China Goldmines Share Discussion Threads

[fordtin] 04/9/2009 10:05

GS


"Even if the deal concludes recall at least $10m set aside for liabs,"


look at the spreadsheet more carefully, it shows figures for inclusion and exclusion of the $10m warranty

[fordtin] 04/9/2009 10:01

GS

anyone who follows the (other company)'s thread will know that is a subject we've beaten to death between us and that your posting it on this thread was an attempt at a 'cheap jibe' with absolutely no relevence to CGM.

I very rarely mention off topic subjects on any thread, but have recently been forced to by your frankly ridiculous comparisons.

If you wish to leave it here please take your own advice and avoid off topic subjects and comparisons with other companies.
TIA

[giant steps] 04/9/2009 09:58

fordtin, you seem to be way ahead of yourself re CGM deal; it has not been
approved and no money is in the bank.

How can you make the statement such as
"At least they've rescued a reasonable sum to re-invest" ?

What about the 10's of millions of pounds wasted over the last few years ?

Even if the deal concludes recall at least $10m set aside for liabs,
and during this time management will be claiming usual fees.

[giant steps] 04/9/2009 09:54

O/T


fordtin, i asked a perfectly reasonable question, namely >

"
O/T

fordtin, can you help remind me re NGL. I understand they have authorised
800m shares (similar to MCR : 1000m authorised, 200m deferred), how many are issued ? (tia)
"

[fordtin] 04/9/2009 09:49

LOL. Kettles & pots spring to mind

GS

you're the one who keeps trying to compare companies. You have made numerous references to NGL on this thread, the MCR thread and probably many others.

[giant steps] 04/9/2009 09:44

fordtin, with respect the current debate on this thread is CGM
not MCR - kindly let your cheap jibes go

Most investors stayed with CGM for the huge upside and management
have disappointed on a monumental scale.

In the last quarterly report the outlook read >

"
The Company intends to execute its 'Centralisation Plan' over the coming 12 month period and will proceed with its planning and feasibility approval study towards a central concept in order to secure gold production targeted at a scale of 100,000 oz's pa over the longer term.
"

[fordtin] 04/9/2009 09:39

GS,

this isn't being run by the questionable stetson topped, spur clad crowd over at MCR. At least they've rescued a reasonable sum to re-invest.
We'll just have to wait and see, but a company with at least £11 million* in cash has a far better chance of turning around than a company which sells over 40% of itself for only £840k


* plus another £6.12m in 12 months time

[giant steps] 04/9/2009 09:34

Exactly chestnuts, new management and the deal should be rejected imo

[fordtin] 04/9/2009 09:33

chestnuts,

that seems an extremely unlikely scenario imo. However, if it does drag on for over 12 months without investing in anything, the $10m comes back in to play thus pushing the cash available for investment up to 35.26p per share (plus any interest earned on the full cash balance including the $10m)

[chestnuts] 04/9/2009 09:29

Fordtin

Lets face it if they do sell the mines and your calculations are correct, we then have a shell company with with a market cap of 22pish, but it could sit like this for yrs and the directors taking a % for yrs.

This what should happen the shareholders should sack the board and new blood come in get the mine working properly

[fordtin] 04/9/2009 09:24

I have received confirmation from a trusted source that the 'at least 20.65 million dollars' does not include current cash balance.

The sale does not include inventories, but does include bonds & securities as these are an integral part of the license area permitting.

There will be no tax payable related to the sale, in China or anywhere else, because it is a matter of a subsidiary company repaying a loan to the parent company as I described in previous posts.

I'm satisfied with the integrity of my source, please contact the company if you have any doubts.


In light of this, my spreadsheet is now showing the following :-



edit -

N.B. the $10m set aside should still earn interest which may be used for investment purposes immediately upon reciept.

See post 107 for more recent cash figures taken from the company circular (now available on the company website.)

[elban] 03/9/2009 02:31

Giant Steps
now had chance to look over MCR.
There are some similarities to NGL (when at 2p). But NGL got very lucky, the timing was right and the management was good. [I only invested in NGL after the management - at 9p, having rejected them as too risky before that.]

MCR seem to be in a bigger hole, without proper management and no indication that they will ever be a proper gold miner again. They may get lucky, but I can't assign much value to them at the moment. A much better bet at that market cap is HZM, which is considerably safer.

[fordtin] 30/8/2009 13:08

Elban,

the following is from the Preliminary results for the year to 30 June 2007.
The sentence which I've high-lighted in bold might help explain what they mean by 100% owned, even though Brigade 407 own a minority interest in HWM.


"Following initial exploration the board of Hunan Westralian Mining Co., Ltd, a wholly owned subsidiary of CGM, (the Joint Venture Company), decided to develop the project as described in the Joint Venture contract and on 23 July 2006 Brigade 407 and China Chemical agreed to transfer the Exploration Licences to the Joint Venture Company. When the Joint Venture Company decides to mine inside the Exploration Licences, Brigade 407 and China Chemical can contribute expenditure on a pro-rata basis to retain their 20% interest, elect not to contribute towards expenditure and thereby dilute to a minimum 10% interest or sell their 20% ownership to the Joint Venture Company with CGM retaining the first right of refusal, subject to agreement on price.

When the Joint Venture Company decided to proceed and mine the 8 mining licence areas an agreement was entered into with the People's Government of the Yuanling County on the 10 April 2007 to acquire a 100% interest in the 8 mining licences. Any mining by the Joint Venture Company in the area covered by this agreement is for the benefit of Westralian Resources Pty Ltd directly rather than the Joint Venture Company On the 26 June 2007, the Company finalised and executed all 8 transfer agreements with each individual miner owner and subsequently took possession of the 8 gold mines on 1 November 2007. "

[fordtin] 30/8/2009 12:02

Morning Elban,

I see what you're getting at. If I ever manage to speak to the company that point will be high on my list questions.
Another point which I'd like clarified if you or anyone else does manage to make contact with the company :
do the Directors intend to continue providing very expensive consulting services to HW/WES via the directors' privately owned companies or would this make them related parties for the purposes of the AIM Rules


"6. Information on Cosmos Cosmos is a company incorporated in the British Virgin Islands, with company number 1447760 on 30 November 2007. The correspondence address of Cosmos is at Suite 2302-2306, 23rd Floor, Great Eagle Center, 23 Harbour Road, Wanchai, Hong Kong. Mr. Cheng Ziazhong is the sole director and sole shareholder of Cosmos and additionally holds the beneficial interest in the sole issued share of Cosmos. The relevant parties to Cosmos, for the purposes of Schedule 4 (a) to the AIM Rules are Mr. Cheng Zaizhong, a registered foreign lawyer at Hong Kong law firm Li and Partners and a financing party (the "Financing Party"). It has been a stipulation that the identity of the Financing Party remains confidential to the Transaction. Aside from Mr. Cheng and the Financing Party the Directors are not aware of any other relevant parties to Cosmos. Li and Partners, the solicitors to Cosmos, have confirmed to the Company that to the best of their knowledge and belief the Financing Party is not a related party to the Company for the purposes of the AIM Rules. "

[elban] 30/8/2009 11:43

Fordtin

The statement about the mine not being wholly owned was not meant to be in regard to the tax situation but to point out a fundamental inconsistency in the statements of the management.

This being: (1) the mine is 100% owned by CGM (as per very many rns) And (2) the mine is owned by HW, which is partly owned by brigade 408 (as per the disposal statement). Clearly these statements are contradictory.

If they are causing confusion on a fact as simple as if they actually fully own the asset, what strength can we attribute to their other assertions?
I find their previous statements now to be somewhat deceptive in the light of the statements in the latest rns. Given that to be the case, I have lost trust in this management.

my emails to CGM have gone unanswered - as indeed they did in the past.

[fordtin] 30/8/2009 11:12

_______________________________________

Giant Steps - 30 Aug'09 - 10:07 - 87 of 87

O/T

fordtin, my understanding is that NGL has 800m authorised ords, and MCR
has 1000m authorised, 200m deferred. Appears that both companies have
been given the authority to issue up to the same quantity, namely 800m.

_____________________

GS,

plucking one tiny irrelevent piece of information out of the air will never make MCR remotely comparable to NGL. If you really want to compare chalk & cheese lets kick off with the following points

______________

NGL have a profitable gold mine

MCR don't have a gold mine

_____________

NGL are debt free

MCR have £2.8m worth of 8.5% loan notes outstanding, the bulk of which are rapidly approaching pay-back time. Paying the interest on the loans by issuing shares at a substantial discount to the 52 week low is very short sighted and doesn't make the problem go away because another installment will be due soon.
(N.B. it was loan notes approaching payback time which got NGL into trouble)

______________

NGL's directors loaned the company a considerable sum of money to see it through a rough patch

MCR's mangement continued to draw unreasonably high remuneration considering the dire position of the company

_________________


NGL raised additional funds by selling 45% of the company for £5m at a ~500% premium to the 52 week low.

MCR raised additional funds by selling 40.1% of the company for ~£840k at a ~25% discount to the 52 week low (which had coincidentally been set in the days prior to the placing)

_________________


NGL are building a comfortable cash cushion

MCR have wasted some of that miniscule £840k by purchasing a micky-mouse option on a marginal copper project which will involve massive (read as MASSIVE) dilution should they decide to exercise the option.

_________________


I maintain that there is absolutely nothing worthy of comparison between the two companies, but I'm sure I could find plenty more points which demonstrate the immense difference between them if you wish to continue trying to compare them ;-)

________________

[fordtin] 30/8/2009 11:11

Elban,

Whether HW is wholly owned by WES or partly owned by Brigade 408 is irrelevent as GRV are selling WES. All agreements, JV's etc at the lower level will remain exactly the same. Any Chinese tax liability should remain with HW or WES, i.e. become Cosmos' problem.
I suspect the gold reserves may remain with the mine, although the first quote below suggests this is not the case. Various pieces of the news release suggest the cash will be retained by CGM/GRV.

_______________


This sentence would surely be a blatent lie if the cash resided with the mine or HW

"HW's only material assets comprise eight gold mines and associated
infrastructure, permits and licences together with two exploration licences

________________


If WES held the $6m, there would be no need to pay the $2.9m liabilities from the proceeds of the sale.

" Of the Total Consideration USD2,900,000 is anticipated to cover outstanding liabilities of Westralian Resources Pty. Ltd."

_______________


If the cash lies with GRV or CGM then it is retained within the remaining group. I can't see a real problem with either of those, but any sensible management would keep cash reserves at the parent company level.



If you, or anyone else has time, please contact the company for clarification and post your findings if you actually receive a reply. It seems the directors/management are avoiding contact with shareholders, so good luck.

________________

[giant steps] 30/8/2009 10:07

O/T

fordtin, my understanding is that NGL has 800m authorised ords, and MCR
has 1000m authorised, 200m deferred. Appears that both companies have
been given the authority to issue up to the same quantity, namely 800m.

[elban] 29/8/2009 23:51

GS,
If you have anything on NGL, can you please post it on their BB.
NGL is my largest holding and I have researched it in depth, without finding anything even remotely suspicious.

[fordtin] 29/8/2009 23:18

Evening GS,

You're not still banging that old 'NGL' drum are you?

For the last time (hopefully) NGL have a profitable mine which they own directly.

MCR don't have a mine. All they have are a pile of debts and a few shares in a company which is in administration (and maybe, possibly a very slender chance of recovering a very small interest in their former subsidiary's mine)

There really is no sensible comparison between the two companies.


Elban,

I think you're probably wrong, but certainly won't be making any further investment in CGM unless the directors start returning phone calls and/or emails from shareholders. I know of at least two shareholders who are 'kin annoyed with being given the silent treatment.

[elban] 29/8/2009 20:21

From the notes on the bottom of each rns ---

"CGM's Gold Project is known as the Guanzhuang Gold Project. Based on an
Independent Geological Report, the project has an estimated inferred resource of
1.8m ounces within the top 325m from the surface and over a strike distance of
1.5km. The resources have been identified from CGM's 100% owned/controlled Shen
Jia Ya Prospect, which is within the Guanzhuang Gold Project."

-------
How can this be consistent with - the mine being owned by HW, which is a joint venture company whose share captial is 'held' both by WES and Brigade 408? But if the mine is not owned by HW then the disposal rns makes no sense.
The more I look at this, the less I know.

From the disposaly doc, it appears that: the mine is the property of HW, which is partly owned by WES (and also brigade 408). WES is then owned by GRV and GRV is owned by CGM. GRV are now selling WES to Cosmos.

So the previously stated gold reserves and cash could reside with (1) the mine, (2) HW, (3) WES, (4) GRV or (5) CGM. Clear as mud.

[giant steps] 29/8/2009 18:55

O/T

fordtin, can you help remind me re NGL. I understand they have authorised
800m shares (similar to MCR : 1000m authorised, 200m deferred), how many are issued ? (tia)

[elban] 29/8/2009 14:28

Fordtin

- with regard to buying Toyotas

the details of the comparable deals were@

Disposal by GGG
"Despite the above mentioned exploration successes the Company's local joint venture partner, SBMGE, is of the opinion that it should take full responsibility for the future development of the Nimu Project itself and has made clear it wishes to purchase the Company's local subsidiary, Lasa Tianli, which owns the Company's interests in the Nimu Project."

Disposal by CGM
"...... for the sale by GRV of the entire issued share capital of Westralian Resources Pty. Ltd. ("WES"), a wholly owned subsidiary of GRV, incorporated under the laws of Western Australia, and the holder of CGM's interest in Hunan Westralian Mining Co. Ltd. ("HW"), a Chinese foreign co-operative joint venture company, whose share capital is held by WES and Brigade 407 of the Hunan Geology & Exploration Bureau (the "Disposal" or "Transaction")."

So CGM has an extra layer of ownership - registered in Australia. This extra layer may void the tax liability; but I wouldn't be prepared to bet on it. The chinese tax laws may (or may not) include changes in ultimate ownership.

The above also makes it look like Brigade 407 ... should be getting something. I must admit that I thought that CGM owned the mine 100% now.


I would have thought that if CGM will have $29million at their disposal then they would have said so.

There is also the possibility that the cash and assets were included in the sale and the tax is zero - which still leaves $20 million at their disposal.

I can understand your reading of the rns as implying that they receive $20 million from the disposal of the mine and would have their $9 million cash etc also available. But for a company that is known to stress the positives and brush over the negatives, I am not convinced that this is the most likely scenario.

[fordtin] 29/8/2009 12:20

GS -

agreed, MCR are definitely in a different league.
Even though CGM have made a horrendous mess of things, at least they're still several leagues above MCR.

The two companies were actually quite a reasonable comparison once.

They both had subsidiary companies with pretensions of producing in excess of 100k oz of gold per year.

They both had a market cap of around £80m - £90m at their peak.



MCR now has debts iro £3m almost balanced by assets of a similar value, with a slight possibility of recovering a minor interest in it's gold mine. However, it now has an additional 40% shares in issue after raising a miniscule ~£840k.
Having demonstrated an eagerness to issue tuppeny shares willy nilly, the limited cash added to the poison pill it is carrying to authorise the issue of up to a billion shares, makes it an extremely high risk proposition, even as a recovery punt.

CGM will have iro £16m to £18m in cash & no debt, but no chance of recovering an interest in it's gold mine. A very tight limit on authorised shares and plenty of cash make it a much more attractive recovery play than MCR.

I guess we'll have to wait a few years to see if either of them can turn a disaster into a success story, but at the moment CGM are streets ahead.

I really hope CGM don't get tempted to buy into MCR!

[giant steps] 28/8/2009 19:49

Yes, incompetence indeed - huge shame

O/T

MCR are in another league, jury is still out !