By John Helmer in Moscow
ABV Gold cannot substantiate its market claims to a multi-billion dollar gold and silver property in Russia.
In the folk history of the Russian trades, it was always said that a tailor lacks trousers, and the shoemaker lacks shoes. A Canadian from Montreal, promoting a penny gold mining stock registered on the U.S. Over-the-Counter market (ABVG:US) is writing a new chapter. This is the one about the gold miner without a goldmine.
According to a posting on the ABV Gold website, on September 24, the company “closes acquisition of a 70% interest in a producing gold mine in Russia.” The link from this announcement leads to www.pinksheets.com, where there is no record of the transaction, the value, the price, or the “producing gold mine.”
A few days later, on October 14, Dan Ryan, the President and Chief Executive of ABV Gold, posted an “open letter to shareholders”, responding, he conceded, “to repeated queries about the status of our company, in particular, requests for more data concerning our gold mine holdings in Russia.”
According to this document, the holdings – note the plural – are in partnership with two Russian companies, Kamsas and DRSU, which “maintain legal addresses in Kransnoyarsk county, Nagarov city, municipality Promyshleny Uzel. Kamzas is licensed to extract gold in the Balyks River Valley, located in the Republic of Hakasiya, 10 km East of Balysk. The areas are located near the villages of Balyks, Neojidany (sic) and Nikolaevka in the Republic of Haskasiya. The region 1.5 km Southwest of Neojidanny (sic), the Magazinskaya section, is located in Balyseen and unifies a few gold-operational zones and gold fields. This are of the licence (sic) is connected to the right shore of the valley in the upper part of the river Magazy and on the right shore in the lower part of the valley of the river Kamzas.”
This quote has several spelling mistakes, as if Ryan was in a tearing hurry to communicate with his shareholders. The Krasnoyarsk krai or territory, in central Siberia, is a gold mining region, and it is currently the leading producer in Russia, through the Polyus-owned Olympiada mine. The neighbouring region is legally a republic. Its correctly spelled name is Khakassia.
No information about the acquisition or financial terms of partnership, nor of the valuation of the gold deposit, was provided.
Then on January 8, Ryan issued this new announcement. ABV Gold “has hired TsNIGRI, a renowned Russian geological and engineering firm to review and evaluate a potential merger with a leading gold and silver mine in the Russian Federation. According to the company, the potential merger is very significant to the company and requires an independent review and valuation in order to verify the proven reserves and economic viability of the operation for the long term.”
“We are very enthusiastic about working with such a prominent organization in Russia. TsNIGRI has been at the center of a large number of large international transactions. If this review and valuation results in the expected positive findings and a major transaction is concluded, ABV Gold will automatically become a major player in the gold and silver mining sector,” said Daniel Ryan, President of ABV Gold, Inc. “We are at the forefront of a new economic revolution in the Russian Federation, where most companies seek to go public as a way to access capital markets. ABV Gold, Inc. is a small public company and is a vehicle for companies wanting to maximize the asset value of their large mining assets located in the Russian Federation,” further added Mr. Ryan.”
Ryan and Dale Baeten were identified with contact numbers or email addresses at the end of the announcement.
Two days later, on January 10, Ryan announced that he had what he wanted. ABV Gold, he claimed, has received a preliminary report from TsNIGRI, a renowned Russian geological and engineering firm, recommending a merger with a potential target and subsequently the Company immediately entered into a Merger Understanding Agreement. According to the company, the potential target is a well known Russian gold and silver mining company with significant gold and silver reserves and production. The company will keep the identity of the target confidential until further due-diligence is completed. The company will now seek to hire an independent appraiser to validate the value and economic viability of the merger.
“We are not surprised at the speed in which TsNIGRI have respondent since the potential target is a well known gold and silver reserve,” said Daniel Ryan, President of ABV Gold Inc. “In order to create a win-win situation for both our shareholders and their shareholders, it is imperative we receive an independent appraisal of the property as well as a better understanding of the economic viability of the mine,” further added Mr. Ryan.”
On January 14, Ryan claimed he had issued another mandate to prove his Russian gold asset. His company, he said, “has mandated BK-Arbadia LLC to appraise the value of the Russian Mine as well as its economic viability. BK Arkadia is a well known Russian independent appraiser registered in the Russian Federation as well as several European Union countries. BK-Arkadia’s appraisal is expected to be received by or before January 18, 2008. “We have mandated BK-Arkadia for their knowledge of this specific Russian Mine and mining industry as well as its superior international reputation and experience,” said Daniel Ryan, President of ABV Gold. “The appraisal consists of evaluating the proven reserve, the production, the potential reserve and potential production based on ramp-up and re-tooling,” further added Mr. Ryan.”
Once again, the statement has marks of slapdash spelling and haste. There is also no identification of the purported gold property.
Dale Baeten’s name reappears as a contact, with Ryan, for follow-up.
Baeten is a full-time teacher in Green Bay, Wisconsin. He told Mineweb he works part-time on investor issues, and was engaged last June to help Ryan respond to investor enquiries generated by ABV Gold’s market announcements. Although his name appears on ABV Gold corporate releases, Baeten says: “I don’t write the pr’s for ABVG. I was hired as the IR for the company to answer calls from Investors.”
The problem is, he adds, Ryan hasn’t paid him. Also, Ryan doesn’t answer the questions the investors call in to give ABV Gold through Baeten. “I pass the calls along to him, but I get no replies”, Baeten told Mineweb. But what of his name on the ABV Gold announcements regarding the big Russian gold find? “I have no idea what is going on. I have no information about the [Russian] properties.”
Baeten’s association with ABV Gold isn’t the only one he appears to have with Ryan. According to market announcements, another Montreal company called Downshire Capital, calling itself a private investment banking firm, has employed Baeten and his firm called Midwest Consulting Services to do research, and market to investors, a company called Bionic Products.
Downshire claims to operate an office on Sherbrooke Street, Montreal. There is no telephone number. It is unclear what Ryan’s association with the company is to warrant his operating a Downshire email address. A source at ABV Gold told Mineweb that Ryan works at Downshire, but gave no detail. The website for Downshire reveals no officers, and some of the links are dead-ends. A survey of published market information indicates that Downshire is a stock promoter for Rolland Energy, Lions Petroleum, Hinterland Metals, and Signature Leisure.
Ryan was asked by Mineweb to clarify the details he has announced to the market since his reported acquisition. He did not reply to emails sent to ABV Gold, and repeated 24 hours apart. He did not respond to an email directed to his address at Downshire Capital. When telephoned at ABV Gold’s office at 1000 de la Gauchetiere West, the receptionist connected the call to Ryan’s answering machine. She said she did not know if Ryan was in his office, or when he was expected. She explained that ABV Gold occupies “a huge floor”, and Ryan “doesn’t always take calls directly.” Asked if ABV Gold has any other executive able to respond to questions, the receptionist said “there is no one else to take calls.”
In addition to Ryan, the company website identifies just one other officer – Marcel Morin, a retired geological engineer, “with experience of over 50 years in mining, mineral exploration and public services”. When Mineweb asked to speak with Morin, the response was that he is “mostly on the road”.
Ryan’s refusal to respond to questions becomes understandable with the information provided by Russian sources.
TsNIGRI is the acronym for the Central Geological Prospecting Research Institute for precious metals. It is state-owned, and is connected to the federal Ministry of Natural Resources, and the State Geological Service. The first two weeks of January are traditional Christmas and New Year holidays in Russia, and according to TsNIGRI sources, almost no one was working there between January 8 and 10. But if they were working, the general director of TsNIGRI, Igor Migachev, General Director of TsNIIGRI told Mineweb he is sure they weren’t doing anything for ABV Gold. “I never heard of the company ABV Gold or Daniel Ryan,” Migachev said. “We never undertook any job for ABV Gold, and we even don’t know them. Besides, they are making a mistake to link to us. We will contact them now and demand they remove us from their information.”
TsNIGRI does do important reserve proving and mine valuation work in the gold sector, but not for ABV Gold. According to Migachev, “the last thing we did was a new valuation of the Sukhoi Log deposit. We finished on December 27 – the reserves and TEO [feasibility estimate] were confirmed. I can tell you that reserves are 1.5 times higher, compared to what was [recorded] there, and now we expect even bigger fight for the deposit.”
BK Arcadia operates an office in Moscow, but its reputation among mining professionals and government officials here is limited to asset appraisals outside the mining sector. Arcadia was contacted to verify the ABV Gold mandate. A spokesman, who declined to identify herself by name, told Mineweb: “our client list is confidential”. She went on to say that Arcadia “does not undertake valuations of precious metals deposits or mines.”
On January 16, Ryan issued a statement, co-signed with Baeten, that claims ABV Gold is a stakeholder in a multi-billion dollar Russian gold asset. ABV Gold, said Ryan, “announced today that it has obtained the independent reserve report on the Russian Gold Mine merger target. According to the company, the reserve report was performed in accordance with the requirements of Canadian National Standard NI 43-101 and Form 43-101F1 (Standard for disclosure of information concerning mineral projects).
In summary of the 43-101 reserve report, the Russian Mine has the following reserves:
— Gold — 68 tons at the average content of 1.7 g/t
— Silver — 739.6 tons at the average content of 17.2 g/t
— Iron — 20.8 million tons at the average content of 52%
— Platinum — 3.6 tons at the average content of 0.09 g/t
“When reviewing the size of the property as per the report, we can estimate the value of the reserves to be anywhere between $3 to $4 billion USD and the objective of the company should be to acquire a portion of the working interest so as not to dilute our shareholders too much, but create sufficient value in the long run,” said Daniel Ryan, President of ABV Gold. “We believe that we can acquire up to 10%, meaning a value of approximately $300 million and structure a deal whereby the current shareholders would own between 25% to 30%, or approximately $75 million to $100 million and if we consider that the company’s current share structure, we would be acquiring assets of between $0.30 to $0.40 per share,” further added Mr. Ryan. The company is awaiting the independent appraisal of the financial value of the mining company and its viability, which is expected by or before January 18, 2008.”
No source for this claim has been made public. Baeten has repudiated it. Ryan refuses to explain it.
Someone appears to have believed it. After hitting zero value on December 13, ABV Gold’s share price has been climbing into positive territory. The billion-dollar news lifted the share price 5% on the day’s trading to US 2.1 cents. That indicates a current market capitalization of $849,000.
In Moscow, the federal regulator of mine licences and licence compliance, Oleg Mitvol, told Mineweb it is difficult for him to check claims of companies and deposits he has never heard of. He said he believes that Kamzas may hold a licence for alluvial mining of river gravels. These are difficult to review in Moscow, Mitvol said, because they are relatively small, and their data are usually held in the regional data base of Rosnedra, the licensing agency. An official at the Krasnoyarsk office of Rosnedra requested a written application for a check of the status of Kamzas’s licences.
Kamzas, one of the Russian partners Ryan has called “a well known Russian Gold and Silver Mining company with significant gold and silver reserves and production”, was registered since 2005 at the address Ryan gave in Nazarovo city, Krasnoyarsk. Its head is, or was, Alexander Perov. The telephone number for his company doesn’t work.