RE: RE: RE: more trouble ahead?here you go. lies, lies & more lies.
ALBERTA SECURITIESCOMMISSION
NOTICE OF HEARING
Citation: Russell,Re, 2011 ABASC 69 Date: 20110204
Docket: ENF-005564
Securities Act, R.S.A. 2000, c. S-4, as amended (Act)
To: Matthew Russell
Notice: The Alberta Securities Commission (Commission) willconvene at 9:30am on
Friday, the 11th day of March, 2011, at Calgary, or elsewhere, in Alberta, to deal with any preliminarymatters, and to set a date for a hearing regarding the allegations in thisNotice. At the hearing, the Commission will consider whether it is in the public interest to order:
(i) Under subsection 198( 1)(a) of the Act, that trading in or purchasing cease in respect of specified securities;
(ii) Under subsection 198(1)(b) of the Act, that you cease trading in or purchasing securities;
(iii) Under subsection 198( 1 )(b.2) of the Act,that you be reprimanded;
(iv) Under subsection198(l)(c) of the Act, that any or all of the exemptions contained in Alberta securities laws do not apply to you;
(v) Under subsection 198( 1)(d) and (e) of the Act, that you resign any positions that youhold as a director or officer of an issuer, registrant or investment fundmanager and that you be prohibited from becoming or acting as a director orofficer or as both a director and officer of any issuer, registrant, or investment fund manager;
(vi) Under subsection 198(1)(e.3) of the Act, that you be prohibited from acting in amanagement or consultative capacity in connection with activities in the securities market;
(vii) Under subsection198(l)(i) of the Act, that you pay to the Commission any amounts obtainedor payments or losses avoided as a result of noncompliance with Alberta securities laws;
(viii) Under subsection 199 ofthe Act, that you each pay an administrative penalty;
(ix) Under subsections 202(1) and (2) of the Act, that you pay the costs of the investigation and hearing; and
(x) Such further and otherorder under Section 198 as the Commission deems appropriate.
Location: Alberta SecuritiesCommission, 5th Floor, 250 - 5 Street SW, Calgary, Alberta.
Procedure: 1. You may obtain disclosure andparticulars of the allegations in this Notice from Don Young, c/o AlbertaSecurities Commission, 4th Floor, 250 - 5thStreet SW, Calgary, Alberta, T2P 0R4, telephone403.297.2642.
2.You may be represented by legal counsel and you or yourcounsel may makerepresentations and introduce relevant evidence.
3.If you or your counsel fail to attend on March 11, 2011, at 9:30am, or as directed, the hearingmay proceed in your absence and an order may be made against you without further notice.
See also section 29 of the Act and Commission Rule 15-501- Rules of Practice andProcedure for Commission Proceedings.
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Allegations
Summary of Breaches
1Staff of the Commission (Staff) alleges thatMatthew Russell (Russell) made or caused Azteca Gold Corporation (Azteca) tomake misleading statements in Azteca news releases.
2Staff alleges that Russell acted as Azteca's QualifiedPerson without the requisite experienceand qualifications.
3Staff alleges that Russell acted contrary to the publicinterest. Parties
4Russell is a resident of Spokane, Washington, U.S.A. At all materialtimes he was the President, Chief Executive Officer, and Chairman of the boardof Azteca.
5Azteca is a mineral exploration company with its headoffice in Spokane, and its securities are listed for trading on theTSX Venture exchange.
6Russell acted as Azteca's Qualified Person (QP) pursuantto National Instrument 43-101 - Standards of Disclosure for Mineral Projects(NI43-101). In that capacity, he was responsible for preparing orsupervising the preparation of all disclosure of scientific or technical information made by Azteca.
Circumstances
7From January to June 2009, Azteca issued a number ofpress releases (each described below in more detail - Releases) relatingto, primarily, drilling and assaying progress with respect to its mainexploration property in Idaho, U.S.A. (Two MileProject). Russell drafted or supervised the drafting of the Releases andcaused or authorized, permitted or acquiesced in their issuance by Azteca.
8On January 13, 2009, Azteca issued a news releasestating, under the heading Development of Mineral Resource, "As reportedDecember 8, 2008, the Company is currently drilling at two locations within the TwoMile Project property in an effort to develop a mineral resource." Staffalleges it was premature at the time, and misleading, to refer to thedevelopment of a mineralresource at the Two Mile Project.
9On February 2, 2009, Azteca issued anews release referring to different drill holes at the Two Mile Project andonce again the "development of a mineral resource". Staff alleges itwas prematureat the time, and misleading, to refer to the development of a mineral resourceat the Two Mile Project.
10 On February 24, 2009, Azteca issued anews release quoting Russell with respect to drilling results "At 5,600FT,the mineralization became continuous and intermittently semi-massive". Staffalleges the statement was misleading or untrue, as there was no assay or other support at that or any time for suchmineralization.
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11 On April 2, 2009, Azteca issued a news release quotingRussell with respect to drilling results"...what we have intersected are Sullivan-type Precambrian massive sulphidebeds forming a thick lens." Russell was further quoted "...we believethat the massive sulphide beds discovered at Two Mile, while very similar inthickness to those at the Sullivan ore body, have much higher grades ofzinc, silver and lead." Staff alleges it was misleading or untrue to compare the Two Mile Project to the Sullivan mineat that or at any time.
12The same April2, 2009 press release also referred to "deep drilling"and quoted Russell "The depths are easily within the mineable horizon,and the potential grades are very exciting." Staff alleges thisstatement was misleading or untrue, as there was no mineral resource and no sufficient evidence at that or any time ofan economically mineable horizon at the Two Mile Project.
13On April 15, 2009, Azteca issued anews release quoting Russell with respect to drilling results "AztecaGold continues to encounter Sullivan-style Precambrian sulfide beds in diamond drill hole DDH-006." Staff alleges itwas premature at that or any time, and misleading or untrue, to characterizethe deposit as "Sullivan-style".
14OnMay 27, 2009, Azteca issued a news release announcingthe closing of a private placement andquoted Russell with respect to drilling results "The Company is pleased toreport the intersection of its initial deep target... which is aSullivan-style sulfide bed." Russell is furtherquoted "...management believes this intersection may represent a mainsphalerite (zinc sulfide) - tetrahedrite (silver-antimony sulfide)zone." Staff alleges it was premature at that or any time, and misleading, to characterize the deposit as"Sullivan-style". Staff also alleges it was misleading or untrue torefer to it as a "main sphalerite (zinc sulfide) - tetrahedrite (silver-antimonysulfide) zone."
15OnJune 10, 2009, Azteca issued a news release updatingthe progress of exploration at the Two Mile Project and announcing a $1.5Mfinancing. Russell was quoted with respect to drilling"We believe that these two zones... are tetrahedrite-typemineralization." Staff alleges it wasmisleading or untrue to refer to "tetrahedrite-type mineralization"for the drill hole in question.Assays for this zone, with results dated June 4 and June 11, 2009, showed no significant mineralization.
16On June 18,2009, Azteca issued anews release updating the progress of exploration at the Two Mile Projectand announcing an increase in the size of the private placement to $2.5M. Russell was quoted "Azteca is pleasedto announce the intersection... of a second major mineralized zone."Russell also referred to the discovery of a mix of "bournonite andpolybasite". Staff alleges the identification of "bournonite andpolybasite" was misleading or untrue,as there was no assay or other reliable information at that or any time toindicate the existence of those minerals.
17 On July3, 2009,following a continuous disclosure review by the Commission, Azteca
issued a news release updating drillingresults and clarifying certain technical and geological
information disclosed in the Releases. In this release, Azteca cautioned"... that any previous
statements suggesting mineable nature orpotential economic viability, the application of a
Sullivan-type bedded massive sulfidedeposit model, or any inferences about metal grades based
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on geological descriptions of "massive sulfide"or other mineralization types should not be relied upon". Other items were clarified inthe release.
18 In December 2008, prior to the Releases, Azteca'ssecurities were trading at
.05. By
mid-June 2009, Azteca's securitieswere trading as high as
.50. In the days following the
July3,2009 clarifying news release, Azteca'ssecurities were trading as low as
.13.
Breaches
19 As a result of the above, Staff alleges thatRussell:
19.1breached section 92(4.1) of the Act by making,causing Azteca to make, or authorizing, permitting or acquiescing in themaking by Azteca of statements in the Releases that were misleading oruntrue and that would reasonably be expected to have a significant effecton the market price or value of Azteca's securities; and
19.2breached paragraph 2.1 of NI 43-101, by acting as QP forAzteca without the requisiteexperience and qualification.
20 Stafffurther alleges that Russell acted contrary to the public interest by makingrepeated
misleading or untrue statements inAzteca press releases and acting as Azteca's QP without the
requisite experience and qualification.
Calgary, Alberta, 4 February 2011
ALBERTA SECURITIESCOMMISSION
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"OriginalSigned By "
W.E. Brett Code Director, Enforcement