publicly traded Loma Vista Capital Inc.
The current bought deal (similar to an underwritten offering in the U.S.) was led by GMP Securities LP. Other underwriters included Clarus Securities Inc., Canaccord Genuity Inc. and Dundee Securities Ltd.
BitGold sold 5 million shares for C$3.65 each in the offering. Also, the bankers exercised their underwriters' option to purchase an additional 750,000 shares, BitGold said Tuesday, June 16.
Investors included Albert D. Friedberg of Friedberg Mercantile Group Ltd. and the Friedberg family's FCMI Parent Co.
Friedberg Mercantile is an alternative asset manager and brokerage firm based in Toronto. Its investment vehicles include the Global Macro Hedge Fund and Asset Allocation Fund, which are available separately for Canadian and non-Canadian investors.
Investors in past rounds of financing by BitGold have included Dundee Capital Markets, Soros Brothers Investments LLC and Sprott Inc., Crumb said.
He distinguished BitGold from other online gold platforms, some of which obtain gold at mercurial spot prices. BitGold's platform allows buyers to purchase gold within 1% of real-time prices.
Along with pricing, the platform offers quick settlement.
"We built our own exchange to get the best price possible and reduced settlement from a couple of days to instantly," Crumb said.
Physical gold purchased through BitGold is stored in Brinks vaults in locations around the world, and Brinks Co. provides insurance on the gold.