Having racked up accumulated losses of $30 million in the last six years, Douglas Lake Minerals Inc. (OTC:BB: DLKM, Stock Forum) does not have much to show for money spent on its exploration properties in Tanzania, East Africa.
Since January 2004, the company has incurred $19.5 million in mineral property costs and $7.5 million in consulting expenses.
But that hasn’t prevented the shares from almost tripling in value in the last few weeks from 10 cents in mid August. On Wednesday, after a bout of profit taking, the stock was trading at 29 cents, down from 34 cents on September 9.
At current levels, Douglas Lake has a market cap of $21.3 million based on the 72.3 million shares that were outstanding on August 12.
That seems high for a company that is engaged in risky, early stage mineral exploration and has generated no operating revenue since its inception. The company posted a net loss of $2 million or 3 cents a share in the year ended May 31, 2010 -- when it had zero cash --, compared to a loss of $4.7 million or 8 cents in the same period last year.
On August 23, Douglas Lake issued six million restricted common shares, (upon the cashless exercise of stock options) at an exercise price of
.05 per share, according to documents filed with the U.S. Securities and Exchange Commission.
The shares were issued outside the United States to four non-U.S. persons who have not been named.
Douglas Lake is headed by Surrey, B.C.-based chief executive officer Harp Sangha, who could not be reached for comment on this story.
Sangha is a 46-year-old former investment advisor, who previously worked for Global Securities Corp. in Vancouver, and is described in company filings as having 18 years of experience in business financing.
He is also chief executive officer of Artepharm Global Corp. (OTC:BB: ARGC, Stock Forum), which says it is negotiating with pharmaceutical company Artepharm Co. in a bid to gain the worldwide marketing rights for an anti-malaria drug called Artequick.
The British Columbia Securities Commission (BCSC) hit Aretpharm with a cease trading order on August 25, saying it had yet to file financial statements for the period ended September 2009, news releases and other documents.
Douglas Lake also had its knuckles rapped last year when the BCSC slapped a cease trading order on the junior.
Regulators in B.C. were reacting to a February 10, 2009 news release in which the company announced for the first time a mineral resource estimate for its flagship Mkuvia alluvial gold property, which covers an area of 380 square kilometers in south Tanzania.
The company did so without filing a technical report to back the estimate as required under National Instrument Standards of disclosure for mineral properties.
The company subsequently agreed to retract the resource estimate, saying it was unreliable because the property sampling program was not conducted or supervised by a qualified person and because there were too few samples taken to project results over a mineralized area.
The cease trading order was revoked on June 16th, after Douglas Lake agreed to file a NI 43-101 compliant technical report within 45 days of the order being lifted.
Meanwhile, the company has raised eyebrows in some quarters by indicating that it may be trying to attract multiple parties to Mkuvia, including investors from China.
This is in spite of the fact that Douglas Lake recently optioned the entire property to New York-based Ruby Creek Resources Inc. (OTC:BB: RBYC, Stock Forum) which can earn a 70% project stake by making payments totaling US$9 million in cash and shares over the next three years.
In a corporate update released in December 2009, Douglas Lake said it is negotiating with Chinese investors from both public and private entities.
It also revealed that a nine-member delegation from China visited the Mkuvia property in October 2009 for due diligence purposes. Douglas Lake management travelled to China to further negotiations and to prepare for a finalized agreement, the company said, adding that it expected a decision by the end of 2009.
However, there has been no subsequent announcement about the state of negotiations with the Chinese. Douglas Lake has also said nothing more about when it will be in a position to make an announcement.