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Canaco Resources Inc. (TSX: V.CAN, Stock Forum) is set to do battle with regulatory authorities in British Columbia over the disclosure of drilling results from a Tanzania, West Africa gold discovery that were made by the company in December 2010.
Controversy has arisen after Canaco received a notice of hearing from the British Columbia Securities Commission that will focus on whether the infill drill results were material information and should have been released to the public before the junior announced that it had granted 7.2 million stock options to certain directors, officers at a strike price of $4.56 per share.
In a strongly worded press release, Canaco said it believes the infill drill results were not material, a view which puts it at odds with the BCSC, which in turn is taking the position that Canaco should have disclosed the drill results prior to the stock options grant.
Indeed the BCSC is alleging that Canaco staggered the disclosure of the drill results by issuing three separate news releases on December 6 (2010), December 9, and December 22.
In statement, the BCSC also alleges that Canaco became aware of assay results from eight new drill results from the Magambazi project in Tanzania’s Handeni district between November 22, 2010 and November 29, 2010.
The BCSC goes on to allege that Canaco President CEO Andrew Lee Smith, and directors David Parsons Brian Lock, and Randy Smallwood were aware of results in four of the eight drill holes as early as November 25, 2010.
“The staff of the BCSC is proposing to rewrite the rules for determining materiality in a way we believe is unfair, contrary to the public interest and damaging for junior mining companies subject to BC jurisdiction,’’ said Andrew Lee Smith, Canaco’s President and CEO. “We intend to oppose that effort and defend ourselves vigorously.’’
In a release issued Tuesday, Canaco said that its board formed a special committee of directors in November 2011 and engaged legal counsel when it was first informed by BCSC staff that a notice of hearing may be forthcoming.
“Since then, Canaco’s counsel has conducted discussions with BCSC staff on behalf of the special committee,’’ the company said.
Canaco announced on December 3, 2010 that it was granting the stock options pursuant to the company’s stock option plan. At that time, it said the options have an exercise price of $4.56 per share and an expiry date of December 3, 2015.
On December 6, said it was pleased to announce “spectacular” new drill results from its Magambazi gold discovery. Highlights, the company said, included a 48.6-metre intersection averaging 14.81 grams gold per tonne.
On December 3, 2010, Canaco shares closed at $4.75. After opening at $5.29 on December 6, 2010, the stock jumped to $6.05 by December 9. In those four days, over nine million shares changed hands.
Trading at 94 cents on Tuesday, Canaco has a market cap of $187.7 million, based on 199.7 million shares outstanding. The 52-week range is $4.90 and 78 cents. |