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I have tweaked one of yesterday's posts to add some more...

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Neil1959

3,013 Posts.

1919

20/12/20

11:32

Post #: 49709713
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Originally posted by Neil1959 ↑

I wanted to add one further post for the weekend to reply to some comments I have read over the past few weeks.

1. "CGB/QBL operated its former QBL business out of the front room of a house and you needed to make an appointment to visit".

I don't fully agree with this statement but the poster was correct in stating that anyone visiting needed to make an appointment.

Birriga Road was a security secured/electronically locked residential premise, similar to many entrances you will encounter when entering commercial office space, in the CBD or suburbs. All visitors were required to make an appointment to get access. I made an appointment when I visited, and as far as I am aware, I have never heard or read of anyone ever being refused. It is a requirement of ASIC.

"Operating out of the front room" This is incorrect. CGB operated on the 1st floor at Birriga Road. There was a living space on the lower ground floor. Many commercial offices in capital or rural city CBD areas have residential spaces on their top floors.

They have now relocated to Castlereagh Street in Sydney and have serviced office space there, I believe.

View attachment 2754757

2. "CGB/QBL/AGV has never made a profit in over 10 years of trading".

This statement is technically correct but needs, and is missing some important context and background information to better understand why they have not yet returned a profit.

For those who are happy to read, I am adding add some further clarity to my post, particularly for new investors who may be wondering about the background, and reasons for the "lack of profit" with this company before it changed to a Medical cannabis company in 2019. You are welcome to agree or disagree.

NOTE: CGB were formerly QBL (Bauxite exploration 2011- 2018) & AGV (Gold exploration 2007 - 2010) before transforming to a Medical Cannabis company in August 2019, whilst retaining a mining division.

CONTEXT
Q: Was CGB (QBL) ever in a situation where it could have made revenues and profits with their mining business?
A1: (Reality)No, I don't believe so, as they were restricted by the condition of their exploration and MDLicenses. All Mining Exploration (Junior miners) operate under these same conditions in Australia. CGB(QBL) need to have their Mining and Retention Licenses (if req'd) approved, before becoming a full-blown Mining producer where they can, under Licence, legally mine for Bauxite resources and produce revenues, or, seek an offtake partner who can provide funding or develop the mine and take it to the next stage and move to a Retention Licence.
A2: Yes, (possibility) QBL was in discussion with a Chinese offtake partner when the Trade wars hit back in 2018. From all accounts, it appears to have shut down or suspended those discussions. They may have found a good financial partner if everything had come together. (speculation)

Q: Why did they have a large SOI before they became a Medical Cannabis company?
A: CGB(QBL) required ongoing equity support whilst undertaking the necessary work to be granted their Exploration and MDL licenses and permits, which also included developing and securing critical logistic infrastructure to transport ore to the Mourilyan Harbour, receiving environmental impact approval permits to conduct mining near-pristine rainforest areas, and the South Johnston river basin. They also were required to get traditional owner approvals and heritage-listed site approvals to develop the mining site.

Extract from "Barry Carbon, Chairman of Bauxite Resources - AMEC mining study 2013.^[1.]

Mr Barry Carbon , Chairman of Bauxite Resources, in correspondence to AMEC writes: “It takes about 1.5 million dollars a month for a new developer to stay active and afloat while they seek approvals for a medium-sized new project. It takes about five years in most of our jurisdictions to get approval processes to the stage of starting the project. You do the simple mathematics over 60 months. If you have less than 90 million dollars when you start your proposal, you will go broke or you will sell your company or your control, probably overseas."

EXPLORATION LICENCE
An exploration licence provides the holder with exclusive rights to explore for specific minerals within a designated area, with special conditions attached to the licence. The exploration licence does not permit mining, nor does it guarantee a mining lease will be granted. An often cited figure is that only 1 in 100 exploration programs find a potential economic resource and 1 in 1000 programs discover a globally significant resource.

Explorers by their very nature do not have production revenue – they rely upon equity raised from the market or private sources to fund their activities. Explorers have small windows of opportunity to actually explore or undertake preliminary studies. If delays in any of the areas discussed below result in them missing their window, they are often forced to wait until the same time the following year.

View attachment 2754788

A miner can choose to go through 3 stages of licensing: 1. Exploration Licence (QBL/CGB) 2. Mining Lease (CGB in process) 3. Retention Licence. *Note: ONLY when a company receives a mining lease do they have the exclusive rights to mine for minerals on their tenement. ^[2]

1. https://www.pc.gov.au/inquiries/com...ssion-counter/sub024-resource-exploration.pdf

2. https://www.lexology.com/library/detail.aspx?g=6ea86c96-ce2a-44aa-9efc-708727eb1966
'Mining rights in Australia'

MOVING FWD
I believe CGB made the right call and read the market well in regards to difficulties with the Australian Resource Industry and found a second industry that would support their ongoing operations as a public company and seek a more stable industry that would return revenues. The revenues are building and if everything falls into place in 2021, I am hoping, like all shareholders, that we will see some good profit returns for the company and our investment dollars.

Further reference
http://minexconsulting.com/survival-rates-and-financial-performance-of-australian-junior-explorers/

Some food for thought.

Have a good weekend and keep safe.

.....59

Expand

I have tweaked one of yesterday's posts to add some more clarity. People are welcome to agree or disagree...

'Comments' have been made about CGB, formerly QBL and AGV's management having never turned a profit in all their years of trading, and if they could be trusted to do that.

PRE CANNABIS - 2007 - 2018 CGB (QBL)
1. Like the hundreds of other Mining Explorer /Junior miners on the ASX, CGB, formerly QBL/AGV, under the provisioning in their Exploration Licenses and Mining Development permits refer Post#49703077, were restricted in the type of mining activities they could undertake that might have returned them revenues, leading to profits.

The company QBL(CGB) was working through the lengthy timetables and processes which are required when operating in close proximity to a heritage-listed area in North Queensland which also has a significant river basin and pristine rainforest bordering the tenements. More scrutiny and longer waiting periods are applied in these cases in order to obtain and be approved to receive the necessary licenses to commence mining and transport ore when close to these sensitive protected areas. Generally, not the fault of management per se but govt. restrictions as per approval guidelines.

2. They were not Mining producers., and IMO, I believe that the spotlight of criticism, and perhaps more so, a misunderstanding of their mining status was put on them as though they were. There is a clear difference between an Explorer and a Producer. One explores and gets the Licenses/permits to prepare to mine, the other produces and makes revenues. I give them kudos for finding a 2nd revenue resource when those global trade wars hit us back in 2018.

CANNABIS/MINING ERA 2018 - 2020 - CGB
From what I can read...
1. CGB has 2 Cannabis/Hemp Divisions producing revenues. The company is working towards turning a profit with the CannTab pills on the way for 2021.

2. Only one of the 30 Cannabis companies who are listed on the ASX has turned a profit through the sale of its products, in these early stages of the global Cannabis legislation deregulation. The last quarter shows that even this company ran a deficit for the period. See Post #48956630.

3. CGB is/has been cutting expenditure and has just announced the wiping of its debt without depleting its cash reserves. I believe this will enable and help the company to work towards making a profit as it has more funds available to put back into the business.

4. CGB has maintained a healthy working bank balance through the majority of its years of operations to protect its operations and shareholders alike.

5. ASX companies still operate effectively and can have significant share prices with large S.O.I's. See post #49700759.

Even though CGB's share price is low, from what I can read, it is not stopping the company from achieving its objectives.

Cheers...59

Last edited by Neil1959: 20/12/20

CGB Price at posting: 0.7¢ Sentiment: None Disclosure: Held
4 Upvote

2 Great analysis

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