Sunday, October 16, 2011

BCSC stands on guard for thee ... NOT


Below is the complaint delivered in person to the British Columbia Securities Commission regarding Fire River Gold many, many moons ago. Has there been so much as a whisper since? Of course not. Is this the case for EVERY matter the BCSC "deals" with? Absolutely NOT. (Read on dear gentle citizen)

This matter is directly related to grotesquely flawed disclosure of material information related to the Nixon Fork gold mine in Alaska by Fire River Gold. It is also related to improper activity contrary to the public interest by internet chat site Stockhouse.com in facilitating and promoting this deception through systemic censorship of facts related to their paying advertiser, Fire River Gold.

The complainant has documented Fire River Gold in blog form since August 2010. (http://firerivergold.blogspot.com) The initial reason for this was the track record of Mr. Harry Barr in the venture securities marketplace and his association with individuals known to be of questionable character. Upon initial review, the complainant’s interest was immediately stoked by the terms of the property vend-in from Mr. Barr’s “flagship” Pacific Northwest Holdings. PFN

The terms for the Nixon Fork property vend-in by Pacific Northwest Holdings to Fire River Gold amounted to a 650% mark-up on the property, along with the repayment of all funds expended by PFN. A written off property acquired for $ 500,000 had been flipped from one corporate hand to another at a paper profit approaching $ 4 million in a few months. That was interesting business.

From the outset it was clear that a large amount of money had been spent drilling and studying the Nixon Fork property in great detail by previous operators. Many tens of millions invested and a partially completed CIL circuit left to rust. There HAD TO BE a compelling reason why that very large investment was abandoned for what appeared to be a comparatively small sum.

Almost immediately the complainant suspected a water problem. There are compelling hints in public documents on file with the Alaska Government. Water tables are discussed in the operating and reclamation plans. There are a score of references in the material to an engineering study by Golder Associates on grouting and pumping the Nixon Fork mine workings. An internet search with the terms “Nixon Fork” and “water” brings a direct quote from the former chief executive of the operator/vendor of the Nixon Fork property, St Andrews (SAS.t) referring to the then ongoing Golder Associates study and the fact ore was below the water table. An engineering study by ground water professionals had obviously been completed yet I was not able to find any evidence of it on Sedar.

Reviewing the SAS material that was posted on Sedar I learned mining at Nixon Fork had been suspended supposedly due to the installation of equipment, with an oblique reference to “ore face availability issues” and the need for more drilling to “better define” the ore zones. SAS was nearing financial crisis and was floating a rights issue and private placement at that time. The next assumption was that SAS wanted to downplay problems at Nixon Fork long enough to complete its financings.

That seems logical considering the Nixon Fork property was written down to zero immediately after the funds were in the treasury. This would explain why the Golder Associates Study was not filed on Sedar. With the property written off, that study was no longer relevant to the company’s affairs and thus disclosure would no longer be required … a turn of events that would bury the matter to the relief of SAS management.

It was against this background that ALL disclosures of Fire River Gold moving forward were examined with a critical eye. The first objectionable disclosure was that the tailings pond contained “150,000 to 170,000 tons”. Since production records were kept since commercial operations began the amount of tailings could be estimated with certainty and that figure was at very least 25% lower than the minimum or 45% less than the maximum being held out by Fire River Gold. It should be noted that after the contradiction was posted on the blog with a link, that particular material on the Fire River Gold website was removed. Eventually a PEA confirmed the figure to be 114,000 tons of tailings.

Another disclosure, an often repeated mantra and one still posted, was that Nixon Fork was “Fully Permitted and Bonded”. That is only partially true as the mine does NOT have an EPA water discharge permit. That undisclosed fact has great significance if the mine has a water issue, a conclusion that I felt was certain.

Fire River Gold found itself in the position to be able to release the 3 year old cores from the SAS drilling program. It would have been recorded at the time that the drill was hitting water but that fact was never disclosed nor was there any hint in any news release of water issues. Instead it was a long string of carefully dribbled out assays, most apparently quite positive as SAS had drilled and re-drilled the same C3000 and C3300 zones multiple times since they contain the only remaining continuous ore zones on the Nixon Fork property … all beneath the natural water table.

While this was occurring Fire River Gold, and the rest of the Barr stable, relied on Agoracom for its publicity needs. As the OSC moved in to censure Agoracom due to conduct contrary to the public interest, Fire River Gold turned to advertising on Stockhouse. Immediately the content on the Fire River thread on Stockhouse was subject to continuous censorship. The complainant personally posted messages that contained only the following sentence. “Golder Associates Study” as a topic and in the body the simple question … “Where is the Golder Associates study?” Without fail the message was censored out of existence and the profile used to create it deleted, within a few hours at most. It seemed very clear that part of the “deal” between Fire River Gold and Stockhouse involved the continuous removal of material that Fire River Gold did not want revealed in the public domain.

This reprehensible conduct is contrary to the public interest.
The long string of news releases continued as the 3 year old core assays were exhausted and new results from Fire River Gold drilling replaced them. Once again the bulk of the holes were directed at the C3000 and C3300 zones where good results would be assured. At no time was there any hint of water problems in any release despite the certain fact the drill was hitting water. In fact, direct quotes from soon to be President Mr. Richard Goodwin contradicted the existence of a water table entirely. The man stated unequivocally that there was “no evidence” of a water table.

That was and is a deliberate falsehood, fully meant to deceive.

During this period tens of millions was raised from underwriters. It is unclear if these underwriters were aware of the very real danger of a major water table issue or not. It seems unlikely ANY investor would turn a blind eye to the fact that upwards of 95% of the reported ore at Nixon Fork was under the natural water table and that a critical engineering report addressing that fact was missing. One must say “unclear” because BOTH underwriters issued strongly bullish “Buy” recommendations to the public. It is hard to fathom that a single individual like myself could do far better due diligence than full-time professionals.

It should be noted that a series of PEAs on processing the tailings and resuming underground mining all returned VERY good numbers, numbers that were and are being breathlessly regurgitated by both Fire River Gold and PFN. These extremely bullish projections rely 100% on the ore being mineable, and that critical factor was NEVER disclosed with the numbers, or in the studies themselves for that matter.

Despite these many hints and clues the first real evidence and admission from Fire River Gold came on May 16, 2011. The Company finally admitted in a news release to having the Golder Associates study the entire time. It is incomprehensible how an engineering report that addresses a critical mining issue to the Company’s flagship property CANNOT be considered highly material and requiring disclosure. The contents of this report REMAIN undisclosed.

On June 17, 2011 another directed me to material filed on the CNQ database. (Fire River Gold was initially listed on the CNQ) http://www.cnq.ca/Storage/1229/110713_FAUNIXON_43-101-FINAL.pdf
This material is a geological report that explains in exacting clarity the water table problems at Nixon Fork and is dated August 22, 2009. Upon yet another review of Sedar I did, eventually, find the document. It was filed at the same time as at least 7 other documents. It truly was equivalent to finding a needle in a haystack and in my opinion that’s exactly what the intent was.

At this point I simply cannot continue to watch the public get completely screwed without taking the time and effort to complain about the matter to the BCSC. This is outrageous and insulting … first that a career promoter spanked numerous times by the BCSC has no fear of consequences whatsoever and secondly, from the available evidence, it appears others have no qualms about it either as long as they stand to profit.

AT A MINIMUM I expect the BCSC to demand disclosure of the Golder Associates report.

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So there we go and could it possibly get any more clear cut for the BCSC with the direct bloody admission from the co that it has ALWAYS had highly critical and undisclosed information since day one?

Well apparently this is not obvious enough to motivate the BCSC at all, not even for a phone call to tell these idiots to follow the damn rules.

So what DOES get the BCSC's immediate attention? How about a tip from a former career civil servant at the Venture exchange with 18 years at the taxpayer teat? Yes dear citizen a complaint from an individual named Mr. Donald Gordon started an INSTANT BCSC investigation that, after 15 months of legal expenses certainly cost the taxpayer well in excess of six figures.

The scope of the agreed to settlement to end the heinous matter? ... $ 15k and $10k of that is the BCSC fine. NO I'm not making this horsechit up.


And what of this Abbastar Resources, that glowing juggernaut of Venture propriety that is being fearlessly lead by Mr. Gordon?

Of course there was a failed PP at a nickle BEFORE a 1 for 4 rollback, and there is the small matter of half a million in liabilities with zero assets to speak of. Certainly over a year not meeting the lowest of listing requirements and is the BCSC concerned one single iota about the public dopes exposed to this paper?