Real Gold Mining Ltd., a Hong Kong-listed Chinese gold producer halted from trading since May 27, will hire an independent forensic specialist to probe company accounts and dealings with the controlling stockholder.
The mining company will also publish details “as soon as practicable” of a previously announced purchase from, and financial assistance to, Wu Ruilin, the major stockholder, according to a Hong Kong stock exchange filing yesterday.
Real Gold has been suspended from trading since a report in Hong Kong’s South China Morning Post newspaper that the company may have filed two different sets of accounts. The company was searched by the city’s Securities and Futures Commission last month, according to a lawsuit.
“We will fully cooperate in the ongoing investigation and will try to resume trading of our shares soon,” Chairman Lu Tianjun said on a video conference call from Beijing today.
Real Gold said on June 20 it was released from loan pledges made improperly by Wu. The entire issued share capital of Real Gold unit Fubon Industrial Huizhou Co. was pledged as security for loans for non-Real Gold entities controlled personally by Wu.
The company also agreed to buy two phosphorus mines in Mongolia from Wu for HK$520 million ($67 million) and loaned him HK$955 million, of which HK$316 million was outstanding on June 30, according to an exchange filing on Aug. 22.
“We think it’s a good deal,” Lu said. “We have hired an independent company to evaluate the project. If the results show it’s a good deal, then we will go ahead and complete the deal. Otherwise, we will call it off.”
Regulators and investors have increased scrutiny of Chinese companies traded overseas amid allegations against Longtop Financial Technologies Ltd., Chaoda Modern Agriculture (Holdings) Ltd. and Sino-Forest Corp.
Real Gold said on June 1 the Morning Post’s allegations were “inaccurate and untrue,” and that it was gathering information to respond to queries by the Hong Kong exchange.
The mining company said on Aug. 25 independent director Wan Kam To, who was leading the internal investigation of the allegations, resigned after disagreeing with the board on the approach, strategy and timing of the probe.
Real Gold’s first-half net income increased to 355.2 million yuan ($56 million) from 322 million yuan a year earlier, the company said yesterday.