re: lenni2001
The last article says it all...the first article is about an arbitration Dragon didn't report to their shareholders. They will never get compensated and that's why they force Mr. Searle to step back..
See ya
Lenni
Posted Thu, 02 Dec 2004
Dragon and MDM Head for Showdown
The first round of court decisions has been handed down in dispute between Dragon Mining and MDM relating to the construction of the processing facility at Dragon's Svartliden Mine in Sweden.
Dragon launched an application in the regional District Court to prevent MDM from removing any of its equipment from the site thereby giving Dragon access to the equipment to complete the construction of the processing facility. The application along with the subsequent appeal were both turned down.
Gordon McCrae, Managing Director of MDM, comments " Dragon launched this application during contract execution while MDM were on site and without our knowledge, fortunately we are well represented in Sweden and we are very pleased that the 1st round of decisions went in our favour."
When asked whether there were plans to remove the equipment from the site he went on to say, " Obviously both sides are preparing their side of the story, however things are going slowly as we cant even agree on whether MDM suspended the contract or Dragon terminated it"
A bit of investigation into the facts reveals that a press release was published on Miningweb on the 16th of July 2004 in which Dragon acknowledged that a claim was submitted by MDM for variations.
" Unfortunately that was where it ended" comments McCrae, " We had no choice but to eventually issue a note of suspension and if you check the dates this was definitely done before Dragon issued the termination notice." " It is a pity when contracts go this way but we believe that the arbitration process will be fair " he closes.
-------- Michael Quinn
Friday, December 17, 2004 INCREASED material prices and a dispute with its prime contractor have seen the development costs escalate at Dragon Mining's Svartliden gold project in Sweden from an originally estimated $12.25 million to around US$17.45 million.
Dragon said that under the terms of the contract it had with South African South African engineering contractor Metallurgical Design and Management, the costs to complete the plant are at the expense of contractor. Legal avenues were being explored, said Dragon.
Meantime the company also said an additional US$2.3 million had been spent in advance of operating costs, principally on mining and earlier construction of a clear water dam.
Better news has been the positive reconciliation of grade control drilling to date with reserve drilling, whereby in situ grade controlled values are reportedly 0.5-1.55 grams per tonne higher than the 7.46gpt estimated previously.
Meantime first gold is now expected in February. The 300,000 tonnes per annum CIL plant at Svartliden will produce 70,000 ounces in its first year, thereafter dropping back to 50,000oz per annum.
Shares in Dragon closed up 1.5c at 26.5c.
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March 03, 2005
Dragon Mining Survives …. But Only Just.
By Our Man In Oz.
If 1992 was the annus horribilis for The Queen, Dragon Mining will mark down 2004 as its own year of torment. Cost blow-outs, construction delays, and a bitter dispute with a construction contractor turned what should have been a time of celebration into a near-death experience. Rather than rejoicing in August with an inaugural gold pour at its Svartliden mine in northern Sweden it ended up re-negotiating debt, re-scheduling construction deadlines, and calling in a fresh construction crew while everyone from the chairman down spent every waking hour with fingers and toes crossed.
The full extent of the crisis is told in one number; 65 per cent. That is the size of the cost overrun at Svartliden, a project Minesite had the pleasure of visiting last May, just as the post-winter thaw was making life more bearable on site near Lyksele. Back then, Dragon management was full of confidence that its South African contractor would deliver Svartliden on time and on the budget of US$12.25 million. Wrong, hugely wrong, thanks to a few oversights such as some of the plant installed being so old that Swedish experts noted that there would be no spare parts available. And that was before it become apparent that a hot weather contractor had not the foggiest idea about what happens to a processing plant in the extreme cold of an address which markets itself as the capital of Lapland.
Without going in to the detail, partly because it is fast becoming a lawyer’s picnic, Dragon now confesses that “the Svartliden project experienced a cost overrun of some A$11 million.” Using an exchange rate of US72 cents to the Aussie dollar that infers a blow-out of US$7.9 million, to produce that 65 per cent cost increase. As compensation for shareholders, Dragon management says “the board and auditors will review the accounting impact of the cost overrun and the potential to recover costs from the contractor.”
In the meantime, while the bean counters and legal eagles have a field day picking over the remains of a failed construction deal, Dragon is getting back on its financial feet. It has restructured its balance sheet for the second time in six months, thanks to the support of Macquarie Bank which has agreed to an accelerated exercise of 36 million options which lift its stake in Dragon to 9.7 per cent. As well, Macquarie has agreed to a major debt restructure which should leave Dragon better able to service outstanding payments on Svartliden.
That, as they say, is the bad news. In the good news department the first point to celebrate is that Dragon has survived. Secondly, it is about to make its first gold pour at Svartliden which remains on track to produce 70,000 ounces of gold in its first year, and then ease back to 50,000 ounces. Delayed as it is, those targets are largely a mirror of the original plan, which has simply blown out in time. The real interest in the company remains its potential projects in Finland, acquired from the Outokumpu stainless steel group when it withdrew from mining.
In terms of future promise, and assuming Dragon does not stuff up again, the company should be able to hit its target of becoming a 200,000 ounce a year European-focused gold producer with production costs of less than US$250/oz. That grand plan starts with Svartliden, moves to the Vammala project in Finland later this year, and then on to the Pampalo project in 2007, followed by a pipeline of well-defined projects sold by the fastidious Fins, so it is reasonable to assume that everything is in order.
On the market, Dragon is slowly regaining its composure. A fall from around A35 cents last July to a low two weeks ago of A22.5 cents has been arrested with the stock closing on the ASX yesterday at A26.5 cents
Lessons: And didn’t our grannies teach us these. First. Never buy cheap shoes or sign up for a cut-price contract. Second. Never believe that someone from a hot climate understands the first thing about icicles on your nose or moose on the road. Third. Make sure there is sufficient funding in place to handle a nasty construction schedule overrun of, oh, say, seven months, and a cost blow-out of, oh, say, 65 per cent.
DRA Price at posting:
0.0¢ Sentiment: None Disclosure: Not Held
(20min delay)