Anthony Giovinazzo Majescor, Data salting, Haiti Mining, Majescor, Majescor Announces Resignation of Director, Majescor Audit Committee Chair leaves, Majescor Director Resigns, Majescor fails to file 2013 Financial Statements, Majescor Management Cease Trade Order, mining in haiti, misleading news releases, Penny Stock Mining, Private Placements, Pump and Dump, reverse stock split, SOMINE, Stock Dilution
While Majescor Resources’ failure to turn in their 2013 Annual Financial Statements is widely noted, no one seems to have remarked the strange fact that within days of their failure to file, the Chair of the Audit Committee, Anthony Giovinazzo, departed Majescor, allegedly having given his resignation. Can anyone really believe this is pure coincidence?
It seems important to understand what an Audit Committee is: In Canada, according to the “January 1, 2011 Unofficial Consolidation – Companion Policy to NI 52-110 Audit Committees”: “audit committee’ means a committee (or an equivalent body) established by and among the board of directors of an issuer for the purpose of overseeing the accounting and financial reporting processes of the issuer and audits of the financial statements of the issuer…. Traditionally, the audit committee has performed a number of roles, including
• helping directors meet their responsibilities,
• providing better communication between directors and the external auditors,
• enhancing the independence of the external auditor,
• increasing the credibility and objectivity of financial reports, and
• strengthening the role of the directors by facilitating in-depth discussions among directors, management and the external auditor.
The Instrument requires that the audit committee also be responsible for managing, on behalf of the shareholders, the relationship between the issuer and the external auditors. In particular, it provides that an audit committee must have responsibility for:
(a) overseeing the work of the external auditors engaged for the purpose of preparing or issuing an auditor’s report or related work; and
(b) recommending to the board of directors the nomination and compensation of the external auditors.
Although under corporate law an issuer’s external auditors are responsible to the shareholders, in practice, shareholders have often been too dispersed to effectively exercise meaningful oversight of the external auditors. As a result, management has typically assumed this oversight role. However, the auditing process may be compromised if the external auditors view their main responsibility as serving management rather than the shareholders.” http://www.osc.gov.on.ca/documents/en/Securities-Category5/rule_20101210_52-110_unofficial-consolidated.pdf
So, it should be clear from this that the Chair of the Audit Committee is pretty important. And, for such a small company the Chair would seem more important than in a larger company — he might be the effective committee.
On Friday, 28 June 2013 Majescor Resources Inc. announced “that it will not be able to file its annual financial statements, accompanying management’s discussion and analysis and related CEO and CFO certifications for the financial year ended February 28, 2013 (collectively, the ‘2013 Annual Financial Statements’), within the period prescribed for the filing of such documents under Parts 4 and 5 of Regulation 51-102 respecting Continuous Disclosure Obligations and pursuant to Regulation 52-109 respecting Certification of Disclosure in Issuers’ Annual and Interim Filings, namely within 120 days of year-end, being June 28, 2013.”
Why? “…primarily as a result of additional time required for its auditors to complete the audit of the Company’s annual financial statements.” This is a strange “excuse” and does not tell us why! There’s not even “a dog ate my homework” sort of excuse here. No explanation given. They knew when the due date was for these Financial Statements.
But, who then apparently jumped ship or was thrown overboard by Majescor? The Chair of the Audit Committee, Anthony Giovinazzo. Of course they claim that he left for “personal reasons”, but does anyone really believe that? On 3 July 2013, Majescor “regrets to announce the resignation of Mr. Anthony Giovinazzo from the Board of Directors of the Company, owing to personal reasons and other commitments. The Company’s Board sincerely thanks Mr. Giovinazzo for his significant contributions during his time with the Company, and wishes him well in all his endeavours”. Now, does anyone really think that his resignation has nothing to do with the their supposed inability to turn in their financial reports?
On Friday the 28 June 2013, they had announced that “Majescor’s Board of Directors and its management are working expeditiously with the Company’s auditors, on a daily basis, to meet the Company’s obligations relating to the filing of the 2013 Annual Financial Statements. Furthermore, a weekly meeting is held by the Company’s audit committee with the auditors to discuss the advancement of the audit and to address any issue or matters pending.” So, what will they do without the Audit Committe Chair? Did some dispute happen between Friday and Wednesday when the Chair of the Audit Committee left? Are they trying to hide something? Was there a dispute over what should or should not be hidden? If so, who is right and who is wrong on this? Or, are all wrong and Giovinazzo is the fall-guy? Are they just incompetent and forgot to do the Audit and Financial Statements? Why won’t they turn in their Financial Statements?
On the 28 June Majescor had said that “The Company expects to file the 2013 Annual Financial Statements on or before July 26, 2013. As a result of the postponement in the filing of its 2013 Annual Financial Statements, Majescor has made an application to the Autorité des Marches financiers (the “AMF”) for a management cease trade order (the “MCTO”), which would restrict all trading in securities of the Company, whether direct or indirect, by management of the Company. The MCTO would not affect the ability of shareholders who are not insiders of the Company to trade their securities. There is no certainty that the MCTO will be granted. If the MCTO is not issued by the AMF, the applicable Canadian securities regulatory authorities could issue a general cease trade order against the Company for failure to file the 2013 Annual Financial Statements within the prescribed time period. The Company confirms that it intends to satisfy the provisions of the alternative information guidelines found at sections 4.3 and 4.4 of Policy Statement 12-203 respecting Cease Trade Orders for Continuous Disclosure Defaults for so long as it remains in default as a result of the late filing of the 2013 Annual Financial Statements. During the period of default, Majescor will issue bi-weekly default status reports in the form of further press releases, which will also be filed on SEDAR. The Company confirms that there are no insolvency proceedings against it as of the date of this press release. The Company also confirms that there is no other material information concerning the affairs of the Company that has not been generally disclosed as of the date of this press release.”
Technically according to the Quebec Financial Markets Authority Majescor’s filing failures are 1a,1c,1e:
“1 a Failure to file annual financial statements.
1 c Failure to file an annual or interim management’s discussion and analysis (MD&A) or annual or interim management report of fund performance (MRFP).
1 e Failure to file a certification of annual or interim filings required by Multilateral Instrument 52-109 Certification of Disclosure in Issuers’ Annual and Interim Filings (MI 52-109).” http://www.lautorite.qc.ca/files/pdf/professionnels/emetteurs/EmetteursEN.pdf (Last update 5 July 2013)
On July 4th, one day after the Audit Committee Chair departed (July 3rd), Majescor received their Management [only] Cease Trade Order. http://cto-iov.csa-acvm.ca/ArticleFile.asp?Instance=101&ID=2F860784B483498399042E02CD72CFDD
See: http://finance.yahoo.com/q?s=mjx.v for the above Press Releases and other Majescor info, or their web site, or all over the internet.
Tuesday 9 July 2013
Now, lest you suspect, as we did, that because he had left the day before the Management Cease Trade Order (MCTO), that Anthony Giovinazzo would be still able to trade his shares, we must inform you that he is still included in the MCTO. Perhaps he or others thought that by his leaving one day before the ruling that he could trade the shares? If so, they were proved wrong. Those included in the MCTO are Khadija Abounaim, C. Tucker Barrie, Marc-André Bernier, Daniel Fontaine Hachey and Anthony Giovinazzo, i.e. all of their Directors and the CFO-Secretary. Nonetheless, the Managment Cease Trade Order is only good for 15 days, until 19 July, but apparently can be extended. http://cto-iov.csa-acvm.ca/ArticleFile.asp?Instance=101&ID=2F860784B483498399042E02CD72CFDD
DEPARTED AUDIT COMMITTEE CHAIR IS AN AUDIT COMMITTEE CERTIFIED (A.C.C.) CHARTERED DIRECTOR (C. Dir.)
Anthony Giovinazzo is not just any director. If anyone should be able to run the Audit Committee it should be Mr. Giovinazzo. In 2011 he graduated from The Director’s College, “Canada’s Gold Standard in Director Education.” Majescor was keen to brag about this on their web site. However, we do not have to look there, because he is listed by the Directors College as a graduate. According to the web site “The Directors College Chartered Director (C.Dir.) Program delivers an accredited corporate director development program that leads to a university designation Chartered Director (C.Dir.). It is a 5 Module residential program that is designed to create an environment for innovative and independent thinking./ In each module, participants learn concepts and best practices from a practitioner; discover what leading boards are doing today from experienced chairs and CEOs (in residence at The Directors College); and apply this knowledge immediately in case studies, behavioral sessions and simulations….The Directors College also offers specialized programs and courses tailored to the needs of board and committee chairs and members who want to learn how leading corporations apply the latest corporate governance principles, practices and insights,” such as the “Audit Committee Certified (A.C.C.) Program”. http://thedirectorscollege.com/
In their 10 year Anniversary Yearbook, where Mr. Giovinazzo is listed, The Directors College is described as “a joint venture of The Conference Board of Canada and the DeGroote School of Business at McMaster University, [which] has been delivering comprehensive director education programs to board members and senior executives since 2003./ Chartered Director graduates (C.Dir.) … have attained the university accredited professional designation from McMaster University by successfully completing an intensive five-module governance education program and a rigorous four-hour exam./ Graduates of … the Audit Committee program (A.C.C.) also attain a university accredited professional designation from McMaster University upon completion of the programs and a written exam./ The Directors College and the Collège des administrateurs de societies (CAS) of Université Laval have a reciprocal agreement whereby their respective designations are recognized as equivalent. This agreement recognizes the national stature and equivalency of Canada’s only two university accredited director certification programs.” http://thedirectorscollege.com/wp-content/uploads/2013/04/DC-Yearbook.pdf
These two universities are old and esteemed. They did not just pop up recently to give business degrees. McMaster dates from 1887 (http://en.wikipedia.org/wiki/McMaster_University) and Laval from 1663 (That is not a typo; it is 340 years old). Besides this certification, he was formerly an international corporate tax specialist, for 7 years in the copper, gold, and aluminum mining, and refining industry. So, something is afoul if, under Mr. Giovinazzo’s supervision, the financial statements were not completed properly and on time, and he resigned before they were turned in.
Still not impressed? Mr. Giovinazzo has also completed Osgoode Hall Law School’s “The Advanced Legal Guide to Advising The Public Company Board of Directors.” This is affiliated with York University, another well-known university. To see what he would have learned: http://www.goodmans.ca/docs/Advising%20the%20Public%20Company%20Board%20of%20Directors.pdf He is supposed to have an MBA from the Swiss IMD (1986) (see http://www.imd.org/about/rankings.cfm ); a Certificate of Studies in Canadian Law from Osgoode Hall Law School (York University)(1984); and a BA in Economics, from McMaster University (1978). So, if he doesn’t know what he is doing, who does? Interestingly enough, if you look at the Majescor site on the Wayback Machine you will see that Giovinazzo arrived on the Board when SOMINE’s current President, Jean-Marie Wolff departed in 2011.
Thursday 11 July 2013
MANAGEMENT CEASE TRADE ORDER
In the Canadian “National Policy 12-203 Cease Trade Orders for Continuous Disclosure Defaults” we find some information regarding the whys and wherefores of Cease Trade Orders, in general, and Management Cease Trade Orders, in particular. They are, in short, meant to help protect those trading or holding stock in public companies. A “cease trade order’ and ‘CTO’ mean an order under a provision of Canadian securities legislation … that prohibits trading in securities of a reporting issuer, whether direct or indirect, by the persons identified in the order, for such period as is specified in the order….Historically, if a reporting issuer has failed to comply with a specified requirement, such as the requirement to file audited annual financial statements, the CSA regulators have generally responded to this default by issuing a CTO./ The CSA regulators have historically taken this action for the following reasons:
• Without adequate continuous disclosure, there may not be sufficient information in the securities marketplace to properly support informed trading decisions regarding securities of the issuer.
• The integrity and fairness, or confidence in the integrity and fairness, of the capital markets, may be compromised if trading in securities of the reporting issuer is permitted to continue during the period of default (when there is heightened potential that some people may have access to information that would normally be reflected in the continuous disclosure document that the reporting issuer is in default of filing).” http://www.lautorite.qc.ca/files//pdf/reglementation/valeurs-mobilieres/12-203/2011-07-29/2011juil29-12-203-ig-cons-en.pdf For these reasons, it seems to us that there should have been a complete Cease Trade Order for Majescor, rather than a partial one. There is insufficient information to “properly support informed trading decisions” regarding Majescor’s securities, and the risk of insider information being used in trading.
These are important to bear in mind when examining Majescor’s Management Cease Trade Order by the Quebec Financial Market Authority. The ruling says that the Financial Market Authority prohibits Khadija Abounaim, C. Tucker Barrie, Marc-André Bernier, Daniel Fontaine Hachey and Anthony Giovinazzo from effectuating any activity related to the trading of Majescor Resources Inc securities, whether direct or indirect. We assume that this is the Canadian “prohibits trading in securities of a reporting issuer, whether direct or indirect, by the persons identified in the order, for such period as is specified in the order” However, the Quebec ruling appears more broad. Why a Management Cease Trade Order? They state that it is because the issuer (i.e. Majescor) did not comply with the obligations of filing of its annual financial statements, its annual management report and its fiscal year ended February 28, 2013 annual certificates provided for in regulation 51-102 and regulation 52-109 and that these people are directors or managers of the issuer (i.e. Majescor) and could have been informed of any facts or material changes concerning the issuer that has not been made public. The prohibition was pronounced on July 4, 2013. http://cto-iov.csa-acvm.ca/ArticleFile.asp?Instance=101&ID=2F860784B483498399042E02CD72CFDD
Notice that it says both “direct and indirect”. It is unclear to us how banning activities indirectly related to trading can be upheld when the Cease Trade Order is only partial.
How did they get by with only a partial Cease Trade Order (CTO), that is a Management Cease Trade Order (MCTO)? “A CTO is an appropriate response to a specified default that is not likely to be rectified within a relatively short time and where the circumstances leading to the default are likely to continue. These circumstances include issuers that no longer have an active business, are insolvent, or have lost a majority of their board of directors./ If the outstanding filing is expected to be filed relatively quickly, and the default is not expected to be recurring, an MCTO may be an appropriate response to the default. /Issuers satisfying all of the following criteria are usually eligible for an MCTO:
• The outstanding filings will be filed as soon as they are available and within a reasonable period. In most cases, we expect this to be within two months.” http://www.lautorite.qc.ca/files//pdf/reglementation/valeurs-mobilieres/12-203/2011-07-29/2011juil29-12-203-ig-cons-en.pdf So, it seems to be because they promised to turn the documents in within a month. However, it is not clear to us that Majescor continues to have an active business. Are they doing anything in Haiti? Their Mistassini property, in Quebec, is under moratorium and will most likely be cancelled. They seem to be in the process of selling their Madagascar property (Besakoa). So, where is their active business?
Under the Canadian regulation, the “management cease trade order’ and ‘MCTO’ mean a CTO … that prohibits trading in securities of a reporting issuer, whether direct or indirect, by
(a) the chief executive officer (CEO) of the reporting issuer,
(b) the chief financial officer (CFO) of the reporting issuer,
(c) at the discretion of the PR [Principal Regulator, e.g. for Majescor the Quebec Financial Market Authority], the members of the board of directors of the reporting issuer or other persons who had, or may have had, access directly or indirectly to any material fact or material change with respect to the reporting issuer that has not been generally disclosed…” In this instance, Quebec ruled for a MCTO for Daniel Hachey, CEO; Khadija Abounaim, CFO; and Anthony Giovinazzo, former chair of the Audit Committee. Why were C. Tucker Barrie, and Marc-André Bernier included? Barrie is VP of Exploration, and Bernier is Sr. Technical Advisor. This could give them inside information. But, these positions are not listed as generally being subject to MCTO. We think that it is because on the 25 June 2013, that Barrie and Bernier bought $5,000 worth of stock each or 100,000 shares each at five cents per share. They also are eligible for purchase warrants (bons de souscription), which will allow them to buy shares at a future date for 10 cents per share (only worthwhile, from our understanding, if the price goes up). The announcement of delay in reporting the financial information was 28 June 2013. The Majescor Press releases reported this “private placement” as $15,000 rather than $10,000, but we cannot find the additional $5,000 on the official Quebec governmental site. See “Marchés de valeurs et des instruments dérivés 27 juin 2013 – Vol. 10, n° 25”, p. 142. Interestingly enough, one line above Majescor, the CEO of KWG, which used to hold properties in Haiti, is listed as having bought his own stock. http://www.lautorite.qc.ca/files/pdf/bulletin/2013/vol10no25/vol10no25.pdf
Additional useful information: “Securities regulatory authorities have sole authority to issue CTOs. The securities regulatory authorities and tribunals oversee securities regulation in their respective provinces or territories and require publicly traded companies to disclose material information to the public as soon as possible. For example, publicly traded companies must file copies of quarterly and annual financial statements and management’s discussion and analysis (MD&A) with provincial and territorial securities regulatory authorities, and must also send this information to shareholders, on request. Companies must also disclose material events or developments – such as takeover bids and merger and acquisitions, which may affect the value of the company’s shares. When a company fails to do so, a CTO banning trading in the securities of the company or banning certain individuals and/or companies from trading in securities of the company may be issued.” http://www.securities-administrators.ca/cease_trade.aspx?id=171 One of the key words here is “may”, a CTO “may be issued”. As well, Majescor did report that they are selling their Besakoa property in Madagascar, but the repercussions of this — good or bad, might have been explained in the financial statements and management discussion and analysis, which are not available. Additionally, there is the issue of their Mistassini Property, and their partner Strateco and Strateco’s Matoush property. The ruling on Strateco’s Matoush property was to be around the time that Majescor’s financials were due. The Mistassini Property would have apparently piggy-backed on the Matoush property. Strateco is the operator of Mistassini and holds 60%, with Majescor holding the remaining 40%. It seems clear that Matoush will be cancelled and that Strateco is losing a lot of money because of it. Hence, it appears that Majescor’s nearby Mistassini Property would also be cancelled. Those who are anxious can read ahead on Strateco, Matoush, and the Quebec uranium moratorium. We will get to it.
Saturday 13 July 2013
In passing we read that the extra $5,000 worth of shares, which we could not account for, was sold to CEO Daniel Hachey. However, we did not see it in the official Quebec Financial Market documents.
PUMP & DUMP, PUMP & BUST, PUMP & DILUTE
We will start with the official definitions of pump and dump schemes. We do this because it is important to know about, and it is still possible that such a stunt could be pulled, in relation to Majescor. Thus, it should be watched for. It seems, however, that it would often be difficult to prove. If you have heard of the first and don’t know the second two, it is because we invented the terms in order to describe activities, which we have observed, in our research.
According to the US SEC, “Pump-and-dump’ schemes involve the touting of a company’s stock (typically small, so-called “microcap” companies) through false and misleading statements to the marketplace. These false claims could be made on social media, as well as on bulletin boards and chat rooms. Pump-and-dump schemes often occur on the Internet where it is common to see messages posted that urge readers to buy a stock quickly or to sell before the price goes down, or a telemarketer will call using the same sort of pitch. Often the promoters will claim to have ‘inside’ information about an impending development or to use an ‘infallible’ combination of economic and stock market data to pick stocks. In reality, they may be company insiders or paid promoters who stand to gain by selling their shares after the stock price is ‘pumped’ up by the buying frenzy they create. Once these fraudsters ‘dump’ their shares and stop hyping the stock, the price typically falls, and investors lose their money.” http://www.sec.gov/answers/pumpdump.htm As the following article explains, they can be run by anyone with large enough investment in the stock, not necessarily insiders or paid promoters. http://en.wikipedia.org/wiki/Pump_and_dump In our opinion this concept of “misleading statements” is a grey zone when it comes to mining exploration news releases. It seems very current to report the best results in a way which we find misleading, but which may not be technically false. Those who know a lot about mining exploration may not find statements misleading, but the average person may. Then, there are things like Majescor reporting a broken drill bit as high grade silver (see “The Great Drill Bit Screw Up).
Outside of ethical considerations related to mining, a major problem with these penny stocks – and really with all stocks- is that they are a sort of gambling. If you are against gambling, you shouldn’t be investing in them, and if you are for gambling it is probably better to go support Native American – American Indian casinos. At least some of your money will go towards helping those communities. Regardless, you should only spend what you can afford to lose and consider it an entertainment expense. If you are entertained by monitoring the stock then it is entertainment. However, you can do that for free without investing. You could even make it a friendly game without spending one cent. Best investment bet: go buy the game of Monopoly. Also, investigate what stocks your pension plan holds. Some hold Majescor and other similar stocks without even knowing. But, don’t believe us, read what Dave Manuel says in his article “Buying Penny Stocks the Dos and Don’ts of Penny Stock Speculation”. He calls it “dangerous territory” and concurs that you should not invest what you cannot afford to lose. He says that you must do your own research of the company, including who is in charge, who has invested, etc. One interesting thing which he says is “3. Don’t invest in ‘broken’ companies. If you are going to invest in a penny stock, try to focus on the companies that are up-and-coming with an exciting new product or service. Don’t invest in companies that used to trade at $10 and now trade at $0.14. These are broken companies, and so many people are stuck in these companies that the share price would never be able to generate any significant momentum. Any time the stock would move higher, you would get a wave of selling as those who are stuck at higher prices finally sell.” http://www.davemanuel.com/2008/01/29/buying-penny-stocks-the-dos-and-donts-of-penny-stock-speculation/ It seems to us that Majescor falls under this definition of “broken” companies. There are large institutional investors in Majescor,(perhaps even those holding your pensions), who need the price to go up just enough to get out, unless they can simply write it off. If you go to the Majescor web site on the Wayback machine you will see that on 8 June 2001 Majescor stock was worth 45 to 50 cents per share, but by 20 November 2001 it had gone up to $1.50 to $1.80 cents, and was at that price on 8 April 2002; and 1 June 2002. By 10 Oct. 2002, it was back down to 50 to 60 cents per share. Now it is worth 2 cents. There seem to have been efforts to pump it up to 3 cents in July, which we find really odd, considering that things look pretty bad for Majescor, and no one has the annual reports to really understand what is happening. It is now at 2 and a half cents. It is hard to imagine a worse investment than a stock which drops from $1.80 to 2 cents over the course of a decade. Leaving money in the bank would have been a much better option. The question then is why did it jump in price and why did it drop? Also, why does Majescor seem to have really achieved nothing in almost 20 years of business? If something has been achieved we have yet to find it and we believe that the value of the stock is indicative.
Tuesday, 16 July 2013
Now, on to pump and bust; pump and dilute. We give a more generic definition to pump and include any hype, including misleading press releases. Also, there can be hype related to things, which look truly promising. These appear to have happened, off and on, for Majescor through the years. It seems that after people realize that the hype was misleading (or overly optimistic), there is a tendency towards bust. But, most importantly, Majescor has frequently offered “private placements”, in order to fund exploration, and to pay inflated CEO and CFO salaries. The result is that there is more stock, which generally results in lowered stock value. It is similar to a country printing more money to pay its debts. The more money or stock in circulation, the lower its value. If you go to the News at the Majescor web site or elsewhere online you will see the private placements, which appear to correlate with a constant lowering of the price. Still you can see small peaks within the downward spiral on the following Morning Star site. Also, by tapping the graph and moving the little dot around you can see the exact date and stock value at each point. (You can even see that at one point Majescor stock was worth $17.50 Canadian, which didn’t show up in the Wayback Machine.) http://www.morningstar.com/invest/stocks/342061-mjx-majescor-resources-inc.html With this, anyone interested, can correlate the dates with News Releases or other hype and make their own conclusions. There are, of course, other, outside, forces which impact value. It is a complicated thing, which makes it gambling.
Our idea of pump and dilute appears a cousin to: “Dump and dilute schemes, where companies repeatedly issue shares for no reason other than taking investors’ money away. Companies using this kind of scheme tend to periodically reverse-split the stock.” https://en.wikipedia.org/wiki/Microcap_stock_fraud However, Majescor appears to be offering stock in order to pay exploration expenses and fat salaries. So, one cannot clearly argue that it is for “no reason”. Nonetheless, if they believed in their prospects, then they would have taken minimal or, ideally, no salaries to help get Majescor off its feet. And, Majescor has, indeed, engineered a reverse-split of the stock, at least once, approved 2 December, 2008, whereby “one (1) post-consolidation common share” was given “for every ten (10) pre-consolidation common shares held.” See: https://en.wikipedia.org/wiki/Reverse_stock_split
By the way, as of Monday, 15 July 2013, the stock had dropped from two cents to one cent.
Thursday 18 July 2013
While this reverse-split was during early parts of the financial crisis, that doesn’t make it better for the investor. On 31 October 2008 the stock was worth 10 cents. The 31 of December 2008, presumably after the reverse split took effect, it was worth 11 cents. However, that means that the old stock was actually worth about one cent, due to the one share replacing 10 shares. On 22 May 2009 the stock was worth 15 cents, meaning the old stock was 1.5 cents per share. The peak after the reverse split was 37 cents, on 29 September 2009, which is 3.7 cents for the old shares. We thought that it had gone up to 50 cents sometime in 2012, but if it did it was so short-lived that it is not showing on the chart, and this would be only 5 cents for the old shares. And, from the last high of 37 cents, per post-consolidation share, it has been mostly in decline, with some small ups and downs. Monday it was at one cent per share, and Tuesday and Wednesday back to 2 cents per share. If there had been no reverse stock split, then you would be able to buy 5 shares for one cent today, i.e. one share would be 2/10ths of a cent.
Although our advisor (who rarely comments) has told us that dealing with the question of Majescor is a waste of time, and that we have bigger fish to fry, we will quickly tell you some more of the things which we have found. But, you can find the same online. With the Morningstar website (see Tuesday) you can see the peaks and valleys of the stock value going back to 2001. It spaces 5 days apart, unlike the Wayback Machine, which spaces months apart. However, the Wayback Machines shows properties that Majescor has held, and the many which have disappeared. With the Morningstar site we found something absolutely amazing: on 17 January 2002 Majescor stock was work $17.50 Canadian dollars. Wow! Incredible! That was really a horrible investment for anyone who bought at $17.50, as it is now worth 2 cents! However, with the reverse split, it is even more terrible than at first glance. The reverse split means that anyone who bought it at $17.50 bought it at what now would be $175.00. Or, they paid $17.50 for what is now worth five shares for one penny. It is very confusing like the shift from the old to new French franc, when it was devalued. The difference between Canadian and US dollars could have an impact for US investors, and for work outside of Canada, if costs are in USD. In January 2002, one US dollar bought $1.50 Canadian and now it buys $1.03. http://research.stlouisfed.org/fred2/data/EXCAUS.txt So, US investors only lost down from 11.66 USD per share to 2 cents. But, because of the reverse split this would be like $116.00 to 2 cents or $11.66 down to five shares for a penny. Small changes in stock price can create huge losses, when many shares are held. This is especially the case for institutional investors, who often hold many people’s retirement funds.
On 31 October 2001 Majescor stock was worth $6.10 Canadian. By 20 May 2002 the stock had dropped back down to $5.20. What happened in the interim? In July 2001, BHP Diamonds decided to partner with Majescor at the “Portage” property, in the Otish Mountains of Quebec, and was going to pay costs through production. http://www.northernminer.com/news/majescor-options-portage-property-to-bhp/1000107319/#sthash.Jcrt5UoZ.dpuf By the 23 April 2002, BHP-Majescor announced that they had found nothing on the Portage property, (which had created such a fuss, and which had pumped up the price): “In a press release dated April 23, 2002, the partners announced that an 18-hole drill program totaling 1,087 m, testing geophysical anomalies, had failed to intersect kimberlitic rocks”. http://www.mrn.gouv.qc.ca/english/mines/quebec-mines/2002-05/otish.jsp This is an example of our “pump and bust”, but it is really a speculative bust. Probably Majescor investors are saying that the $5.20 sounds pretty good compared to the two cents. Ironically, a neighboring property continues to move forward and is (just) now at the stage of environmental impact study.
Now the above seems to come along with the territory of speculating on this type of stock. However, more recently there has been pump or hype in what we feel is a misleading way. (Nonetheless, the onus is upon the consumer, who most often doesn’t know what these press releases mean). Caveat Emptor, Let the buyer beware.
Saturday, 20 July 2013
The following is an example of a Majescor News Release, which we feel is misleading: 18 August 2011, “Majescor and SOMINE Intersect 77 g/t Au over 10.5M at Faille B, NE HAITI and Majescor Announces the Closing of the 2nd Tranche of a Non-Brokered Private Placement for $510,000”. Remember that Au is gold. If anyone looks at the entire news report then they will see that the neighboring drill core had “no significant results”. Also, 10.5 meters isn’t a wide stretch. Another drill core, with a width of 15 meters showed only 0.14 g/t gold, as did its neighbor over a width of 13.5 meters. Clearly the reported 77 grams per tonne of gold is not representative. We do not know the outcome, when it was sent for verification, either. This selective reporting of results, also served to distract from the further dilution of Majescor stock, by a “private placement” of half a million dollars worth of additional stock. Calling it a “private placement” also makes it sound good, when the impact on the existing stock holders is to dilute, and thus devalue their stock. And, wouldn’t everyone want to be involved in something as special sounding as “private placement”? This News Release appears to have made the stock jump from the 12th of August 2011 value of 16 cents up to 24 cents on the 19th of August, and up to 28 cents on the 2nd of September 2011, after which someone may have read the press releases in detail, cooler heads prevailed, the impact of dilution was felt, and by the 16th of September it dropped down to 25 cents. Even afterwards, Majescor stock had its ups and downs but due, we believe, to the various “private placements” continued to spiral downwards and has hovered around 2 cents for some time. We feel that the SOMINE property in Haiti is not a worthwhile mining property (we have not studied Majescor’s other properties in detail), but it appears that constantly diluting, by issuing more stock, is really what has made the stock value go down. From our observation, shortly after a new private placement, the stock value appears to drop. There could be other factors, however. Additionally, right now, the worthiness of Majescor’s other properties is largely irrelevant, because they are selling the one in Madagascar to another microcap Canadian company, and it appears clear that the one in the Otish Mountains of Canada, operated by Strateco, will not move forward. That leaves only poor Haiti.
Majescor-SOMINE’s breaking of the drill-bit, which resulted in super-high silver grades from the broken drill bit itself, was jubilantly announced on the 11th of April 2012: “Majescor Confirms 154 g/t Silver (4.49 oz/ton) over 12 m in Sulphide Zone In Hole B-001, Blondin Porphry Copper-Gold Prospect, Northeast Haiti – Includes High Grade Intervals of 869 g/t Silver (25.35 oz/ton) and 301 g/t Ag (8.78 oz/ton) over 1.5 M”. Somewhere we read that the thickness/ width of a core section has to be 20 to 30 meters for the grade to really have meaning, though we haven’t been able to find that reference again. Regardless, the more narrow the area with a grade, the less true significance it has. The greater the width, the more meaning it has. 1.5 meters is virtually meaningless. We also wonder why they wrote 869 g/t silver and 301 g/t Ag, when Ag is silver? These are two 1 and 1/2 meter pieces, within the same drill hole. Did they think that, at a glance, people would think it was Au, i.e. gold? Was it a spacing issue for the title? This news release based on silver from a broken drill bit – inadvertently but effectively “salting” the data – also led to a tiny bump from 15 cents on the 6th of April 2012 to 16 cents on the 13th of April. However, a 27th of March “Private Placement” probably helped hold the price down, despite a media hullaballo, which occurred around May 2012. It is tragic that most media pick up the press releases by the mining companies, without question. Caveat Emptor, May the Buyer Beware.
Monday 22 July 2013
According to the Majescor web site, as recorded by the Wayback Machine(http://archive.org/web/web.php) on 18 August 2009, Majescor stock was worth 30 cents and their (exploration) projects were Mistassini, Lac Laparre and Baker Lake, Mirabelli, and Madagascar: Daraina, Ankaramy, Analalava, Antsakabary. The current status and location of these properties is: Mistassini Uranium Mining, in the Otish Mountains, with Strateco as operator, now in trouble; Lac Laparre, now gone (for uranium partnered with Santoy-Otish Energy and for diamonds owned by Majescor) and Baker Lake, now gone (Thelon Basin, Nunvut); Mirabelli (Western James Bay Territory, Quebec), now gone; Madagascar: Daraina, Ankaramy, Analalava, Antsakabary are all gone and, as of April 2013 Besakoa is being sold by operator Sunridge and Majescor. On the 30th January 2009, as recorded by the Wayback Machine, there was also South Rae and West Minto, Nunuvik, Quebec, which were soon gone from the web site and about which we have no details. For those interested in more details of Majescor exploration property ups and downs, besides their News Releases, Wayback Machine, and Internet searches, the following article from 26 August 2002 makes some interesting points and discusses the Wemindji and the Portage Project: http://www.siliconinvestor.com/readmsg.aspx?msgid=17920313 Wemindji and Portage were additional hyped and now gone properties. The Wemindji project, had been dropped by DeBeers and picked up by Majescor. See also: http://www.mrn.gouv.qc.ca/english/mines/quebec-mines/2002-05/milestones.jsp http://www.mrn.gouv.qc.ca/english/mines/quebec-mines/2002-05/wemindji.jsp http://www.mrn.gouv.qc.ca/english/publications/mines/potential/2006-1b.pdf
It is notable that most of Majescor’s properties have been in indigenous homelands – First Nations and Inuit parts of Canada: James Bay, Otish Mountains, Nunavut, Nunuvik, as well as Madagascar and Haiti, both suffering from deforestation and endangered species. https://en.wikipedia.org/wiki/Nunavut http://en.wikipedia.org/wiki/Nunavik Interestingly, in January 2013, a Rio Tinto Chief Executive, and 200 employees, were trapped by protesters in Madagascar. http://www.google.com/hostednews/afp/article/ALeqM5jVYVOsiN9mP6ASb4LwNVLySfXBcQ?docId=CNG.bd5ad27274fa0c103870fe20ba5e0b91.a11
Looking at the Morningstar web site, “Wall Street Recommendations” for Majescor seem to be to hold the stock, presumably because of lack of information. Last Monday, one week ago, the stock dropped down to one cent, but rebounded to two cents. Our two cents worth, for free: Although we believe that you should get rid of your stock for ethical reasons, we cannot tell you when. We do not know what Majescor may pull out of the hat, which could bump up the stock temporarily. It appears clear, however, that they will soon have to admit that the Mistassini uranium project, being operated by partner Strateco, will not be able to move forward. Partner Strateco appears blocked on the nearby Matoush uranium property, which seemingly would impact Mistassini for both financing and permitting. http://ca.finance.yahoo.com/news/strateco-resources-inc-minister-no-200000712.html The Cree First Nations (Indian) do not want uranium mining in their territory, and without their approval nothing is supposed to move forward. Regardless, the long-term looks very bad for Majescor stock-holders, given all of the Majescor stock out there. It is very bad for Haiti, in that it is not clear how Majescor could get money to do anything properly, such as the environmental study. It does not appear that they can continue to get money from private placements without lowering the stock price further, unless they do a reverse stock split, as they did in 2008, in which case investors may soon have less stock, which will most likely quickly devalue. They may have done other reverse stock splits, for which we did not find the documentation. Depending on the reverse stock split, an investor may end up with, for instance, half the amount of stock but worth 4 cents, but which can end up devaluing to one or two cents again. 4 stocks or even 100 stocks could become 1 stock in a reverse-split and eventually devalue back to two cents. As we have seen, in the past, they converted 10 stocks to 1. https://en.wikipedia.org/wiki/Reverse_stock_split
When the 2008 Majescor Reverse Stock Split occurred the announcement looked like this:
“Montreal, QC, October 2, 2008. Majescor Resources Inc. (MAJ: TSX-V) (‘Majescor’ or ‘the Company’) announces it will seek shareholder approval at a special meeting scheduled for November 17, 2008 in Ottawa, to consolidate its common shares at a rate of one (1) new common share for each tranche of ten (10) outstanding common shares. The resolution regarding the consolidation must be approved by at least two thirds (2/3) of the votes cast at the meeting by the shareholders. The consolidation is also subject to regulatory approval./ It is the Board of Directors’ opinion, that Majescor’s existing issued and outstanding common share structure is not conducive to securing additional equity financing and that a restructuring is warranted in order to facilitate attracting new investments to the Company. Implementing the restructuring process in a timely manner will also put Majescor in a much stronger position to take advantage of potential value-added opportunities.” It was apparently approved so that there was the subsequent announcement “Montreal, QC – December 2nd, 2008 – Majescor Resources Inc. (‘Majescor’ or the ‘Company’)
(MAJ : TSX-V ) reports that, at the Special Meeting of Shareholders held on December 1st 2008, shareholders approved the consolidation of the Company’s common share capital on the basis of one (1) post-consolidation common share for every ten (10) pre-consolidation common shares held./ The share consolidation has been approved by the TSX Venture Exchange. Effective at the opening of trading on Thursday, December 4, 2008, the Company will start trading on a post-consolidated basis under the new trading symbol: ‘MJX’./ Upon implementation of the consolidation, the Company will have approximately 9,992,417 common shares issued and outstanding.”
We hope that everyone, investor or not, has learned that Majescor, and similar companies, are not companies to be invested in, either from an investment perspective, or from an ethical perspective. CAVEAT EMPTOR, LET THE BUYER BEWARE!
We will see if Majescor turns in their missing Annual Financial Reports, etc., this week, as they promised. And, what, if any, new rabbits they pull from their hat.
A new post will appear on Thursday 25 July 2013. We may post regarding Majescor and Strateco, as promised, or perhaps on another topic or the News posting, which we still need to get started with. Our other ongoing post, started on Sunday, continues on Wednesday 24 July 2013.
Stay vigilant. Things often happen in July or Christmas time when whoever making the things happen believe that no one is looking. According to a recent comment on BBC, things often happen in early August.
For those who wish to understand the complexities of Pump and Dump scams: