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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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  • Pictures Of Ping Yi Operations, Over Extended Period Of Time, Confirming LLEN’S Ownership 6 comments
    Feb 21, 2012 5:43 AM | about stocks: LLEN

    Over the past month, we have witnessed an attempt by Geoinvesting to place uncertainty and doubt in the minds of investors of L&L Energy (LLEN) through the release of a series of blog posts. The timing of their releases (for example, options expiration, progress dates at LLEN, and other key events that would result in profit if such releases moved the market) clearly showed the intentions and goals of Geoinvesting: to instill fear and uncertainty in the market, thereby enabling them to profit from the manipulation of LLEN's share price. The core goal of their blog posts were to put panic in the mind of investors by causing them to question LLEN's ownership of Ping Yi mine, and make the claim that LLEN never purchased the mine in the first place.

    The crux of their argument has relied primarily on:

    1. Conversations with an anonymous and unverified individual named Mr Wu that were not independently validated and questionable in integrity.
    2. A suspicious testimony of an individual who claims to be a minority owner of Ping Yi, who read from a pre-arranged script and included this person asking what his lines were, while the director of the video whispered to just read the script. Given the nature and appearance of the interview, we fundamentally and fully question Geoinvesting's intentions and the integrity of this individual that was acting out his role (actors typically get "paid money" for their role).

    Missing from Geoinvesting's analysis is the presence of actual "on-the-ground" due diligence, something we would have expected any "research" firm to conduct prior to releasing such an opinionated and "conclusive" report. Given the basic fundamental need of this type of due diligence, the lack of actual on-the-ground due diligence and unbelievable incompleteness of Geoinvesting's work leads us to believe in ulterior motives, but that is not the point of this article.

    The point is that we have actually been on-site at Ping Yi, several times, and for extended periods of time. We have reviewed actual bona fide documents and have proof of actual footage and pictures that show, among other things, the ownership of Ping Yi by LLEN. During our various times at Ping Yi, LLEN management has both been there with us, and we have been there in absence of any senior management. This clearly allows us to verify independently with the personnel at the mine sites, the local government officials, suppliers, and customers - people both introduced to us by LLEN, and those who don't have a relationship with LLEN senior management.

    As an example of what we have as true "on-the-ground" due diligence, below are just a few of our many pictures from our trips to Ping Yi in particular. While we have other pictures of the Ping Yi operations, we decided to focus specifically on the pictures in our collection that show LLEN's ownership in everyday life at the mine. These pictures were taken over the course of several of our trips to Ping Yi. We translated the signs and posters that appear:

    Picture #1:

    English: L&L; US L&L Energy Co., Ltd.; Guizhou Province Pan County Ping Yi Coal Mine; Office building

    Picture #2:

    English: L&L Ping Yi Coal Mine

    Picture #3:

    English: Establish a corporate safety image; L&L Ping Yi Coal Mine main inclined shaft; Do a good job of working safely

    Picture #4:

    English: Promote a safe and civilized production; L&L Ping Yi Coal Mine main shaft; Establish a mine safety image

    Picture #5:

    English: L&L Co., Ltd.; US L&L Energy; Pan County Ping Guan Town Ping Yi Coal Mine

    Picture #6:

    English: Ping Yi Coal Mine 600,000 tons capacity coal washing plant; Sichuan Weiyuan Silver Star Company Design and Manufacturing General Contractor

    As you can see in the above, there are multiple signs at Ping Yi which have been up and seen in existence over an extended period of time since we first started visiting the property till as recently as a few months ago. These signs clearly and undeniably indicate that LLEN is the owner and operator of the mine. These signs were not temporary; they were consistently at the site when we visited both announced and unannounced. Confirmation of LLEN's ownership is to be expected, as the company has:

    1. a published agreement with Ping Yi;
    2. a legal opinion from the largest law firm in the country stating they own Ping Yi;
    3. an independent auditor verification that they own Ping Yi;
    4. conducted an investor visit that allowed anyone to visit Ping Yi to verify the operations themselves; and
    5. consistent third party independent verification of the same.

    Clearly if Geoinvesting's purported owner of Ping Yi never sold his mine to LLEN as Geoinvesting would like shareholders to believe, then we find it quite odd that LLEN would, over extended, uncorrelated periods of time, have signs on the property that state that Ping Yi is owned by LLEN; strange that Geoinvesting's purported owner would enter into agreements saying LLEN owns the mine; peculiar that he would allow one of the largest law firms in China to provide a legal opinion (directly to LLEN's auditor without the involvement of LLEN) stating LLEN own the mine; and equally unusual that Geoinvesting's purported Ping Yi owner would let LLEN operate the mine and develop a second mining shaft that we believe will result in production resumption in the near future. Maybe Geoinvesting should also tell their Ping Yi "owner" that he should remove the US flags at Ping Yi, since Geoinvesting claims Ping Yi is not owned by a US company.

    Aside from our factual and truthful due diligence, we should note the character of Geoinvesting: that they are currently under lawsuit by other companies for share price manipulation and defamation. While these are allegations, we still think this is worth noting as it helps frame the character and integrity of their firm.

    Should LLEN pursue similar actions, they would have our full support, as it is clear to us that their motives are not to finding the truth, but one of deceit to profit from share price manipulation for their own trading accounts and the accounts of those that pay to front run the release of such negative allegations. Geoinvesting's actions have clearly damage the integrity and trust of the markets, and we feel that any action against them, either civil or criminal, would only serve to help restore ethics and accountability in the markets.

    As a side note: immediately after Geoinvesting posted on their blog about LLEN, we offered to have a representative of Geoinvesting meet us on-site at Ping Yi to do joint actual "on-the-ground" due diligence to discuss mutual findings. Geoinvesting outright declined such offer with no valid reason given.

    Additionally, should anyone want to see more of our pictures of Ping Yi or other mines of LLEN, we can typically accommodate such requests.

    We are long LLEN and intend on transacting to acquire additional shares or options.

    Disclosure: I am long LLEN.

    Additional disclosure: T Squared and our relationships (including corporate entities) plan on transacting to acquire additional shares and options of LLEN.

    Themes: long-ideas Stocks: LLEN
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Comments (6)
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  • Author’s reply » Geo - why not actually go to the mine with my team?

     

    I have no lawsuits outstanding against me. Are you threatening one? I would look forward to discovery on that case.

     

    The best I can do is pictures? My team is not a coward and will go there ourselves. If LLEN doesn't own the mine than clearly we would not be welcome and you would be. Not sure what you have to be scared of given what you claim? We would be the ones in danger according to your scripted movie production.
    21 Feb 2012, 02:21 PM Reply Like
  • Author’s reply » I was named in one lawsuit in my life and dropped.

     

    I am happy to travel to the mine itself if you want to put an end to your childish banter. I am not going back and forth as you would hope to do. I have kept pretty quiet even with your multiple attempts to discredit the company especially given the lack of quality and professionalism you have portrayed. I believe you have some answering to do on a lot of the information you presented as well as the timing of such releases.

     

    If you want to stick with your claims thats your perogative but I have better things to do than make up information like you so I will stick to facts.
    21 Feb 2012, 03:27 PM Reply Like
  • Why did you delete my posts? We are asking you to provide Chopped SAIC filings. Was gathering such information part of your DD?
    21 Feb 2012, 05:30 PM Reply Like
  • Was Wendell Chen in china or Washington DC?

     

    Maybe he could accompany T Squared to China?

     

    Guessing he doesn't actually live in China because his facebook page says Washington DC.
    23 Feb 2012, 01:34 AM Reply Like
  • Author’s reply » Maj - once again you are ignoring the questions and facts.

     

    We can review all the documents and proof you want at the mine site when you take me up on my offer to go visit the mine together.

     

    If LLEN does not own the mine than what are you scared of having your team go to the mine with my team?

     

    If LLEN doesn't own the mine, and as you claim the owners are pissed off at LLEN, than wouldn't they be violent towards us and not you?

     

    If LLEN does own the mine and the management and myself are US citizens do you really think we are going to physically harm your team?

     

    Also how did you get a notary office to open on a Sunday given numerous calls say they are closed on Sunday?
    22 Feb 2012, 06:43 AM Reply Like
  • Maybe GEO should consider your offer and bring along Mr. Hu to the Ping Yi mine.

     

    I'd love to see a shareholders' meeting at Ping Yi mine.
    23 Feb 2012, 10:02 PM Reply Like
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