promising my butt!
this dispute is as old as Bumbat and should have been settled before production even started - now it's a convenient way of not restarting the mill. Nice move + suckered shrholder's along the way. Sign me up for Dave's next play.
Partner intends to sell interest in the Bumbat Co
Mongolia Gold Resources Ltd
MGR
Shares issued 24001373
1998-03-23 close $0.18
Monday Mar 23 1998
Dr D.R. Webb reports
The company has been informed by its partner, Mongolyn Alt Corp, a private
Mongolian company, of its intent to sell its 51% interest in the Bumbat Co. The
Bumbat Co is the joint operating company responsible for the ownership and
operations of the Bumbat property, Zaamar district, Mongolia.
The company and MAC have been negotiating a resolution to the company's
excess contributions (totalling more than US$918,000) to the Bumbat Co since
May 1997 (see news in Stockwatch April 15 1997). Negotiations have
encompassed many issues, but have focused on a dilution clause, and on an
alternative penalty clause for non-contribution. A proposed resolution was
reached in June 1997 whereby the company would make a one time concession
to give preference to the penalty clause and accept cash compensation plus
interest in lieu of an increased equity stake. This resolution required among other
issues, a complete rewrite of the operating agreement by a mutually acceptable
legal firm. A draft in English of this agreement was received by MAC and the
company in September 1997.
In January 1998 the company and MAC met with the management of Bumbat Co
and reviewed the 1997 results and plan and budget for 1998. It became apparent
that MAC was unwilling or unable to make payments according to the penalty
clause, and was unwilling to forfeit equity in Bumbat according to the dilution
clause. It is also unwilling or unable to provide its required financing to Bumbat
Co. In late February 1998, MAC notified the company of its intent to sell. The
company sought clarification of this statement, and MAC provided the company
with a general provision contract dated February 24 that discloses only general
terms of a sale, without disclosing details necessary to complete the transaction.
The company has engaged legal counsel in Mongolia, and is seeking clarification
of this GPC document. The company intends to review the complete
documentation according to its first right of refusal as defined in the Bumbat
agreement. Until these issues are resolved, the company will not increase its
over-contribution to Bumbat and thus continuing operations at Bumbat are
dependant upon a speedy resolution of these issues or financing provided by
sources other than the company. The company's interests are secured by
Mongolian and international law. The company's financing for the project was
completed by equity sales, and has no outstanding debt on the project. Debt
financing by the partners secured by the Bumbat is specifically prohibited without
unanimous consent of the joint venture participants.
(c) Copyright 1997 Canjex Publishing Ltd. canada-stockwatch.com |
