POSSIBLE LEGAL STRUCTURES FOR MINING-LINKED INSTRUMENTS (ARGENTINA)

Direct contracts vs. Trusts vs. Vehicles (SPVs) — what each approach solves

1. Purpose and Scope

This section describes legal structures commonly used to implement economic rights linked to mining projects (e.g., cash flows, royalties, future receivables, or corporate instruments), including cases where those rights are digitally represented. The objective is to clearly and practically explain which alternatives exist, what advantages each offers, and which aspects must be contractually defined to achieve traceability, enforceability, and protection of the parties.

2. Legal and Offering Disclaimers

This material is published exclusively for informational and educational purposes. It does not constitute (i) a public or private offering, (ii) an invitation to make an offer, (iii) an investment recommendation, nor (iv) legal, financial, accounting, or tax advice.

No offering of negotiable securities, virtual assets, or financial instruments is made through this medium, nor is any person requested to make investment decisions based on this content.

The appropriate legal structure depends on the specific case, the applicable provincial jurisdiction, the project’s contracts and permits, the investor profile, the offering regime (public/private), and the objectives related to governance, guarantees, and enforcement.

3. Guiding Principle: the “Token” Is a Representation; the Right Arises from the Contract

In any legally robust structure, the economic right (payment, participation, royalty, return, etc.) is defined and becomes enforceable through contractual documentation. Any digital representation (where applicable) must faithfully reflect that right: enforceability derives from the contract, not from the format.

4. Structure 1 — Direct Contracts (Issuer ↔ Investor / Beneficiary)

4.1. What It Is

A scheme in which the investor enters into a contract directly with the issuer or project vehicle. Typical examples include:

• Loan or credit agreement (with defined repayment and/or return).

• Revenue-sharing or royalty participation agreement.

• Assignment of receivables or future collections.

• Subscription of equity (shares/ownership interests) or debt instruments issued by the vehicle.
  
  
  

4.2. What It Solves (Advantages)

• Simple and quick to implement.

• Tailor-made contractual definitions (events, returns, guarantees, covenants).

• Lower operational complexity than fiduciary structures when the scope is limited.
  
  
  

4.3. Typical Risks / Points of Attention

• Greater exposure to counterparty risk (issuer performance).

• Administrative and governance complexity may increase with a large number of investors.

• Requires special care in offering/dissemination (public vs. private) and contractual standardization if scaled.
  
  

4.4. Minimum Expected Documentation

• Core agreement (loan/royalty/assignment/subscription/debt).

• Definition of calculation base, pricing, frequency, audit rights, events, defaults, and enforcement.

• Guarantees (if applicable), jurisdiction, and dispute resolution.

• Risk package and disclosure (mining risk, commodity risk, permitting, counterparty, execution).
  
  

5. Structure 2 — Trust (Asset-Segregation Vehicle)

5.1. What It Is

A trust allows specific assets or rights (e.g., receivables, royalties, receiving accounts, sales contracts) to be contributed to a separate estate managed by a trustee, with defined distribution rules for beneficiaries/investors.

5.2. What It Solves (Advantages)

• Asset segregation: trust assets are separated from the settlor’s and trustee’s own estates, strengthening legal protection.

• Enables standardization of rights and rules among multiple investors (administration, payments, priorities).
  Facilitates governance and accountability mechanisms (reporting, audits).

• Often a natural vehicle for cash-flow-based structures (royalties/revenue).
  
  
  

5.3. Typical Risks / Points of Attention

• Higher structuring cost and complexity (trustee, audits, reporting).

• Requires very precise contractual design: contributed assets, collection mechanics, payment waterfall, events, controls, and enforcement.

• Requires coordination with provincial jurisdictions and mining project documentation when rights/assets derive from concessions or mining contracts.
  
  
  

5.4. Minimum Expected Documentation

• Trust agreement (definition of assets, trustee, beneficiaries, rules).

• Waterfall definition (payment order), expenses, reserves, audits, reports, assemblies/decisions.

• Trustee replacement rules, default events, and enforcement mechanisms.

• Underlying contracts: royalty/offtake/collection agreements, receiving accounts, and guarantees.
  
  
  

6. Structure 3 — Vehicle (SPV / Project Company) + Corporate Instruments

6.1. What It Is

A structure channeled through a special-purpose vehicle (SPV) that:

• owns and/or manages the project’s contracts, permits, and relationships, and

• issues equity or debt instruments (or assumes economic obligations) toward investors.
  
  
  

6.2. What It Solves (Advantages)

• Governs the project under a standard corporate framework (bylaws, bodies, controls).

• Enables market-type instruments (equity, debt, convertibles).

• Facilitates investor entry/exit under corporate and contractual rules.
  
  
  

6.3. Typical Risks / Points of Attention

• Requires clarity regarding which assets/rights are held by the SPV and how ownership is documented.
  Management and operational risk of the vehicle (governance, reporting, conflicts).
  Depending on the instrument and dissemination method, capital markets regulations may apply.
  
  
  

6.4. Minimum Expected Documentation

• Bylaws / shareholders’ agreements / investment agreements (for equity).

• Debt agreement (if applicable): interest, maturity, covenants, guarantees, events.

• Financial statements, reporting, conflict-of-interest policies, governance, and audits.
  Project contracts and permits supporting the vehicle’s value.
  
  
  

7. Comparative Table

8. What Defines the “Right” Structure

The choice between direct contracts, a trust, or an SPV typically depends on:

• The economic right being tokenized/represented (cash flow, receivable, equity, debt, commodity).

• Number and profile of investors (institutional vs. sophisticated retail; qualified vs. non-qualified).

• Offering regime (public vs. private) and dissemination/communication strategy.

• Required level of protection (asset segregation, guarantees, account control).
  Governance and reporting needs (frequency, audits, assemblies, events).

• Technical/operational complexity (custody, traceability, registration, transfers).
  
  
  

9. Final Note

A legally sound mining-linked structure requires that the right be clear, verifiable, and enforceable. Regardless of the chosen form, the core pillars are:

• comprehensive contractual documentation,

• evidence of the asset or cash flow,

• traceability and auditability, and

• governance and enforcement rules.