Ms. Tia L. Jenkins
Senior Assistant Chief Accountant
US Securities and Exchange Commission
JenkinsT@sec.gov
Mr. John Coleman, Mining Engineer
Division of Corporate Finance
US Securities and Exchange Commission
ColemanJ@sec.govDear
Mr. John Reynolds, Ms. Tia Jenkins and Mr. John Coleman,
Global Gold has failed to fully disclose its affairs in Armenia since 2008. It is relatively easy for them to hide the truth because material contracts and public documents are only posted in Armenia and only in the Armenian language. Furthermore a number of material contracts have not been posted in SEC filings or the website of Global Gold Corp, namely Mining Contract No 287 regarding the contractual obligations related to GBGD's flagship gold project, the Toukhmanuk Mine, held by its subsidiary, Mego-Gold LLC, in the republic of Armenia.
I have presented to you in the past concrete evidence of failures of GBGD to disclose material facts that make their 8-K, 10-Q and 10-K disclosures misleading to investors.
I recently posted on Investors Hub (link http://investorshub.advfn.com/boards/read_msg.aspx?message_id=109463083) and on my blog "Is There Any Gold in The Toukhmanuk Mine in Armenia, Worth Mining" (link http://toukhmanuk.blogspot.ca/2014/12/armenian-ngo-demands-criminal.html) updates on the continuing saga of Global Gold Corp (Mego-Gold) in Armenia.
My recent blog presents a demand letter sent by Environmental NGO, Ecological Right (EcoRight), to the Minister of Nature Protection of the Republic of Armenia, seeking criminal investigation and charges against GBGD/Mego-Gold. EcoRight accuses GBGD of:
- embezzlement of state property through fraud;
- tax evasion through false entrepreneurship, hiding overpayments and other gained material benefits, which has caused major damage to the citizens of the Republic of Armenia;
- Performing illegal commercial activities without a special permit (license) to carry out entrepreneurial activities subject to licensing;
- violation of rules in implementing environmental safety activities;
- features of crimes in violation of rules of mineral resources conservation and use.
The complaint is a result of EcoRight's efforts in documenting the illegal operations of Global Gold at the Toukhmanuk gold mine. EcoRight's research and my research all confirm that the Toukhmanuk mine is technically in default of its mining license obligations.
GBGD has failed to disclose in its SEC EXHIBITS the Toukhmanuk MINING CONTRACT No. 287 issued in 2006, which should not be confused with the MINING LICENSE No. HA-L -14/356, now referred to as ShATV-29/184, December 12, 2012. The MINING CONTRACT discloses all obligations entered into between Mego-Gold/GBGD and the State. It includes the mine plan and the mining and investment requirements.
This and other issues related to GBGD's Toukhmanuk MINING CONTRACT No. 287 were covered in my email to you, and others, on November 18, 2013, where I state:
"MEGO-GOLD was required to mine 80,000 tones per year (tpy) of mineralized ore by open pit method for 2 years and then move to underground mining method at a rate of 168,500 tpy for 6.5 years. Since 2006 Global Gold has claimed that it mined 176,400 tones of ore in its SEC filings in an effort to mislead investors and the SEC that it has met its requirement to mine 160,000 tones of mineralized ore in the open pit section of the TOUKHMANUK mine. THE TRUTH IS, and can be confirmed from reading the official Armenian Mine production records deposited by MEGO GOLD with the Ministry of Energy and Natural Resources of the Republic of Armenia, that MEGO-GOLD has only mined 86,420 tones of mineralized ore in the open pit. GBGD has overstated it mining volume 89,980 tones to cover up the fact that they have not fulfilled the mining requirements of their license, to fool investors, the SEC and potential new JV partners."
GBGD's 10-K only provides the following incomplete description on the property related to its license and contracts. I have added some comments below;
The Toukhmanuk property is adjacent to the Hankavan property in central Armenia, between the Aragatsotn and Kotayk provinces. The property includes seven surrounding exploration sites as well as other assets. The property is located approximately 60 km (72 km by road) north of Yerevan, close to the Town of Aparan and some 75 km (by road) from the Alaverdi copper smelter in northern Armenia. Access to the Toukhmanuk Property is by paved road (about 57 km from Yerevan to the turn-off of the road north of Aparan and about 15 km by dirt road from Aparan to Melikkyugh, the nearby village to the site). Local infrastructure is available at the site and at nearby towns. Infrastructure at the site includes electrical power, cell phone network and road building equipment. Logistical support, in terms of power, is available at the Toukhmanuk site, and at Melikkyugh, which is linked by a 10 Kv line to the Armenian Power grid. Water is available from natural sources within the property, independent of community sources. In addition to the central property, the acquisition included a 200,000 tonne per year capacity plant [it is a cement mill used to crush ore and breaks down all the time]. The Company has maintained the plant’s crushers, mills, and gravitation circuits ingood condition while also adding a hydro cyclone and flotation cells, as well as building a new tailings dam [they have been trying to build this new tailings dam since 2011, which permit was refused in April 2013]. Other major assets at the property include several bulldozers, excavators and a track trencher which are all in good condition [I have seen this equipment rusting in a field; it is far from good condition]. The property also includes some temporary housing units, and hangers which are used to store core samples, a gold room, and a new ISO certified laboratory [ISO certified lab? Really? IMO this Lab would never pass real international standards and the Lab certificate is presently expired].
The area of the Toukhmanuk Property is underlain predominantly by Jurassic volcanic rocks and Cretaceous intrusive rocks. The volcanic rocks comprise andesites and dacites, and the intrusive rocks are dominantly granitic with minor granitic gneiss and amphibolites. Parts of the area are also covered by Tertiary volcanic rocks including obsidian and perlites. Gold mineralization in the Toukhmanuk area is hosted by both volcanic and intrusive rocks. [ A Canadian Geologist you has visited TOUKHMANUK described this property as a massive shear zone with an anostomizing vein system]
On October 27, 2009, the Company issued a press release announcing the approval of the first stage. The Republic of Armenia’s State Natural Resources Agency (the "Agency") issued its certificate based on the proposal of the Agency’s State Geological Expert Commission made during its October 23, 2009 session, all as further disclosed on our website.
On November 18, 2009, the Company issued a press release announcing that following up on the issuance of the approving a first stage gold reserve, the Republic of Armenia’s State Natural Resources Agency (the “Agency”) has delivered its full decision with backup calculations on November 13, 2009. The Agency issued its decision based on the proposal of the Agency’s State Geological Expert Commission made during its October 23, 2009 session. A copy of the official approval and a partial unofficial translation are available on the company’s website www.globalgoldcorp.com (please refer to the “Cautionary Note to U.S. Investors” on page 3 of this report).
The Company has done geological mapping, ground geophysical surveys, trenching and diamond drill testing at Toukhmanuk and continues its exploration work there based on the Armenian historical GKZ records in conjunction with the exploration work and results done so far (please refer to the “Cautionary Note to U.S. Investors” on page 3 of this report). [failed to disclose 4000 meters of drilling done in 2011] Additional exploration work will need to be funded with additional funds raised through joint ventures, debt, equity or a combination thereof.
The Toukhmanuk property is a lode deposit which is being mined using an open pit method. [The Mine plan and Mining Contract required underground mining for 6.5 years. Never done] The Company has one national exploration license #15, as extended on July 2, 2013 until July 2, 2016 (available on the Company’s website), covering approximately 10,915 acres for sub-surface exploitation of gold. The Company also has one national mining license #HA-L-14/356, since replaced under the new 2012 Armenian Mining Code with License #29/184 (available on the Company’s website), which covers the central section of the property and is approximately 446 acres for mining gold and silver. [No mention or disclosure of MINING CONTRACT #287, which is a material contract] On December 28, 2012, the Company received the new, renewable mining license through August 5, 2017 [this renewed mining license is disputed, since It was renewed illegally and for too long a length of time. All renewals are for 2 years not 3 years, but still not mention of the MINING CONTRACT which they are in breach of]. The Company is required to pay annual governmental fees of approximately $32,000. The Company is also required to spend annually approximately $1,200,000 on exploration work [no evidence this investment has been spent on exploration work] and mining annually 168,500 tonnes of mineralized rock at the property as submitted and approved in its mining plan in order to maintain the licenses in good standing [this statement is incomplete statement ignoring required mining volumes from underground operations. Prior to the 2012 10K, GBGD only declared had to mine 80,000 tones per year and make $1,000,000 in exploration on the property. The 80,000 tones per year was for the open pit and only for 2 years, GBGD partially corrected this statement after I complained to their auditors. GBGD has only mined 86,420 tones of ore as per Armenian Government Records but falsely declares it mined 176,400 tones since 2006 in its SEC filings] (please refer to the “Cautionary Note to U.S. Investors” on page 3 of this report). The exploration license area is defined by the following coordinates:
[omitted]
The Company is required to pay annual government fees and perform work at the property, both as described above, to keep the license in good standing. In various circumstances, Armenian law allows for annual work requirements to be cured in subsequent yearsand by other means without losing good standing status [Check the Armenian Law it does not say that, But GBGD gets away making these statements without baking them up, because no one really knows the laws outside Armenia and the CIS]. Failure to maintain good license status could result in the license being suspended or terminated under Armenian Law. The Company has not received any suspension or termination notices, but could based on the Company’s performance and other factors. [But could? which means what? that the non-performance and annual work requirements can't be cured. GBGD under the Mining Contract had to Mine.] See Item 1A “Risk Factors,” below.
In 2008, GGM upgraded the plant and lab, installed a new gold room, recommenced mining and production of concentrate, and continued its analysis of the prior year’s drill results. Also, the Company compiled its reserve report and submitted it to the state committee on reserves of Armenia in March 2009 (please refer to the “Cautionary Note to U.S. Investors” on page 3 of this report). The Company has generated minimal sales from gold and silver concentrate from the property. Sales were approximately $6,000 in 2006 based on unmeasured old concentrate with waste concentrate, $10,400 in 2007 based on approximately 53 tonnes of concentrate with gold content of approximately 20.8 g/t gold, nothing in 2008, $136,600 in 2009 based on approximately 121 tonnes of concentrate with gold content of approximately 52.6 g/t gold, $358,400 in 2010 based on approximately 222 tonnes of concentrate with gold content of approximately 52.7 g/t gold, $81,702 in 2011 based on approximately 60 tonnes of concentrate with gold content of approximately 38.8 g/t gold, and none in 2012 and 2013. The Company has mined mineralized rock of approximately 52,000 tonnes in 2006 with content of approximately 1.27 g/t gold and 6.37 g/t silver, no mining in 2007, approximately 82,000 tonnes in 2008 with content of approximately 1.85 g/t gold and 5.21 g/t silver, no mining in 2009, approximately 21,000 tonnes in 2010 with content of approximately 2.08 g/t gold and 5.68 g/t silver, approximately 21,400 tonnes in 2011 with content of approximately 0.92 g/t gold and 3.32 g/t silver, and no mining in 2012 and 2013. [This data does not match Armenian State Records] As of December 31, 2013, the Company has spent approximately $11,310,000 on mining and exploration activities [how much on exploration, and where are the drill results?] at this property, excluding acquisition and capital costs. In 2012, the Company installed two new mills at the plant to increase capacity and efficiency, but in 2012 and 2013 did not process any ore pending approval and construction of a new tailings dam and resolution of joint venture issues."
In 2014 GBGD through its subsidiary Mego-Gold deposited a new mine plan and application to extend their license, which officially expires in February 2015. This material information was never disclosed to investors through SEC filings. All this material information was hidden in Armenia and in the Armenian Language.
As stated above and in my November 18, 2013 email, the current MINING CONTRACT which was issued in 2006 requires GBGD to mine for 2 years by open-pit method, 6.5 years underground, and confirm its mineable resources and invest $1,000,000 a year in exploration on the project. GBGD has failed to meet these requirements and has made this application for a an extension of the mining license trying to bypass their failed MINING CONTRACT by abandoning underground mining and focus on the open pit mining. All this in hope to avoid the cancellation of their license due to defaulting on their obligations.
The new plan which was reviewed by the technical agencies of the Ministry of Nature Protection, as referred to in the letter by EcoRight, (see Armenian version of report BP-93: http://aarhus.am/Expert_PDF/Tuhmanuk%20verlucutyun.pdf) rejected GBGD/Mego-Gold's application on December 11, 2014. But you will not hear anything about this from GBGD. Unfortunately I do not have an English version of report BP-93, but will endeavour to provide to you shortly.
Granted that the truth about GBGD is getting out which is evidenced by their floundering stock price which is now about $0.02 a share, but investors have been hurt by GBGD's lack of disclosure and omission of facts, that have made their SEC disclosures misleading.
The SEC has tried and failed to bring transparency to GBGD's lack of disclosures since 2009. Your department issued a request for clarification of certain disclosures made by GBGD dated June 10, 2013(http://www.sec.gov/Archives/edgar/data/319671/000000000013031522/filename1.pdf). Point 1,2,3 of the letter request clarification to issues related to Industry Guide 7 as well as details on their licenses related to all their properties:
1. We note your disclosure of tonnes and average grade of ore in this section of your filing. As a company incorporated in Delaware, only proven or probable reserves meeting the definitions in section (a) of Industry Guide 7 may be disclosed in filings with the United States Securities and Exchange Commission. Historically, the reporting of measured and indicated resources in term of tons and grade of mineralized material has been permitted. However, this material should be designated as mineralized material in your filing. Please
revise your disclosure accordingly.
2. Please provide an overview of the permits or licenses required to explore or mine in each of the countries in which you operate. In this regard, we note your disclosure of
exploration, mining, and special exploration licenses. Please ensure your disclosure
includes the permits and/or licenses your company currently has at each property and the
applicable terms, conditions, and expiration dates.
3. We note your disclosure of 2006 to 2012 concentrate sales values. Please disclose the
volume and grade of concentrate associated with these sales values. If necessary,
comment on metal recoveries and current stockpiles.
This is not the first time the SEC has requested clarification by GBGD under Industry Guide 7. In SEC letter dated February 2, 2010 you made the following comments 5,6,7 and demanded responses to questions from way back in 2009:
Engineering Comments
5. We note that you have not complied with comment 2 of our letter dated November 20, 2009. Since you do not have proven or probable reserves, identifying the company as a development stage enterprise, and claiming that you are engaged in the development of mineral properties is not consistent with the terminology guidance in Industry Guide 7 and is therefore not appropriate. This would be true even if you have realized some revenues from mineralization on your properties, given the uncertainty of not being able to establish proven and probable reserves. If you have these transactions, you would need to quantify and disclose the production obtained from your properties for each period, also to include the tonnage and grade of the material mined and concentrate produced. In either case, you should remove all terminology that indicates you have progressed beyond the exploration stage, and if production has been realized, we would expect disclosure clarifying that this has been obtained from properties that are in the exploration stage, for which you have not been able to establish proven and probable reserves as defined in Industry Guide 7; the uncertainty surrounding your ability to continue production under these circumstances should be emphasized. We reissue prior comment 2.
Marjan
6. We note your disclosure regarding reserve definitions of proven and probable reserves used in Armenia. Please include additional disclosure comparing and/or contrasting the reserve definitions of Armenia with the definitions in Industry Guide 7. In addition, please clarify in the text whether the proven and/or probable reserves under discussion are defined by Armenia, Canadian 43-101 or Industry Guide 7.
7. We note that you have not complied with comment 6 of our letter dated November 20, 2009. We continue to believe that you need to clarify the nature of any facilities and infrastructure, including a description of any major equipment at your exploration/mine sites, or if there is none, a statement that the properties have no significant assets, surface or underground workings or facilities/infrastructure. We reissue prior comment 6.
In September 24, 2009 the Sec made the following requests too:
Engineering Comments
General
10. We note that you refer to or use terms such as potential mineralization, drill indicated resources, measured, indicated, or inferred resources on your website. As you may know, for U.S. reporting purposes, measures of mineral reserves must be consistent with the definitions set forth in Industry Guide 7. These generally differ from measurement systems that guide the estimation of resources. If you continue to make references on your website to measures other than those recognized by the SEC, please accompany such disclosure with the following
cautionary language:
“Cautionary Note to U.S. Investors - The United States Securities and
Exchange Commission limits disclosure for U.S. reporting purposes to
mineral deposits that a company can economically and legally extract or
produce. We use terms on this web site, such as “reserves,” “resources,”
“geologic resources,” “proven,” “probable,” “measured,” “indicated,” or
“inferred,” which may not be consistent with the reserve definitions
established by the SEC. U.S. investors are urged to consider closely the
disclosure in our Form 10-K. You can review and obtain copies of these
Please indicate the location of this cautionary language in your response.
General Overview, page 3
11. We note your statement that your company is in the development stage. The terms development and production have very specific meanings within Industry Guide 7 (see www.sec.gov/about/forms/industryguides.pdf). The term development stage should be used to describe companies that are engaged in preparing reserves for production, while the term production stage should be used to describe companies that are engaged in commercial-scale, profit-oriented extraction of minerals. Since you do not disclose any reserves as defined by Industry Guide 7, please revise disclosures that include the terms develop, development or production throughout your document, as necessary to avoid implying that you have progressed beyond the exploration stage. For example, you may replace this terminology, as appropriate, with terms such as explore or exploration, and you should identify your company as an exploration stage enterprise in the financial statement head notes to comply with Instruction 1 to paragraph (a) of Industry Guide 7.
Armenia Properties, Page 5
12. We note your reference to property maps that are posted on your website. Please insert small-scale maps in your filing showing the location and access to each of your material properties, as required by Instruction 3.B to Item 102 of Regulation S-K. Please note that our EDGAR program now accepts Adobe PDF files and digital maps, so please include these maps in filings that are uploaded to EDGAR. It is relatively easy to include automatic links at the appropriate locations within the document to GIF or JPEG files, which will allow figures and diagrams to
appear in the right location when the document is viewed on the Internet. For more information, please consult the EDGAR manual, and if additional assistance is required, please call Filer Support at (202) 551-3600 for Post-Acceptance Filing Issues or(202) 551-8900 for Pre-Acceptance Filing Issues. We believe the guidance in Instruction 3.B of Item 102 of Regulation S-K would generally require maps and drawings with the following features:
• A legend or explanation showing, by means of pattern or symbol, every pattern or symbol used on the map or drawing.
• A graphical bar scale; additional representations of scale such as "one inch equals one mile" may be utilized provided the original scale of the map has not been altered.
• A north arrow.
• An index map showing where the property is situated in relationship to the state, province, or other geographic area in which it is located.
• A title of the map or drawing, and the date on which it was drawn.
• In the event interpretive data is submitted in conjunction with any map, the identity of the geologist or engineer that prepared such data. Any drawing should be simple enough or of sufficiently large scale to clearly show all features on the drawing.
13. Please disclose the following information for each of your properties:
• The nature of your ownership interest in the property.
• A description of all interests in your properties, including the terms of all underlying agreements and royalties.
• The process by which mineral rights are acquired at this location and the basis and duration of your mineral rights, surface rights, mining claims or concessions.
• An indication of the type of claim or concession, such as placer or lode, exploration or exploitation, whether the mining claims are State or Federal mining claims, patented or unpatented claims, mining leases, or mining concessions.
• Certain identifying information, such as the property names, claim numbers, grant numbers, mining concession name or number, and dates of recording and expiration that is sufficient to enable the claims to be distinguished from other claims that may exist in the area or your properties.
• The conditions that must be met to retain your claims or leases, including quantification and timing of all necessary payments, annual maintenance fees, and an indication of who is responsible for paying these fees.
• The area of your claims, either in hectares or in acres.
Please ensure that you fully discuss the material terms of the land or mineral rights securing agreements, as required under paragraph (b)(2) of Industry Guide 7.
14. Please disclose the information required under paragraph (b) of Industry Guide 7 for all your material properties listed under this heading. For any properties identified that are not material, please include a statement to that effect, clarifying your intentions. For each material property, include the following information:
• The location and means of access to your property, including the modes of transportation utilized to and from the property.
• Any conditions that must be met in order to obtain or retain title to the property, whether you have surface and/or mineral rights.
• A brief description of the rock formations and mineralization of existing or potential economic significance on the property.
• A description of any work completed on the property and its present condition.
• The details as to modernization and physical condition of the plant and equipment, including subsurface improvements and equipment.
• A description of equipment, infrastructure, and other facilities.
• The current state of exploration of the property.
• The total costs incurred to date and all planned future costs.
• The source of power and water that can be utilized at the property.
• If applicable, provide a clear statement that the property is without known reserves and that the proposed program is exploratory in nature.
You may refer to Industry Guide 7, paragraphs (b)(1) through (5), for specific guidance pertaining to the foregoing, available on our website at the following address: www.sec.gov/about/forms/industryguides.pdf
15. On a related point, it appears you should also expand your disclosure concerning the exploration plans for the properties to address the following points.
• Disclose a brief geological justification for each of the exploration projects written in non-technical language.
• Give a breakdown of the exploration timetable and budget, including estimated amounts that will be required for each exploration activity, such as geophysics, geochemistry, surface sampling, drilling, etc. for each prospect.
• If there is a phased program planned, briefly outline all phases.
• If there are no current detailed plans to conduct exploration on the property, disclose this prominently.
• Disclose how the exploration program will be funded.
• Identify who will be conducting any proposed exploration work, and discuss their qualifications.
16. We recommend that a brief description of your QA/QC protocols be disclosed, addressing matters such as sample preparation, controls, custody, assay precision and accuracy. This would apply to exploration and operational analytical procedures.
Tukhmanuk, page 5
17. Please disclose your annual production for all properties to comply with Instruction 3 to Item 102 of Regulation S-K.
18. We note your reference to a reserve report that was submitted to the state committee on reserves of Armenia in March 2009, inferring proven and probable reserves are located on your properties. Please forward to our engineer as supplemental information and not as part of your filing, information that establishes the legal, technical, and economic feasibility of materials that you have designated as reserves, pursuant to paragraph (c)(2) of Industry Guide 7 Rule 12b-4 of Regulation 12B. This information should include:
• Property and geologic maps
• Description of your sampling and assaying procedures
• Drill-hole maps showing drill intercepts
• Representative geologic cross-sections and drill logs
• Description and examples of your cut-off calculation procedures
• Cutoff grades used for each category of your reserves and resources
• Justifications for the drill hole spacing used to classify and segregate proven and probable reserves
• A detailed description of your procedures for estimating reserves
• Copies of any pertinent engineering or geological reports, and executive summaries of feasibility studies or mine plans which including the cash flow analyses
• A detailed permitting and government approval schedule for the project, particularly identifying the primary environmental or construction approval(s) and your current status on that schedule.
I have reviewed all the replies made by GBGD to these letters since 2009, and to this date GBGD has failed to respond appropriately to SEC requests.
The other problem with GBGD disclosures is the publishing of a NI 43-101 report on the Toukhmanuk and Getik properties (Getik license was lost last year). GBGD is not listed on a Canadian exchange and the 43-101 report has never been vetted by the TSX. From my experience in dealing with the TSX and reviewing 43-101 reports, for investment purposes, the published 43-101 report on the Toukhmanuk property would never, ever, be approved by the TSX, in its current form for the following reasons:
The first issue is that the 43-101 report erroneously converts and reports GKZ classifications C1, C2 and P1 as Measured, Indicated and Inferred Resources. That can not be done without work being done on the resources by a qualified person. Mr. Christopher JV Wheatly, the geologist and author of this 43-101 report has not done any work on theses resource to classify under CIM as Measured and Indicated, neither has GBGD and neither has the Armenian GKZ. All the resources in this report have to be reported in their original classification as C1, C2 and P1.
The State Resource Agency of Armenia (GKZ) is not qualified to define these resources as Measured and Indicated under "international standards" as it attempts to do in its DecisionN234. As you are well aware there are many standards for classifying resources but basically two standards stand out CIM (43-101) and JORC. You may be aware what kind of work has to go in to defining and reporting resources. Global Gold has not done this work under JORC or CIM(43-101), it has done it under GKZ, and I believe it has done it poorly considering the GKZ did not find the resource reported in its Decision N234 acceptable to amend the State Inventory with the FOND to reflect the new resource. In effect the GKZ Decision N234 was a non-decision.
The second issue relates to the Toukhmanuk resources completed prior to 2006, namely the 2004 and 1995 GKZ reports which the author of the Behre Dolbear report states them as "Historical Resources". This again is a problem. With the introduction of NI 43-101 in February 2001, all resources published after this date must meet 43-101 requirements for classification and reporting. Therefore it is illegal to report on the 2004 GKZ Decision N28 as historical, this is not compliant. This is the same rule under JORC but the cutoff date for Historical Resources is 1989. Furthermore JORC does not allow the use of historical data unless you receive a waiver: http://www.jorc.org/docs/jorc2004web_v2.pdf
2. Reporting historical estimates or estimates currently not reported in accordance with the JORC Code Companies seeking to list on ASX wishing to include information in their prospectus which is not JORC compliant need to approach ASX for a waiver, and, subject to certain conditions, waivers may be granted. Listed companies seeking to announce information that does not comply with the JORC Code (PDF 335KB) will also need to approach ASX for a waiver, and, in certain circumstances, waivers may be granted (see Companies Update dated 5 December 2007). Where companies lodge announcements which are based on historical estimates that are not reported in accordance with the JORC Code and not the subject of an ASX waiver, or do not come under Clause 18 of the JORC Code, it is likely that ASX will request the company to make a further announcement retracting the comments made in the earlier announcement. In addition ASX may pursue further supervisory action.
The third issue is the use of the GKZ N234 Decision to confirm resources on the Toukhmanuk Project. None of the work done to confirm the resources is compliant to NI 43-101 or JORC. The work was never done or supervised by a "Qualified Person" it was performed by Mr. Henryk Mkrytchyan who holds no acceptable credentials under CIM or JORC. Furthermore all the assays compiled and reported by GBGD in their application to the GKZ in 2008 were performed at GBGD's own lab which Mr. Krikrorian claims has received "international, ISO, certification". The Toukhmanuk lab has not received International ISO certification, it was received certification from the ISO Agency in Armenia. I believe that this lab would never qualify for ISO certification, if it was done by a reputable US, Australian or Canadian agency, let alone pass an annual review and inspection. I am also told the lab's ISO permit expired in 2011. The SGS lab located in Kappan (southern Armenia) has a similar ISO certificate which the Manager informed me was issued after a single visit by the Armenian ISO Agent and he considered that certification process amateurish at best. SGS Kapan does not operate as an ISO approved lab in Kappan even though it has this Armenian issued ISO certification, SGS Kappan claims it only uses SGS standards, which are highly regarded. The only two recognized ISO certified labs in the region that can perform gold analysis are the ALS lab in Romania and the SGS lab in Bulgaria. There is also a lab in St-Petersburg Russia but customs clearance will delay you forever.
But the key question to ask is why did GBGD create their own lab? I refer you to a Global Gold news release of January 11, 2008.
Global Gold Announces Plant Commissioning And Gold Production In Armenia At Toukhmanuk
Greenwich, CT – January 11, 2008 – Global Gold Corporation (OTCBB-GBGD), is pleased to announce that it commissioned its upgraded gold processing plant in Toukhmanuk, Armenia on December 20, 2007, and has continued production from ore stockpiles since, just as gold prices have undergone epochal changes. The Toukhmanuk property is located in the North Central Armenian Belt.
In December, an offtake agreement for the plant's gold production was concluded with the Sagamar Company, and the first delivery of 53 tonnes of concentrate was made before year end. Production had initially commenced in 2006, but was terminated because of the need to upgrade the plant substantially, including a new flotation circuit. A new tailings dam was also constructed in 2007. Current plant capacity is 100,000 tonnes per year. Current throughput is approximately 6,000 tonnes per month with gold grades between 2 – 3 grams per ton.
In addition, the Company is pleased to announce that it has received international, ISO, certification for its laboratory at the Toukhmanuk site. Over the last two years, the Company has drilled over 15,000 meters to confirm the historic GKZ resource at Toukhmanuk of over 2 million ounces of gold and approximately 12 million ounces of silver. Even with control checks in labs outside Armenia, results were inconsistent, and a re-assaying program was undertaken with the new lab. Based on preliminary analysis, it is anticipated that Toukhmanuk may include a wider zone of mineralization to be bulk mined, rather than a higher grade narrow vein underground operation as the initial reports indicated. As small scale production continues from the upgraded plant in 2008, Global Gold is preparing mining and processing plans to substantially increase production.
Global Gold Corporation, an international gold mining, development and exploration company with properties in Armenia, Chile and Canada, is committed to building shareholder value and maintaining social and environmental responsibilities. Minera Global Chile Limitada is a subsidiary through which Global Gold does all of its business in Chile. Global Gold Mining LLC operates in Armenia as a subsidiary of Global Gold Corporation. Global Gold Uranium LLC, a wholly owned subsidiary of Global Gold Corporation, is engaged in the exploration for and development of uranium deposits in the province of Newfoundland and Labrador.
More information can be found at www.globalgoldcorp.com.
The difference between the two lists, is that the real gold values of the drill results, as claimed by the anonymous sender, are penciled in. If this is true then there appears to be serious fraud involved at Toukhmanuk and at Global Gold. I have no reason to doubt that the numbers I received are true because to this date Global Gold has failed to mine high grade gold as indicated in its version of the drill results. The alleged real values of the gold grades (penciled in) can be reviewed below along with the actual published data by GBGD, which was handed to the Armenian GKZ.
Here is the GKZ data as published by Global Gold (page17).
Here are the alleged real results penciled in (page 17).
Drill hole Number Reported GKZ Alleged Real Value
-------------------- ----------------- -------------------
T-44-06 (GGMT 01548) 1m @ 3.10 g/t Au 0.7m @ 1.2 g/t Au
T-38-06 (GGMT 07991) 1m @ 3.90 g/t Au 1.0m @ 1.0 g/t Au
T-60-06 (GGMT 12297) 1m @ 1.20 g/t Au 0.4m @ 0.5 g/t Au
T-24-06 (GGMT 05402) 1m @ 10.00 g/t Au 0.7m @ 0.8 g/t Au
T-53-06 (GGMT 11297) 1m @ 9.60 g/t Au 0.4m @ 0.6 g/t Au
T-85-07 (GGMT 13946) 1m @ 4.00 g/t Au 1.0m @ 0.8 g/t Au
T-30-06 (GGMT 07150) 1m @ 2.30 g/t Au 1.0m @ 0.6 g/t Au
Here is the GKZ data as published by Global Gold (page18).
Here are the alleged real results penciled in (page 18).
Drill hole Number Reported GKZ Alleged Real Value
-------------------- ----------------- -------------------
T-91-07 (GGMT 15734) 1m @ 7.20 g/t Au 0.7m @ 0.8 g/t Au
T-32-06 (GGMT 07866) 1m @ 3.10 g/t Au 1m @ 0.6 g/t Au
T-31-06 (GGMT 07625) 1m @ 3.90 g/t Au 1m @ 0.6 g/t Au
T-34-06 (GGMT 07232) 1m @ 6.20 g/t Au 1m @ 1.6 g/t Au
T-40-06 (GGMT 08782) 1m @ 8.19 g/t Au 1m @ 2.1 g/t Au
T-45-06 (GGMT 08654) 1m @ 7.02 g/t Au 1m @ 1.8 g/t Au
T-39-06 (GGMT 08163) 1m @ 2.34 g/t Au 1m @ 0.6 g/t Au
T-41-06 (GGMT 08356) 1m @ 3.12 g/t Au 1m @ 0.8 g/t Au
T-82-07 (GGMT 13706) 1m @ 7.00 g/t Au 1m @ 1.0 g/t Au
T-70-06 (GGMT 10472) 1m @ 3.80 g/t Au 1m @ 0.8 g/t Au
T-26-06 (GGMT 06386) 1m @ 3.10 g/t Au 1m @ 1.7 g/t Au
T-35-06 (GGMT 07973) 1m @ 3.10 g/t Au 1m @ 0.8 g/t Au
T-36-06 (GGMT 08945) 1m @ 8.60 g/t Au 0.7m @ 2.2 g/t Au
Here is the GKZ data as published by Global Gold (page19).
Here are the alleged real results penciled in (page 19).
Drill hole Number Reported GKZ Alleged Real Value
-------------------- ----------------- -------------------
T-94-07 (GGMT 14666) 1m @ 3.28 g/t Au 1m @ 0.8 g/t Au
T-85-07 (GGMT 13958) 1m @ 8.10 g/t Au 1m @ 0.8 g/t Au
T-89-07 (GGMT 15488) 1m @ 1.30 g/t Au 1m @ 0.2 g/t Au
T-91-07 (GGMT 15681) 1m @ 4.50 g/t Au 1m @ 1.15 g/t Au
To summarize the above tables we find the following:
Drill hole Number Reported GKZ Alleged Real Value
-------------------- ----------------- -------------------
T-44-06 (GGMT 01548) 1m @ 3.10 g/t Au 0.7m @ 1.2 g/t Au
T-38-06 (GGMT 07991) 1m @ 3.90 g/t Au 1.0m @ 1.0 g/t Au
T-60-06 (GGMT 12297) 1m @ 1.20 g/t Au 0.4m @ 0.5 g/t Au
T-24-06 (GGMT 05402) 1m @ 10.00 g/t Au 0.7m @ 0.8 g/t Au
T-53-06 (GGMT 11297) 1m @ 9.60 g/t Au 0.4m @ 0.6 g/t Au
T-85-07 (GGMT 13946) 1m @ 4.00 g/t Au 1.0m @ 0.8 g/t Au
T-30-06 (GGMT 07150) 1m @ 2.30 g/t Au 1.0m @ 0.6 g/t Au
T-91-07 (GGMT 15734) 1m @ 7.20 g/t Au 0.7m @ 0.8 g/t Au
T-32-06 (GGMT 07866) 1m @ 3.10 g/t Au 1m @ 0.6 g/t Au
T-31-06 (GGMT 07625) 1m @ 3.90 g/t Au 1m @ 0.6 g/t Au
T-34-06 (GGMT 07232) 1m @ 6.20 g/t Au 1m @ 1.6 g/t Au
T-40-06 (GGMT 08782) 1m @ 8.19 g/t Au 1m @ 2.1 g/t Au
T-45-06 (GGMT 08654) 1m @ 7.02 g/t Au 1m @ 1.8 g/t Au
T-39-06 (GGMT 08163) 1m @ 2.34 g/t Au 1m @ 0.6 g/t Au
T-41-06 (GGMT 08356) 1m @ 3.12 g/t Au 1m @ 0.8 g/t Au
T-82-07 (GGMT 13706) 1m @ 7.00 g/t Au 1m @ 1.0 g/t Au
T-70-06 (GGMT 10472) 1m @ 3.80 g/t Au 1m @ 0.8 g/t Au
T-26-06 (GGMT 06386) 1m @ 3.10 g/t Au 1m @ 1.7 g/t Au
T-35-06 (GGMT 07973) 1m @ 3.10 g/t Au 1m @ 0.8 g/t Au
T-36-06 (GGMT 08945) 1m @ 8.60 g/t Au 0.7m @ 2.2 g/t Au
T-94-07 (GGMT 14666) 1m @ 3.28 g/t Au 1m @ 0.8 g/t Au
T-85-07 (GGMT 13958) 1m @ 8.10 g/t Au 1m @ 0.8 g/t Au
T-89-07 (GGMT 15488) 1m @ 1.30 g/t Au 1m @ 0.2 g/t Au
T-91-07 (GGMT 15681) 1m @ 4.50 g/t Au 1m @ 1.15 g/t Au
IT IS ALLEGED THAT A TOTAL OF 24 ASSAYS ABOVE HAVE BEEN FALSIFIED AND THAT WOULD OBVIOUSLY HAVE THE NET EFFECT OF INCREASING THE GRADE OF THE RESOURCES FILED WITH THE GKZ AND MAKING THE TOUKHMANUK RESOURCE SUSPECT.
Now you don't have to take my word for it...All the core was analyzed by GBGD/CRA in 2011 and 2012, as indicated in the Behre Dolbear report. Just get the data from them.
Considering GBGD has been mining grades in the range of <1.2 g/t Au, I believe the allegations of falsification of assays is true and needs to be investigated by the SEC.
The Fourth issue relates to the GKZ Decision N234 of October 30, 2009, which approved the reserves for Toukhmanuk Mine as:
C1: 4,104,300 t grading 1.85 g/t Gold and 6.31 g/t Silver(eq to Measured)
C2: 17,814,000 t grading 1,57 g/t gold and 4.55 g/t Silver(eq to Indicated)
----------------------------------------------------------------------------------
C1 + C2: 21,918,300 t grading 1.62 g/t Gold and 4.88 g/t Silver(eq to Measured & Indicated)
The actual Table in the GKZ Decision N234 is posted in the Behre Dolbear report in Appendix 4 under the title GLOBAL GOLD RESOURCE APPROVAL STATEMENT, issued on October 27, 2009, while the Official Decision N234 is published on October 30, 2009.
Reviewing the official Republic of Armenia State Committee on Reserves (GKZ) report of October 30, 2009 it states in Point 1
"To approve the reserves of the Central Section of Toukhmanuk gold property".
In Point 4 it states:
"To propose to Republican Geological Fund State Non-Profit Organization to refrain from making changes resulting from Point 1 of this Decision in the Republican Balance of Properties of Natural Resources..."
It is evident that while GBGD received an approval of the Resource in the form of a statement from the GKZ, 3 days before the actual report was tabled. (This should raise some bells in of itself.)
The Decision N234 issued on October 30, 2009 conveys that the GKZ felt the work on the property needed to be improved so as to to allow for the reserves to be accepted in the "Republican Balance of Properties of Natural Resources the state balance sheet to reflect the changes of the reserves.
Decision N234 appears to be a non-decision. The Agency with the state authority to approve resources issued a positive decision that it can't accept the results in the state balance? Is this possible? Is this legal?
The Behre Dolbear Report also publishes a new resource calculation provided by GBGD on page 35, that Global Gold has delineated the following resource using a 0.6 g/t cut-off.
Measured (C1) 6,043,000 t grading 3.10 g/t Gold and 23.83 g/t Silver
Indicated (C2) 18,767,000 t grading 1.99 g/t Gold and 15.71 g/t Silver
----------------------------------------------------------------------------
Measured & Indicated 24,810,000 t grading 2.26 g/t Gold and 15.71 g/t Silver
(C1+C2)
This is a neat trick how you increase the resource from 21,918,300t to 24,810,000t (an increase of 2,891,700t or 13.19%) and increase the Gold grade from, 1.63 g/t to 2.26 g/t ( an increase of 0.63 g/t Au or 38.6%) and the Silver grade from 4.88 g/t to 15.71 g/t Silver (an increase of 10.83 g/t Ag or 221%). I find it difficult to believe, nay impossible, that when you include a lower cutoff you, get a higher grade of Gold in the resource calculation.
The GKZ numbers should never be reported as Measured &Indicated and Inferred, but as C1, C2 and P1. Frankly they should not be reported since a qualified person never did the work on these assays for these assays to be even reported here and they don't even qualify as Historical Resources as defined by CIM 43-101and JORC.
The press release issued by Global Gold on October 17, 2011 (
http://www.globalgoldcorp.com/news/2011/GBGD-Release-Tech-Report-Ni-43-101-Standards-Toukhmanuk-Getik) should be removed as well as the 43-101 Report since they are misleading. GBGD does not have any M&I and Inferred resources as defined under NI 43-101. NI 43-101 forbids that historical data be used without disclaimers and cannot be used if not validated by a "qualified person". The data was never verified as is confirmed by Behre Dolbear themselves on page 6, section 2.3, where they state:
"Behre Dolbear has relied upon information provided and assumed that it has been accurate. Behre Dolbear has not carried out any independent exploration work, drilled any holes, carried out sampling or analyses on any of the prospects and assumes no liability for the accuracy of the information provided by the client."
Fifth Issue refers to the drilling that Global Gold completed after this Behre Dolbear Report was commissioned. The author of the report indicates on page 40 that GBGD "is currently working on a CIM compliant mineral resource estimate to include all assay results from 4,000 m of recent diamond drilling at Toukhmanuk in 2011."
RAKE was engaged in June 2011 to drill Toukhmanuk at US$218 to US$241 per meter which includes VAT, this is equal to $180 to $200 per meter without Vat not including extra fees. When I was drilling at Marjan in 2010 I was paying $165 per meter all in, no extras ($198 with Vat). Why was GBGD paying such a premium for drilling?
GBGD/Mego-Gold was drilling 4000 meters in 2011 as follows: June 500m, July 1000m, August 1250m and September 1250m. It is over 3 years now, and GBD has never published these results, probably because they found no gold, which would be a material disclosure or lack thereof.
