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T Squared is a fundamentally-oriented private investment firm focusing on special situation and deep value companies.
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  • Sloppy Reporting and Analysis by Motley Fool on L & L Energy (LLEN) 1 comment
    Jun 16, 2011 2:52 PM | about stocks: LLEN
    As we have always stated due diligence and skepticism is key, but also reporting factual information is key as well. We believe Chris Barker at the Motley Fool as show in his article on June 16th (which he later modified due to signficant errors) did neither and is attempting to drive viewership by being controversial and is just flat out bad at interpreting or understanding data. With all public data we believe we have answered all his questions that he used to negatively attack the Company based on non factual statements or clearly biased statements. We will focus on what we believe is important.  We have asked for a retraction of the article and hopefully it is honored as it is factually incorrect, sloppy and we believe questionable in its integrity.
     
    Our statements within this article are ours and should not be construed as any statement by the company and may or may not be factual per the SEC documents. We recommend anyone looking at the company should rely on public SEC filings. All our responses can be obtained in the public domain and are purely the opinion of the author.
     
    Statement one:
    Gene Bennett
    Gene Bennett was employed by LLEN for I believe a little less than three months. I asked Dickson of this involvement and he said they did not get along and it was a short lived relationship where by Gene left the Company (per the SEC filings). He said that is all he wishes to say but that they did not see eye to eye on many things.   He also mentioned he had very little involvement in the Company and did not make any substantial decisions within the Company during his involvement.
    This is amusing we are alleging anything questionable about LLEN for an individual that the individual and the Company parted ways from in 2008 after a very very short stint…. If we took this approach we would have trouble finding any company in the world to invest in.

    Funny that people bring this up as I believe the fact that he is not involved in LLEN is a good thing.  Shouldn't a company be rewarded for no longer being involved with a person of questionable record, especially after a very short stint?

    ---------------------------------------------------------------------------
    Statement Two:
    The author is naively pointing out only the senior executive’s qualifications in coal. 
    I am pretty sure Warren Buffett of Berkshire Hathaway does not fly the jets at Netjets, or that he does not write the insurance contracts at Geico. Let’s be clear, I am not calling Dickson Lee Warren Buffett, but I am saying that Dickson is filling his team (employees, advisors, consultants, etc.) with qualified and talented coal executives and employees on the ground in China as well in the U.S. 
    Anyone that visits the company on the ground in China and meets their full team, as we have, will see that the LLEN’s team and their JV and partnership employees have many years of experience in coal and are very talented individuals.   LLEN Executive team, made of U.S. Citizens, brings a lot of common business sense to the equation.  We have seen many improvements in the quality of the operations and progression of their business.   Simple business decisions such as adding shifts, improving equipment standards, building structural support outside and inside the mines goes a long way to improving production and consistency of production. Also vertically integrating the operation gives LLEN the ability to have better negotiating power with its customers, potential acquisitions, etc.   Simple business decisions that add value to any organization be it a clothing retailer, an insurance company or a coal miner. 
    ---------------------------------------------------------------------------
    Statement Three:
    Coal Safety and Safety Apparatuses
    I have been an investor and very active participant in coal mines in the past in the United States. I have been all throughout the Appalachia region and have seen many coal mining operations and coal washing plants. I have lived for months on end in a double wide trailer while visiting these mines to ensure I saw the day to day of a coal mining operation. One thing I have never seen is coal safety apparatuses worn at the mines or the wash plants, despite being high above the ground at times, as Chris Barker claims should be worn. I am sure LLEN will take the suggestion if it would benefit their employees, but I would invite Chris to the Company or to Kentucky to see a coal mining operations, before he becomes a coal mining safety inspector. 
    Despite Chris’s desire I believe LLEN should stick to improving the safety of inside the mines in terms of structural support and training of coal safety standards for its employees. Structural support in underground mining is very important and in china many smaller mines have inadequate support. LLEN immediately focusing on improving this standard at mines they buy makes a lot of sense to us as your people and employees are your assets and you must ensure you protect them in the mine shaft. 
    I applaud the consolidation efforts within in China for this very reason as safety is very important. 
    ---------------------------------------------------------------------------
    Statement Four:
    Mine Reserves
    Chris is once again comparing apples to oranges. Quoting tons they claim on their site and on their presentations.  The reserves they quote on their presentation are from their producing mines. The one on the website is from non producing and producing mines at the time. Ultimately if anyone wants an accurate calculation regarding the reserves they should read SEC filings and not rely on Chris Barker for such analysis as clearly he is flawed in ability to differentiate time periods and what is actually being stated.  LLEN is very clear about their reserves in their filings with the SEC which is what should be relied on. I as an investor have asked LLEN to update their website and improve their Site. I hope they take such a suggestion when they get time from building the business to do so. 
    ---------------------------------------------------------------------------
    Statement Five:
    Production Questions.
    The interview was done on April at the mines (not the date they bought them or historical production comments). My team was there – for weeks on site at the mines. Dickson quoted current status or production they are targeting. He did not mention a specific date as this was ad hoc interview done in April and was based on current production, not historical or as of the date they bought the mine.

    MF made statements of each mine at 150,000 tons. That is completely absurd as those dates are not consistent – at times you are comparing 2008, to 2011 and 2010 to 2011…. You are comparing apples to oranges and is flat out sloppy and I believe was done to manipulate the stock, draw attention and create viewers as we all know negative statements in the current market draws viewers.

    I EXPECT A RETRACTION OF THE ARTICLE IMMEDIATELY. This need for retraction is based off the same data they referenced, yet they took what best justified your negative comments versus facts!

    DaPuAn – Acquired in 2008. At time that time when they acquired they said it was producing 150,000 tons. (Chris Barker takes this as currently). They clearly state that they are targeting 300,000 of production and applying for greater expansion as well. I would assume this desire and aggressive expansion plan takes place monthly.

    SuTsong – The also acquired in 2008. Was producing 90,000 tons, they very quickly expanded it to 150,000 tons. They state they are expanding to 300,000 tons. That means they “are” expanding. They state as of the date of production they are expanding to 300,000 tons. Using historical production to compare Dickson’s comments of current production is ludicrous.

    These two mines Dickson said they production roughly 500,000 tons currently. So DaPuAn at 300,000 tons and SuTsong between 150,000 to 300,000 would tie out pretty consistently to his approximate 500,000 ton comment.

    Ping Yi – they acquired in 2010. When they acquired it was producing 150,000 tons. They have been aggressively expanding this mine and built a large wash plant there. Its targeted to produce 300,000 tons per the presentation, but per the interview Dickson stated they are looking to now expand that to 450,000 tons. Which is not unheard of given they are plowing all money back into the mine and we saw the expansion on the ground.

    DaPing – They just bought it in 2011. Historically it produced 150,000 tons. In the presentation and per Dickson’s interview they are targeting 300,000 tons.

    Total production he mentioned as of that date was roughly 1.25 million (this was a broad interview statement) as of the interview date, but his statements are consistent and were highly accurate per all materials quoted. The only inconsistency was MF's article which was not accurate.
    Stocks: LLEN
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  • mikejw
    , contributor
    Comments (15) | Send Message
     
    I am pretty much disgusted with what Motley Fool has become. It was a good forum for the individual investor but now has become a "boiler room" type operation in which the independent contractor writers push their own agenda. Christopher Barker is a "gold bug." I hope he keeps his portfolio in 100 percent gold assets. When it crashed he can write articles about how he screwed up.
    17 Jun 2011, 05:32 AM Reply Like
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