This humble corner of cyberspace has been a vociferous critic of the Canadian market regulatory bodies for a long time, but today we need to give credit where due to the British Columbia Securities Commission (BCSC) for its decision to impose a cease trade order (CTO) on Barkerville Gold Mines (BGM.v) late yesterday.
The reason for the CTO is straightforward, but the fact that the BCSC has moved quickly and applied the rules as stand to BGM is something of a surprise. A very pleasant surprise and hopefully just the first part of a chain of events that will see Frank Callaghan prosecuted and (hope against hope) sent to prison, but a surprise all the same. The terse CTO release from the BCSC today gave this as its main reason:
“A technical report for the Cariboo Gold Property, completed in accordance with the Act and regulations, supporting Barkerville’s disclosure of the change in mineral resources at the Cow Mountain (the required record).”
Fact is, the 43-101 filed on Monday August 13th may have arrived (just a couple of hours) before the deadline for filing, but it did not support the June 28th NR, the one that started this whole bunch of shenanigans running and shot the BGM.v share price higher on heavy volume. That June 28th release claimed that the Cariboo gold project had an indicated (no inferred at all) resource of 10,626,100 ounces of gold. However, the 43-101 as filed Monday did not tell us how BGM.v and its now very suspect looking 43-101 compiler Peter George got to that figure. The technical report did not support the BGM disclosure of June 28th, but instead came up with different resource numbers for Cariboo which depend on whether you want to concentrate on indicated, indicated/inferred, uncapped or capped. Personally I prefer focussing in on the 4.25m oz indicated and 3.25m oz inferred capped numbers, but whichever set you use they do not add up to the 10.6m that BGM announced in the NR that shot the price higher. Period.
The BCSC made its position crystal clear to BGM on this point on July 10th as well. In its mail to the company the BCSC said that the news release must confirm the Company will file a technical report supporting its Cow Mountain estimates within the 45-day period following the June 28th, 2012 news release, and that it will promptly announce any material changes to its estimates that result from the audit or preparation of the report. So when BGM didn’t do that, the BCSC slapped its CTO on the company.
This is a good thing for a first step and the ball is now in BGM’s court. The company has to comply with its directive; it has to tell us how it got to 10.6m oz Au in the first place. If Callaghan, George et al can’t do that, it will then be clear that the company lied in its June 28th release and somebody got rich (while others got poor) via ill gotten gains. It’s at that time, if we get there, that we’ll find out whether the BCSC really has grown a pair at long last because if Callaghan is a liar, he must be taken to court by the authorities and when found guilty of his lying, sentenced accordingly. What we saw from the BCSC yesterday is a good thing, as it’s actually applying its own rules (much to the surprise of many, not just your author, according to mails received this morning) and actions of this sort will help clean up the stinking cesspool of the Canadian junior market. However, if Callaghan, George & Co can’t justify the June 28th NR and then get off with nothing much more than a slap across the wrists months or years later, it will be just another another sordid chapter of an old book, not the start of a new and more pleasant story.