Monday 5th December 2016

Resource Clips


Posts tagged ‘bre-x’

Fortnight in review

March 28th, 2013

A mining and exploration retrospect for March 16 to 28, 2013

by Greg Klein

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Qualified person de-qualified

A geologist who faked assays and wrote false news releases has been slammed by the Ontario Securities Commission. On March 28 the OSC announced sanctions against Bernard Boily, a one-time VP of exploration for Bear Lake Gold TSXV:BLG who worked on the company’s Larder Lake gold project in the Cadillac Break of northeastern Ontario.

Some examples of his fanciful figures follow, with real results in brackets:

  • 8.5 grams per tonne gold over 1.2 metres true width (2.6 g/t over 1.2 metres)
  • 10.6 g/t over 6.5 metres (3.6 g/t over 6.5 metres)
  • 9.9 g/t over 6.5 metres (1.3 g/t over 2.1 metres)
  • 23.4 g/t over 0.6 metres (3.1 g/t over 0.6 metres)
  • 10.5 g/t over 2.1 metres (1.7 g/t over 2.1 metres).
A mining and exploration retrospect

His scam came to light in July 2009 after Bear Lake hired an independent firm, InnovExplo Inc, to compile a resource estimate. Bear Lake then hired other independents to investigate. Investors, meanwhile, launched a class action suit. That was settled in April 2010 under confidential terms.

The OSC banned Boily from trading securities for 15 years, fined him $750,000 with $50,000 costs, and barred him from QP-ing for life.

In a statement announcing the penalties, OSC director of enforcement Tom Atkinson said Boily’s behaviour ran “contrary to the important gatekeeper role played by qualified persons in the securities disclosure regime.”

But Larder Lake’s not barren. Drilling continues by Bear Lake’s JV partner Gold Fields Abitibi Exploration, a subsidiary of the multi-billion-market-cap Gold Fields Ltd.

In January a Vancouver ex-QP, John Gregory Paterson, got a six-year prison term for faking assays while CEO of Southwestern Resources.

Speaking of fraud

Bre-X, the outrage that brought about QPs and NI 43-101 in the first place, is coming to an anti-climactic end. That’s according to an Ontario judge quoted in the March 21 Globe and Mail as he granted a bankruptcy trustee’s request to drop its legal action against Bre-X, its former officers and other companies involved. The G&M stated that an Alberta court is likely to approve a similar request and an Ontario class action suit will likely be dropped.

But some people made money and it wasn’t just company insiders. Clint Docken, the lawyer representing the Alberta class action suit, told the paper that trustees Deloitte & Touche got $3.9 million in fees and paid its lawyers $8 million, leaving $79,000 in Bre-X coffers. “A lawyer representing the trustee was not available for comment,” the G&M stated.

No charges were ever laid and “little also came of a move by the trustee to freeze the assets of [John] Felderhof, his ex-wife Ingrid and former Bre-X chief executive officer David Walsh, who died in 1998.” Nor is there any trace of the $75 million the Felderhofs got by selling Bre-X shares, the story added.

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Week in review

December 7th, 2012

A mining and exploration retrospect for December 1 to 7, 2012

by Greg Klein

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Lawyer wants to cross-examine Bre-X wives

A lawyer representing Alberta investors wants to know what happened to $95 million that two families received from the Bre-X fraud. The multi-billion-dollar mining scam hit the fan in 1997 and the company filed for bankruptcy in 2002. On Tuesday class-action lawyer Clint Docken told media he wants to cross-examine Ingrid Felderhof, ex-wife of Bre-X chief geologist John Felderhof, and Jeannette Walsh, widow of founder David Walsh, about affidavits the women made concerning their financial situation.

According to Tuesday’s Calgary Sun, Docken told court that the company founder received $25 million from investors while the chief geologist got $70 million. Ingrid Felderhof lives in the Cayman Islands. Jeannette Walsh lives in the Bahamas.

A mining and exploration retrospect

Docken told the Calgary Herald he also wants an appraisal of a Cayman Islands mansion the Felderhofs bought 15 years ago for $3 million.

“It’s important to know what it’s worth now,” the Herald quoted him. “That’s an asset that should be taken into consideration. If this claim is successful, she may have to sell it.”

Lawyers representing bankruptcy trustees Deloitte & Touche want the suit dismissed, saying there’s no money left. The Calgary Court of Queen’s Bench adjourned the case to May 30. The Herald also stated that Ontario has a parallel class-action suit underway.

Darryl Stretch’s downfall

Solid Gold Resources TSXV:SLD announced on Monday that it replaced outspoken CEO Darryl Stretch. According to a company statement, the BOD appointed director/chief financial officer Alan Myers interim CEO.

Stretch courted controversy several times after coming into conflict with the Wahgoshig native band and the Ontario government. He said the Wahgoshig wanted him to fund a $100,000 archeological study prior to drilling claims near Lake Abitibi in northeastern Ontario. Saying the company couldn’t afford it, he told the Globe and Mail last March, “It’s not my obligation to go find arrowheads for those people, period…. If they don’t like you, you don’t work.” That outburst followed a January court injunction ordering him to suspend drilling and consult with the Wahgoshig band. The company filed for leave to appeal, arguing that consultation wasn’t a legal obligation.

The Wahgoshig, in turn, filed a claim in February against the province and Solid Gold. According to a company statement, “the claim states that ‘the mining act does not establish any requirement on the Crown or the holder of a prospectors licence to consult or accommodate aboriginal communities’ therefore the act ‘is unconstitutional and of no force and effect.’”

According to an August Solid Gold statement, “While the company was restricted from operating in the area, the [Wahgoshig First Nation] used information obtained from Solid Gold during the consultation process to stake mineral claims over an area approximately six kilometres long and 500 metres wide, bordering the Solid Gold property.”

By September, a judge granted Solid Gold leave to appeal the court-imposed drilling suspension. The judge, according to a company statement, wrote that he saw “no basis in the facts of this case for an imposition of a duty to consult on Solid Gold. If the Crown wishes to delegate operational aspects of its duty it must establish a legislative or regulatory scheme. The mining act does not presently contain such a scheme.”

Such a scheme was already underway. Under new rules to take full effect April 1, the province will require companies to consult native bands prior to early-stage exploration drilling on Crown land. The bands will have 30 days to express concerns, which could then block a permit.

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Week in review

September 28th, 2012

A mining and exploration retrospect for September 22 to 28, 2012

by Greg Klein

Saskatchewan miners safe after 17-hour ordeal

Widespread relief greeted the news Tuesday evening that 20 miners surfaced safely after 24 hours underground—including 17 hours trapped by a fire.

Smoke spread through PotashCorp’s TSX:POT Rocanville Mine in southeastern Saskatchewan as plastic insulation on coiled electrical cable caught fire just before 2:00 a.m. Tuesday morning. Nine workers made it to surface within minutes but 20 others had to make their way through smoke to refuge stations.

A rescue squad spent nearly 12 hours fighting the fire with water and foam, then waited hours for the mine to cool and ventilate.

All 20 were reported safe at about 6:42 p.m. Tuesday, nearly 17 hours after the fire started and over 24 hours after their shift began. The mine re-opened Wednesday afternoon.

In a statement released Wednesday, President Dave Coles of the Communications, Energy and Paperworkers Union said, “The potash industry has seen more than 50 fatalities in Saskatchewan since its inception in the late 1950s.”

Mining and exploration week in review

Last June a backup operator died at the PotashCorp Allan Mine. Two others died in accidents at Agrium’s TSX:AGU Vanscoy Mine in May 2010 and Mosaic’s MOS Esterhazy Mine in November 2009.

Reports suggest this week’s emergency was handled effectively, with the trapped miners waiting out their vigil safely in four well-provisioned refuge stations. Some of the miners recounted their experience to the Globe and Mail. At press time, however, the cause of the fire hadn’t been determined. An internal investigation is underway.

With a market cap of $36.7 billion, PotashCorp says it is the world’s largest potash producer, providing about 20% of global capacity.

Unsettling questions about South Africa

Turmoil continues in South Africa, increasing concerns about how far the labour strife will go. After strike-related violence killed 46 people at Lonmin’s Marikana platinum mine last August the company settled with employees, most of whom returned to work on September 20. But approximately 75,000 others remain on strike at mines operated by other companies, including Anglo-American Platinum (Amplats), Impala Platinum (Implats), AngloGold Ashanti, Gold Fields and Villa Main Reef. An additional 20,000 transport workers have joined the walkouts.

Adding to the tension is rivalry among unions and politicians, including President Jacob Zuma and his arch-foe Julius Malema. The latter talks of nationalizing the country’s mining sector and has encouraged strikers to make the industry “ungovernable.” Zuma counters that the strikes could plunge the country back into recession.

Meanwhile Lonmin’s pay raises, ranging from 11% to 22%, haven’t pacified the situation. On Wednesday Bloomberg quoted SBG Securities gold analyst David Davis, who says, “Workers are now demanding wage increases according to the ‘Lonmin settlement.’” That prompts the despairing question of whether a significant pay hike from one employer can help destabilize poverty-stricken countries.

Riot shuts down Chinese factory city

Last Sunday’s riot at one of China’s sprawling labour camps might indicate deeper problems within the world’s largest consumer of resources. Although details are murky, reports indicate a personal dispute in a Foxconn factory barracks may have lead to security guards beating a worker severely, which then sparked a much bigger confrontation. As of Friday, work was still shut down and the 79,000-person company city was being patrolled by riot-equipped company cops.

As the Sydney Morning Herald explains, “The unrest underscores the social strains of a Chinese export-manufacturing model where thousands of workers, mostly young, work long hours in military-style conditions, sleeping in dormitories and surrounded by security guards.”

Foxconn’s factory cities came to Western attention in 2010 after a wave of suicides at its 300,000-person complex in Shenzhen, China. The company manufactures electronic components for Apple, Nokia, Dell and Sony.

Guess what—Bre-X has no money

That revelation came out in a Calgary courtroom Thursday as bankruptcy trustee Deloitte & Touche applied to have investors’ class action suits dismissed. The infamous gold scam came to light in March 1997, when Bre-X shares plunged faster than a geologist falling from a helicopter.

But University of Calgary Finance Professor Gordon Sick comments on the futility of the lawsuits, asking, “Who else can pay but other shareholders?” As he told the CBC, “Shareholders are essentially suing themselves. The only winner is the lawyer…”

The hearing was adjourned until December 4.

Bean honoured

Gold bugs continue to gain mainstream support. On Tuesday the Financial Post reported Morgan Stanley’s top picks for commodity investments. Gold holds the #1 spot due to “interest rates, risk aversion and strong physical market fundamentals.” The firm’s commodities team likes silver for the same reasons. Among base metals, copper, nickel and, looking further ahead, zinc get good marks. Platinum, however, “lacks safe haven status and has limited investment demand.”

But no metal follows gold into second place. Morgan Stanley reserves that honour for soybeans. “U.S. production continues to get slammed and South American harvest results have also been disappointing,” the FP states. “Meanwhile demand remains high.”

Juniors are the only way to invest in graphite

In an interview published Tuesday by the Gold Report, Industrial Minerals writer Simon Moores points out that Chinese companies and private companies dominate the graphite market. Therefore “juniors are really the only way to participate directly in this market. The non-Chinese major players, like TIMCAL Graphite & Carbon in Canada, are part of larger minerals companies. So when you invest in Imerys, which is the parent company, you’re not investing in an exclusively graphite-focused company. Graphite is only a tiny percentage of its business…. Ultimately, your most direct option is to go for the juniors.”

Moores sees a bright future for graphite, which he attributes to “layers of demand.” The commodity’s new uses don’t replace older uses, so demand keeps growing. “Electric vehicles should be the catalyst for explosive growth in graphite demand,” he adds.

Just what this industry needs

The shortage of skilled mining specialists could reach 50,000 to 100,000 people in the next five years, according to one prediction reported by the Financial Post on Tuesday. Not only that, but the industry needs new types of expertise. The paper quotes Richard Ross, former CEO of Inmet Mining TSX:IMN, who says executive responsibilities are no longer limited to “building and running a mine.” They now include “all the issues around that mine, such as sustainability, government relations, business modeling, strategic planning, etc.”

To address those issues, Ross is now program director for York University’s Global Mining Management studies, a new field for MBA specialization. Additionally Laurentian University has created a School of Mines which will eventually turn out MBAs.

The FP quotes Dave Constable, former VP of FNX Mining (now Quadra FNX Mining TSX:QUX): “You need people with the full integration of skill sets, from capital market and business development to the technical, cultural and environmental aspects of the business.”

And if there’s anything MBAs don’t learn in their theoretical studies, someone can always show them how to do it.

How junior might help the juniors

While industry executives were preparing for the Toronto Resource Investment Conference this week, five minutes of fun called Gangnam Style went viral. The video might have inspired reflection for any CEOs disappointed with offspring pursuing celebrity ambitions instead of the practical world of business. According to a Tuesday Reuters dispatch, Psy’s video helped his father’s software firm double its share price.