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Gold/Mining/Energy : YBM Magnex Intl Sees Revenue Growth 30-35%/Yr In MagnetOp -- Ignore unavailable to you. Want to Upgrade?

To: Mr Metals who wrote (187)	6/21/1998 1:58:00 AM
From: Adrian du Plessis	Respond to of 314

CANADA: Faces new share regulation setback By Edward Alden in Toronto The Ontario Securities Commission disregarded a number of warnings about sales claims at YBM Magnex International, the magnet maker since suspended on the Toronto Stock Exchange, the Financial Times has learned. The commission was told by industry experts last autumn that YBM had attributed almost a quarter of its 1996 revenues to a procedure that technical specialists say has no commercial applications. The news will add to suspicions that securities regulation in Canada is not being conducted as rigorously as it should. Regulators are still reeling from the collapse last year of Bre-X Minerals, a mining exploration company whose claims to have found the world's largest gold deposit in Indonesia turned out to be groundless. The warning on YBM's revenues was just one of a series of red flags disregarded by regulators when they approved a secondary C$53m (US$36m) stock issue last year, according to people familiar with the OSC's due diligence investigation. YBM, which attained a market value of more than C$900m this spring before being suspended last month, faces possible de-listing from the exchange. Regulatory hearings have been postponed until August 10 and trading in the stock remains halted. In its 1996 financial statements, YBM said it earned more than US$20m of its US$90m in total revenue from adding a neo-dymium powder byproduct to crude oil it buys, has refined and re-sells to the Ukraine. Neo-dymium is a rare earth material used to make permanent magnets for industrial applications. The neodymium powder absorbs sulphur from crude oil, which reduces refining costs, according to YBM's 1997 prospectus for the stock offering. However, more than six experts on rare earth applications said they had never heard of neodymium being used to desulphurise crude oil. A comprehensive literature search by the centre for rare earths and magnetics at Iowa State University, the major clearing house for information on rare earth applications, turned up no reference to the procedure. YBM has not provided evidence to substantiate its claims. YBM's Pennsylvania headquarters were raided last month by the US Federal Bureau of Investigation and thousands of documents seized as part of a criminal investigation. One of the company's major shareholders, Semion Mogilevitch, a Ukrainian-born financier, was barred from the UK in 1995 following an investigation into alleged money laundering involving Russian organised crime. Police said Mr Mogilevitch's personal worth at the time was US$100m. The Ontario Securities Commission is thought also to have been warned during its investigation late last year that the company's sales claims in eastern Europe were highly questionable. OSC officials this week declined to comment on the YBM investigation. The Financial Times (London) June 19 1998