Golden Queen Mining Co. Ltd. is classified as a passive foreign
investment company, or PFIC, which will subject our U.S. investors to
adverse tax rules.
Based upon our analysis of our assets as at December 31, 2012 and income
for the year 2012, we were a PFIC for U.S. federal income tax purposes
during 2012. We have substantial passive assets in the form of cash and
cash equivalents, and can provide no assurance that we will not continue
to remain a PFIC in 2013 and beyond. The determination of whether or
not we continue to be a PFIC would principally be based upon:
- The composition of our assets, the amount of which will depend, in
part, on our total net assets and the market value of our Treasury
portfolio, which is subject to change; and
- The proportion of our revenue that is passive income.
We have limited control over these variables. To the extent we do have
control over these variables, we may take steps to reduce the material
and adverse effect that our PFIC classification may have on our share
price. Further, we may consider additional capital markets or corporate
financing transactions in the future. Should we proceed with such
offerings, we cannot, at this stage, comment with certainty on timing,
amounts or particular uses of net proceeds. Depending upon the usage of
such net proceeds, we could continue to remain a PFIC. Since we are a
PFIC, U.S. investors are urged to consult their tax advisors regarding
the application of the PFIC rules to their particular circumstances.