Go for it DUDE;
Digging Deep Into Mining
Text Version
Mining Operations & Mining Scams
An Overview of the Mining Industry &
Questions To Ask
BEFORE
You Invest in a Mining Operation
Provided to you by:
Nevada Office of the Secretary of State
Securities Division
and
Nevada Department of Business & Industry, Division of Minerals
The Lure of Gold - "Dirt Pile Swindles"
Nevada, known as the Silver State, is the leading supplier of gold in the United States today and is experiencing the
greatest gold rush since the mid 1800s.
Gold mining in Nevada is very real and an investment worth consideration. It is this very premise, however, that has been
the foundation for investment fraud, swindling investors out of millions of dollars. The illegitimate operations, sometimes
referred to as "dirt pile" gold swindlers, dovetail the media coverage of facts surrounding the successful, legitimate mining
companies, often times using these very news clippings in their promotional pieces.
At the heart of the "dirt pile" swindle is the promise of gold at bargain basement prices. The catch is that the gold, if there
is any at all, is not economically recoverable.
A typical "dirt pile" investment involves a payment of $5,000 for which an investor holds the title to a 100-ton unit of
unprocessed dirt guaranteed by the promoters to contain 20 ounces of gold, which works out to a price of $250 an
ounce, well under the prevailing market price. Delivery of the gold is deferred for 15 months to 3 years, allowing the
swindler time to abscond with investors dollars before the investors know what happened.
Customers are constantly peppered with advice that they need to sit back and wait with statements like,
"Trust me, these things take time."
Also, the locations of the mine sites are usually in such remote areas that it is difficult to personally visit the mine site.
Investors learn too late that their "aggregate ore" is nothing more than a worthless pile of dirt somewhere in the desert or
scrubland regions of the Southwest. Productivity of the mines is everything from highly suspect to downright doubtful.
Gold found, if any, would not amount to that found in a tooth filling.
Telephone Pickpockets
Promoters and scam artists "reach out and touch" your investment pocket. They are smooth, slick, and successful in
extracting your investment dollars. To avoid contact, just hang up!
Pitches & Pitfalls
Unsolicited, high pressure phone calls
Claims of confidential, inside information
Urgent advice that you must act immediately
Promises of huge, quick profits
Evasive or incomplete answers to your questions
Claims of no risk
Claims that you will get your money back if you are dissatisfied
Company names that sound like the names of well-established firms
FOOLS GOLD RUSH
Investors are pressured by "dirt pile" gold swindlers and other promoters of mining-related scams to "invest immediately
or miss out on the opportunity of a lifetime."
Take Your Time
Don't be fooled and don't rush into any investment. For every headline-grabbing story about one person who became a
millionaire by investing, there are hundreds of stories about people who have lost more than they could afford to lose.
These missionaries of hype lure unsuspecting investors on an adventure down the path to financial disaster.
All That Glitters Is Not Gold
The typical con artist polishes his lies so that an investor is blinded by flashing dreams of easy riches. Bear in mind that the
clever, convincing con artist, too, has dreams of making a lot of money fast and you, his victim, are the answer to his
dreams.
Brochures Can Be Misleading
Recognize, too, that printed material (brochures, sales kits, and other promotional material) may be forged, fabricated,
and/or falsified. Fictional statements may sound credible through false association with factual information. Again,
remember, that promoters use the legitimate news and valid news clippings to their advantage.
When In Doubt, Don't Invest
It is far better to wait and lose out on an opportunity than to invest quickly and lose money you can t afford to lose. There
are many legitimate investment opportunities worthy of your investment dollars.
Investigate Before You Invest
Unfortunately, investors hesitate to invest $5 in phone calls to investigate a company before investing $5,000 in that
company. Often a phone call of inquiry will alert you to a financial disaster in the making.
Investigate BEFORE You Invest
1.Is the firm registered with city, county, state, and/or federal agencies as required by law? Does the mine have the
necessary legal permits to mine in Nevada? Appropriate government approvals include, but are not limited to, the
following:
Business license - city and/or county
Securities registration and dealer and broker licensing - Office of the Secretary of State, Securities Division.
Approved Plan of Operation - Bureau of Land Management and/or Nevada Division of Environmental
Protection.
Water Pollution Control Permit - Nevada Department of Conservation & Natural Resources, Division of
Environmental Protection
Air Quality Permits - Nevada Department of Conservation & Natural Resources, Division of Environmental
Protection
Record of Mine Inspection - State Inspector of Mines
Permit to Appropriate Public Waters - Nevada Department of Conservation & Natural Resources, Division
of Water Resources
2.Is the firm listed with the Nevada Division of Minerals as a producing mine?
3.How long has the firm been in business? Who are the principals and directors?
4.Is there a history of violations of city, county, state, and/or federal law?
5.Does the firm have a published disclosure statement or other written materials explaining in detail the company, the
proposed transaction, and the risks involved?
6.Does the firm have audited financial statements?
Once you have verified the first three questions, read the company s disclosure material carefully, including the small print.
Question everything you do not understand. When the answers are evasive, or if intimidation tactics are employed, do not
sign any contract. Invest time in thinking it over and, if necessary, consult counsel before you invest.
Investing in Nevada Mining
Mining in Nevada is big business. In 1995, 6.7 million ounces of gold and 24.6 million ounces of silver were mined,
making Nevada the leading U.S. producer in both commodities. Nevada is also the leading U.S. producer of magnesite,
barite, and mercury; and the second leading producer of lithium and diatomite. Overall, mining is the second largest
industry in the Silver State with gross revenues exceeding 3.2 billion dollars.
There are well over 150 companies actively mining or exploring for mineral resources in Nevada. If you are planning to
invest in Nevada s mining industry, please consider the following:
1.Check the legitimacy of the dealer. Investment in most mining companies is made through stock purchases by
licensed brokers. Almost all major companies stocks are traded on the NYSE, AMEX, or other exchanges and in
the Nasdaq market. Legitimate mining companies do not generally solicit investors by telephone or mail.
2.Investments take many forms, which can be confusing. Mining companies do not sell ore, processed
("concentrated") or unprocessed, and rarely sell precious metals (bullion) to individual investors. Consult a
reputable financial adviser and deal through a recognized merchant, broker, or financial institution.
3.Do not fall for claims of new of "secret" processes. Processes used by mining companies to extract precious metals
are well-known and understood. Almost all use one form or another of cyanide leaching.
4.Promises greater than average amounts should be viewed with scrutiny. The average ore grades at most Nevada
mines range from 0.04 to 0.10 troy ounces of gold per ton.
5.Precious metals do not mix. Claims of a mine site with high levels of platinum along with gold and silver is almost a
certain indicator of fraud. Platinum has not been mined in Nevada since 1919 and, more than likely, will not be for
the foreseeable future.
6.Reward vs. Risk. Mining is a capital-intensive industry with great rewards possible. However, mining operations
are high risk ventures. Investments are usually long-term. Be skeptical of "guaranteed" or promised high returns
over short periods of time, i.e., 6 months to 2 years.
Remember, investigate before you buy. Invest your time before investing your money. The name of the mine, principal(s)
of the company, and the exact locations(s) of the mine site (section, township, and range, for example: Section 12, T18S,
R68E) are needed for verification of facts with county, state, and federal agencies.
Requirements for Mining Operations
All mining operations in Nevada must have:
1.Legitimate mining claims registered with the U.S. Bureau of Land Management, or ownership or control of
minerals rights on private land;
2.Approved "Plan of Operation" from the U.S. Bureau of Land Management, the U.S. Forest Service, or the
Nevada Division of Environmental Protection; and,
3.Necessary state permits, list available for the Nevada Division of Minerals.
Contact:
Office of the Secretary of State
Securities Division
Las Vegas 800-758-6440
or 702-486-2440
Reno 702-688-1855
Nevada Dept. of Business and Industry
Division of Minerals
Las Vegas 702-486-4343
Carson City 702-687-5050
Division of Industrial Relations
Mine Inspector
Las Vegas 702-486-5150
Carson City 702-687-5243
Nevada Dept. of Conservation & Natural Resources
Division of Environmental Protection
Las Vegas 702-486-2851
Carson City 702-687-4670
Division of Water Resources
Las Vegas 702-486-2770
Carson City 702-687-4380
U.S. Bureau of Land Management (BLM)
Nevada State Office, Reno 702-785-6510
Securities and Exchange Commission (SEC)
800-732-0330 or 213-965-3998
National Association of Securities Dealers (NASD)
800-289-9999 or 213-627-2122
Office of the Secretary of State
Securities Division
555 E. Washington Ave., Ste. 5200
Las Vegas, NV 89101
---
1105 Terminal Way, Ste. 211
Reno, NV 89502
Dept. of Business and Industry
Div. of Minerals
2501 E. Sahara Ave., Ste. 206
Las Vegas, NV 89104
---
400 W. King St., Ste. 106
Carson City, NV 89710 |
