from stockwatch by Will Purcell
Andrew Lee Smith's True North Gems Inc. (TGX), unchanged at one-half cent on 51,000 shares Thursday, intends to pursue opportunities in the resource sector while it wait for the bankruptcy proceedings for its majority-owned subsidiary, True North Gems Greenland (TNGG), to wrap up and a possible settlement amount to be offered. Mr. Smith, interim chief executive officer, does not have a confirmed date for when the bankruptcy will conclude, but in the meantime, he is planning a 1:10 rollback and a $400,000 private placement. The consolidation would leave True North with just over 30 million shares outstanding and a five-cent stock. With a working capital deficiency topping $5-million, the company's stock will probably resume its decline.
True North's woes stem from the voluntary bankruptcy declared by TNGG in the summer of 2016, after it was unable to arrange the final financing needed to complete its little Aappaluttoq ruby and sapphire mine on the western coast of Greenland. The owners of TNGG, led by True North Gems Inc., voted to declare bankruptcy at the end of August and by early October, the Greenland government had whooshed through the process, transferring the Aappaluttoq licences to LNS Group, one of TNGG's minority shareholders.
Naturally, Mr. Smith and his crew were unimpressed with the process. They say that while their company "respects the laws of Greenland" -- as great an insult as launching a complaint with the phrase: "with all due respect" -- True North does not intend to comply with any demand that would indicate its acceptance of the decision to transfer Aappaluttoq to LNS Group, at least until it receives full disclosure of the bankruptcy process and gets enough answers to let its shareholders know what happened.
Meanwhile, LNS Group completed construction of the mine in early 2017 and Aappaluttoq began production a year ago under an LNS Group subsidiary, Greenland Ruby. Gunnar Moe, chairman of Greenland Ruby, said late in May that his company has been talking with potential customers and is getting set for its first sale of rubies and sapphires. "It has been exiting and educational," said Mr. Moe. (He presumably meant "exciting," although the process was indeed "exiting" for True North.) Mr. Moe says that the company's first sale will be completed through "preferred partners" who will assist in creating value to his company's unique product.
Its Aappaluttoq woes aside, True North's future in the resource sector appears uncertain. The company's fall-back project had long been its Beluga sapphire project on Baffin Island, on which it had spent nearly $1-million. Last year it wrote down its investment. Now, Mr. Smith says that the company expects to complete work, mainly mapping of ground disturbance caused by True North's earlier efforts, to plan a reclamation program. The company has already reclaimed its Tsa Da Glisza project in Yukon, which it is hoping to sell for a nominal amount of cash. That leaves True North with just its True Blue project, also in Yukon, which remains in good standing for now.