B.C. Securities Commission enforcement staff are asking the commission to force Calgary promoter Ross Stanfield to provide what he has so far failed to provide: An independent technical report on the Gallowai Bul River gold project.
"I expect this application will put the Stanfield Mining Group under the microscope. And it's about time," Russ Renneberg, an investor in the project, said in an interview from Edmonton on Friday.
Over the past three decades, Stanfield and his companies, Gallowai Metal Mining Corp. and Bul River Mineral Corp., have raised $229 million from nearly 3,000 shareholders to develop the project 40 kilometres southeast of Cranbrook.
For years, Stanfield has told investors the property is fabulously rich in gold, platinum and feldspar, and on the verge of production. But so far he hasn't produced a thing.
That raises the question: Does the property have an economically viable deposit? And if so, why hasn't Stanfield put it into production?
In 2007, a group of 12 dissident shareholders, all from Alberta, began seeking answers to those questions, but Stanfield -- who owns all the voting shares -- refused to meet with them or give them any meaningful response.
Last year, the dissidents stepped up the pressure by filing a petition in B.C. Supreme Court seeking to remove Stanfield from his position of authority. In February, Judge Peter Leask ruled against the dissidents, saying he was satisfied that Stanfield and his companies "engaged in no oppressive conduct." The dissidents are appealing that decision.
That case deals only with corporate governance issues, not whether the property is viable. The implicit, overarching question has always been whether the property contains an economic deposit. That question may soon be answered.
In a notice of hearing Friday, BCSC acting executive director Martin Eady asked the commission to order Stanfield and his companies to provide an independent technical report on the property.
The report would be prepared by a qualified person and comply with National Policy 43-101, which prescribes standards of mineral disclosure.
Eady's staff will ask the hearing panel to compel Stanfield to provide the report within 45 days of the order, and distribute it to all shareholders within 15 days of receipt.
A date for the hearing will be set on May 27.
The application does not allege any breaches of any specific rules. It simply asserts that, after spending so much time and money on the project, there is still no commercial production, and that it is in the public interest to get an independent audit of what the property contains, or doesn't contain.
That poses the question: If the report shows there is no economic deposit, will Stanfield be subject to disciplinary action?
"We'll deal with that when we get there," BCSC enforcement director Lang Evans replied in an interview.
At this stage, there are many indications the deposit is not economically viable:
1. As noted by enforcement staff, a huge amount of time and money has been spent without any production. Also, Stanfield has repeatedly told shareholders that production is imminent, but nothing ever happens.
2. Stanfield, 81, claimed that he took the hugely prolific Gibraltar copper mine public in the 1970s and shepherded it into production. This is not true -- he was simply a property vendor.
3. Stanfield has run into many regulatory problems over the years. Both the Alberta and Saskatchewan securities commissions have made allegations of serious misconduct and imposed cease trade orders.
4. Stanfield's former consulting engineer, Philip de Souza, was disciplined by his professional association for making claims about the property that could not be supported.
5. Stanfield used unconventional assay methods and dubious assayers, including John Carneil and Gregory Iseman, both deemed not credible by B.C. regulators. Stanfield also used an obscure Russian lab that used unconventional assay methods.
6. Geologists in the B.C. Geological Survey Branch at the B.C. mines ministry twice conducted check assays that contradicted high assay values previously reported by Stanfield.
7. In an affidavit supporting the dissidents' petition, Vancouver mining engineer Ian Smith said there is strong evidence the deposit "is not economic and will never go into production."
8. Stanfield has promised on at least two occasions to provide shareholders with technical reports that are compliant with National Instrument 43-101, but has failed to do so.
9. When dissident shareholders have asked for more information, Stanfield has rebuffed them. Moreover, Stanfield filed a $220-million defamation suit against them in Calgary. Also, some of the dissidents' supporters claim Stanfield's staff threatened them with legal action.
"Stanfield thought he could intimidate us into oblivion," Edmonton investor Stephen Roehrig said in an interview Friday. "He has done that successfully in the past to individual shareholders, but not to our group."
Evans said Stanfield has been cooperative, and hasn't refused to provide an independent technical report. But he said that, rather than asking Stanfield to voluntarily provide one, he is seeking a formal commission order.
"We think it's important that we get a proper report on the merits of the property and we share that with investors. We think that's the right thing to, and we are asking the commission to agree with us."
Neither Stanfield nor his lawyer, Robert Abells of Edmonton, returned telephone messages Friday. The companies' lawyer, Luciana Brasil of Vancouver, said she had not received instructions to comment.
dbaines@vancouversun.com