Callaghan settles with BCSC to not ‘drag it out’
Frank Callaghan agrees to $30,000 fine for misleading claims about gold resource estimates.
Frank Callaghan, the colourful founder and former CEO of Barkerville Gold Mines Ltd. (TSX-V:BGM), has agreed to a $30,000 fine and one-year suspension from being a director or engaging in investor relations in a publicly traded company.
Callaghan says the one-year suspension will have no impact on any of the companies he still holds shares in because he’s no longer a director of any of those companies.
In an October 27 press release, the BC Securities Commission (BCSC) announced Callaghan had agreed to the $30,000 fine and one-year suspension on being a director.
The penalties were the result of a BCSC investigation into resource estimates Callaghan announced in 2012 for Barkerville Gold’s Cow Mountain property.
His estimate of 10.6 million ounces of indicated gold was quickly called into questioned by geologists and analysts, and the BCSC ordered a technical report to back up the estimates.
The commission found Callaghan had breached the National Instrument 43-101 Standards of Disclosure for Mineral Projects (NI 43-101). Barkerville was forced to issue a press release stating its earlier claims, based on a draft technical report, were “inadequately supported” and therefore potentially misleading.
Even after a revised technical report reduced the resource estimates, Callaghan continued to justify his original claims, according to the BCSC.
“Two-and-a-half-months after Barkerville adopted the revised estimates and retracted the initial estimates, Callaghan publicly repeated, and attempted to justify, the initial estimates in an online article, and at an investor presentation,” the BCSC states.
Callaghan said his mistake was in combining referred and indicated resources in his estimates, contrary to 43-101 regulations.
As detailed by Business in Vancouver in a two-part series on Barkerville Gold and Callaghan, the BCSC halted trading in Barkerville’s stock for more than a year, while the company went back to the drawing board to have a new technical report completed.
When trading resumed on October 9, 2013, the company’s stock dropped from $1.22 to $0.57 per share, and later sank below $0.20 per share.
The company was bailed out by Eric Sprott with a $19 million debt-to-share conversion that gave Sprott a 41% share in the company.
Callaghan is still the third largest shareholder in Barkerville, but is no longer a director. He resigned as CEO last year and as director earlier this year.
One other company Callaghan founded is Starr Peak Exploration Ltd. (TSX-V:STE) – formerly Lions Gate Energy – which is focused on the El Toro copper-molybdenum-silver property in the Smithers, B.C., region.
Earlier this year, when the name change and a six-to-one share consolidation was announced, Callaghan did not stand for re-election to Starr Peak’s board of directors.
While he’s not happy with the fine, Callaghan said, “I agreed to it. How long do you want to drag it out for?”
In addition to the fine, Callaghan also agreed to complete a weekend course on 43-101 reporting, which seems to suggest he may not be done with the junior exploration game just yet.
Asked what his plans are when the one-year suspensions expires, Callaghan said: “What am I doing next year? I don’t have a freaking clue.”