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puda - Puda coal the next China RTO victim?
OK it looks like Geoinvesting is getting in on the 'something stinks in China RTO land theme so we paid them a visit' (better late than never I guess?).
They mentioned taking a short position after they did their work over there and apparently will release more detailed info tomorrow.
PUDA recently raised approx $100 mill cash in a PIPE at I think $12/share last December.
They just 'spent' a big chunk of that in today's PR buying up coal mines (I get about $42 mill spent on today's mines and the bigger one probably using up the rest of the $60 mill approx cash from PIPE).
They still have more to spend to acquire the largest mine. Considering 18% of that interest cost about $15 mill, buying up the remaining 82% could run the company another $60 million as mentioned.
So basically all the PIPE money just got burned up with those deals? Hope the stuff they bought is worth all that money.
The obvious question becomes what in the world did they get for all that money? That is a tough question but considering what is being 'dicsovered' in this China RTO space, who knows.
Most all the company's tangible assets will be in the form of PPE/mining rights from these mines as the deals are completed. So verifying their reserves/ worth is of paramount importance in understanding the company's value obviously.
Also found this in annual (cut and paste) and am wondering if this is where Geoinvesting will be going with their writeup tomorrow?:
The Jianhe project has total recoverable reserves of 23.7 million MT, based on government records filed by original owners of the mines.
If I was Geo and went all the way to China, a top priority for me would be to verify the govt records on recoverable reserves for the big Jianhe mine. If the reported reserves the govt has in records are below the reported ones in the annual there could be a world of hurt for longs depending on how discrepant numbers might be.
But I have no idea if that is what Geo will talk about. I am curious.
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Also noted this thing about semiannual dividends to be paid to Shanxi but could not find any evidence of specific dividends paid on PUDA's Q reports- did they receive anything with their 18% ownership and supposed rights to 80% of annual profits on their share of ownership thru dividends?:
On May 14, 2009, we entered into an agreement to purchase 18% ownership in Jianhe Coal, for an aggregate purchase price of RMB 100 million (approximately $15.2 million). The closing occurred in December 2009 when the share transfer was completed. According to the agreement, Shanxi Coal will be paid dividends semiannually proportionate to its 18% ownership in Jianhe Coal. Aggregate dividends to be declared by the Jianhe Coal will be no less than 80% of its annual net profits. In addition, Shanxi Coal has first priority in the right to purchase other shares of Jianhe Coal within the 24-month period following execution of the agreement.
I don't think this stuff would be what Geoinvesting is on, just curious why I couldn't find any line items on earnings statements that show the dividend payments.
Is this the same Moore Stephens auditing firm that does PUDA's 10K?:
http://www.thestreet.c...#
Interestingly, I previously mentioned MLKNA.PK's auditor as a weak one having many findings (14 I think?) when the PCAOB did their inspections of the auditor. When you read this article, it looks like the PCAOB did not find any findings on Moore Stephens even though the SEC handed down punishment to them later on.
If Moore Stephens was not doing their job as auditors per SEC punishment yet cleared the PCAOB inspections, what's that mean for an auditing firm found to have something close to a dozen problems found by the PCAOB? Look back to MLKNA post to reread their accountant probs there.
I have my doubts MLKNA is correctly reporting their revenues. And obviously it is not terribly difficult to get auditors to buy off annual audits even when some revenues are being faked.
All IMO.
Looks like you touched a nerve with this one, Avoidthegarbage, judging from the chatter on PUDA's Yahoo! Finance board about your comments here.