Dear Mr. Peregoy:
We believe Solv-Ex Corporation ("Solv-Ex") has failed to meet its minimum stockholders equity requirement for listing on NASDAQ SmallCap Market.
Solv-Exs Unaudited Balance Sheet included in Form 10Q for its second quarter ended December 31, 1996 filed with the Securities and Exchange Commission on February 14, 1996 showed that Solv-Ex valued certain assets titled "Net property, plant and equipment" at $64,554,929 and other intangible assets at $4,514,985. Solv-Exs total stockholder equity was $37,054,293. The NASDs NASDAQ SmallCap Market minimum maintenance listing requirement requires Solv-Ex to maintain at least $1 million in stockholders equity.
Solv-Ex and its chairman have been accused by the U.S. Securities and Exchange Commission and certain of its shareholders of numerous fraudulent activities. We have shown that Solv-Ex has issued completely false, totally untrue statements about its plants capacity and condition. Last year, Solv-Ex obtained approximately $70 million from a money manager who misappropriated the funds for personal gain. We do not believe that Solv-Ex has spent $67 million on its plant. We believe that Solv-Ex has grossly overstated the expenditures that qualify to be capitalized to create this asset. These expenditures have never been independently audited. The Solv-Ex plant can not be used to economically produce any marketable product. Therefore, it has no going concern value. The Solv-Ex plants market value can only be estimated by appraising the NASDAQ Issuer Services used market price of its individual components, less needed repairs, transaction cost and transportation expenses.