Response from Mr. EdwardsThe response as promised.
GLTA and goooooo.......CQV
RE: Garden Hill?
From: Gerard Edwards (
gedwards@canadianimperial.com)
Sent: January 19, 2009 12:39:32 PM
To: kenneyboy@xxxxxx
Ken,
CIVC still has the contractual right to a gross overriding royality on production from Garden Hill.The royality is capped at $1.5 million so once that amount is received then we have no further rights at Garden Hill .The paragraph that you have quoted below regarding a valuation allowance against the $1.5 mil simply refers to the classification or treatment of the royality for accounting purposes such that CIVC remains compliant with the governing accounting rules.This particular accounting treatment of the potential royality receivable in no way affects our contractual right to receive our royality payments should production be established at Garden Hill by PDIP.
Regards
Gerard Edwards
CFO
------------------------------------...
From: kenneyboy@xxxxxxxxx
Sent: January 15, 2009 3:10 PM
To: Gerard Edwards
Subject: Garden Hill
Hi Mr. Edwards. In the past, you have been kind enough to respond to my questions when I'm a bit confused. In a posting on an investment discussion board it was stated by Mr. Millan in an e-mail that CIVC will get $1.5 million when and if Garden Hill achieves production. I find that statement confusing me because if I look at the May 31st/08 financial statements on page 9 it says:
"The first and second closing under the Agreement took place January 18, 2007 and March 31, 2008 respectively and the Company received $4,000,000. On behalf of the Company, and as per agreement with CIVC Creditor Corp. (“CCC”), PDIP paid $1,500,000 directly to CCC. The Company has a right to recover this payment to Creditor Corp. through a royalty reduction on production from Garden Hill, in the event that production occurs."
"The Company has elected to take a valuation allowance against the $1,500,000 royalty reduction receivable from CCC as the properties purchased by PDIP are unproved and there is no guarantee that the Company will receive any royalty reduction payments until the property becomes commercially viable. Any royalty reduction payments received in subsequent periods will be recorded as income when they are received."
The second paragraph seems to eliminate the $1.5 million as receivable by CIVC. It doesn't negate all royalties but only the $1.5 million held by CCC. Can you advise me what CIVC stands to gain from any production achieved at Garden Hill?
Thank you, in advance, for your help in understanding this. Best wishes to you and Steve in your quest to provide your investors with a viable company.
Regards,
Ken