Hi Bill,
I am in the wrong business. Maybe we should do the same thing as all these wonderful companies(BRE-X,SGV,KWG,DELGF,GNU,IPM,NPA,ETC,ETC,ETC) have been doing....WHAT A FUC@&%* JOKE.
KWG tries to trace lost
$21M as another unit files
for CCAA
Creditor forces St. GeneviŠve to seek protection
By PETER KENNEDY and PAUL BAGNELL
The Financial Post
In the end, Pierre Gauthier's appetite for promotion may
have got the better of him.
That was the consensus Friday after St. GeneviŠve
Resources Ltd., the flagship company in Gauthier's
Montreal mining group, joined affiliate KWG Resources
Inc. in seeking court protection from creditors.
The Toronto Stock Exchange said trading in shares of St.
GeneviŠve and KWG will remain halted "pending
clarification of the companies' affairs."
Shares of affiliates Genoil Inc. and Emerging Africa Gold
Inc. are not expected to trade until Tuesday at the earliest.
The probe centres on who in the St. GeneviŠve group
signed documents resulting in the transfer of US$5 million
from Genoil and $14.8 million from Emerging Africa Gold
into accounts of KWG.
Results of the probe are expected to be released on
Tuesday.
"The question is who did what with our money, where did
it go and can we recover it,'' said Richard Wilson, a
Calgary lawyer acting for Genoil.
Jacques Rossignol, a Montreal lawyer retained by KWG
and St. GeneviŠve, said he and others would spend the
weekend "trying to understand all the transactions that
took place."
The transactions have raised questions about the
involvement of former St. GeneviŠve chief executive Peter
Miller and Alain Taillefer, KWG's vice-president of
finance.
Both have resigned along with other directors in the St.
GeneviŠve group.
"We don't know who signed the authorization
documents,'' said Wilson, adding Genoil's funds have been
deposited with Wellington West Capital in Winnipeg.
Gauthier or other company spokesmen could not be
reached for comment Friday. But analysts and lawyers
interviewed by The Financial Post have concluded this is a
classic case of a group getting overextended in a bid to
fund projects in risky areas like Cuba and Russia.
St. GeneviŠve's problems are especially surprising because
Gauthier's reputation for raising money is rivalled only by
the likes of Robert Friedland, the Singapore financier
whose company made the Voisey's Bay nickel strike in
Labrador.
A 50-year-old former stockbroker, with film-star looks
and the gift of the gab, Gauthier is known for taking
analysts and fund managers on extravagant trips to
projects in Cuba and the Dominican Republic.
"Everything he talked about was highly promotional,'' said
one analyst, adding that during a 1996 trip to the
Caribbean, Gauthier told his guests he would be "the next
Friedland.''
But the excursions involving analysts and fund managers
from the likes of C.M. Oliver & Co. Ltd., BPI Capital
Management Corp. and Altamira Management Ltd. paid
off, resulting in glowing reports and raising millions of
dollars for his projects.
During 1996, Gauthier's group of companies went to the
market six times, raising $141.9 million.
Underwriters included C.M. Oliver, Midland Walwyn
Capital Inc., CIBC Wood Gundy Inc., Yorkton Securities
Inc. and Marleau Lemire Securities Inc.
But few of the group's many projects have met investors'
hopes and share prices of the group's main companies
have languished.
In early 1996, shares of KWG jumped to $20 a share
from $3.35 on a glowing report by an analyst on the
company's Gaspar gold exploration project in Cuba, but
Gaspar has since been a big disappointment.
KWG (KWG/TSE) shares were worth 40› when trading
was halted Thursday.
Shares of St. GeneviŠve (SGV/TSE) were trading at $1.56
in last December and were valued at 16› apiece on
Thursday.
In July this year, KWG announced it was on the verge of
becoming a major nickel producer, with an agreement to
become a 50% owner of the large Cupey nickel mine in
Cuba.
Gauthier said KWG was required to come up with
US$300 million by the end of November to make the deal
happen.
Earlier this month, however, KWG said it needed more
time to negotiate with the Cuban government and raise the
needed money. On Thursday, it said it is abandoning the
Cupey deal.
Insiders and the companies themselves have traded
actively in their stocks, records show.
For instance, St. GeneviŠve did 146 trades in KWG stock
in January alone. Gauthier did 37 trades in St. GeneviŠve
stock in May through his personal holding company,
Gencap Inc.
John Ing, president of Maison Placements Inc. in Toronto,
said Gauthier has "a long history" of touting ever-larger
projects that never quite reach expectations.
He remembered an early Gauthier venture, a gold
company that claimed to be able to extract gold from ore
by spinning it in a large machine. "That was an object of
derision and much amusement."
GOLDIGER.
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