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Posts tagged ‘Southwestern Resources’

Week in review

January 18th, 2013

A mining and exploration retrospect for January 12 to 18, 2013

by Greg Klein

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Colombia kidnap victims still missing

By press time Friday, little was known about the five people abducted earlier in the day from Braeval Mining’s TSX:BVL Snow Mine gold project in northern Colombia. The three employees and two consultants included a Canadian, two Colombians and two Peruvians. The Peruvian consulate identified two victims as Javier Leandro Ochoa and Jose Antonio Mamani. The other names haven’t been released.

Colombian kidnap victims still missing

Military sources say the victims were abducted
in a rural area of Norosi municipality, in Bolivar department.

The hostages were taken by members of the National Liberation Army (ELN) in a region described as a traditional ELN stronghold, the Globe and Mail reported. With an estimated 1,500 members, the ELN is much smaller than the Revolutionary Armed Forces of Colombia (FARC), news reports stated.

Although FARC holds peace negotiations with the government, “the ELN has been seeking peace talks … without success. Unlike the FARC, it has not renounced ransom kidnappings,” according to the G&M.

“Miners in Colombia have traditionally paid tributes, or ‘war taxes,’ to rebels and other illegal armed groups,” the paper added.

Geologist gets jail

A Vancouver court handed former mining executive John Gregory Paterson a six-year prison sentence for his faked assay scam, the CBC reported on Friday. Paterson pleaded guilty last September to four counts of fraud.

As CEO of Southwestern Resources and a qualified person, Paterson signed off on 433 assays that he invented between 2003 and 2007. His make-belief numbers were used in a 2005 PEA for the Boka Gold Project in China.

According to the CBC, Paterson’s lawyers told a sentencing hearing that “he suffers from severe depression and argued he didn’t carry out the fraud to line his pockets. Instead, Paterson was motivated by wishful thinking and a crippling fear of failure.”

But the Crown prosecutor told court how investors suddenly lost their savings. “Really, the floor fell out from underneath them,” the CBC quoted him. “It was an absolute shock and a terrible loss.”

Read more about Paterson’s Boka gold scam here.

Land claims clash with claim-staking

A possible overhaul of British Columbia’s claim-staking process could give natives more power to block early-stage exploration on Crown land. A Monday Vancouver Sun article discussed implications of a December decision by the Yukon Court of Appeal, which ruled that the territorial government must consult and “accommodate” the Ross River Dena Council before awarding mineral claims within the Ross River area.

So far the ruling concerns a region surrounding one native band. But it might have wider repercussions within the Yukon and B.C. As the Sun pointed out, the three judges behind the decision also sit on the B.C. Court of Appeal, “meaning they could rule similarly in any separate B.C. case.”

Mining Association of B.C. spokesperson Zoe Younger told the Sun that B.C., unlike the Yukon, doesn’t automatically approve exploration once a claim has been staked. Different circumstances “have different trigger points and thresholds,” she said.

Nevertheless the Sun stated that Andrew Gage, a lawyer with West Coast Environmental Law, “called the Yukon decision ‘hugely significant’ and urged the B.C. government to take notice or face the prospect of more litigation with the same results in this province.”

In a statement issued Monday, the Association for Mineral Exploration B.C. said, “We are encouraging the Yukon government, First Nations and Yukon Chamber of Mines to work together to resolve this issue in a practical way that brings certainty to everyone. AME BC is supporting YCM and following this important file closely. The government of Yukon has been given 60 days to determine if it will appeal the decision to the Supreme Court of Canada.”

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Geologist faces jail

September 18th, 2012

QP admits fraud, prosecutor wants 10 years

By Greg Klein

The former head of gold exploration company Southwestern Resources faces a possible 10-year prison term, the Vancouver Sun reports. John Gregory Paterson, who was the company’s president, CEO and largest shareholder, pleaded guilty to four counts of fraud involving false assay results from the Boka Gold Project in China. A sentencing hearing is underway in Vancouver.

But the process of justice has been slow. As Sun columnist David Baines reports, Paterson scammed shareholders from May 2003 to February 2007, when he issued 25 press releases reporting 446 assay results—of which 433 were fictional. Paterson was the qualified person who signed off on the phoney numbers.

He managed to continue his fraud during a 2005 PEA. His numbers were used to estimate a resource of 966,000 gold ounces indicated and four million ounces inferred.

QP admits fraud, prosecutor wants 10 years

A multi-million-dollar fraud involving false drill results could bring the former head of Southwestern Resources a lengthy prison term.

It was only in 2007 that Southwestern executives and board members became suspicious about persistent delays in completing a pre-feas. In June of that year they launched an internal investigation. Paterson resigned. A delegation to China failed to locate Project Manager John Zhang, who received half a million dollars from Paterson.

The Crown prosecutor told court that Southwestern paid its CEO over $1 million a year from 2003 to 2005, rising to over $2 million in 2006. In his final year Paterson made $372,500 in salary and severance. He gained another $5.6 million by trading Southwestern shares through five brokerage accounts, the Crown added.

A class action lawsuit was settled in September 2008 for $15.52 million. The company put up $8.32 million while Paterson and his wife paid $7.2 million.

In June 2009 the B.C. Securities Commission slapped Paterson with a lifetime ban on trading, acting as a QP or engaging in IR activities. Shortly afterwards the Australasian Institute of Mining and Metallurgy revoked his membership.

The commission stated that due to the lawsuit, Paterson “is unable to pay the approximately $3.5 million to the BCSC that would have been required in this matter.”

The BCSC also found that on July 16, 2007 Paterson dumped 50,000 Southwestern shares at $5.96, knowing the company was about to come clean. When the news broke two days later, Southwestern plunged to $2.90, reducing its market cap by $157.7 million.

In May 2009 Hochschild Mining HCHDF, a JV partner with Southwestern in a Peruvian gold-silver project, took over the company for $0.50 a share. The deal totalled $22.5 million.

RCMP laid charges in December 2010 and the case came to court last September 17.

The sentencing hearing continues in Vancouver where, the Sun reports, Paterson is expected to dispute Crown statements about the extent of damage his fraud inflicted.