GOLD STANDARD MINING CORP GSTP S
November 11, 2010 - 10:04am EST by
unkown345
2010 2011
Price: 2.05 EPS $0.00 $0.00
Shares Out. (in M): 203M P/E 0.0x 0.0x
Market Cap (in $M): 415 P/FCF 0.0x 0.0x
Net Debt (in $M): 0 EBIT 0 0
TEV ($): 415 TEV/EBIT 0.0x 0.0x
Borrow Cost: NA

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Description

The fundamental question behind this investment thesis is do you want to bet that a lawyer who does IPO's through reverse mergers and his Russian actress wife (who together own 34% of the stock) along with an apparently unsuccessful bar owner suddenly "found gold" in Russia that justifies a $400+ million market cap on an empty shell?

Why would a successful, producing mine owner allegedly producing $8 million a year in profits merge with an empty shell that didn't trade?

They'll need money to survive.   $277 of cash probably won't get them far.

Take solace that the assets are in Russia.  It was an empty shell.  They have no money.  The shell was domiciled in Nevada.  I believe that one of the principals was a bar owner who was sued for allegedly retransmitting "The Battle": Miguel Cotto v. Antonio Maragarito, WBA Welterweight Championship Fight Program on July 26, 2008 from his 27th Avenue Bar in Phoenix, AZ { http://www.27thavebarandgrill.com/} . He was also sued for failing to give $5,000 out of escrow in the sale of his Uno Mas Cantina.  As far as I can tell, none of the other companies they were associated with ever amounted to anything.

There are presentations on their website http://www.goldstandardmining.com/

They show nice pictures and forecasts.  I could not find any audited financials of the Ross Zoloto mine or its prior production.

What is clear is that they either have the 6 billion ounces of gold or they don't.  If you are a skeptic, like me, you may want to bet that it is too good to be true.  Note their business plan says 6.24 million ounces (http://www.goldstandardmining.com/business-plan/) but their 8-K/a dated May 6, 2009 says "6,24 billion ounces."

Or you might want to bet that it is true. That's up to you.

BUSINESS

 

Gold Standard Mining Corp. is a publicly held Nevada corporation, whose common stock trades on the over-the-counter bulletin board under the trading symbol, "GSTP."  The Company's subsidiary, Gold Standard Mining of Wyoming had entered into an agreement to acquire Ross Zoloto, a Russian company that operates a producing gold mine in the far east of Russia near the Russo-Sino border.  Ross Zoloto produces gold from its alluvial mining operation on 12 claims with gold reserves of 3186 kilograms, with a gold content of 2 to 10 grams per ton and a gold standard of 763 to 933.  

 

They claim that the Company's total gold reserves are estimated at 6.24 billion ounces.

Ross Zoloto mine

I wasn't able to find anything independent of what GSTP says on Ross Zoloto.  Of course it is in Russia.  But here is what they say:

The company has averaged approximately $22 million in annual revenues and $8 million in annual profits the previous two fiscal years.  The company has three sources of sales for its gold, at prices indexed to the market rate; the Russian Central Bank, the Russian Savings Bank, and its gold broker in London.  Its primary customer is the Russian Savings Bank.

The company licenses its mining claims from the Russian Government.  The license for Snezhinka expires in 2030, and the license for Elnichnoe expires in 2019.  Both licenses can be renewed at the election of the company, provided their terms are being performed. The company is obligated to pay a 3% fee for any exploration activities.  Production fees are 2.6% on all produced gold, and 2-4% of gold production for unexplored areas, for a total payment on production of up to 6.6%.  In addition, on any properties that the Russian government has expended costs on research and exploration, the company is obligated to pay a fee of 7.8% of all gold produced, unless it refunds the government's costs or conducts its own research and exploration.  The company has a staff of 200 gold miners and owns 25 pieces of heavy machinery.  Currently the company is producing gold from alluvial deposits but its principal reserves are in hard rock.  Fixed expenses, including fuel cost, equipment maintenance and labor are approximately 25%.

 

Russian mineral rights are owned by the government and licensed to enterprises such as Rosszoloto.  The Russian mineral resource and reserve reporting is split into two categories; "resources" and "reserves;" depending on the level of exploration.  Mineral resources are in situ estimates based on geological evidence with preliminary technical and economic assessments sufficient to show that there are reasonable prospects for eventual economic extraction.  Mineral reserves are the economically mineable part of a mineral resource, having taken into account all dilution and recovery factors and technical and economic studies having been carried out in sufficient detail to demonstrate that extraction can reasonably be justified.  

 

Relevant Identified Risks in their Financial Statements

 

We are a relatively young company with no operating history

We expect to incur net losses in future quarters.

We may require additional funds to operate in accordance with our business plan.

  There is Substantial Doubt About Our Ability to Continue as a Going Concern, which Means that We May Not Be Able to Continue Operations Unless We Obtain Additional Funding

 

Financial Condition Disclosure

We may require additional funds to operate in accordance with our business plan.

 

We may not be able to obtain additional funds that we may require. We do not presently have adequate cash from operations or financing activities to meet our long-term needs.  If unanticipated expenses, problems, and unforeseen business difficulties occur, which result in material delays, we will not be able to operate within our budget. If we do not achieve our internally projected sales revenues and earnings, we will not be able to operate within our budget. If we do not operate within our budget, we will require additional funds to continue our business. If we are unsuccessful in obtaining those funds, we cannot assure you of our ability to generate positive returns to the Company. Further, we may not be able to obtain the additional funds that we require on terms acceptable to us, if at all. We do not currently have any established third-party bank credit arrangements. If the additional funds that we may require are not available to us, we may be required to curtail significantly or to eliminate some or all of our development, manufacturing, or sales and marketing programs.

 

If we need additional funds, we may seek to obtain them primarily through equity or debt financings. Such additional financing, if available on terms and schedules acceptable to us, if available at all, could result in dilution to our current stockholders and to you. We may also attempt to obtain funds through arrangement with corporate partners or others. Those types of arrangements may require us to relinquish certain rights to our intellectual property or resulting products.

 

 

 

Management Ownership

 

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

 

The company has outstanding 142,699,522 shares of common stock. Management positions are as follows:

 

Name

Amount of Shares

Beneficially Owned

Percentage of Outstanding

 

Araik Khachatrian

 

49,500,000

 

34.7%

Agata Gotova

49,170,000

34.4%

Pantelis Zachos

2,000,000

1.4 %

Zurab Chavchavadeze

1,999,998

1.4 %

Management as a Group

102,569,998

71.9%

 

General Counsel Kenneth Eade is the beneficial owner of half of Agata Gotova's shares.

They are husband and wife.  She is a Russian actress.
http://www.sayitinrussianmovie.com/resources/first+edition+imperia+siir+and+agata.pdf

http://newshopper.sulekha.com/kenneth-g-eade-agata-gotova_photo_37844.htm

http://en.wikipedia.org/wiki/Agata_Gotova

 

Araik Khachatrian

He apparently does custom homes as well.

http://phoenix.blockshopper.com/search?f=buyer&q=Ariks%2BCustom%2BHomes%2BLlc

 

http://starpas.cc.state.az.us/scripts/cgiip.exe/WService=wsbroker1/officer-detail.p?corp-id=L13832108

http://starpas.cc.state.az.us/scripts/cgiip.exe/WService=wsbroker1/officer-detail.p?corp-id=L12150033

 

Court Cases

Superior Court of Arizona
County of Maricopa
Docket for Case #: CV2009-005997

Arizona Escrow & Financial Corporation vs. Araik Khachatrian

Date Filed:

Feb. 25, 2009

Assigned to:

Hicks, Bethany

Case location:

Downtown

Case Type:

Civil

 


U.S. District Court
DISTRICT OF ARIZONA (Phoenix Division)
CIVIL DOCKET FOR CASE #: 2:10-cv-01567-MEA

J & J Sports Productions, Inc. v. Khachatrian et al

Date Filed:

July 23, 2010

Nature of suit:

890 Other Statutory Actions

Demand:

$150,000

Assigned to:

Magistrate Judge Mark E Aspey

Cause:

Civil Miscellaneous Case

Jurisdiction:

Federal Question

Jury demand:

None



 





 

Parties and Attorneys

Plaintiff

J & J Sports Productions, Inc.


Attorneys and Firms

Thomas P Riley
Law Offices of Thomas P Riley PC
1114 Fremont Ave
South Pasadena, CA 91030-3227
(626) 799-9797
Fax: (626) 799-9795
TPRLAW@att.net
1st Library Sq
ATTORNEY TO BE NOTICED


 

Defendant

Araik Khachatrian
doing business as:27th Avenue Bar & Grill



 

Defendant

Arik Company, LLC
doing business as:27th Avenue Bar & Grill



 

 

Docket Proceedings

 

Req #

Filed

#

Docket Text

1

July 23, 2010 

COMPLAINT. Filing fee received: $ 350.00, receipt number 0970-4156355, filed by J & J Sports Productions, Inc.. (Attachments: # 1 Civil Cover Sheet, # 2 Summons, # 3 Summons, # 4 Certification as to Interested Parties, # 5 Corporate Disclosure Statement)(Riley, Thomas) (Entered: 07/23/2010)

 

Other Links / Connections / Business Affiliations
A search through 10k wizard will identify these:

1.    Kenneth Eade
http://10kwizard.com/files.php?exp=kenneth+eade&smonth=11&sday=2&syear=2009&emonth=11&eday=2&eyear=2010&cd_items_opt[]=1&submit.x=20&submit.y=10&submit=Submit&g=11952903934cc06fa9a95e8

2.    .McSmoothies - Agata Gotova, Chief Financial Officer
also http://www.10kwizard.com/files.php?submit.x=36&submit.y=7&submit=Submit&exp=Agata+Gotova&alld=ON&cd_items_opt[]=1&g=8663121444cdaaa51814e9

 

Other:

The name Araik Khachatrian is an extremely uncommon name - at least in the United States.  The Google search ont hat name http://www.google.com/search?q=Araik+Khachatrian&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a reveals the docket for a person with that name.  It seems hard to believe there are two people with that name.  The Company lists his address as 26 Gorkova Street, Blagoveshensk, Russia 675000.  This is the same address as that of Zurab Chachavadze



Disclaimer:

 

 The author of this posting and related persons or entities ("Author") currently may hold a short position in this security. The Author makes no representation that it will continue to hold positions in the securities of GSTP.  In fact the Author is likely to buy or sell long or short securities of this issuer and makes no representation or undertaking that Author will inform Value Investors Club, the reader or anyone else prior to or after making such transactions.  Additionally, because the Author has these current positions the reader may assume that the Author is biased in favor of his investment view and may also be mistaken.  While the Author has tried to present facts it believes are accurate, the Author makes no representation as to the accuracy or completeness of any information contained in this note.  The reader agrees not to invest based on this note and to perform his or her own due diligence and research before taking a position in securities of this issuer.  Reader agrees to hold Author harmless and hereby waives any causes of action against Author related to the above note.

Catalyst

 
    sort by    

    Description

    The fundamental question behind this investment thesis is do you want to bet that a lawyer who does IPO's through reverse mergers and his Russian actress wife (who together own 34% of the stock) along with an apparently unsuccessful bar owner suddenly "found gold" in Russia that justifies a $400+ million market cap on an empty shell?

    Why would a successful, producing mine owner allegedly producing $8 million a year in profits merge with an empty shell that didn't trade?

    They'll need money to survive.   $277 of cash probably won't get them far.

    Take solace that the assets are in Russia.  It was an empty shell.  They have no money.  The shell was domiciled in Nevada.  I believe that one of the principals was a bar owner who was sued for allegedly retransmitting "The Battle": Miguel Cotto v. Antonio Maragarito, WBA Welterweight Championship Fight Program on July 26, 2008 from his 27th Avenue Bar in Phoenix, AZ { http://www.27thavebarandgrill.com/} . He was also sued for failing to give $5,000 out of escrow in the sale of his Uno Mas Cantina.  As far as I can tell, none of the other companies they were associated with ever amounted to anything.

    There are presentations on their website http://www.goldstandardmining.com/

    They show nice pictures and forecasts.  I could not find any audited financials of the Ross Zoloto mine or its prior production.

    What is clear is that they either have the 6 billion ounces of gold or they don't.  If you are a skeptic, like me, you may want to bet that it is too good to be true.  Note their business plan says 6.24 million ounces (http://www.goldstandardmining.com/business-plan/) but their 8-K/a dated May 6, 2009 says "6,24 billion ounces."

    Or you might want to bet that it is true. That's up to you.

    BUSINESS

     

    Gold Standard Mining Corp. is a publicly held Nevada corporation, whose common stock trades on the over-the-counter bulletin board under the trading symbol, "GSTP."  The Company's subsidiary, Gold Standard Mining of Wyoming had entered into an agreement to acquire Ross Zoloto, a Russian company that operates a producing gold mine in the far east of Russia near the Russo-Sino border.  Ross Zoloto produces gold from its alluvial mining operation on 12 claims with gold reserves of 3186 kilograms, with a gold content of 2 to 10 grams per ton and a gold standard of 763 to 933.  

     

    They claim that the Company's total gold reserves are estimated at 6.24 billion ounces.

    Ross Zoloto mine

    I wasn't able to find anything independent of what GSTP says on Ross Zoloto.  Of course it is in Russia.  But here is what they say:

    The company has averaged approximately $22 million in annual revenues and $8 million in annual profits the previous two fiscal years.  The company has three sources of sales for its gold, at prices indexed to the market rate; the Russian Central Bank, the Russian Savings Bank, and its gold broker in London.  Its primary customer is the Russian Savings Bank.

    The company licenses its mining claims from the Russian Government.  The license for Snezhinka expires in 2030, and the license for Elnichnoe expires in 2019.  Both licenses can be renewed at the election of the company, provided their terms are being performed. The company is obligated to pay a 3% fee for any exploration activities.  Production fees are 2.6% on all produced gold, and 2-4% of gold production for unexplored areas, for a total payment on production of up to 6.6%.  In addition, on any properties that the Russian government has expended costs on research and exploration, the company is obligated to pay a fee of 7.8% of all gold produced, unless it refunds the government's costs or conducts its own research and exploration.  The company has a staff of 200 gold miners and owns 25 pieces of heavy machinery.  Currently the company is producing gold from alluvial deposits but its principal reserves are in hard rock.  Fixed expenses, including fuel cost, equipment maintenance and labor are approximately 25%.

     

    Russian mineral rights are owned by the government and licensed to enterprises such as Rosszoloto.  The Russian mineral resource and reserve reporting is split into two categories; "resources" and "reserves;" depending on the level of exploration.  Mineral resources are in situ estimates based on geological evidence with preliminary technical and economic assessments sufficient to show that there are reasonable prospects for eventual economic extraction.  Mineral reserves are the economically mineable part of a mineral resource, having taken into account all dilution and recovery factors and technical and economic studies having been carried out in sufficient detail to demonstrate that extraction can reasonably be justified.  

     

    Relevant Identified Risks in their Financial Statements

     

    We are a relatively young company with no operating history

    We expect to incur net losses in future quarters.

    We may require additional funds to operate in accordance with our business plan.

      There is Substantial Doubt About Our Ability to Continue as a Going Concern, which Means that We May Not Be Able to Continue Operations Unless We Obtain Additional Funding

     

    Financial Condition Disclosure

    We may require additional funds to operate in accordance with our business plan.

     

    We may not be able to obtain additional funds that we may require. We do not presently have adequate cash from operations or financing activities to meet our long-term needs.  If unanticipated expenses, problems, and unforeseen business difficulties occur, which result in material delays, we will not be able to operate within our budget. If we do not achieve our internally projected sales revenues and earnings, we will not be able to operate within our budget. If we do not operate within our budget, we will require additional funds to continue our business. If we are unsuccessful in obtaining those funds, we cannot assure you of our ability to generate positive returns to the Company. Further, we may not be able to obtain the additional funds that we require on terms acceptable to us, if at all. We do not currently have any established third-party bank credit arrangements. If the additional funds that we may require are not available to us, we may be required to curtail significantly or to eliminate some or all of our development, manufacturing, or sales and marketing programs.

     

    If we need additional funds, we may seek to obtain them primarily through equity or debt financings. Such additional financing, if available on terms and schedules acceptable to us, if available at all, could result in dilution to our current stockholders and to you. We may also attempt to obtain funds through arrangement with corporate partners or others. Those types of arrangements may require us to relinquish certain rights to our intellectual property or resulting products.

     

     

     

    Management Ownership

     

    SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     

    The company has outstanding 142,699,522 shares of common stock. Management positions are as follows:

     

    Name

    Amount of Shares

    Beneficially Owned

    Percentage of Outstanding

     

    Araik Khachatrian

     

    49,500,000

     

    34.7%

    Agata Gotova

    49,170,000

    34.4%

    Pantelis Zachos

    2,000,000

    1.4 %

    Zurab Chavchavadeze

    1,999,998

    1.4 %

    Management as a Group

    102,569,998

    71.9%

     

    General Counsel Kenneth Eade is the beneficial owner of half of Agata Gotova's shares.

    They are husband and wife.  She is a Russian actress.
    http://www.sayitinrussianmovie.com/resources/first+edition+imperia+siir+and+agata.pdf

    http://newshopper.sulekha.com/kenneth-g-eade-agata-gotova_photo_37844.htm

    http://en.wikipedia.org/wiki/Agata_Gotova

     

    Araik Khachatrian

    He apparently does custom homes as well.

    http://phoenix.blockshopper.com/search?f=buyer&q=Ariks%2BCustom%2BHomes%2BLlc

     

    http://starpas.cc.state.az.us/scripts/cgiip.exe/WService=wsbroker1/officer-detail.p?corp-id=L13832108

    http://starpas.cc.state.az.us/scripts/cgiip.exe/WService=wsbroker1/officer-detail.p?corp-id=L12150033

     

    Court Cases

    Superior Court of Arizona
    County of Maricopa
    Docket for Case #: CV2009-005997

    Arizona Escrow & Financial Corporation vs. Araik Khachatrian

    Date Filed:

    Feb. 25, 2009

    Assigned to:

    Hicks, Bethany

    Case location:

    Downtown

    Case Type:

    Civil

     


    U.S. District Court
    DISTRICT OF ARIZONA (Phoenix Division)
    CIVIL DOCKET FOR CASE #: 2:10-cv-01567-MEA

    J & J Sports Productions, Inc. v. Khachatrian et al

    Date Filed:

    July 23, 2010

    Nature of suit:

    890 Other Statutory Actions

    Demand:

    $150,000

    Assigned to:

    Magistrate Judge Mark E Aspey

    Cause:

    Civil Miscellaneous Case

    Jurisdiction:

    Federal Question

    Jury demand:

    None



     





     

    Parties and Attorneys

    Plaintiff

    J & J Sports Productions, Inc.


    Attorneys and Firms

    Thomas P Riley
    Law Offices of Thomas P Riley PC
    1114 Fremont Ave
    South Pasadena, CA 91030-3227
    (626) 799-9797
    Fax: (626) 799-9795
    TPRLAW@att.net
    1st Library Sq
    ATTORNEY TO BE NOTICED


     

    Defendant

    Araik Khachatrian
    doing business as:27th Avenue Bar & Grill



     

    Defendant

    Arik Company, LLC
    doing business as:27th Avenue Bar & Grill



     

     

    Docket Proceedings

     

    Req #

    Filed

    #

    Docket Text

    1

    July 23, 2010 

    COMPLAINT. Filing fee received: $ 350.00, receipt number 0970-4156355, filed by J & J Sports Productions, Inc.. (Attachments: # 1 Civil Cover Sheet, # 2 Summons, # 3 Summons, # 4 Certification as to Interested Parties, # 5 Corporate Disclosure Statement)(Riley, Thomas) (Entered: 07/23/2010)

     

    Other Links / Connections / Business Affiliations
    A search through 10k wizard will identify these:

    1.    Kenneth Eade
    http://10kwizard.com/files.php?exp=kenneth+eade&smonth=11&sday=2&syear=2009&emonth=11&eday=2&eyear=2010&cd_items_opt[]=1&submit.x=20&submit.y=10&submit=Submit&g=11952903934cc06fa9a95e8

    2.    .McSmoothies - Agata Gotova, Chief Financial Officer
    also http://www.10kwizard.com/files.php?submit.x=36&submit.y=7&submit=Submit&exp=Agata+Gotova&alld=ON&cd_items_opt[]=1&g=8663121444cdaaa51814e9

     

    Other:

    The name Araik Khachatrian is an extremely uncommon name - at least in the United States.  The Google search ont hat name http://www.google.com/search?q=Araik+Khachatrian&ie=utf-8&oe=utf-8&aq=t&rls=org.mozilla:en-US:official&client=firefox-a reveals the docket for a person with that name.  It seems hard to believe there are two people with that name.  The Company lists his address as 26 Gorkova Street, Blagoveshensk, Russia 675000.  This is the same address as that of Zurab Chachavadze



    Disclaimer:

     

     The author of this posting and related persons or entities ("Author") currently may hold a short position in this security. The Author makes no representation that it will continue to hold positions in the securities of GSTP.  In fact the Author is likely to buy or sell long or short securities of this issuer and makes no representation or undertaking that Author will inform Value Investors Club, the reader or anyone else prior to or after making such transactions.  Additionally, because the Author has these current positions the reader may assume that the Author is biased in favor of his investment view and may also be mistaken.  While the Author has tried to present facts it believes are accurate, the Author makes no representation as to the accuracy or completeness of any information contained in this note.  The reader agrees not to invest based on this note and to perform his or her own due diligence and research before taking a position in securities of this issuer.  Reader agrees to hold Author harmless and hereby waives any causes of action against Author related to the above note.

    Catalyst

     
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