When I bought into Douglas Lake Minerals (DLKM.OB) (click here and here), I knew I was buying a lottery ticket. I presumed that either the claims of a potential multimillion oz low-capex alluvial deposit would either prove out or would turn out to be overblown. I guess I should have considered what having it turn out to be overblown might look like. It might look like a controversy with accusations flying.
There have been a few developments since the above two articles:
- Douglas Lake Minerals produced a news release that misinterpreted lab results and announced gold grades 10 times bigger than the lab measured. Douglas Lake Minerals then took six days to issue a correction where they seemingly blame shifted the mistake onto the lab. That looks like a combination of incompetence and a lack of character.
- Douglas Lake Minerals closed on the property in question which means they got more than 1 million $ from somewhere, presumably their Chinese investors.
- There have been some pictures of the site released on the Internet by someone who visited the site.
- A German investing web site put up an article with what seemed like a glowing, back-up-the truck recommendation.
- A message board announced that a technical report on the project, by a seemingly respected academic, could be found on Douglas Lake Minerals PR firm's web site.
- There was a news release announcing assay results of a small number of samples giving too-good-to-be true sounding gold results with a significant uranium byproduct.
- There was noticeably no SEC 8K filing on whether or not the Chinese investment closed even though this seems like a material event to all the stock investors on the message boards.
The overall impression from these developments were that it looked like Douglas Lake had a very promising property on their hands, but that management had some competency and credibility issues.
Things took a significant new turn when web site operator and sometime Douglas Lake Minerals supporter Bob Moriarty (321gold.com) published this (click here) hit-piece on Douglas Lake Minerals entitled BRE-X II. As you may know, BRE-X was a huge gold exploration scandal from about a decade ago where management allegedly falsified exploration results and where investors lost all their money. Moriarty levels many charges against Douglas Lake Minerals CEO, Harp Sangha. Here's an example:
"I emailed both Sangha and the IR firm and told them they need to issue a correcting press release at once. But, at that point I didn't understand the scam. Overstating the results by a factor of 10 wasn't a mistake on their part any more than Hampton claiming the project was 950 square kilometers; it was a deliberate effort on their part to ramp up the shares. And it worked, the stock shot up to $1.01 before collapsing to under $.50."
One interesting thing about the Moriarty piece is that his accusations are directed against Douglas Lake Minerals management, but he supports the idea that the property in question has significant value. Here's an example:
"Someone asked me how big the project was and I said something to the effect that it was less than 100 million ounces and more than 5 million ounces. I stand by that today. It's very big. "
As far as perspective goes, if its five million ounces, Douglas Lake Minerals investors are looking at a major multibagger on their investment. My lottery ticket will pay-off.
This is quite a story, isn't it?
The latest is a late-afternoon news release (click here) by Douglas Lake Minerals announcing two seemingly very-well connected, very-expert Tanzanian mining experts joining Douglas Lake Mineral's board of directors. This seems like a very positive step to me. Getting an SEC 8K form in covering the status of the Chinese investment as soon as possible would be a very helpful next step.
So, the situation seems to be that a Jr explorer may have both a really excellent property and a CEO that is in way over-their head or worse.
I thought I was buying a lottery ticket, not a soap opera. I sure hope it doesn't turn into a court-room drama.
So what is Douglas Lake Minerals really? A scandal, a ten to 100-bagger investment opportunity? I really hope its not a protracted court fight (NOTE: No announcements of this yet, but who knows what may come out of this controversy). The thing I really like about investing is:
- At one point, nobody really knows what's going to happen and yet you have to make decisions.
- Later, one gets to find out what's going to happen and whether your thinking is right or wrong.
This weekend I considering that, at the age of 52, there was too much of "the last time ever" in my life and not enough of "first time ever". Be careful what you ask for. With my Douglas Lake Minerals I seem to have gotten a "first time ever" situation, at least for me.
Leave me a comment if you'd like me to continue to report on this story.
MontyHigh