JAVA GOLD are sitting on a LUCRATIVE GOLD MINE in Mongolia, but they need to act swiftly.
Here are the problems, and the solutions.
1. ZAAMAR GOLDFIELDS CO.LTD. failed to re-register with the Foreign Trade & Investment Board of Mongolia in December when it was required to do, as required by crystal-clear Mongolian regulations. A few weeks ago, this Board liquidated Condor Resources Co. Ltd., one of Armand Beaudoin's companies, on the grounds that it was inactive and had not reregistered. The same fate awaits ZAAMAR but there is a stay of execution because the Board have first been busy striking down inactive companies.
2. A special factor in the failure by ZAAMAR to reregister may have been the death in the middle of 1999 of its CEO, Armand Beaudoin, leaving the company rudderless - but of course the company does have other Directors. Anyway, they don't appear to have notified the Board of Foreign Investment BFI of the death of the CEO - I told the BFI.
3. For ZAAMAR to re-register properly requires some paperwork and - to do it properly - to appoint a replacement for its deceased CEO, duly appointed by the ZAAMAR BOARD and approved by a Shareholders Meeting, submit audited accounts for 1999 (and 1998 I guess). This is all straighforward except that the Shareholders Meeting is of a single legal entity as 100% shareholder - JAVA GOLD CORPORATION!
4. Complicating the issue is that JAVA GOLD CORPORATION also has the same deceased Armand Beaudoin as its President and Director. However it did have and does have a Board still with THREE DIRECTORS -
ANDREW M. CHATER of 6 Denham Drive, Richmond Hill, Ontario, Canada L46 6J1
GARY E. GERMAN of 3 Ridgefield Road, Toronto, Ontario, Canada M4N 3H7
BERNARD L. KRAFT of 2 Bluejay Place, Don Mills, Ontario, Canada M3B 1V9
These three Directors have a legal obligation to call a long-overdue Board Meeting which in turn has a legal obligation to call a long-overdue Shareholders' Meeting at which the JAVA GOLD BOARD present:
a) Annual Report for 1998
b) Audited Accounts for 1998
c) Quarterly Accounts for 1st, 2nd, 3rd and 4th Quarters of 1999 and 1st and 2nd Quarters of 2000
d) Annual Report for 1999
e) Audited Accounts for 1999
f) immediately issue a Press Release notifying death of CEO
g) decide on a replacement CEO to be nominated and approved by the Shareholder's Meeting
h) call a Shareholders Meeting of Zaamar Goldfields Co. Ltd.
i) same for Mongolian Goldfield Corporation (Ontario registered private corporation which is 100% subsidiary.
j) the shareholders should invite the resignations of the 3 Directors for having broken regulations as Directors before the CEO death, after the CEO death (when the 3 of them were collectively and equally responsible for running JVAG in accordance with Ontario company laws and - until the NTO order - the regulations of the Ontario Securities Commission, and in managing the affairs of all subsidiaries).
5. JAVA GOLD BOARD needs to take firm control of the management and operations of its wholly-owned subisidiary ZAAMAR, as this produced 0.5m$ of placer gold in Mongolia last year from the Tulson Terrace property and this is the only cashflow the group appears to have.
6. A further problem is that Armand Beadoin, immediately before his death, signed a contract - in his capacity as CEO of Zaamar Goldfields - with a private Mongolian Company (approx name Polymet)which signed away most of the rights to the lucrative placer gold properties of Toson Terrace to Polymet. Afterwards, ZAAMAR mined the 0.5m$ of gold before the end of the 1999 season.
7, Now the difficult part. Since the death of the CEO, Zaamar Goldfields has got in dispute with Polymet regarding the abovementioned contract. Polymet called me in as business adviser (unpaid volunteer I might add!!) to check though the paperwork. The contract is badly worded and misses out elementary things such as a confidentiality clause, and my analysis indicates that Polymet can walk all over Zaamar if they so choose.
8. Thus Zaamar needs to be smoothly and professionally supervised by JAVA GOLD (in turn by its shareholders) and a very flexible and friendly relationship reestablished with Polymet. The relations are currently so soured that Polymet could sit and wait for Zaamar to wither away, which it probably will do if it doesn't get cashflow from mining soon. In any case, Zaamar is in danger of being compulsorily liquidated unless it reregisters soon.
9. Now the bit that you long-suffering shareholders have been waiting for. Polymet is interested in buying shares in Java Gold Corporation if it helps to clear up the mess and build a bridge, at a low price but a low price is better than no price at all! Email me privately if you are interested and I'll connect you with Polymet.
10. Of course it would have been nice if the JAVA GOLD BOARD (i.e. Messrs. German, Kraft and Chater) had fulfilled their obligations to you the shareholders and to the Ontario Securities Commission, and then it would now be still possible to buy shares on the CDNX. Now it is more difficult. Furthermore, you can hardly expect a sensible deal to be struck, when the three Messrs. have not presented the financial books to anyone since 1998! Sure Java Gold Corporation has assets, but how much exactly (or even approximately?). Maybe the three Messrs will tell us, as is their duty as Directors.
11. I would suggest a deal can be struck whereby Polimet buys a sizeable chunk of shares if the price is sensible, and if the present Directors step down.
12. Now the obvious bit. In order to rebuild this company, its only future for the time being is in swiftly generating cashflow from placer gold mining in Mongolia, and sticking in this lucrative line of business for a number of years. It is much less risky than hard rock exploration and hard rock mining but less exciting. On the other hand, when the shares only current value is as wallpaper, then a huge increase in present value can be achieved. Success depends upon ALL directors being already resident in Mongolia and with all the necessary skills in management, placer technology, placer geology and diplomacy. I would be happy to put together a high calibre Mongolia-based Board and run it as a strictly low-budget movie, and carry on an active dialogue with shareholders.
13. Now to encourage you:
a) last year, Mongolia produced 11+ tons of gold, nearly all of this placer gold. To get this in perspective, in 1994 it was only around a ton (accurate annual figures later if you ask me on this string). A fantastic achievement. To get this in perspective, Mongolia has now overtaken big Kazakhstan in gold production! Production is set to rise again this year.
b) actually Mongolia should have, and could have, produced 22 tons of placer gold. However water cannon plus sluices are the norm. Our group in Mongolia (the Mongolian Business Development Agency which I helped to establish as Chief Adviser 1995-97, plus my company - Eco-Minex International Co. Ltd, Ochir Leasing Co. Ltd, BEMM Co.Ltd and ADMS of the Netherlands) tested a lot (15+) active mines by meticulous panning of tailings or putting tailings through a Knelson centrifugal concentrator, and results proved that 40-60% of the gold is lost, just washes through the equipment.
c) We have tested and are highly satisfied with IHC jigs, Knelson Concentrators and - in some situations - NZ hydraulic riffled sluices - able to achieve 90% gold recovery in Mongolian conditions.
d) We have identified a portfolio of properties ready-to-mine where the Mongolian owners are wanting to sell out to us. We have checked the ownerships via the Cadastral Office, gathered independent old data from the Geofund, and for several already checked the deposit in the field. Of course we have had to winnow out a lot of suspect properties first.
I hope you found all this information useful, at least newsworthy.
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