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Investor Alert – Canadian Richmond Minerals and Austrian Silbermine

Toronto registered Richmond Minerals Inc. is a mining company listed on the Canadian TSX-V. The company is a micro-cap listed on the stock exchange and has a capitalization of just over CAD 3 million. Investors love to speculate with micro-cap stocks like Richmond. CEO of the company is the Austrian Franz Kozich-Koschitzky who has also gained a special reputation with other mining companies like Vendome and has collected a lot of investor money. The acquisition of 99 mining rights of the Austrian silver mine in exchange for 40 million shares in Richmond is a dubious deal for the shareholders.

Silbermine und Aurex Biomining

The acquisition of 99 claim units of the Austrian Silbermine GmbH (“Silbermine“) in exchange for 40 million shares in Richmond is a dubious deal for the shareholders. The Austrian Silbermine has solicited millions from hundreds of retail investors in Germany and Austria over the last 20 years to search for gold in the Austrian mountains. In vain. Through the silver mine’s Swiss-registered parent company, Aurex Biomining AG (“Aurex“), shares have been sold to retail investors over the years in order to have the money for exploration.

Actually, exploration was never carried out and therefore no gold was found. Austrian Silbermine GmbH was established in 1988 by the Austrian Lisa Haidvogl and her father. She is also a member of the board in Swiss Aurex. The 99 claim units now sold to Richmond have been around with Aurex already for almost ten years without any findings.

Richmond Minerals acquires claim units

In December 2019, the TSX-V-listed Canadian mining company Richmond Minerals Inc. (“Richmond“) announced that it has entered into an agreement with the Austrian Silbermine GmbH (“Silbermine”), a wholly-owned subsidiary of Swiss-based Aurex Biomining AG (“Aurex”), to purchase a contiguous group of 99 mineral claim units in exchange for 40,000,000 common shares in the capital stock of Richmond. The transaction is considered a so-called fundamental acquisition.

To finance the transaction, Richmond announced a non-brokered private placement of new shares. The First Tranche of 6,000,000 shares has been placed at a price of CAD 0.05 for aggregate gross proceeds of C$300,000. The company expects to close a second tranche for up to an additional $100,000 of gross proceeds on or around February 5, 2020.  

The closing of the Transaction remains subject to final approval of the TSXV and certain other closing conditions customary in transactions of this nature. Closing of the Transaction is anticipated to occur on or about February 5, 2020. CEO of Richmond is the Austrian Franz Kozich-Koschitzky, CFO is the Canadian Victoria Kuklina. Franz Kozich-Koschitzky and his fellow board member Andrew McQuire have both been involved in the collapsed silver mining project of the Canadian Vendome Resources Corp.

The Problem with mining in Austria

Persons in the vicinity of the silver mine have provided FinTelegram with information showing that exploration of the mining rights of the silver mine (now Richmond) is difficult or impossible. The environmental regulations are such that mining of metals (if any are found) is legally hardly possible. Apparently the purchase of the 99 mining rights is merely a kind of hidden reverse takeover (RTO) to reassure Aurex investors.

In fact, Richmond, founded by former stock exchange trader Warren Hawkins, has been searching in vain for gold in Canada for almost two decades and needs fresh investor money every year to survive. So far nothing has been found.

Preliminary conclusion

Shareholders and investors should be very careful with the Richmond stocks.

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