By Peter Kennedy
It isn’t often that a money-losing junior with no revenue and no discernible exploration success would attract the attention of high profile media outlets such as Forbes.
But Big Bear Mining Corp. (OTC: BGBR, Stock Forum) achieved that feat in April when its stock price soared to $1.68, giving the company a market value of over $230 million.
Forbes expressed the view that the market valuation was hard to justify, given that the Tempe, Ariz., company had generated nothing but losses since its inception in April 2005, and had only $1,317 in the bank at the end of 2009.
Forbes said investors who bought shares at over $1 were ignoring the track record of Big Bear chief executive officer, Steve Rix – who declared personal bankruptcy in April 2009 -- and the fact that the company had executed stock transactions that seemed hard to fathom.
They included the sale of 250,000 shares for 20 cents each on January 20, 2010, the day before it proceeded with a 50-for-one stock split. All of the shares were issued to non U.S. residents in an offshore transaction.
Since the article was published in April, the stock price has plummeted to 13 cents, leaving the company with a market value of about $10 million, (based on 72.7 million shares outstanding) and an uncertain future, especially for investors who coughed up $1.75 at the peak of the rally.
Where things go from here appears to depend on Rix, who holds the multiple titles of President, treasurer, and chief financial officer as well as ceo.
He replaced Dwayne Skellum, who resigned in March, according to company filings.
Rix became Big Bears’ single largest shareholder in April by acquiring 30 million shares in the company from Aaron Hall, a 33-year-old Vancouver resident, who is both a licensed free miner and nightclub security man, according to U.S. Securities and Exchange (SEC) Filings and published reports.
As a result of the 50-for-one stock split, Hall had previously owned 100 million shares, or 72 per cent of the company.
However, regulatory filings say he recently agreed to return 66.7 million shares to treasury, leaving Rix with 41.2%.
Hall is the company’s original President and still owns about 250,000 shares, regulatory filings show.
Commenting on the stock’s dramatic rise and fall, Rix said it was attributable to the efforts of “several promoters who seemed to latch onto the company without any communication with us.’’
“I only found out about that through the grapevine after other articles were written,’’ said Rix during an interview from Charleston, S.C. “It was quite a shock to us.’’
Rix said he was recruited by Intosh Services Ltd, a United Kingdom company which agreed in March to invest $1.4 million in Big Bear in return for shares priced at 70 cents each.
Rix describes himself in his Linkedin profile as a visionary thought leader and change agent. At the age of 44, he says he has been involved in dozens of industries, including financial planning, mortgage brokering and investment capital.
His personal bankruptcy results from a failed real estate venture, Rix told Stockhouse during an interview that was arranged by Vista Partners LLC, a San Francisco company to which Big Bear issued 450,000 restricted shares on July 20, 2010, according to regulatory filings.
But his profile contains no reference to mineral exploration.
This would indicate that Rix is reliant on vice-president, of exploration John Glasscock and his Jelm, WY., company Cowboy Exploration & Development LLC.
Under an agreement with Glasscock, Big Bear can earn a 100% interest in 452 Wyoming mineral claims known as the Rattlesnake Hills property. In return, the company has agreed to pay Glasscock $250,000 and issue three million shares to him over the next two years.
This is an opportunity that presented itself after Vancouver-based Crescent Resources Corp. (TSX: V.CRC, Stock Forum) couldn’t finance exploration on the Rattlesnake properties and was forced to give them back to Glasscock’s company Cowboy Exploration in June.
Exploration is at a very early stage at Rattlesnake Hills and Big Bear has committed to spending only $800,000 there this year. It hopes to be in a position to release drill results by the first quarter of 2011, Rix said.
The junior is also engaged in early stage exploration at properties in the Red Lake mining district of Northwestern Ontario that it recently optioned from Rubicon Minerals Corp. (TSX: T.RMX, Stock Forum).
It means Big Bear remains a highly speculative bet for investors, especially the ones who bought in April and held on through the collapse.
Meanwhile, after posting a loss of $262,540 for the second quarter ended June 30, 2010 on zero revenue, the company says it expects to spend approximately $835,000 on general and administrative expenses over the next 12 month.
It also said it will require additional funds to finance budgeted expenses.