RE: The BS continues.PWC was confirmed at the AGM in June. KPMG are the auditors of record with Severstal...go figure. HRG posed a risk for PWC so in some ways I think they are glad to lose HRG as a client. Too much hanky panky going on, and BIG audit fees, in excess of a million bucks!!! Now that’s a stupid amount to pay for audit fees, but then again that’s HRG.
PWC could not report anything regarding National Instrument 51-102 as all statements provided by HRG were "unaudited". Which brings me to my next point, any HRG write off/down when compared to Severstal's consolidated balance sheet and income statement would not be material. Ergo Severstal can/could play whatever game they want. KPMG rep is not that good anyway, they have had more than their share of lawsuits and settlements anyway.
I am going to file a protest with the CRA, as I do not believe for tax purposes HRG can just elect to write off their Prognoz investment. This does not follow GAAP, in spite of GAAP (EIC - 174). Just because you could not have activity does not in itself diminish any intrinsic value. If silver went to $2 per oz, then maybe their argument would be valid, otherwise Severstal is just cooking the books in order to deflate earnings and keep a lid on the stock price.
It was confirmed to me by HRG, that HRG does have recourse against the other 50% partner of Prognoz with respect to the $17 million HRG has paid for ( and is owed) drilling and was booked as due, and then reclassified as an intangible. So if HRG wanted HRG could use “force majeure “ to either get paid out or take more of the project.
Severstal just gets sleazier and sleazier. When you think of the growth it is astounding, and even more astounding that HRG just keeps going. I take my hat off to the hard working folks in the mines, they are the true managers of this company, certainly not the current brain trust, and especially not the BOD, they should be sued. Oh ya, I almost forgot, Severstal gave them a “get out of jail free” card, and it was passed at the AGM, too bad. I think of the millions of dollars they wasted on bogus reports, millions paid out in professional service fees to those who were not always working in arms length relationship and never added any value to HRG. It was always about sucking out the cash, never building a great gold company, and Severstal is doing the same thing.
CJ