How about a class action suit against Pierre Gauhier for Gross Incompetence? Perhaps something similar to what the legal case against David Walsh. I really think P/ Gauthier has to go. The whole company, from top to bottom, is in denial.
Saturday, March 28, 1998
St. GeneviŠve, KWG blame Bre-X
Mining juniors struggle to survive market conditions and 'unauthorized
borrowings'
By PAUL BAGNELL
Mining Reporter The Financial Post
High noon for Bre-X
Barrick knew Busang claims false, lawsuit says
Junior mining affiliates St. GeneviŠve Resources Ltd. and KWG Resources
Ltd., which collapsed in financial chaos when millions of dollars of
unauthorized bank withdrawals came to light in November, are now blaming
their woes on the Bre-X scandal.
The companies, both vehicles of Montreal-based mining promoter Pierre Gauthier, reported 1997
losses of $196 million on Friday. Gauthier, meanwhile, got a raise of $105,743, taking home
$255,743.
The companies have been under creditor protection since late November, when they revealed $21
million in "unauthorized borrowings" from two affiliates, with the proceeds diverted to a Russian gold
mine.
Montreal-based Emerging Africa Gold Corp. had $15.3 million taken without the knowledge of its
directors. Genoil Inc., a Calgary oil and gas exploration junior,
had $5.2 million withdrawn.
On Friday, St. GeneviŠve said it had a loss of $92.1 million
($1.10 a share) on revenue of $3.4 million in 1997. KWG lost
$103.9 million ($2.97) on revenue of $400,000. Both companies
blamed $150 million in writedowns on their mining properties and
other investments.
St. GeneviŠve said the writedowns were forced by "market
conditions, namely the price of common and precious metals and
the aftermaths of Bre-X." Bre-X Minerals Ltd.'s Busang gold
project was proven to be a hoax on May 4.
Together, KWG and St. GeneviŠve raised $57 million in equity
financings in 1996. A further
$21 million was raised by Far East Gold Inc., which owned the
Russian gold mine now at the centre of Gauthier's group. KWG
acquired 100% of Far East in a reverse takeover in late 1996.
Today, the firms are scrambling to stay alive.
They are offering to give creditors shares of St. GeneviŠve in
exchange for cancelling $28.1 million in debts. They are also
seeking support for a proposed $30-million rights offering to
shareholders.
Genoil, meanwhile, has sold 50% and control of itself to Beau
Canada Exploration Ltd.
St. GeneviŠve has pledged to repay the $5.6 million it owes
Genoil by April 1, 1999, at an interest rate set at 1% above
prime. It also owes another $6.5 million to "various third parties."
On Dec. 8, when KWG and St. GeneviŠve announced a restructuring they said part of the plan
would be "a reduction of the salaries of remaining senior management." Gauthier, however, has
escaped that fate.
St. GeneviŠve's management circular shows that, while his salary was cut to $75,743 from
$150,000 in 1996, his wholly owned company Gencap Inc. was paid $180,000 for "management
services." No such fee was paid in 1996 or 1995.
The Toronto Stock Exchange halted trading of both companies on Nov. 27. They were suspended
on Dec. 5. Both now trade without daily quotations on the over-the-counter Canadian Dealing
Network.
BREAKING NEWS
MARKET WATCH
BIZ TICKERS
MUTUAL FUNDS
MONEY RATES
BIZ SEARCH
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