To All / VSE Steps in to Halt the Hype
October 25, 1996
Vancouver Exchange goes public against hype. For those of you who
aren't familiar with my feelings on promoted companies, I HATE HYPE.
VSE slaps Booker's wrist
Vancouver junior amends overly enthusiastic release about Hearne Hill copper-gold discovery, but the firm still says it has a 'sweet' find
Vancouver junior Booker Gold Explorations Ltd. has had to eat crow for being "overly enthusiastic" in a news release earlier this week that claimed it had discovered a copper-gold resource in northern B.C. worth $1 billion in the ground.
The apology came after the Vancouver Stock Exchange halted Booker on Wednesday and gave company officials a dressing down for the wording of a news release put out Monday that exchange officials said was "unbalanced."
"In the excitement of this discovery," Booker director Shelley Hallock said in an "amended" release late Wednesday, "the original news release was couched in overly enthusiastic terms, and Booker Gold would like to apologize to all parties affected by our exuberance."
The company acknowledged that it was "premature" to compare the so-called Hearne Hill discovery to two former copper producers nearby, or to calculate that the property has a 28-million-tonne deposit worth $1 billion. The company said these figures should be "disregarded."
"Additional work . . . will be required to establish definitive tonnage and grades for this property," the amended release added.
But company officials were less humble in interviews yesterday. "We've got the goods and can back it up," Hallock said. "We did whatever the VSE required to get back on the board."
"We stand by that news release," said David Coates, a Booker spokesman based in Toronto. "We believe we have another sweet hole in the next set of assays."
VSE surveillance manager Angela Huxham said, while "there is definitely merit" to the Hearne Hill property, the VSE insisted Booker put out a release "a little more balanced than the previous one."
Booker re-released the assays it published Monday for six holes. "The fact remains," Hallock said in the amended release, "Booker has located further high grade core mineralization in the copper-gold porphyry system."
The VSE was going to reinstate the shares for trading yesterday morning but Booker then asked for a further halt, pending the announcement of a private placement.
Eagle & Partners of Toronto is to handle the placement of 600,000 units at $4 a unit, with each convertible into one common share and one warrant, exercisable at $5 within nine months. The money is to be used to accelerate exploration of the Hearne Hill property.
The placement will need the VSE's approval. The exchange is likely to give unusually careful scrutiny to the terms, including whether the pricing adequately reflects what happened to the shares after the original press release.
The shares (BGE/VSE), which have a 52-week range of $7.25 to $2.35, closed up 36¢ at $4.15 on Monday, prior to the news release being issued.
On Tuesday the tightly held stock -- there are only 8.3 million shares outstanding -- got as high as $5 before closing at $4.40, up 25¢ on the day.
On Wednesday, they traded for almost five hours before the VSE halted them at 11:19 a.m. Pacific time. On a volume of 124,900, the shares got as high as $4.60 but closed at $4.32. The stock did not trade yesterday.
The VSE is not rolling back any trades. "People that are buying shares on that kind of disclosure are doing so at their own risk," Huxham said.
The Hearne Hill property is near Smithers, B.C., about 15 kilometres from two former copper mines operated by Noranda Mining & Exploration Ltd.
MORE:
Friday, October 25, 1996
Mining juniors mount defence as U.S. promoter charged, stocks halted
Two Vancouver mining juniors swung into damage control yesterday following revelations that their U.S. promoter has been charged with securities fraud.
"This is pretty much a mess," said George Heras, director of Highgrade Ventures Ltd. "We're caught in the crossfire . . . and trying to clear this thing up as soon as we can."
The Vancouver Stock Exchange halted trading in Highgrade on Tuesday and Yukon Gold Corp. on Monday pending clarification of the company's trading records and promotional activities, said Angela Huxham, the exchange's director of surveillance.
The allegations against Florida promoter Patrick Kephart, 32, mark the second time this month U.S. regulators have cited promoters of VSE stocks for allegedly bribing brokers.
Daryl Buerge, former chairman of Cam-Net Communications Network Inc., was charged Oct. 10 with securities fraud in a Wall Street FBI sting operation.
In a civil suit filed earlier this week, the U.S. Securities and Exchange Commission alleges that Kephart and 14 other parties paid more than $450,000 in bribes to brokers in 1992-93 to boost the shares of six U.S. juniors.
The allegations were vigorously denied by Scott Mijares, a promoter named in the suit who works with Kephart.
"There's no truth to this," Mijares said. "We never had any bank accounts or paid off brokers."
On July 31, Highgrade agreed to pay Kephart and his firm, MarketMedia Inc., $70,000 for U.S. investor relations services. Both Heras and Mijares claim MarketMedia had yet to begin work on the Highgrade account.
When trading was halted, Highgrade shares (HGV/VSE) were changing hands at $10.15, more than five times the company's 52-week low of $2. European interest in the stock -- and not share promotion -- is behind the dramatic rise, Heras said.
On Sept. 30, Yukon Gold hired MarketMedia. Despite words to the contrary from the VSE, the company maintains the trade halt was due to pending drill results.
Both Highgrade and Yukon Gold have ended their business relationship with Kephart and MarketMedia.
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