AXenS: Live Case Studies and Solutions

Iron Ore transaction – FOB vs. CIF financing gap

Seller: Peruvian mine

Buyer: Chinese Buyer, Shanghai Port
Seller was only able to supply the
product on an FOB basis. Buyer was only
willing to buy it on a CIF basis and to
this effect was willing to issue a letter of

Financing Gap: Logistics, especially the
shipment cost and insurance, usually
needs to be paid in upfront cash.

AXenS Platform: Would have used the Letter
of Credit and Product as Guarantee/
Collateral, and would have provided both
the physical supply chain support from
the loading port to destination, as well as,
liquidity for the logistics. Furthermore, full
traceability and transparency of the supply
chain process allows us an additional
cushion of safety,

Different Forms of Performance Bonds

• SMEs which win government tenders
are usually required to post a hefty
performance bond (in the form of
Bank Guarantee or Standby Letter of
Credit) before being officially awarded
the contract, which can cause strain
on their balance sheet.

• A recent example was a wheat tender in East
Africa – won by an East European
wheat supplier.

• Local East African Supplier of sesame
seed did not have the banking
relationship to issue a 2% (of value of
the transaction) performance bond.
European buyer wanted a guarantee
to insure any costs incurred by them
would be covered if supplier did not

Copper Cathode Transaction – warehousing

• Supplier required financing for an
approved warehouse (i.e Steinweg),
which was a specific requirement by the
European buyer.

 • Since warehouses are nodes in the
supply chain process, we are able to
keep track of quality, quantity, etc…
of the stored product through our

Copper Cathode Transaction – Product End Cycle Financing

• Cooperative mine needed additional
financing for smelting of the copper ore
to copper cathode before export.

Income for Platform:

The net income for the platform would
be a combination of interest on the loan,
and/or a spread on the purchase-sell
price of the product. Furthermore, any
services rendered by the platform on the
physical supply chain management side.