Audit problems for VVC

If you Google VVC Exploration, (VVC-V, VVCVF-O) the slogan “Your ticket to China” still comes up, but the company hasn’t been spending time in China the way it used to.

After pulling out of its sole Chinese joint venture with Tong Guan Glory Mining earlier this year, VVC’s only remaining properties are in northern Ontario and in Newfoundland, where the company has an 18% interest in the Beaver Brook antimony mine.

VVC announced that it wouldn’t be filing its 2006 audited financial statements on time because it’s having trouble auditing its former gold project in Tong Guan, China.

The company dissolved the agreement because of declining production and revenues; increasing costs; a lack of co-operation with the joint-venture partners; fierce local competition for new properties; and unjustifiably high audit fees, as well as accounting and supervision costs, in light of low gross revenues.

VVC’s Chinese partners were upset about its decision and the relationship between the two companies deteriorated, making it difficult for VVC employees to visit the project site and collect information for the audit.

According to VVC, it took months of “fierce negotiations” before the local authorities approved and implemented the dissolution plan to end the joint venture.

Now VVC’s auditors are waiting to receive necessary documents from Tong Guan Glory Mining so they can complete the audit.

VVC says the project is a complete writeoff because it has been too difficult to determine which assets it can recover, and the value of those assets. The amount VVC has invested was not disclosed.

The company expects to have filed its annual financial statements by the end of July, after which the securities commissions in Ontario, Quebec, British Columbia and Alberta will be able to impose an issuer cease trade order against the company. The OSC issued a temporary management cease trade order at VVC’s request in early June.