SBLC, bank instrument
There is one circumstance under which you could start to think to issue a SBLC.
There are miners that has such good bank contacts that they could discount a SBLC to invest in new machinery to increase the output of gold in their mining operation.
Of course they then do not have any gold to show as POP. What they then have to have is a track record. Otherwise they would not be able to discount the SBLC and finance the purchase of machinery and allowing the miner to pay the labourers their salary.
The SBLC is contructed so that it become operational against a 2% PB. When you have made your due diligence on the miner and the mining operation you can open the SBLC for one month supply.
Stand By Letter of Credit is only used as security for the payment of the gold after it has been refined and assayed. This means that if the buyer does not pay the gold in time the seller can claim the money under the SBLC. Opposite to a DLC, the SBLC, is not the payment instrument, only a back up if the buyer does not pay as per agreement.
As said earlier SBLC can be misused. The due diligence has to be careful. If everything is in good order I can just congratulate you both. Seller and Buyer.
