The Oversight and Reform Committee recently conducted a hearing about the spill. I'm posting a link to the first of two parts. These are really long, but interesting if you've followed this stock. All throughout the question of what is to be done with all these abandoned mines came up. The Animas River Stakeholders Group and Hennis are mentioned a few times. If the mill was running now it would have been a start.

Lol, the buildings are located at the Gold King. There are a lot of things in this world with the same name, doesn't mean they all occupy the same space and time - I'm in this dimension. The document I linked was Hennis - open it up and read it. I agree, it is very interesting.

Uh, isn't the Gold King located at Gladstone?



Think you might want to research a little more on those buildings. Hennis put another map of the area in this old 10K.

http://www.sec.gov/Archives/edgar/data/1344394/000095013408003886/d54537e10ksbza.htm

What's really interesting about this 10K is that it addresses the millions in private placement Hennis made - and the $8,000/mo salary he gave himself - this wasn't payable in locked up shares, like Guyer and Rice, but in cash.

Not that impressive, but I have been in this thing since Hennis was CEO and I have done my DD. Maybe that gives me a more informed perspective and therefore an opinion satisfactory to myself.

Just one of the examples that helped form this opinion was my second trip to Silveton when I took the drive up to Hennis' Gold King. The PR's had listed the mine as a customer; however, what surprised me was the well maintained shape of the shop buildings at the mine. The county had recently landscaped the the whole area where these buildings sit, because of the county road intersection there - the land was freshly graded and well sloped, buildings freshly painted, all equipment and parts on the ground well organized, concrete pads swept and bright; impressive. What caused me pause was the sign on the main shop building - a very clean, new looking CGFI sign with letterhead. What the hell? The company didn't own this mine and where did the money come from to make things look this way? In contrast, other than the house that sits at the mill, (which Hennis spent shareholder dollars to have painted), the POW looked run down with weeds surrounding the buildings, sign faded and weather beaten. Rust and neglect.

Concerned me enough to go back to the motel and look up the Q's again on slow wifi. Could find no rhyme nor reason for Hennis to spend CGFI dollars on a non-CGFI asset. Of course, Hennis was not CEO at this time, but it was apparent the money at the mine had been spent while he was. What was he thinking spending shareholder dollars on a non-company asset, even if it was speculative? The fact that this property was personally owned by another of his non-public companies made the term "conflict of interest" an understatement.

This issue caused a lot of confusion for other shareholders that made the DD trip to Silverton. There were more than a couple that went to the mine instead of the mill, thinking that was company property. Who's to blame them? The sign was there. Think about it, taking the time and expense to make the DD trip to a remote location - and never actually seeing company assets.

I believe I tried contacting the company about this issue, but never received a response. In hindsight, the Hennis legal BS made response impossible. This is bared out in the Q's - hundreds of thousands in legal spent in regards to Hennis. Shareholder dollars spent and wasted on the decisions of a prior CEO and his "no money down" mentality.

I look at the stock compensation package of Guyer and the late Lee Rice as being pretty fair to shareholders. They didn't realize any gain until the stock sold. They didn't sell much. Rice's fingers are probably still clutching his shares - he was literally fighting for the company on his death bed. I don't care what anyone says about Rice, he wrote book on mining in Colorado, had integrity and tenacity - spent the last years of his life working for the company and shareholders for less than minimum wage. He didn't say much; talk is cheap and he put money on the line - his own name and his own money.

Comparing Hennis and Rice? A study in contrast - no doubt about it. Hardly off base.

As a shareholder I blame Hennis. He knew what was in that mine before he bought it. That's why the purchase price was so low. Doesn't take much imagination to see the plan; buy a mine for a few grand, use hundreds of thousands of shareholder dollars from another company(cgfi) to develop the mine, while at the same time litigating yet another company(Sunnyside) to pay for the cleanup. In the end he would have personally owned a mine someone else paid for while the shareholders would gain basically zip. The mine wouldn't be in the company portfolio and the ore milled at that mine would have been processed at a discount. Factoring in the money spent - shareholders would have realized negative cash flow!

A good analogy would be a used car. It's like buying a 1976 Mustang for $50, with 250,000 on the clock and every body panel rusted to nothing, engine froze, that's been sitting in a field for 20 years. Hennis tows his car home and the first thing he does is sue all the prior owners for damages. While that's in the works he starts siphoning off a savings account he shares with his elderly Mom to install a windshield and put new tires on rusted rims. When the lawsuits fall through and his Mom takes his name off her account he jumps up and down, screaming like a little girl. Next day proceeds to sue his Mom until the legal fees put her on the street. The city gets tired of the eyesore of a car and has it towed, not knowing the frame is rusted through. When half the car falls off on the highway and takes out a school bus of preschoolers - first thing Hennis does is start blaming the prior owners again, thinking it'll help the new lawsuit.

Just for fun I'm envisioning the circumstances where I would agree with you - where Hennis would have shown good faith.

Let's say the hypothetical scenario was this: as CEO of CGFI, Hennis offered to sell the company his mine, at say, double what he paid for it. Can't remember what he paid - think it was something like $4 grand. So he offers to sell the mine to the company he heads for $8,000 while disclosing it's a toxic dump. After discussion with the officers he see's the liability involved and does a 180 - instead of sinking our money into a dead horse he uses the shareholder cash to complete the mill. He would have been my hero.

Again, he knew that mine was a toxic dump when he bought it. He knew there was no way of telling who was responsible for the flooded shafts when he bought it. Nothing more than an opportunity to use litigation to get something for nothing.

I do give him Kudos for his selfishness and greed though - without it it's possible the mine would be tied to shares I own.

Yep, it's the EPA's fault on this one. Hennis knew what was in there and Fearn, (a member of the Animas river stakeholders), knew what was in there.

The article's timeline states in 2002 "Gold King #7 level begins to discharge significant amounts of acid mine drainage." Significant, but manageable. A few gallons a minute can be filtered with ponds. Many of the mines have runoff like this and are managed with ponds. The Silver wing is managed like this. However, when ten times the nominal amount started draining out - even ponds the size the POW had wouldn't have handled it. 3gpm maybe, 300gpm no way, 3,000,000gpm? Looks like only the EPA can mess things up to this scale.

Never know if it had anything to do with it - but the acceleration of runoff seemed to coincide with the company's disassociation with Hennis. In a way, Hennis' refusal to turn over control of the mine to the company was a good thing - just too bad he was able to bleed off so much company cash to fund his own private dream before the company put a stop to it. That dream turned into a nightmare, but has nothing to do with CGFI, partly thanks to Guyer. Hennis is still trying to make a living off blaming others.

On the bright side - this doesn't seem to be affecting PPS one bit.

Hey AK, long time no see.

Yep, this is exactly what they didn't want to happen. I can't imagine what it was like when all that water shot down Cement Creek. That's the one from the mine that goes through town, right next to the museum. Hennis has always stated it's another mine's problem, but he's never been down there to see - speculation. I imagine Todd never took the CGFI sign off the maintenance building up there. Probably gave the Governor an eye full when he went to scope it out - we're probably off the Christmas list.

What if you have a mining company that trades on both the TSX and NYSE? Mining companies have NI-43-101 reports on mines all over the world. If someone was to look at the NI-43 as the main indicator of stocks not to watch - they would lose out.

Say you have an exploratory mining company with part of the goal being to develop and sell. A large part of your market is in Canada, and the chairman of your board just happens to live, and has influence in Canada. Wouldn't it add value to have a report done to NI-43-101 standards, even if it isn't an actual NI report? I mean, it's pretty common knowledge that a US based mining company doesn't file a NI report.

That's not all they do.

I could care less, unless it was Hennis doing the buying. Let me know if he ever starts a public company again and I'll teach you a thing or two about public indignation.

Maybe you should go to Colorado and see what they do. I'm no expert, but I try not to put out bad info to try and make myself look smart.

http://mining.state.co.us/Programs/Abandoned/Pages/impwelcomepage.aspx

I think a majority of the money was divided between 3 groups: toxic funding, lawyers, and marketers, (well, the MM's, too, but that's a given). Investor awareness marketing can be put under Toxic funding I guess, since marketing is one requirement of the funding.

Early on, I think things like the comedy radio show promotion was a company decision. Things that were paid for with shares. Later on when the CD was full swing promotions were paid for with cash - something the company didn't have but if a requirement of taking a tranche is paid promotion the only way out of it is not taking the tranche.

These promotions could cost $20K+. There was a little transparency at the time that allowed me to see a bit about what was going on. That 3 minute Youtube chart video of some guy talking about the technicals cost something like $700.

This can all be seen in the Q's, but isn't broken down line item, so easy to overlook.

It all started by people trying to do right by the environment.

Here you have the Animas River Stakeholders Group trying to clean up a river, of which tailings are a real problem.

http://www.animasriverstakeholdersgroup.org/

One member of this group, Steve Fearn, has an idea how it could actually be done, and spends a million of his own to get it started.

http://drmsweblink.state.co.us/drmsweblink/0/doc/728497/Page1.aspx?searchid=a0d009e9-bbf6-4672-942a-3f51aa943ea5

Before it's all said and done, there's drama with the state, with other environmental groups, opportunists, and market - right back where they started. Too bad really.

As a reply to the PM I received:

The DRMS reclamates old mines now. They perform a needed task in the area. One problem is the sheer number of mines in that state. They can seal them off and monitor, but trying to clean up all the tailings from thousands of operations? It's one of the reasons we petitioned the governor for POW in first place. That little mill wouldn't solve the whole problem - but it would have been a start. CGFI tried to be the ones to start. Didn't work out too well.

The EPA has issues of it's own. They regulate and enforce, they don't clean up themselves. The Oversight and Reform Committee has had hearings recently with the EPA that have shown just how political and inefficient they are.

Tomorrow is going to be quite a ride.

Were you referring to Garpa Resources? There are a lot of mining concerns in Colorado and it's a small area - a small world. The history of the relationship between the stock market, miners, and shareholders is over a hundred years old. More shareholders have lost money on mining stock than ever made money. Sad, but true.

Who is to blame?

Well, the corporate officers have to shoulder quite a bit. They tripped over many hurdles when they could have just walked around them, but they aren't the only ones to blame.

It's the nature of penny stocks to see the L2 be manipulated by algorithms to paint an inaccurate picture. Also, convertible debt attached to a company should pop up a huge red flag when it comes to shareholder equity.

Using the NI-43-101 for a mine inside the states is a red flag for sure, but it's a minor red flag from a trading or short term investing standpoint. Looking through the Q's for any reference to CD is a much better indicator.

Any company that decides convertible debt is a good way to gain working capital is on a hail mary mission. Imagine going to the bank to get a 1 year term loan to buy a boat and using your pickup for collateral. The day after the loan closes the bank comes over and starts pulling parts of your pickup to sell at auction. Now you have a boat, but no way to pull it to the lake. CD is toxic financing.

Is it fraud? Nope. Trying to prove fraud against a company that publicly reports is like suing a state for losing money on the lottery. Best way to win is not to play.

Some traders made money over the years on CGFI. They didn't know anything about NI reports or CD or the emotions involved on either side; they just looked at volatility and spread. Should we blame them, too? I wasn't one of them. I did really in-depth research and every bit of it - every single bit - hinged on the price of gold. The company bet of the price going to $5k/oz, and so did I. Well, it didn't happen, so I've got 20 shares at a cost per basis of about $2450. Who to blame? I blame myself. I win some and I lose some. I've never won by thinking negative.

I don't know about most mining districts, but this specific mining district has ore mined before current regulations that is piled next to streams and is an environmental hazard in itself. One reason the local government supported POW all these decades is that it would be an avenue to clean up the mess.

There's money in the ground all over the place, but the regs make it difficult to legally extract it. There are forest service people that drive around and search for ninja miners.

Yeah, call them again. Ask them if you can gift the shares to them. Who wouldn't like a few shares of CGFIA as a late Xmas present?

Call up your broker and they'll help you clear the books. Keep a record of how much loss you have, anything over the max just keeps rolling over year after year until gone. The only nice thing about losing on a stock pick. I have quite a few years left.

Normal investors only thoroughly read the SEC filings of companies that, you know, are like tradeable. Not many research for lack of anything better to do. I have better things to do.

Yeah I read that and thought to myself, "That can't be what he's talking about." Guess it was. Just let me be a little facetious here say the SEC's response would give brave men continence problems. They didn't have to be so harsh.

I can't be bothered to find it if you can't be bothered to link it. I mean, did you see the letter in Edgar from the SEC to Guyer about the upcoming fishing trip? Just gotta look for it.

The 43-101 topic is just downright hilarious to me at this point. About four years ago I remember debating one well informed mining investor whose opinion was no legitimate mining company doesn't also supply a report using 43-101 standards. Funny how things go full circle. Water under the bridge.

It's interesting to me that you find the SEC letters surprising at all. It's the SEC's job to facilitate capital formation. When the CEO of a mining company is being ravaged by terminal cancer it's nice the SEC helps the company. I did see reference in the letters, while searching for whatever it was you were talking about, letting Guyer know he could contact the SEC mining guy. That was nice - it's also their mission to help. One might look at the SEC correspondence as kicking a dying man - I don't see it that way. A punch list isn't a bad thing, it helps add clarity.

Missed that one...have a link?

Yeah. they read like a generic punch list. Wish the IRS used the same playbook.

While the SEC's mission is investor protection, it also has the mission to facilitate capital formation. The SEC had questions of the company, and they were answered. If the SEC had other questions in regards to the "full disclosure" you mentioned - maybe they should have asked.

Is the SEC now incompetent, since they don't know disclosure as well as the average penny stock mining investor? I won't have time for a few months, but let me know if you need any help educating the SEC with a petition or whatever. Might give them something to talk about over at goldfields.com

I doubt Guyer does anything without running it by the lawyer. Maybe we should practice mining law - that seems to be where the money is.

Yep, still have mine, too!

Merry Christmas to you and yours, AK.

Between the governmental and and ecology nightmare, toxic financing, and past CEO's that want to steal the company through court actions or die - things are going well with not much to talk about.

Still around, but not active. Probably be awhile before they are.

Yeah, an 8K was filed on the 10th.

Yeah, comes to a point where you can't blame the secretary - that point was years ago.

Far as I know they are still buried in legal until next year.

Not sure if I'd call it goofy, but it is up in the air. Lee was listed as the Qualified Person on the reports - that hasn't changed - but it does make a difference. The Hennis case has been pushed back once again. Seems like the lawyers are the ones that are making money.

I stopped by Silverton on the way to Vegas this afternoon and heard the news about Lee. Sad.

You don't have to do too much. You can let them sit, or sell for the tax write off. You'll end up paying for the trade commission to retire the shares, but write off is at bought price. Your broker should do the math for you at the end of the year if you did multiple buys at different pps's.

I averaged down over the years; I'm not sure what the equivalent price of those first shares I bought would be worth today.

What shares I have left would need a pps of about $2400 to break even at this point. I still have about $1500 loss carryover from last year - I might sell a share this year, but maybe not.

Any benefit to not selling them all? I don't know, really up to you. Sometimes a shell will be sold down the road and the shares end up being worth something. CGFI was RS'd to the point you probably don't have too many shares left.

If you trade a lot of high spec stock, your portfolio will look like a seesaw if you hold. I've seen some pretty huge gains, anything over 2000% being pretty good - my best was when a partial share was sold for a reorganization one time. I saw something like 28,000% on the gain column. Brought the old blood pressure up, until I saw how little was involved. Still, having a partial share I bought for a couple cents go up that much was fun to see. All it takes is a couple 0%'s to bring me back down to earth.

Where does that show up? The Form 4 looks like he acquired, not disposed.

Slap the ask?

Not really, you have news?

I'm not sure if every criminal or civil case has ever been public record, but the case number has been public record since July 4th, 1966.

So what's the case number and court?

A case number isn't public record?