Dear Robert, I haven't forgotten you re the last matters we touched upon, but, in the meantime, I thought you might find interesting the following piece that's posted on my web-site @http://www.imagen.net/howenow Best wishes, Adrian
Carson Gold - DiamondWorks PR mines diamonds out of a lump of...
George Orwell fans seeking entertainment can always look to the creative output of those writing press releases for penny stock promotions. For the amusement of all but the sheep, shepherds of offerings in the VSE menagerie rarely fail to deliver. Orwell himself, whose real name was Eric Blair, might get a chuckle or two out of announcements that have appeared recently under the name of another Eric -- Eric Friedland, caretaker of Carson Gold.
In March 1996, when trading in its shares was halted to allow for the acquisition of Chinese diamond assets, Carson, now called DiamondWorks, raved about its future in China: "Carson has acquired control of the largest diamond mine in China as well as extensive high quality diamond, gold and copper exploration projects in the country. In addition, Carson has assembled a highly experienced business and technical team of both Chinese and western personnel to manage the future growth of the enterprise."
(Further details of the Carson Gold-DiamondWorks enterprise have been previously posted under the Big Top, Sideshow and Midway section of the howenow web-site @ imagen.net )
The company's press release extolled the great benefits of the Changma diamond mine -- "the largest producer of diamonds in China, accounting for approximately 60% of the country's production." According to a report by Richardson Greenshields, said Carson, "only the Mir, International and 23rd Congress diamond mines have grades exceeding that of the Changma mine. In addition, the paper concluded that the Changma mine is nearly twice the average reported grade of the Lac de Gras diamond occurrence in the Northwest Territories and many times richer than the reported average grades of the Fort a la Corne diamond occurrence in Saskatchewan."
The Carson-DiamondWorks 50% controlling interest in the Changma was to be acquired for 25 million of the VSE junior's common shares from China Diamond Corp, a private British Virgin Islands company in which controversial stock promoter Robert Friedland held "a significant direct or indirect interest".
"An independent study by Kilborn Engineering in 1995 determined, through extensive Chinese data accumulated over a period of 26 years, that the mine contains measured and indicated reserves of 1.77 million tonnes averaging 1.17 carats per tonne to a depth of 300 metres, and an inferred reserve of 1.38 million tonnes averaging 0.77 carats per tonne to a depth of 600 metres. The deposit is open below a depth of 600 metres. Total measured, indicated and inferred reserves to 600 metres are approximately 3.1 million carats," trumpeted Carson Gold.
And, should that not be enough to establish this Chinese enterprise was worth every one of the 25 million shares to be paid for it, there was more: "In addition to its high average grade, the Changma mine historically yielded some exceptionally large stones, 119 carats (one year in the 1980s), and every year it continues to recover some remarkable stones from its very small production of ore. In 1992, six stones weighing 38, 23, 23, 16, 11 and 11 carats were recovered and in 1993 five stones of 34, 26, 11, 10 and 10 were recovered."
With the Changma in China, Carson, which had flopped with its earlier Venezuelan ventures, planned "to improve the efficiency and security of the existing open pit operation and concurrently develop a modern underground mine and processing plant." Having control of an operating mine, better yet, "the largest diamond mine in China", was central to the company's promise to transform itself into "an international recognized producer, developer and marketer of diamonds of the highest quality."
(A "parallel business transaction" to the Changma deal was the purchase of all the non-cash assets of Yunnan Mining -- another private BVI entity of which Robert Friedland is a shareholder -- for 500,000 shares, U.S. $1.54 million cash and the surrender to Yunnan of 2 million Yunnan shares which Carson currently holds. Yunnan is reportedly engaged in the exploration for gold and copper in China.)
As a tag-end to its lengthy, printed, Chinese celebration, the company appended these two less sentences: "In light of the production and marketing potential of diamonds in China, Carson has been approached by a group with significant diamond assets in Southern Africa. The company is currently in discussions regarding the possible acquisition of these assets."
Over the summer months of 1996, it came to pass that the good Chinese fortune paved a shining path to diamond prospects in Sierra Leone and Angola. To add to its operating mine in China, the company announced it would acquire certain African prospects from Branch Energy Limited, a private Isle of Man company, for 33 million shares. The China Diamond Corp. (CDC) and Yunnan ventures formed two legs, and the Sierra Leone and Angola diamond deals the other pair of supports for Carson as it metamorphosed into DiamondWorks.
As Orwell's characters would ultimately have it: "Two legs good, four legs better." The brains behind Carson-DiamondWorks, however, would have investors believe: "Four legs good, two legs better."
Following months of building investor expectations, DiamondWorks (on November 18 1996) announced that: "The company will not be proceeding with the proposed acquisition of China Diamond Corp." The company's press release appeared open-ended as to why the hyped Chinese enterprise had tanked. It said only that "completion of the transaction remained conditional on the government of the People's Republic of China issuing the necessary diamond mining and exploration licences and related permits and approvals." While this leaves a reader to assume that the licences and permits were not granted it doesn't say so -- or even hint why such would be the case. The full reason for the collapse of the Changma deal remains, therefore, unexplained.
While wording of the failure of this major acquisition (no longer referred to as "the largest diamond mine in China") to complete was oblique, the company has been more explicit in emphasizing what it views as favorable elements of the situation. According to the news now attached to Eric Friedland's name: "The company's business plan always projected that the majority of its diamond revenues would come from its African assets, consisting of projects in Angola and Sierra Leone." This statement, which would seemingly come as a surprise to those following the company's public announcements in 1996, was supplemented by reserve and per carat value figures that unfavorably compared the operating Changma's actual values with the company's "calculations" of the worth of its largely undeveloped African assets.
(There's no shortage of National Hockey League coaches who could benefit from the Friedland team's approach of looking at a loss as a win.)
In this way, with a mere fraction of the words employed to hype the prospects of the Chinese diamond mine, DiamondWorks has glossed over the disappearance of the project for which its share trading was originally halted from trading on the VSE.
The Vancouver Stock Exchange has a Listings Policy Statement that states VSE-listed companies must be mindful of the "CONTENT OF ANNOUNCEMENTS: Releases should be factual and balanced, neither over-emphasizing favorable news nor under-emphasizing unfavorable news." Fittingly, this fundamental policy -- rarely acted upon -- was instituted in 1984.
Small wonder then, that some penny stock promotions spawned on the VSE may have about them the odour of an animal farm staple -- horse manure. |
