test,test,test

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Moneypenny

Post by mariog on Wed Mar 20, 2013 10:22 am

good luck tomorrow!!

btw.just came back home from abroad and found a letter in a box "Angel Mining PLC - Bankrupcy Information".. not a nice thing to read just after holidays

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600

Post by Moneypenny on Wed Mar 20, 2013 9:18 am

Many thanks again for your kind words.

I think that's the best way to look at it....if i come away with something it will be a bonus

Gold production or lack of it.... is on the agenda...don't you worry Smile

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Moneypenny

Post by 600 on Wed Mar 20, 2013 8:36 am

Many thanks for the time & effort you have put into this on our behalf. Good luck for tomorrow and don't come away feeling frustrated if you don't get any/much of a response from him. You will do extremely well to gain anything!

I do hope that the reason for the incredulous forecasts as per the RNS on Mon, 24th Sep 2012 "The Company expects total gold recovery for September to reach 793oz and forecasts gold recovery of 1,940oz in October, 1,765oz in November and 2,232oz in December." is on your agenda.

Good luck and many thanks once again.

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Moneypenny

Post by Sorte_Engel on Wed Mar 20, 2013 8:13 am

Good luck for tomorrow.

Can you enquire as to whether the much vaunted new recruits who were scheduled to begin work in January did so, and whether they are still employed?

(can't remember if this has been raised previously)

Thanks

Sorte_Engel

Good posts below, well done peeps. Food for thought.

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Gorilla

Post by mimbrit on Wed Mar 20, 2013 7:08 am

Thanks for that interesting post.

I'm not sure what that Arctic Mining Ltd company in Greenland is, but it doesn't appear on the Danish CVR system.

I obtained the Feb 2011 accounts for the UK Arctic Mining (Feb 2012 accounts long overdue), and the Feb 2012 accounts for Angel Mining (Gold) A/S (direct subsidiary of ANGMplc) and Black Angel Mining A/S (subsidiary of Arctic Mining UK) and none of these refers to an Arctic Mining Ltd entity in Greenland.

Moneypenny has copies of all these accounts and it would be good if someone better qualified than me had a good look at them - email her through this site would be easiest.

I find it strange that ANGM first said that Arctic Mining UK would be under the protection of administration as well as the plc, yet it is not. I also find it odd that Nalunaq activity is channelled through Arctic Mining rather than our own Greenlandic subsidiary. It's also abundantly clear that all Arctic Mining's assets are pledged to Cyrus.

Moneypenny is meeting tomorrow with Nick Hall; if the outcome of that meeting is unsatisfactory, we should take appropriate action.

mim

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Great post Gorilla

Post by JohnnyT on Wed Mar 20, 2013 2:05 am

Some great information there Gorilla.

I'm not sure what to make of it. It's very difficult to second-guess what the intentions of the BoD were and who was the party(ies) to blame for this.

But re-reading those RNSs it is easy to see why we all thought that there wasn't a problem with Angel and they were going to come good (eventually).

It does smack of being 'played' but, without meeting Nick and looking him in the eye, it is very difficult for me to make a judgement about the mans character or his intentions throughout all this.

I still cling to a very very tenuous hope that we will get some value back from our shares but I think that may be even beyond wishful thinking. ;-)

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SUMMARY TO DATE

Post by Gorilla on Wed Mar 20, 2013 1:54 am

http://www.bbc.co.uk/programmes/b00xjyfx
"Under the section it is an offence for anyone to make a statement, promise or forecast that is designed to induce someone else to buy or sell shares if the person making the statement either knows it to be misleading, false or deceptive in a material particular or is reckless as to whether may be. On indictment, the maximum sentence is seven years imprisonment."

"The FSA pursues proceedings against firms and individuals where it asserts serious rule breaches or to raise public awareness of its areas of current focus, such as financial crime. The conviction and imprisonment of the two AIT directors following these unprecedented proceedings should provide a harsh reminder to listed company directors of the importance of checking and double-checking all statements put out to the market, and a warning to all directors that the FSA is prepared to enforce its rules through the criminal courts."

http://www.mondaq.com/x/35628/Corporate+Crime/Directors+jailed+for+making+misleading+statement+to+the+market

This BOD including Danielle Bordessa (Cyrus) just might have a Prima Facie case to answer to!

Christ knows what were even invested in we have, http://opencorporates.com/companies/gb/03319691 which is angel mining which we are invested in. A public UK registered company. http://opencorporates.com/companies/gl/12539061 Angel mining (Gold) A/S a greenland mining company but one of the subsideries of ANGM. http://opencorporates.com/companies/gl/12439911 Black Angel mining A/S a greenland mining company but one of the subsideries of ANGM. http://opencorporates.com/companies/gb/05000828 Which is Arctic Mining limited note the last word in spelt in full who has our directors and officers ETC. Then there is this mysterious company http://opencorporates.com/companies/gl/32459544 called Artic mining LTD also operates in greenland started 2 years ago has a man named Johansson Rigmor Who is our Finance manager at Angel mining Gold A/S.

30th Nov 2012 Interims

"FINANCE

"The recent funding, provided by Cyrus, amounting to $3,750,000 has enabled the Company to overcome its recent setbacks and, it is now expected that Nalunaq will generate cash to meet all Group funding needs."

"Discussions are on going with Cyrus Capital Partners with regard to the refinancing of Angel Mining plc, which will include the renegotiation of the short term debt repayment terms. It had been hoped that a financial restructure plan could have been agreed by the end of November but this is now expected to be finalised in the New Year. Cyrus is our largest stakeholder and a long-term investor in the business. We anticipate that they will play a significant role in the future development of the Company."

"One of the conditions to Cyrus making the additional funds available to the Company was that the Company grant to Cyrus an option entitling Cyrus to acquire 75% of the issued share capital of Arctic Mining Limited in exchange for £1 and a write-down of a portion of the short term loan to be agreed at the time of exercise."

All above said after forecasts of ! -

1940ozs Gold recovered October 2012
1765ozs Gold recovered November 2012
2232ozs Gold recovered December 2012

Reaction to Cyrus Feb deadline on BAM -

"not worried in the slightest"

"Cyrus interests are aligned with shareholders"

We never stood a chance! Every word ever recently uttered from this BOD was wrong!

We are now in a better position than ever to service our debt and take the company forward! Yet we are denied as shareholders for this uplifting newsflow!

Why cut the PLC out of the equation and the added value of the equity markets?

What were the liabilities of the PLC?

We were running 1.8million central costs. With administrator's costs now, will now be much higher with no fall back to call cash from equity? Does not stack up for value unless Cyrus see an independent future of developing all prospects with management signed up and 100% control/ reward! What would motivate the management to sign up to such a plan?

Where did Dec, Jan, Feb, cash from gold go, if we have had continuous production from Dec !!!

When were Cork Gully first consulted?

Why was the market not informed of the serious delinquency in trade creditors through the interims?

This looks like a text book snatch and grab and everybody is in on it at shareholders expense! It needs to be dispelled!

Who is legally championing shareholder's interests at the moment if the very people acting as administrators are potentially part of the consultation process that led to this suspension and it's current outcome? They are experts at this!

Stinks!

Below is just one example of a AIM director lying to their shareholders

RNS Number : 0575I Angel Mining PLC 19 July 2012

"In summary I am becoming increasingly confident of our ability to deliver real shareholder value." Nicholas Hall, Chief Executive Officer. At the time that comment was made plans were already afoot to dilute shareholder value even further with a placing at 1p.

RNS Number : 4111K Angel Mining PLC 21 August 2012

"The board of Angel Mining plc announces that it has raised GBP258,000 through the issue of 25,800,000 new ordinary shares of 1p each in the Company......"

A note from Nick.......I believe that he may have sent a similar one to a few people, but just in case you haven't seen it here it is in full..........
I very much regret the recent events which have seen Angel Mining plc enter into administration. This is a new experience for me but I now know that the Administrator takes full responsibility for the affairs of the company, during the period of administration, and the directors have no effective powers or responsibilities, which is why we have not been able to make any public statement (RNS) since the appointment.
It is possible for companies to recover through administration and I know that the Administrator will explore recovery opportunities. I have undertaken to help in any way that I can.

The underlying business continues to operate and the team is now completely focussed on the generation of cash for the benefit of creditors.
Regards
Nick

Hi all, Found this article on ANGM in Oil and Mineral Magazine #6 (page 55) (http://sermitsiaq.ag/oil-and-minerals) see bottom of page for link. In the article they write "Accounts published in February 2011 showed Angel Mining owing $23 million in outstanding taxable loss to British and other foreing tax authorities." and that "demand for pure Greenland gold is extremely high. ...and is up to 20% more expensive"

Hey all got a bit of a theory here,

www.companiesintheuk.co.uk/ltd/arctic-mining

If you take a look you should notice that the accounts were overdue on the 4th of march however yesterday when I checked it said the 1st of march possibility for removal from FTSE?.

Secondly under recently filed document Raymond Tong resigned on the 20th of February from my memory we was not told about this right?

Thirdly Arctic Mining had a capital of £1,186,330.00 ($1,785,901.18) on the 8th of January 2013 and since then a dore pour producing $1,104,740, which equals $2,890,641.18 altogether. surely gold pours since then must have totaled more than the amount we owed to cyrus.

Just take not of the link above and the one below and information is displayed there first.

www.companiesintheuk.co.uk/ltd/angel-mining

One of the conditions to Cyrus making the additional funds available to the Company was that the Company grant to Cyrus an option entitling Cyrus to acquire 75% of the issued share capital of Arctic Mining Limited in exchange for £1 and a write-down of a portion of the Cyrus Outstandings to be agreed at the time of exercise. Arctic Mining Limited is a wholly owned subsidiary of the Company that owns 100% of the share capital of Black Angel Mining A/S. It does not include the Nalunaq license which is held separately in another wholly owned subsidiary of the Company.

Angel Mining plc has 100% interest in the following active subsidiaries: (note the word 'active')

Arctic Mining Ltd (formerly Black Angel Mining Ltd)
Black Angel Mining A/S
Angel Mining (Gold) A/S

So here we have just Angel Mining in administration which is the company at the 'top of the tree' so how will the administrators get to grips the subsidiaries. If Angel continue to produce gold for revenue then they could be in administration for years, or the creditor will be forced to do a deal. I thought it was the Greenland tax man causing the problem and it still could be, however, I'm now starting to think that Cyrus were very recently doing their utmost to carve Angel into pieces for their benefit and as such NH played hard ball and called the administrators in. Thoughts anyone?




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Thanks 600

Post by JohnnyT on Wed Mar 20, 2013 12:08 am

Thanks for the info.

Yep, it would be lovely to think there would be any hope for *something* at the end of all this but then, to consider it from their (the managements) point of view, I ask myself, why would they bother?

The business model / management strategy was obviously flawed or we wouldn't be where we are now. So, why not just start again with a new incarnation and clean sheet?

I fear we may be sunk although time will obviously tell. ;-)

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JohnnyT

Post by 600 on Tue Mar 19, 2013 11:44 pm

Cork Gully have 8 weeks from entering administration to put their proposals to shareholders/creditors (23 April) since we went into administration on 27 February 2013. This was the basis of what CG told me and of course gives no indication of the likely outcome - it merely outlines their statutory obligations. I like to think that they are looking for a solution to retain something but the past experience of ANGM belittles that hope! GLA

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Re: test,test,test

Post by JohnnyT on Tue Mar 19, 2013 11:25 pm

Maybe there are struggling for a buyer...

What's the cut off date for us getting some news back from the Administrators?

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Re: test,test,test

Post by goooba769 on Tue Mar 19, 2013 11:21 pm

They must look like they are trying to save the company so it will probably go to the end.
If Nal is producing then we have a slight glimmer of hope but to be honest I can't see any positive outcome for us now.

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Strange

Post by stuart143 on Tue Mar 19, 2013 10:56 pm

Is it just me or does anyone else think after 7 weeks we should've been sold up to another co and gone by now either by pre pack or other avenues of sale. I know CG have enquiries to make etc but most of those I anticipate were dealt with prior to their involvement just a thought

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Thanks Gorilla

Post by bjarnen on Tue Mar 19, 2013 4:53 am

That was a good read :-)

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good read

Post by Gorilla on Tue Mar 19, 2013 2:52 am

Brenton Saunders | Fri, 15 Mar 2013 08:35 [miningmx.com] – I am a gold and precious metals analyst and portfolio manager. It’s what I do. I run a gold and precious metals fund. I have been doing this since 1994. It’s my life and my livelihood. Three things from this:

1. I feel half qualified to make some observations (okay, it’s a rant) about this industry. 2. I have a vested interest in the industry doing well, but selfishly I get really “excited” when I see my livelihood threatened by serial mismanagement of the industry. 3. I get really sad when our industry does not learn from its mistakes.

As part of my value-add, for the other analysts out there I thought I’d make your lives easier by putting together a report template for Gold Company results and announcements:

• [insert company name] reported results today. Earnings fell by xx% and were below expectations by xx%. • Production guidance was downgraded for 2013 by xx%. • Capex and operating cost guidance for 2013 was increased by xx% and xx% respectively. • [insert company name here] impaired it last major investment by $xx bn….as a result…. • The CEO and COO have been replaced. • [insert company name here] is raising $xx bn for working capital and new investments. • The recent recalculation of reserves has resulted in a xx% decrease in reserves and a xx% decrease in expected plant recoveries. • NAV and target price decreased by xx% and xx% respectively. • BUY.

This should save all analysts and fund managers like me a bit of time. Gauging from the last several quarterly reporting seasons, the template should work for 95% of Gold Companies. The BUY rating is a stab at the sell side, but more on that later.

I despair. I’m at wits end. I need a drink. Just when you think surely, it can’t get any worse, …..after management replacements, recapitalisations, guidance downgrades, more guidance downgrades, more guidance downgrades on the old ones, strategic reviews, asset sales, exorcisms, ….it does get worse.

In my role I am constantly confronted with the reason why gold equities have underperformed the gold price. Obvious question, but I find myself shuffling nervously as I try and find something good to say. My answer has always been……It’s a bad business; gold’s not hard to find, costs follow price, management are for the most part delusional about what’s possible and what’s likely, the market implied cost of equity makes corporates think that its free money.

The only other business as bad as the gold business in resources, in my mind, is paper and pulp … overcompeted, overgeared, over capacity, falling market size, falling real prices etc....

The Gold Business has a lot to answer for as it has not faced many of these issues.

The Gold Price has compounded at near 15% since the low in 1999. It has increased +540% over the period. Since FTSE Global Gold Mines Index has increased a modest 190% (8% p.a.), and this is in round numbers at about twice the volatility of Gold. Almost unbelievable statistics, but not news to many.

So what’s wrong with the gold business?

As a first off in defence of some of the disappointment, the gold industry faces the following structural headwinds:

• Large high quality discoveries have been few and far between in the last 20 years. • Existing “base load” operations have become much more difficult as they have matured. • Good skills have been increasing difficult and more expensive to come by as the resources industry emerged from 20 years in the doldrums. • Sovereign risks, operating conditions and costs associated with these have deteriorated/changed significantly, by way of higher taxes and royalties, increased risks of nationalisation, local ownership/participation and operational disruption (to name a few). • High input cost inflation, opex and capex.

These issues, amongst others, have made the mining business more difficult and expensive to operate. In some areas it has made operating efficiently near impossible, like South Africa, but this has been more the exception than the rule.

Gold ETFs When the World Gold Council (WGC) proudly trotted out its gold ETF in the mid-2000’s as a means to drive gold demand few imagined just the impact these products would have.

Nine years later this ETF and many more like it have facilitated, encouraged and resulted in an enormous and highly efficient way to invest in physical gold. Something that was previously not easily possible.

Today gold and gold ETFs are almost synonymously interchangeable in the minds of investors, and widely owned both institutionally and by private investors alike.

Personally I think they are great. They have greatly helped re-legitimise gold in its rightful and important place as an institutional investment and asset class, something that has always existed pre and post the 1990’s.

Ironically, the WGC ETF was a producer initiative and few thought that gold ETF’s would have the impact on the gold equity business that they have. Gold ETF’s appear to have largely “cannibalised” gold equity investments taking their status from the “go-to” Gold Investment to a very peripheral investment in the minds of most gold investors.

The reason, for me is quite simple, Gold companies demonstrated a hopeless inability to turn a higher gold price into commensurately higher profits per share.

In addition, because they are more volatile (risky) investors went to physical gold in preference. In my mind, the switch away from gold equities did not need to happen and could have sustained a happy symbiotic co-existence if Gold companies made more money along the way.

So where has all the money gone?

Growth obsession In the gold business this is not just an obsession, but a sickness. Until very recently there was not even a question about what to do with retained earnings and free cash flow that Gold Companies occasionally make.

They use it to try and find the next mine or to buy the next mine or fund the operating losses of mines not making money. Management seems to have forgotten that for equity investors there is more than one way to make returns on their investment. In the hands of investors, returns increase when the share price goes up, and if they received returns of capital. Imagine that!

And for those companies that do pay dividends, I’d suggest the point of departure when faced with the question (and it is a question) of what to do with retained earnings, should be “why should we not pay it all back to investors” as opposed to “how little should we pay them to keep them happy”.

Tax issues/consequences aside, chances are that if you ask them for money at a later stage for an attractive business proposition they are likely to give it back to you. To this point Bloomberg shows that an aggregation of the largest North American listed Gold and Silver companies in the Philadelphia Gold and Silver Index forecasts that based on consensus numbers to have Free cash flow in 2013 and 2014 of -$6.7bn and -$1.7bn on comparable EBITDA of $28 and $33bn!

To be sure that means despite making operating margins (in accounting terms) of around $30bn p.a., the industry is still not making any money on a net basis…….this after 13 years of 15% p.a. increases in the Gold price.

They are also not producing any more gold than they were. No wonder the gold shares are being ignored.

The other issue with respect to the growth “problem” relates to the incessant need to get bigger (by any metric) that occupies most in the gold sector. It would appear to be a complete insult not to be seen to be designing for continual and significant growth in size as opposed to a focus on quality, profit and yield.

Almost without exception, gold companies will spend a significant, if not dominant portion of any presentation on growth. Herein lies the rub. Gold Fields Ltd. calculated back to 2005 that if the world’s top 10 producers grew their production at the rates they all communicated in 2005, their combined production should be 60% higher than it actually is today!

Two problems here…..no doubt significant financial resources have been consumed chasing this growth, but again, all of these estimates were delusional, disingenuous in my view. Mining isn’t straight forward but it’s not a lottery either. This goes to my point on guidance later, how many times have they grown production collectively by 60% more than their own forecasts? I guess we all know the answer. This industry will never be believed until they start doing what they say.

The acquisition and impairment game –Now you see it now you don’t.

Not to single companies out, because there are many more examples, but Barrick Gold reported results for 2012 on 14 Feb 2013 (yes on Valentines Day). Most analysts comments were along the lines of “Result OK, guidance lower”…..and as an aside, “they wrote down $3.8bn of their Equinox/Lumwana investment”.

Wow! That’s >10% of the size of their company.

Newmont recently impaired/wrote down $1.6bn for its Hope Bay acquisition, 7% of their company. Kinross incurred a $3.1bn write down on its Tasiast/Redback investment which amounts to 33% of the company’s current size.

Companies are obliged under accounting terms to write down assets if they are impaired, but in layman’s terms this means that any return on capital or return on equity calculation that the company or analyst calculates post a write down is wrong(!). It’s over-inflated. Why? Because $8.5bn collective write down described above wasn’t monopoly money, shareholders actually paid for those acquisitions! This makes a complete mockery of all the returns management proliferates as “industry leading” and “disciplined risk adjusted returns” as one of the above told us at the Denver Gold Conference in September. Add all the impairments made back over the past 10 years and re-do the numbers! Different picture.

In 2009, Barrick issued 12.4% new shares to raise $4bn to buy back its hedge book. They applauded themselves at the time as the gold price continue to rise, but no one was held to account for putting in place such a ridiculous amount of hedging in the first place! Who paid for this? Shareholders.

Almost all of the large gold companies did similar things around this time at great expense, but again it was just a footnote to proceedings instead of being highlighted as a serious issue.

Expectations management and guidance – Welcome to Cloud Cuckooland This for me is 50% of the problem. The gold industry is absolutely shocking at managing expectations almost without exception despite the fact that failure to do so always ends in tears. Everyone knows that if you promise your kid a bike for Christmas on 25 December and you don’t get him one, he’s going to cry his eyes out and ask some serious questions about your integrity. So, don’t do it.

Expectation management is so key in this game. Some of my rules of thumb in this regard for corporate management:

1. Guidance must be attainable, not 2% of the time, at least 50%.....driving with the review mirror is a healthy sanity check. Chances are if you only produced 80k oz last year you are unlikely to produce 110k oz this year! There is a good correlation between companies that “have high multiples” and those that regularly deliver on guidance.

2. Conversely, if you have to stretch guidance to a make something meet a hurdle rate/sound acceptable/sound attractive, you probably should not be doing it in the first place. The planets only align very seldom, that’s why everyone runs outside to see an eclipse; it’s a rare event.

Mining the market vs running a mining company – Welcome to the Cocktail circuit The CEO of a +$1bn gold company with serious operational issues recently told me, he goes to see his operations about once a quarter, but he goes to more than four conferences around the world every quarter to talk to analysts, investors and prospective investors.

Surely the process of making money/running a business with which you are entrusted by shareholders is more important than telling people about it. The cart is in front of the horse somehow.

To me, for too long, gold company executives, have made a living out of spending all of their time marketing and telling people what their share prices should be as opposed to making good returns, providing people with the information, and letting the market figure it out. History shows, that those that companies that make good returns get the share price they deserve. It’s causal!

Obviously shareholder communication is very important, but get the balance right.

Capital Structure/Cost of Capital –Free Money For me there are several issues in this topic that need addressing and they are complex and subjective, but appear to mostly be the result of one unique phenomena that has long characterised gold companies known as the “Gold Premium”. More on that later. But first some comments.

The simple rules of value creation, return on capital and or economic value added (EVA) are: • Be sure that your investments make more money than they cost(!) • Be sure that the return your investments make is greater than the cost of the capital used to make the returns. • If you make only your invested capital back, you lost money, because you could have got more in the bank. • If you make your invested capital back plus enough to cover the cost of the capital, you have made or lost no value. On a risk adjusted basis, the same as having your money in the bank. • If you made back your invested capital plus more than the cost of the capital used in the investment then (and only then) have you added any value……on a per share basis for public companies.

Apologies, this sounds very basic. But the actual understanding and application of these principles is very hard to find in the gold sector.

One of the major issues I find is that very few corporates spend time understanding or know what their marginal cost of capital is. Given the very high use of and dependence on equity capital it would seem that most executives in the gold sector think is very low or even zero.

Back to the issue on the “Gold Premium”.

This issue relates to the fact that using flat or declining long-term real gold prices as valuation assumptions for Gold Companies, they historically traded at very low implied discount rates (5% real or lower).

The reason it’s problematic in my mind, is that it has actually led management and analysts in many cases to believe that their cost of equity is basically close to zero. Here’s an example of how this becomes dangerous:

Recently a prominent North American Silver and gold royalty company announced the acquisition of a gold two separate gold streams from Vale for a combined value of around $2,03bn, of which $1.9bn is cash.

I calculated that using a $1,700/oz spot gold price increasing by around 2% p.a. (the slope of the Gold forward curve) over +25 years, that my best case production scenario was an IRR of around 7,5%.

The deal was around 16% of the current size of the company and would extend the company’s debt position significantly, so a very material transaction. Using pretty standard methods I calculated the company’s cost of capital at 7-9%, so a marginal transaction from a theoretical “value accretive/value destructive” perspective.

Stressing the gold price and production within normal bounds easily took my IRR to 5.4%. Management was incensed by the notion that this looked to be a marginal deal. “it was a competitive process” I was told (i.e. there were other bidders), “these are world class assets”.

Asked what they thought their cost of capital was, I was told “way below 5%, all analysts use these numbers”. Enough said.

Save to say the share price went no where, which seemed to confirm that the deal was neither hugely accretive nor dilutive, but I found the discussion very instructive.

I am afraid that I battle to take seriously anyone running a public mining company that thinks their cost of equity or cost of capital is 5% or less let alone uses this as a return hurdle rate for a mining project.

Even though mining royalty deals are much lower risk than mining project returns, I would think that unless a project on paper had a return of 10% or more over the cost of capital using conservative commodity price inputs, it should not be contemplated.

Why? Because implementation costs most always increase, so times significantly and there are almost always hidden and unbudgeted costs that eventuate. Also, metal prices go down sometimes (really), so having a large safety margin isn’t a luxury but a requirement.

Alcoholics Anonymous – “Hi, my name’s GoldCo……” In terms of the realisation that investors will only reward companies that actually add value on a per share basis, amongst Gold company executives, I find broadly three groups:

• Those still drinking the pub (at a mining conference) – these are the ones who pursue growth “at any cost”, have little if any regard or understanding of their cost of capital, hurdle rates and returns to shareholders.

They firmly believe that their company share prices will appreciate if they grow the size of the business irrespective of the returns it generates. For me, they are the problem that pervades the industry and are firmly in the denial phase.

You can identify them by the ones that take gross exception to any suggestion that they don’t pay enough attention to return. Or cannot compute the math to support their claims of value add. They’ll say things like “the combination of our companies takes our market cap to $xxbn and get us a re-rating”.

• There are those that realise they have a problem, are going to the group meetings and find relief from talking about their problems. There are several senior Gold companies entering this camp.

A gold company CEO recently remarked during his presentation at the Denver Gold Conference in September 2013 that the industry’s new found obsession with maximising value to shareholders and paying dividends was “like a newfound religion”…..”a Jerry Maguire moment”.

Although several of them are talking the talk, unfortunately not many of them are walking the walk just yet, including the aforementioned CEO’s company. Actually, he’s just taken a new job down the road.

• There are a couple (literally) that get it. They are either totally reformed or have always been tee-totallers. There are very few in this camp and even they are prone to the occasional drink.

These companies are generally characterised by slow steady growth, very lean capital structures with moderate use of debt, very low levels of increase in shares in issue over time and more importantly strong share price performances.

Normally when you try to reach between reporting periods them they are at their operations and may be irritated by your interruption. They have different priorities that revolve around running their businesses.

A quote from Randgold Resources’ Mark Bristow, which is our minds one of the better examples to follow in the sector is:

“It’s not about the size of your production, but about the value you create”. Sounds obvious, but that approach is almost absent from the gold sector.

The Jerry Maguire moment A gold company I follow recently completed a strategic review following the appointment of a new CEO and CFO in the last year (this narrows it down to about 10 of the top 15 gold companies globally).

They have also had a large merger/acquisition in the last two years (this narrows it down to about 50% of the top 30 gold companies globally) and have had problematic operations in the past two years (this narrows it down to about 90% of the top 30 gold companies globally). Following the strategic review they proudly pronounced that from now on the company would be run along the following lines:

• Focus on value, by • Maximizing free cash flow • Maximizing portfolio value • Returning value to shareholders • Minimizing project risk !!!!

Amazing. I asked “does this imply these were not the principles on which the company was previously run?”. I applaud them for this value set, and honestly believe they will do a better job than the previous management, but honestly this could have come from a 101 finance text book. Any public business should without question be run along these lines. But, unfortunately in many cases the answer to my question is “yes”.

Accounting – lunatics, asylums and all that 10 years ago I was invited onto an advisory panel for the International Accounting Standards Board led by a well known audit firm to “aid” in their mission to broadly try and accomplish three things in the basic materials accounting practises:

1. Converge reporting standards of Oil and Gas and Mining companies globally,

2. Converge reporting standards of US and non-US companies in the basic materials sector,

But more fundamentally,

3. Propose a move towards full fair value accounting, which for mining businesses would mean a full mark-to-market of reserves and resources at least annually.

To this day I cannot for the life of me understand how this will improve investors understanding of the value of financial position of a company, especially private investors. As far as I know this still has not been “enacted” but further highlighted to me that, they way resource companies are representing finances and financial performances to investors, was being taken an additional step away from reality.

Fortunately it was creating all sorts of additional work for audit firms that mining companies would be obliged to comply with and pay for……………

A step back from here is until about 1999 most South African mining companies reported according to an “antiquated” and “thoroughly out-dated” (note sarcastic tone) accounting system that was essentially based on the principles of cash flow accounting.

This required companies to report and expense most all cash flow items in any given period that they occurred. Fortunately the tax system was broadly aligned with this form of accounting. The downside to this is that……..uuuuum, it was really cheap and easy to audit(?!).

The upside was that, it was easy to understand, and more importantly plain to see whether your mining investment was in fact making any money or not, what its actual cost of production was and a direct correlation between Profit After Tax (PAT) and whether the company was actually making any money.

I over simplify, but more importantly appropriation accounting (as it was known) was not based on the principle of accrual accounting or the assumption of the said business being a going concern.

A mine is not a going concern, it has a defined mineral inventory (at any one time) and it will be depleted in time. In my mind, a mining company is not a going concern either, but an aggregation of “depleting” assets. We seem to have forgotten that somewhere along the way.

My point of the above rant of “how to win friends and influence people in the accounting profession” is two-fold:

1. With modern accounting standards it’s often hard to decipher whether a company is in fact making any money let alone figure out where it is making an acceptable return on capital. In my mind, this has definitely also confused corporate executives along the way and changed the way they run their businesses. 2. For some reason this whole notion of treating depleting assets as going concerns has somehow compelled mining company management to re-invest most all of the money they may make in the hope of finding the next deposit or buying another asset……the pursuit of growth. This in combination with a couple of other unique circumstances in the gold business has, in my mind, made for a vicious cocktail of value destruction. More on that later.

The Sell-side – Between a rock and a hard place. Having been a sell side analyst for nine years I understand the dynamic for sell-side analysts. It’s not an easy job trying to manage the conflict that exists in investment banks between research and the advisory side of the business.

For those unfamiliar with this it means the investment research and recommendations given by broking analysts are almost always compromised with a positive bias, why?

Firstly because gold companies feed analysts with delusional guidance, but more importantly because if you said anything about a company you research that was anything but neutral to positive, the chances of your company participating in the next capital raising or advisory fee is effectively zero.

More to the point, you could lose your job as happened to a very good analyst and friend of mine in the space last year.

This effectively ends up enforcing the delusional guidance that companies supply, because rather than say anything negative about company guidance, valuation or stock price forecast, they say nothing.

Fortunately most professional investors understand this dynamic well, but it still skews the outcome negatively. This dynamic will not change until or if sell-side research as a business is separated from Investment banking in the same way consulting and audit firms were forced to do more than a decade ago.

The way forward – NCE/Total (total) costs, a touch of reality There are several things that need to happen, and I fear it will take time and have many more casualties along the way, but much to his credit, Nick Holland and the Gold Fields team along with the help of some able bodied analysts at JP Morgan have started somewhat of a revolution in the gold industry.

A sort of support group if you like. Much like my friend, Martin Murenbeeld, who in the late 90’s was considered the lunatic fringe because of his gold price views (most of which have proven correct for the right reasons), Nick has espoused the need for, and designed a new gold production cost reporting format.

Scoffed at by other senior gold miners initially, the methodology tries to take account of all of the cash costs associated with extraction…sound familiar?....much like the appropriate accounting of old.

Nick’s point is that by “misleading investors and governments” that operating costs (according to accounting standards) are much lower than the holistic cost of extraction several things have happened:

• Investors have rightly asked, if your costs are $800/oz, where’s the other $850/oz gone? You should be making a lot more money. • And governments the world over have used this as a reason to increase taxes and royalties. Gold Fields uses this internally as a means to benchmark operations and target returns on a total cost basis. I see many of the other senior companies are starting to do similar things, which is, in my mind, a step in the right direction.

This sector is in real trouble and unfortunately I don’t see the panic yet. In the absence of another 13 years of 15% p.a. gold price increase, the sector risks being relegated (back) to obscurity. The gold sector needs a big re-think. Investors are battling to take the sector seriously in the positive gold price environment, let alone any other scenario.

The gold sector needs a breed of company executives who can put the horse back in front of the cart.

We need a breed of management who are realistic about what their assets can deliver.

We need a breed of management that will not pay over the odds for assets and use disciplined and sufficiently onerous return hurdles for any new business consideration.

I know you don’t want me to say it but the oracle of Omaha teaches us something here. Focus on the business and only the business. Focus on real value creation in the old traditional sense. Let the results speak for themselves ……….. that’s the best form of marketing.

Gorilla

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Great post/another forum

Post by Gorilla on Tue Mar 19, 2013 1:09 am

In hindsight shareholders of Angm had odds stacked against them, why?

(1) Nick Hall, an accountant, brought in by Cyrus to look after their interests despite the challenges of mining in Greenland - these challenges would overwhelm the experienced let alone a bean counter.

(2) Despite a series of persistent clangers mainly due to managerial incompetence eg reactive rather than proactive, NH, not only was not replaced but allowed to access funds whenever they were required.

(3) The departure of Mr Tim Daffern, the Director of Mining.

(4) Despite average gold prices of over $1200 per oz non achievement of breakeven for gold production or a positive cash flow NH used borrowed funds at punitive t&c to finance Bam further eroding shareholder value whilst enhancing Cyrus' hold on Angm.

(4) Socius, soon after their association backed out, was another sign that things were heading the wrong direction and the use of YA Global (death spiral alternative), as sole source of funds.

(5) Cyrus' main aim for Angm ie to facilitate Bam at the expense of shareholders.

Is NH still in communication with any pi? If so asks him why Cyrus has suddenly refused to bankroll Angm now (despite an increasing gold price), Bam getting ever closer to production and given the sizeable "borrowed" funds already spent on Bam? I think an explanation is the least NH could do given the remunerations NH has received over the years despite his lack of mining expertise.[list][*]

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mp4

Post by Asprat on Mon Mar 18, 2013 11:00 pm

Did you copy the page by chance?......Seems Mr G E Dwyer has something to hide.....and is lurking here too.

One sad man.

Good luck on Wednesday.

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Re: test,test,test

Post by Andy h on Mon Mar 18, 2013 2:16 am

Hello everyone I didn't post much on the lse site but been holding these shares for a few years at just over 8p I have 650000 I put in a bit more than I could afford really, hope we get some answers

Andy h

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Test

Post by TunnelKing on Sun Mar 17, 2013 9:22 pm

Hi all,thanks to mp4 for this forum,it's good to know ther are others who feel the company owe the shareholders an explanation for their actions over the past 2 years.for the record I lost £40k in total,far more than I could afford so have been licking my wounds over the past few weeks,and trying to look after my health which has been vey poor over last 24 months when this nightmare for me began. good luck to mp4 for the meeting on Wednesday,I spoke to nick hall on numerous occasions over email,and on one occasion over the phone.be warned he is a slippery customer,very convincing in his sincerity,and ambiguous( just like his RNS releases)in his answers to direct and probing questioning.he certainly convinced me,hence that's why I never bailed even though I considered it many times.This was my first ever investment,could hardly have made a worse start,and it's had a major impact on my life,far worse than i would want to gointo on a public BB.im just so thankful and blessed of having a supporting family,and extremely loving and understanding wife....god knows where I would be if they hadn't helped me through this.anyway,thanks again to mp4,and good luck to all remaing shareholders.

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Guardian report: Greenland government falls

Post by rac on Sun Mar 17, 2013 3:50 am

Guardian has a relevant report, but I cannot yet post a link!

Greenland government falls as voters send warning to mining companies

The article also gives details of what other companies have been planning in Greenland.

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stuart143

Post by J99 on Sun Mar 17, 2013 1:22 am

I am also in the OCH action group. They quickly managed to contact a lawyer in the Cayman Islands where OCH is registered and took it from there, the judge at the hearing was sympathetic and they got a seat on the liquidation committee. They meet by teleconferencing. Can't say too much more at this stage, but they are now a thorn in the side of the BoD.

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stuart143 Action Group OCH

Post by Sorte_Engel on Sun Mar 17, 2013 12:32 am

The Cosalt Action Group may be worth a try.

Sorte_Engel

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I tried

Post by stuart143 on Sat Mar 16, 2013 11:54 pm

to contact the OCH group to find out who they were using with no joy. Best to wait till meeting with NH on Wednesday see what MP4 comes back with and take it from there imo

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Nobody rising to the challenge?

Post by J99 on Sat Mar 16, 2013 10:51 pm

Have to agree, Moneypenny. Nobody as yet appears to have taken the bull by the horns. With so many unhappy investors feeling they have been ripped off, I would have expected the online equivalent of a pitchfork riot by now. With the general consensus being that we were hard done by, I'd have thought one or two at least would have gone off to take legal advice on the situation. OCH Group were blessed with a particular holder who was determined and competent enough to take the bulk of the task on and shoulder much of the responsibility, though with able helpers as well.

I feel it would be wrong to just sit and await the outcome of the joint administrators without at least getting a different legal perspective, or doing a little digging around ourselves. The administrators will be less than interested in our misgivings and will probably be quite happy to focus on figures rather than conspiracies.

I think the idea of somebody approaching Sharesoc is a good start, that is where some members of the OCH Group made their first port of call, as I remember. I still think somebody should contact a previous Nalunaq onsite mine manager (they seemed to go through several) to see if they can shed some light on any unusual practices or dodgy dealings by their superiors.

I somehow doubt whether your meeting with NH will reveal much. Whether he was in cahoots with Cyrus from the start to steal shareholder value, or was their patsy who perhaps only recently discovered that he'd been played all along, or was himself simply incompetent and just not up to the job, I fear he will do his very best to prevaricate and put you off the scent. Perhaps best to rely on feminine intuition to read between the lines and come to your own conclusions.


Anyway, all the best with the meeting and thanks again for your help, concern and input via setting this BB up.

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600

Post by Moneypenny on Sat Mar 16, 2013 7:46 pm

600 you are a lovely man....with a good heart. I’m not struggling and I’ve had more than enough appreciation, thank you’s etc....Everybody please ignore 600 post!!

However I am frustrated as there is still no clear direction

Moneypenny
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Re: test,test,test

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