Share Issue By Pivdenny Iron Ore Fails.

Pivdenny Iron Ore’s (PGZK: BUY) EGM scheduled for May 18, 2006 did not have quorum and the key issue on the agenda, approval of the subscription for an additional share issue, could not be approved. Concorde Capital: The company is controlled jointly by Privat and SMART Group who own equal stakes in it. The additional share issue was allegedly an initiative of Privat group and would effectively triple the company’s charter fund. Apparently the EGM did not reach a quorum due to its non-attendance by SMART Group representatives, which may indicate the existence of a disagreement between the two shareholders. However, we do not rule out the possibility of a new EGM later this year where the share subscription will be approved. We maintain our dilution-adjusted target of USD 0.14 for PGZK and sustain a BUY recommendation. If the share issue were not to come into effect, the target would be USD 0.33.