Who Knows What Lurks at the Heart of Chinese Balance Sheets? Guang Group May Be Sunk Due to Hunan Mine

Prior coverage:
China Top 100 Developer Guang Property Rumored Bankrupt; Firm Says Capital Tight, But Not Bankrupt; Was Paying 21.6% Interest
Guang Group Needs ￥500 Million; High interest Loans To Blame

The Guang Group story grows more interesting. There is speculation that the firm is in financial trouble due to money spent on a mining project in Hunan province.
Real estate giant denies rumor of bankruptcy

The company was reported to have realized strong sales volume with its housing developments in Huizhou and it received 2 billion yuan in funding support from its partner.

Speculation persists that the company’s vast expansion in a mining project in Hunan Province was a primary driver in its fiscal downturn. Company president Guo Yaoming declined to comment.

Elsewhere, there is speculation that the Huizhou government (site of a ghost city) is urging Century Golden Resources Group (金源) to buy the company. 光耀承认数盘停工 知情人士称湖南开矿拖累光耀

Two weeks ago, the Southern reporter learned from the Guang Group insiders, government officials and other sources confirm, Huizhou municipal government set up a "Guang Group Problem Project Work Group" does not want Guang to go bankrupt because it is bound to increase pressure on the relevant government departments. Therefore, when discussing solutions, urged the government level Jinyuan acquired shine.

Although not officially confirmed by Guang Group, but internal management gave evidence. Yesterday, the Guang Group south of Dongguan project-related management personnel have told reporters that the Guang Group news doesn't affect the Dongguan project, but does damage the brand, "future projects into the market, is likely to put aside Guang Group."

Guang Group looks like a textbook example of misallocation of capital during a credit boom. How many others like it are out there?