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"Risk comes from not knowing what you're doing" Warren Buffett I look and sift the world for such misplaced bets. When I occasionally find one, I first exploit it for profit. Then, I write about it for anyone else interested in such ideas. Twitter: @unemon1 Scribd:... More
  • LLEN: Problems With Respect To The Recently Acquired Weishe Coal Mine? 2 0 comments
    Sep 24, 2013 2:37 PM | about stocks: LLEN

    LLEN: Problems with respect to the recently acquired Weishe Coal Mine?

    The Weishe Coal Mine (see LLEN 10K for FY2013, page 19)

    "The WeiShe Coal Mine is located in WeiShe FangYuTang Village, HeZhang County, Bijie Area, Guizhou Province, China. It is an underground coal mine and is accessible by public roads. The map below shows the location of the Weishe Coal Mine.

    Prior to our acquisition of the majority controlling interest of the Weishe mine, the mine was wholly owned and operated by Union Energy. Effective February 3, 2012, we acquired a 51% controlling interest in the Weishe mine (including 51% interest in the corresponding resource mining permits and the mining rights to the WeiShe mine) and assumed mining operations.

    A resource mining permit issued by the Guizhou Province Municipal Bureau of Land and Resource specifies the coordinates of the Weishe mine's mining area and the mine's designated annual production capacity. The resource mining permit for the Weishe mine estimates that the mine's production area is 1.8772 square kilometers and the scale of production is 150,000 tons per year based on current mine operating conditions. Currently we are in the process of expanding the mine's capacity to 300,000 tons per year."

    To the following two pieces of info are of Interest:

    1. "we acquired ….95% interest in the corresponding resource mining permits and the mining rights to the LaShu mine
    2. mine's production area is 1.8772 square kilometers

    Necessary Assumption:

    1. The real name of the Weishe Coal Mine is: 赫章县威奢煤矿

    I think the necessary assumption is satisfied for the Following 2 Reasons.

    1. LLEN states that the mine's production area is 1.8772 square kilometers

    The mining area reported in LLEN 10k for FY 2013 (page 16) exactly match the mining area of the赫章县罗州煤矿 (according to the mine's mining license)

    (click to enlarge)

    1. Picture on the L&L Energy Website (Link) seems to confirm it.

    (click to enlarge)

    Picture from the L&L Energy Website (Link), as of 08/26/2013

    Picture from the L&L Energy Website (Link), as of 08/26/2013 (Investors Day)

    (click to enlarge)

    Picture of the赫章县威奢煤矿, as of April 2012.

    (click to enlarge)

    Picture of the赫章县威奢煤矿, as of April 2012.

    The Problem:

    September 2013, the Mining Rights for the Weishe Coal Mine have been assigned to UNION ENERGY (贵州优能(集团)矿业股份有限公司)

    According to the Govt Documents, the transferor was the Weishe Coal Mine (赫章县威奢煤矿(张国旭), where(张国旭) is the name of the Legal representative).

    People have time one month to oppose to this decision.

    How is this possible? According to LLEN 10K for FY2013 (page 18), LLEN

    "…

    acquired ….51% interest in the corresponding resource mining permits and the mining rights to the Weishe mine

    …"

    Attachment: - Mining Rights Transfer Public Notice

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

    Themes: Too Easy Stocks: LLEN
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