Opportunity In Crisis Investing

Hi, Erelation,
I have just finished checking up on Liongold. I was not aware until now that the Liongold’s management thinking was exactly the same as mine where investment in gold is concerned. I have started accumulating the stock and will share with you my views on this shortly.

Hi observer2,

Thanks... I have accumulated some shares and intend to keep for long term. Fortunately i didn't buy when it is trading at above S$1.

On the negative side, there are some question and doubt with regards to all their past dealing which was highlighted by investorcentral.org

1) Where are the S$22 mln proceeds from the sale of its environmental business?

2) Will it invest S$165 mln in a gold mine that runs the risk of being nationalised?
It bought Amayapampa Gold Project in Bolivia from Republic Gold in an all-shares deal. But LionGold got back the proceeds of 2 mln shares. Where did the cash go?

3) Where did LionGold's S$6 mln investment in Mornington Offshore end up?

4) Will ASX-listed Bass Metals Ltd end up like Signature Metals Ltd?
- People linked to LionGold have bought stakes in Bass Metals, even as LionGold and Bass Metals battle it out in court. What will happen if they vote out three directors at an Oct 4 EGM?

I won't be able to list down all the question that was raised by investorcentral as it is a subscription website and not right for me to post their information online.

From the question raised, many of their acquisition have very complex matter that lay man like me can't understand.

Maybe you can help to enlighten me...

I am seeing the collapse of USD sooner than expected with China already signed agreement to trade with 22 countries without the use of USD.

Cheers.
Yee

Hi Erelation;
After all those reading, is the stock worth some investment, which I'm seriously interested in. This is the gist of this column, identifying opportunity in crisis.

My view is that some of these issues are dated few years back and should have been captured in the respective audits, quarterly or annually. The point is why do the "analysts" bring up these issues only now, and after actions have been taken by SGX and the market has already started to rock! Getting attentions? Thanks.

Today one of the most highly respected fund managers in Singapore spoke with King World News about how the the Chinese are now making global chess moves that threaten the West. Grant Williams, who is portfolio manager of the Vulpes Precious Metals Fund, also warned about an approaching moment, “when it will get very dangerous for the US dollar.” Below is what Williams had to say in part I of this interview series.

Eric King: “Stephen Leeb was speaking to KWN yesterday about the Chinese positioning themselves to eventually declare financial war against the United States, and particularly against the US dollar.”

Williams: “The motivations and the strategies of the Chinese are incredibly important. We’ve seen this happen slowly. At first it was small swap agreements between China and other countries. But very slowly the amount of world trade that’s being done in renminbi has gone from zero to about 17% in the last few years....

“That’s a very, very big number (17% of global trade) and still growing. So China is going to do what’s in China’s best interest. They are vacuuming up gold because they understand it’s money. They also have an enormous amount of US Treasuries, so selling them right now would be against their better interest.

But if we do get a Treasury crisis, the price of gold is going to go through the roof. So, this is a delicate balancing act for China right now. But when the Chinese reach a point where they feel the increase in the value of their gold holdings will offset that of their Treasuries, it removes the shackles, and that is when it will get very dangerous for the US dollar.

Up to now the Chinese have been trapped because of their enormous holdings of US Treasuries. But as the Chinese continue to diversify heavily into gold, this will give them much more freedom. There will come a time when they can stand a strong currency. That’s something you have to watch very carefully.

So, the time will come when that suits them (a strong currency). Right now they are just moving their chess pieces into play, and they are being very, very smart and deliberate about it. Unfortunately, I think the West is taking the other route, and they are being very foolish about how they are running things.”

Source: kingworldnews.com/kingworldnews/KWN_Dail...bal_Chess_Moves.html

12 October 2013

Mr Ng said: “We would like to emphasise that the company’s ongoing operations are unrelated to the recent trading restrictions imposed on LionGold’s shares.”

The stock fell 3.1 cents, or 16.8 per cent, to 15.4 cents at the close of trading yesterday. LionGold said it was now trading below its book value.

For the quarter ended September, the company’s unit, Castlemaine Goldfields’ Ballarat Mine, produced a record 13,845 ounces of gold at an all-in cost of A$1,055 (S$1,245) an ounce. This represents a 47 per cent increase in gold production compared with the preceding quarter.

* This is positive with all-in-cost below gold price


LionGold also acquired all the common shares it did not already own in Canada-based gold exploration company Acadian Mining, bringing its holding to 100 per cent. It said it now holds 7.0 million ounces of gold resources, with 900,000 ounces of gold classified as reserves.

Meanwhile, LionGold director Md Wira Dani Abdul Daim’s direct and deemed stake in the company has fallen to 5.63 per cent from 6.22 per cent after a market sale on Thursday of about 5,539,000 shares for $1,048,532, working out to about 18.9 cents apiece. Director Ng Su Ling’s deemed stake was further trimmed to 0.19 per cent from 0.27 per cent after a market sale of 742,493 shares for $140,702.

* Why is insider not buying after price plunder from $1.70 level to current $0.20? Are they over leverage or does this mean price still not undervalued?

Hi dynamo,

I am not sure whether these issues has already been "effectively" reflected in the share price.

The question for investors now is the quality of their assets (gold mine) and how much is it really worth now.
Maybe Observer2 will be able to provide more insight.

I am not too concern about the gold mine in Australia as they are well regulated since those entity are listed on ASX. I am more concern about their gold mine in Ghana and Boliva which seems to contribute quite a fair share of their gold reserve.

I am still more positive on CNMC even though it is a small mining company with small reserve as management have been doing all the right things. They still hold significant stake in the company and they have not disposal of any shares below S$0.40.

Recent convertible loan come with exercise price above $0.40.. money come from smart investors that includes related party to Director.