Pershing gold: We Believe Shares Are Virtually Worthless

1. Hindenburg Research December, 13, 2017
Pershing Gold: We Believe Shares Are
Virtually Worthless
• Pershing Gold’s director and controller of approximately 28.4% of voting securities,
Barry Honig, has a questionable history.
• The company’s key asset, the Relief Canyon Mine, was purchased with backing from a
hedge fund whose executives were federally indicted for operating “like a Ponzi
Scheme," according to prosecutors.
• The mine, which previously targeted production in 2014, has yet to commence
production and only recently completed a pre-feasibility study.
• Pershing is nearly out of cash and will need to dilute shareholders by an estimated
40%+ in order to bring the mine into production.
Pershing Gold Corporation (Nasdaq:PGLC) is an emerging gold producer whose primary asset is the
Relief Canyon Mine in Pershing County, Nevada. The company is listed on the NASDAQ Global
Market and the Toronto Stock Exchange under the symbol PGLC and on the Frankfurt Stock
Exchange under the symbol 7PG1.
Pershing Gold’s Director and Key Backer, Barry Honig, As Described
in Plea Agreement
Honig was Chairman of the company until he resigned on February 9, 2012. He currently remains as
director. While no longer the key front man, he is still a key backer of the company, according to the
company’s most recent 10-Kdated December 31, 2016. As of that filing, Honig owned 8,842,763
shares of PGLC, representing approximately 28.4% of the company’s voting securities.
In 2015, Joseph A Noel, the CEO of a penny stock company called YesDTC Holdings, was charged
with securities fraud for running a pump and dump scheme. Noel was charged both criminally and
civilly, and ultimately pled guilty. A copy of the plea agreement in which Noel confessed his crimes to
authorities, also details Noel’s account of the role that Barry Honig played in the scheme, including

2. setting up a reverse merger via a shell company he controlled and by encouraging a focus on stock
promotions to drive up the price rather than focus on fundamental drivers. Per the plea deal:
“In the fall of 2009, I met Barry Honig, who I understood was a large investor in small cap
companies. Later that fall, Honig suggested that we do a reverse merger to create a publicly
traded company to take control of Allay Online's assets and that I be the CEO of the new
company. I was very excited with this opportunity. Honig had the experience and
resources to implement the reverse merger. He proposed that we utilize PR Complete
Holdings, Inc., a publicly held shell company that Honig controlled, and that is what
we did...”
“...During 2010, I worked hard as CEO to make YesDTC a successful enterprise.
However, I soon realized that it was not Honig's priority to make YesDTC successful.
Instead, I realized that Honig wanted to use promotions to drive up the price of
YesDTC shares and then sell his shares. Honig introduced me to David Zazoff who Honig
said would promote YesDTC stock. Honig said that Zazoff was a ‘magic maker," who could
make the price of YesDTC stock rise through his services. Honig made it clear that I should
not ask questions about how Zazoff achieved his success.’
Honig has denied the claims. We reached out to Pershing's investor relations for comment and have
not heard back as of this writing.
Pershing Purchased its Primary Asset from Firm Run by Mark
Nordlicht, Indicted For Allegedly Running $1 Billion Investment
Fraud
Current key holder aside, the company’s early partners and lenders have recently been arrested and
charged with federal securities crimes. On August 30, 2011, the company, through a wholly owned
subsidiary, Gold Acquisition Corp. (“Gold Acquisition”) acquired the Relief Canyon Mine for (i)
$12,000,000 cash and (ii) $8,000,000 of senior secured convertible promissory notes issued to Platinum
Long Term Growth LLC (“PLTG”) and another entity. PLTG was run by an individual named Mark
Nordlicht. On December 19, 2016, Mark Nordlicht and 6 other executives of Platinum Partners were
arrested by federal authorities for allegedly running a $1-billion fraud. In particular, the valuation of
Platinum's assets was called into question by prosecutors. Per the press release:

3. “Their returns were the result of the overvaluation of their largest assets, which eventually led
to Nordlicht and his co-conspirators operating Platinum like a Ponzi scheme”
On April 9, 2012, a press release (which has since been removed from the Pershing website)
highlighted the ties Pershing had with Platinum and its founder Mark Nordlicht (emphasis added):
“Converting the debt resulting from the Relief Canyon Mine acquisition has been a priority
for Pershing as we desired to strengthen the balance sheet and move forward with
autonomy. It has been a pleasure working with Mark Nordlicht and Mark Mueller from
Platinum Long Term Growth LLC as they have proven to be great long term value
added partners with Pershing since the very beginning. Pershing would like to thank
them for their assistance in working with us to help us carry out our vision.”
We are troubled that the described “long term valued added partners” Pershing worked with from the
very beginning were later indicted on charges of securities fraud, in part relating to asset valuation. We
reached out to Pershing's investor relations for comment on the historical relationship with Mark
Nordlicht and Platinum and have not heard back as of this writing.
The Company’s Key Mine Asset Has Been Delayed for Over 3 Years
and Has Produced Zero Revenue Since Acquisition
Aside from the issues with the company’s current and historical backers, the operating history of
Pershing has literally produced zero mining revenue since inception.
On September 17, 2012, the company issued a press release announcing “Pershing Gold Reports
Results and Progress Toward Reopening the Relief Canyon Mine.” The release set a target date for
the mine to be producing gold in 2014. It used multiple phrases indicating the speed with which gold
production would be initiated:
• “well on its way to putting this long-neglected gold mine into production.”
• “unique opportunity to achieve a fast-track path to production at the Relief Canyon”
• “re-starting the mine and resuming gold production should proceed with minimal delays and
capital investment.”

4. Fast forward to the present: after almost 5 years following that initial release, the company has not
resumed production and hasn’t generated a dime of revenue. On June 5, 2017, the most recent Relief
Canyon milestone the company highlighted was the completion of a preliminary feasibility study. In
case the name of the study left any doubt, pre-feasibility studies are typically the step undertaken
before a full feasibility study. In other words, it’s generally the study before a study and is used to
determine whether a mine is potentially viable.
Between 2012 and the present, the company’s announcements have included numerous token
accomplishments such as the completion of a preliminary economic assessment in June of 2016, and
preliminary internal economics in November 2015. Frankly, we’re not entirely sure what the difference
is between a preliminary economic assessment and a preliminary internal economics report, but as far
as we can tell, one of the differences is about 8 months of elapsed time in between the announcements
(but still zero revenue).
Pershing Gold is a Capital Raising Machine
Despite the company’s inability to generate one dime of revenue since its purchase of the Relief
Canyon Mine, it has been quite successful at raising capital from share offerings.
Looking back at the same September 2012 press release indicating the speed with which the company
aimed to start production, we find this gem:
“Because Pershing Gold already has a fully permitted and built heap leach processing
facility, re-starting the mine and resuming gold production should proceed with
minimal delays and capital investment.”
Since that release suggesting production would resume with minimal capital investment, the company
has announced the following capital investments and proposed capital investments:
1. August 12, 2013: Raised $9 million in a private placement
2. August 27, 2013: Raised $11.1 million in a private placement
3. July 31, 2014: Raised $12.2 million in a private placement
4. October 20, 2014: Raised $10 million in a private placement

5. 5. April 22, 2015: Raised $11.5 million in a private placement
6. February 26, 2016: Raised $8.15 million in a private placement
7. March 29, 2016: Raised $6 million to Advance Relief Canyon
8. December 1, 2016: Signed a term sheet for a $20-million credit facility
9. December 8, 2016: Raised $7.5 million from a secondary common stock offering
Even More Capital is Likely Needed in the Near Future
In addition to the capital raises above, the company has indicated that yet more capital will be needed
to get the Relief Canyon project to production. A June 5, 2017, press release stated, “The Company
will be reviewing various options to cover future capital needs, including debt, royalty or stream
financing, gold off-take agreements, investment from strategic investors, or combinations of those
approaches.”
As of the latest 10-Q, the company had only $7.8 million of cash, cash equivalents and restricted cash
equivalents on the balance sheet. Given the anticipated expenses, the company expected to have $4.2
million in cash, cash equivalents and restricted cash equivalents at the end of fiscal year 2017. The
quarterly release stated quite plainly, “We expect to require additional financing to fund our current
operations in the first quarter of 2018.”
Aside from merely needing cash to keep the lights on, in order to advance the Relief Mine, the
company has stated that it needs capex and working capital of $35 million, according to its preliminary
feasibility study. Given Pershing’s current market cap, such a raise would represent over 40% dilution
to the current equity structure.
Conclusion: This Game Has Gone on Too Long
Given the company’s inability to bring its key Relief Canyon mine to production in the past 5+ years
and given the questions relating to its key backers, we have very little faith in the value of the company
or its mining assets. The $7.8 million of cash on the balance sheet has value, but we believe the
company will burn through that in short order based on its disclosures. Collectively, we see enough
red flags with Pershing to warrant a heavy amount of scrutiny. Buyer beware.

6. Disclosure: I am/we are short PGLC.
I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it.
I have no business relationship with any company whose stock is mentioned in this article.
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