Over the past few days, we have presented indisputable evidence that L&L Energy (LLEN: NASDAQ) has materially misled its investors and the SEC. For two years now, LLEN has unambiguously claimed to be a 100% owner of the Ping Yi mine, which allegedly provides almost 40% of its claimed capacity. As we explained in

our original full report

LLEN does not own the Ping Yi Mine.

After the report, some investors have stated that the SAIC file we pulled on Jan 13, 2012 showing that LLEN does not own the Ping Yi Mine is not the most up to date SAIC filing. They have also disputed what the sales agent of the mine, Mr. Wu, said.

We will now present the most compelling piece of evidence that we have, the recordings and transcripts. The conversations that you are about to read will make it crystal clear what actually happened in this story and that LLEN does not own the Ping Yi Mine.

The first conversation is a new conversation with Mr. Zhao Weijun (赵维君), the vice director of Company Registry of Guizhou SAIC Office on Jan 19. 2012 (Beijing Time). Mr. Zhao Weijun clearly explained what the examination date (核准日期) means and confirmed that there shall be no corporate change after the examination date shown on the SAIC file.

  • Jan 19, 2012 Conversation with Mr. Zhao Weijun, Vice Director of the Guizhou SAIC office, proving we have the most current SAIC filing – Full Recording and Transcript

On multiple occasions in December, 2011 and January 2012, we contacted the sales representative for the Ping Yi Mine, Mr. Wu. Mr. Wu confirmed that the mine was up for sale by an investment group (four individuals) with no discernible ties to LLEN. When we asked him whether LLEN owned the mine, he answered an insistent no, and doubted that LLEN was even financially strong enough to make such an acquisition. He also told us that LLEN had discussed an acquisition in 2009, but no deal had happened.

We recorded two conversations with Mr. Wu, sales representative of the Ping Yi Mine on Jan 11, 2012 and Jan 16, 2012: The first one is a conversation prior to our first alert on Jan 13, 2012 and the second one is after our alert.

  1. Jan 11, 2012 Conversation with Mr. Wu, confirming LLEN does not own the Ping Yi Mine Full Recording and Transcript
  2. Jan 16, 2012 Conversation with Mr. Wu, confirming again that LLEN does not own the Ping Yi Mine Full Recording and TranscriptConversation with Mr. Zhao Weijun regarding the different dates on the SAIC file.

Background:

There is a confusion regarding the date on the SAIC file below.

Ping Yi SAIC

There is a date of Aug. 20, 2008 as the examination date (核准日期) on the file we pulled on Jan 13, 2012. Some people regard that the file we pulled only explain the legal status of Ping Yi Mine up to Aug. 20, 2008. We already explained this issue as follows:

“The second date, “2008-08-20″ highlighted above, is the date that the business license reflecting the last change in corporation information was issued or examined. On that date, the Ping Yi Mine changed its official information from Yidong Village, Pingguan Town, Pan County to Yiche Village, Pingguan Town, Pan County and obtained its most recent business license. The SAIC filing is telling us that since that date, no material aspect of the business structure has changed.”

Key Points of conversations are below:

To clarify this issue, we called Mr. Zhao Weijun (赵维君), the vice director of Company Registry of Guizhou SAIC Office, which is in charge of the company registration of Guizhou province, picked up our call and confirmed our explanation. The key points of the conversation between our investigator and Mr. Zhao Weijun (赵维君) is as follows:

Geo: Here it is. This company is established on Aug. 2, 2000. There is an examination date (核准日期) which is Aug. 20, 2008. At the bottom of the file, there is a date, which is Jan 13, 2012. I want to know, what does the examination date (核准日期) mean? (是这样的,这个企业的成立日期是2000å¹´8月2日。上é¢æœ‰ä¸€ä¸ªæ ¸å‡†æ—¥æœŸæ˜¯2008å¹´8月20日。然后这个文件最底下是2012å¹´1月13日。我想问你一下,那个核准日期是什么意æ€ï¼Ÿ)

Mr. Zhao: Examination date (核准日期), for example, if the company comes to our office to do the corporate change, such as business scope, and we exanimate the corporate change, that day shall be the examination date. There is only one establishment date, which shall not change at all. (核准日期,比方说,它今年æ¥å˜æ›´ï¼Œæˆ‘们核准以后,比方说它变更经营范围,我们核准以后,这就是核准日期。如果说成立日期,它只有一个,它不会变的。)

Geo: Yes.

Mr. Zhao: To the examination date, if the company changes one item, such as company name, registered capital, there shall be an examination date for each change. (核准日期,如果说它有变更事项,比如说变更名称,变更注册资本,每变更一次,就有核准日期。)

Geo: ok. For example, the date on the bottom is Jan 13. On Jan 13, we obtained its partner information, as this is a partnership. Can we say that the partner information we obtained is as of today, right? (哦。那比如说,它最底下日期是1月13日,然后我在1月13日查到了它的,因为这个是合伙企业,查到了它的合伙人的情况。那等于就是说今天它合伙人是哪些就是哪些,对吧?)

Mr. Zhao: Yes. You are right. (对。对。)

Geo: Can I also understand in this way that, after the examination date (核准日期) up today, there is no change of shareholder and/or partner? (那我是不是还可以这么理解,也就是说,在核准日期一直到今天为止,它没有更换或股东或者合伙人什么之类的?)

Mr. Zhao: Yes. Yes. There is no change. (对,对。那就没有。)

Geo: There is no change. OK. I understand. Additionally, annual inspection date and examination date are different, right?

Mr. Zhao: Yes.

Geo: ok. If so, when is the annual examination date?

Mr. Zhao: It is a date varying from March 1 to June 30.

Geo: Now, the examination date (核准日期) of the company is Aug. 20, 2008. We can say there is no any corporate change from Aug. 20, 2008 to now, right? (那现在就是说,这个公司的核准日期是2008年8月20日,那就是说2008年8月20日到今天,它没有做任何变更,对吧?)

Mr. Zhao: Yes. You are right. (对。对。对)

Geo: thank you very much. How can I call you? (谢谢。那您怎么称呼?)

Mr. Zhao: My last name is Zhao. (免贵姓赵)

Geo: Are you vice director, Mr. Zhao? (赵副局长,对吧?)

Mr. Zhao: Yes. (是的。)

Geo: thank you so much. Vice Director Zhao. (谢谢你,赵副局长。)

Two conversations with Mr. Wu, the sales agent of Ping Yi Mine

After the GeoTeam found the sales post of Ping Yi Mine at the beginning of Dec. 2011, we contacted Mr. Wu on Dec 12, 2011 to talk about the possible acquisition of the Ping Yi Mine. Our GEO investigator pretended to be from an investment company from Beijing China. In our first talk, Mr. Wu confirmed that Ping Yi Mine was still for sale.

After that, we periodically contacted Mr. Wu regarding the acquisition of Ping Yi Mine and confirmed with him several times that the Ping Yi Mine was not acquired by Fuyuan County Baoxing Economic & Trade Co. Step by Step, GEO told Mr. Wu that it was LLEN that told us that Ping Yi Mine was acquired by Fuyuan County Baoxing Economic & Trade Co. for the consideration of around USD 4 million at the end of 2009. Mr. Wu denied this claim by LLEN. To build trust, the Geoteam told Mr. Wu that a group of people led by Mr. Zheng (郑总) from Beijing may visit Ping Yi Mine before the Chinese New Year.

On Jan 11, 2012 (Wed.) (Beijing Time), GEO called Mr. Wu again and made an excuse that the group of people cannot visit Ping Yi Mine as there are not available air tickets before the Chinese New Year. We recorded this call and confirmed relevant issues surrounding the ownership of Ping Yi Mine again with Mr. Wu. The key part of the conversation is as follows:

[…]

Geo: then. We will try to visit you before the Lantern Festival (Feb. 5, 2012). Is it ok?

Mr. Wu: OK. OK.

GEO: Additionally, we contacted Longteng Mining (龙腾矿业,LLEN’s Chinese name) again. They told us that Baoxing Economic & Trade CO., Ltd. paid you tens of millions in RMB, or USD 4 million to purchase the mine at the end of 2009 or beginning of 2010. Did you have this deal or not?

Mr. Wu: No. No.

GEO: No? No for this deal?

Mr. Wu: the deal failed at last (最后没成啊).

GEO: this deal failed at last, right?

Mr. Wu: Yes.

GEO: Oh. They said that, at that time, Baoxing did pay around USD 4 million, or RMB more than 20 million amount. It is to say that that deal failed at last?

Mr. Wu: Yes.

GEO: Oh. They said that, at that time, Baoxing did pay around USD 4 milion, or RMB more than 20 million. It is to say that that deal failed at last?

Mr. Wu: Yes.

GEO: OK. We are not clear about their stance. Whatever, we just disregard this [LLEN’s stance].

Mr. Wu: Yes.

[…]

After we released our initial alert on Jan 13, 2012, we knew that some investors may call Mr. Wu during the long holiday weekend and that LLEN may also contact Mr. Wu regarding this issue. On Jan 16, 2012 (Monday) GEO’s investigator called Mr. Wu to once again confirm the relevant issues surrounding the ownership of Ping Yi Mine. Mr. Wu confirmed again that Ping Yi Mine is still owned by four individuals and LLEN did not acquire the mine. He also said that LLEN did contact them to acquire Ping Yi Mine but that deal never went through. Mr. Wu also told us that several guys called him during the weekend with “private numbers” or “oversea numbers”. Furthermore, Mr. Wu did not mention whether LLEN contacted him or not after we release this press release. The key part of this conversation is as follows:

[…]

Mr. Wu: Now, our biggest boss is Mr. Zhang, Zhang Baoguo. The mine is owned by individuals. (我们最大的老æ¿å§“张,张ä¿å›½ã€‚我们现在是私有的。)

GEO: What? (现在是什么?)

Mr. Wu: owned by individuals. At the beginning, LLEN (龙腾矿业) did discuss this deal with us. At last we did not reach a final deal. (私有的。最åˆï¼Œé¾™è…¾çŸ¿ä¸šè°ˆæ˜¯è°ˆè¿‡ï¼Œä½†æ˜¯æœ€ç»ˆæ²¡æˆäº¤æ˜“。)

GEO: Oh.

Mr. Wu: LLEN did not pay money to us at all. (他们也没有付钱。)

GEO: signed a contract but not pay any money? So the claimed agreement is a void contract?

Mr. Wu: Yes.

GEO: Oh. The agreement on the hand of my boss is a void contract?

Mr. Wu: Yes. Even mentioned something called like Baoxing Group. (还说那个什么å®å…´é›†å›¢ï¼‰

GEO: Yes. Baoxing Economic & Trade Company. Therefore, my boss complained about Mr. Zhang a lot and said he did not do a good job. As this is a big issue, we also pulled the SAIC file of Ping Yi Mine. Based on the SAIC file, we realized that Ping Yi Mine is owned by four individuals as a partnership. (the voice is disturbed) Hello?

Mr. Wu: I am listening.

GEO: This is owned by four individuals as a partnership, not owned by LLEN, right?

Mr. Wu: Yes.

Mr. Wu: Yes. Now, it is owned by four individuals and it is not sold to any other. (是的。现在是四个自然人所有的,没有卖给任何人。)

GEO: Yes. I read the SAIC file and it says that it is owned by four individuals.(是的,我知道,我看了工商档案,是说四个自然人。)

Mr. Wu: No such a thing (acquisition by LLEN) at all. (没有这个事情)

GEO: no such a thing (acquisition by LLEN) at all, right? (根本没有这个事情,对不对?)

Mr. Wu: There was this thing. But, there is no reached deal. (有是有过,但是最后没有成交。)

GEO: We know. If the deal is not done, we know what we can do. Then, I can report to Mr. Zheng, my boss, to arrange the following things and possible trip. After our arrangement, I will give you a call. Is that ok?

Mr. Wu: You already know the information of the mine, right?

GEO: Yes. This is the only thing in doubt. Even though I am already on my vacation, my boss still asked me to call you to confirm this.

Mr. Wu: There are several guys that called me in these days to enquire about this issue. There was no phone number reflected on my cell phone. Sometime, it reflects “private phone number” or “oversea phone number”. (这两天有好几个人打电è¯ç»™æˆ‘,æ¥é—®è¿™ä¸ªäº‹æƒ…。他那个号码没有æ¥ç”µæ˜¾ç¤ºï¼Œè¿˜æœ‰å°±æ˜¯æ˜¾ç¤ºä¸ºç§äººå·ç æˆ–者海外号码。)

GEO: Oh. Really?

Mr. Wu: they all called me for this issue. I thought they were from your company. (他们打电è¯éƒ½æ˜¯é—®è¿™ä¸ªäº‹æƒ…,我还以为是你们公司的人。) […]

See our full report