is this the next madoff ponzi scheme

The whistle blower raised two possible issued to the returns of Madoff funds

1. Front Running - which when investigated proved wrong
2. Pozni Scheme - never investigated

One key issue raised by the whistle blower, was the auditor was small and unknown.

Lets look at this with Citigold?

Auditor - KS Black - has anyone heard of them? How many ASX 200 companies have auditors like a 6 person shop as indicated on their website www.ksblack.com.au

Second lets look at the accounts now:

1. Cash Flows - Net Cash Flow From investing -$30m. Covered by Cash Flows from financing approx $30m.

Yet the PP&E increased by $44m, how could this happen, look a little deeper I see they have conducted an independent valuation on the assets and this accounts for most of this $16m increase. This independent valuation was conducted by Sandercock Associates Pty Ltd....Has any one head of them?

and lets understand the basis of this valuation (not what they are worth today)Its actually a theoretical model valuation based on the following:

15 year mine life
Gold Production from 30k oz to 310k oz
Gold Price A$1,100
Discount Rate 12.5%
Plant Recovery 95%

Starts to sound more like CDO's?

Lets look at actual production, Gold Sold for FY08/09 of just 10,000 oz what possible basis could any independent valuation be conducted at 30k oz to 310kz oz per annum. A minimum increase of 300% on FY008/09.

This number is well above the market cap of the company, yet no has made a bid?

Am I missing something here or would the valuation be what we could sell it for today? And is the valuer really independent valuation to do a valuation on this basis?

The accounts are misleading at best. I suggest ASX and ASIC investigates this immediately.

Also what is the current cash? At the burn rate in the last quarterly announcement they would be negative several million dollars right now but no mention of this.

Be careful here everyone.

Please do your own research and I am happy to be corrected on anything here as I might be getting something wrong and for all investors I hope I am wrong, otherwise this could end in tears for many people.