IKN

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• I’m guessing there was internal concern about the materiality of the information they have been sitting on
• Seems like the minimum form of disclosure for a cover your ass scenario for regulatory purposes/capital raising

• I
  am not familiar with CSA Global, I reached out to numerous people who
  spend a lot of time immersed in technical reports and none said they
  were familiar with them
• I do know Asanko mgmt has a history with CSA Global as they used them in some capacity for Mantra
• I
  don’t think you hire a bucket shop who you have a previous history with
  as your independent third party to review your resource/reserve
  problems if your intention is to come clean

• I’ll
  be very interested to see what they’ve done here.  They’ve mined about
  260koz out of Nkran, at most 240koz of that came from reserves but
  probably less. based on our estimates we believe they’ve
  depleted reserve blocks that were supposed to contain over double that
  amount
• This creates a problem, you have to
  include the depletion, and that will show the rate at which they’ve been
  losing ounces from Nkran as they extract blocks from the pit, so what
  we have cynically
  expected for a long time is the following:
  • They will write down what they’ve
    already lost due to depletion, which will be hundreds of thousands of
    ounces more than what they’ve reported fed to the mill and sitting on
    stockpile
  • They will change the parameters of their
    reserve estimates while lumping in new assets to backfill, making it a
    non apples-to-apples presentation of reserves so that it isn’t clear how
    many have
    been lost from mining to date, only the net change will be apparent
  • In other words, they’ll be forced to
    write down what they’ve already mined out, they’ll leave as much of
    their estimates from below intact, and they will present it in a way
    that won’t make it
    clear what they’re doing

• I doubt this is over just yet, reading
  between the lines on who they hired to perform the review.  In general
  ponzi schemes don’t collapse until people are told they aren’t getting
  their money
  back, no matter how obvious they are if you apply basic math… I don’t
  expect this to be any different and I doubt the Company is about to
  fully throw in the towel.  Their satellites are garbage though in our
  opinion, and so is Essase, I wish them good luck
  on making those work.

• The gold shortfall that we told people to watch increased by its largest amount in Q4.
• Their
  feasibility has been delayed 6 times now, it was supposed to come out
  in Q2 2016 initially, then they pushed it to Q3, then they told people
  by the Site tour, then they said by early Dec
  reportedly, then they said by the end of 2016, then they said in early
  Q1 2017, now they’re saying by the end of February… we have our thoughts
  as to what is going on behind the scenes
• They appear to be dropping the pit
  around 25-30m in the ore zones and pulling the amount of gold they were
  supposed to get by going down every 10m
• Their
  accounting appears ridiculous to us and has major red flags surrounding
  their inventory accounting, their reported AISC numbers, their reported
  unit costs, and their reported Capex spending,
  if you’re interested in this stuff, let me know and I’ll be happy to
  point it out
  • We
    pointed out these accounting problems to some analysts and asked them
    to try and explain them, they were unable to do so and reached out to
    the Company for an answer, that was 2 months ago and
    the Company still hasn’t provided an answer to them as far as I
    understand
• If
  people thought the CFO resigning to go take on an exciting opportunity
  to be CEO of Timmins gold was unrelated to what is going on inside AKG,
  then I think it’s time for them to rethink that. 
  FWIW, we first engaged with the company through a call with their CFO
  on May 26^th after the CEO refused to meet with us and
  cancelled a scheduled meeting.  On June 3 we sent him a follow-up list
  of questions.  On June 8^th, he blew out
  ~500k options… I doubt that was unrelated either.

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