Just some added facts after spending sometime on these. I did notice something different from Q2 to Q3 in the Long-Term Debt note #10. It looks like the May 25th, 2011 due date has been added to the terms now. The good news here is that the rise of the Cdn dollar (until recently) actually dropped the amount owing from Q2. However the original loan of $15,000,000 US has added a further $3,136,548 in accrued interest. So the amount outstanding at Sept 30th is now $18,571,548. Moreso by now.

I also reviewed the Notes Payable in note #9. While we knew that an extra $1,400,000 was loaned to Liberty by JIIN on July 16th, a further $2,000,000 was loaned to Liberty on October 5th, last month. However when I break down the notes payable to JIIN, there were two extra loans. Looks like a combined $2,500,000 was also loaned to Liberty in August of Q3. This would explain the notes payable rising from 11 known notes at Q2 to 14 now by Q3. These amounts owed to JIIN are up to $16,706,370 from $12,553,714 at the end of June.

The accumulated losses over the last 5 years have grown to almost $90,000,000 with about $50,000,000 in debts still being owed.

So it becomes very clear that Q3 and probably Q4 will not have any turnaround effect on the company's financial health at all.

So where does the company go from here? Well its obvious its has and will always be in the Chinese hands to decide. I would expect some sort of announcement soon from a new CEO with a new business direction. What that direction will be is up to the Chinese. Since the last news release was signed off by the ex-CEO on Nov 10th things could change. But in it there is some positive news regarding McWaters as Wanderer pointed out. They do (or did) expect the underground ore from McWaters to be 2 - 2 1/2x better grade of ore. But this is still below what was originally expected. If they can process the 40,000 tonnes per month going forward at these higher grades there just may be enough cash flow to start chipping away the various obligations. If they expect that there are 550,000 tonnes of ore left at McWaters this would give the company about a years worth of mining life left.

I would say the best case scenario (for the Chinese) is that this next year may allow them to retrieve some of their money back. But it looks like more money will be required if they want to proceed with the Hart project. I would say to watch for news on it. Its already been delayed a few times and is now pushed into April 2011 to start construction on it. But that is based on the last CEO's expectations. Pay close attention to Hart. Further delays cut into the McWaters mine being depleted and the mill running out of feed. That is my best guess of an indication of what the Chinese plan to do with the debts outstanding.

In the meantime I would expect the Edmonton office to be closed and moved to Timmins. Cut cost at every point possible. The new CEO I would expect to remain a Canadian (it just looks good) but their input into matters may not be as bold as the last one. But read the reports closely kids for any signs of new direction.

Will they convert the debts and preferreds into common? It would look bad to the public I would say. They could foreclose on any loan right now and take this company private without getting into an ugly pr game with minority shareholders. But being a private entity going forward would allow the Chinese to not announce their financials to the public any longer. That could save them some embarrassment later on. Just one man's interpretation of the company's data.