A legal dispute over a mining property in Colombia has cost him $850,000 of his own money, and resulted in the seizure of his computer hard drive.
But as the painful fight with Tresoro Mining Corp. (OTCQB: TSOR, Stock Forum) winds down, Canadian entrepreneur Rahim Jivraj says the time may be right to jump back into gold exploration in the Latin American country.
“It looks like Colombia is heating up again,’’ said the 35-year-old Vancouver resident who continues to battle a defamation suit that was launched against him in August 2012, by Brent Pierce, a British Columbia promoter who has received significant regulatory sanctions from securities commissions.
His optimism has been fueled by recent deals involving IamGold Corp. (TSX: T.IMG, Stock Forum), Solvista Gold Corp. (TSX: V.SVV, Stock Forum), Atico Mining Corp. (TSX: V.ATY, Stock Forum), and others.
Jivraj heads privately-owned MercerBC, a Vancouver company which four years ago struck a $4 million deal with Comunidad Minera Guayabales to earn a 100% stake in a 248-hectare concession known as the Guayabales property.
Comunidad Minera Guayabales is an umbrella entity for 15 Colombian artisinal miners and their families.
A former associate with Vancouver venture capital firm Varshney Capital Corp., Jivraj was introduced to the project by a geologist named Keith Laskowski in 2009.
Located in a historic gold district known as Middle Cauca, about 80 kilometres south of Medellin, the property is adjacent to Gran Colombia Gold Corp.’s (TSX: T.GCM, Stock Forum) Marmato project, which is estimated to host up to 14 million ounces of gold resources.
Technical reports say previous work has focused on high grade gold mineralization in relatively narrow underground workings. Results from roughly 10,000 metres of diamond drilling have also shown that the property contains the same host rocks as Marmato.
Needing a partner to fund exploration, Jivraj says he was introduced to promoter Brent Pierce and ended up striking a deal with Tresoro in April 2010, which at that time was known as Uranium International Corp., but which became Mercer Gold Nevada in June 2010. The company later changed its name to Tresoro in September 2011.
The deal required Tresoro to issue 10 million restricted shares to Jivraj and four other nominees, fund exploration by spending $11.5 million over three years and make the necessary payments to the artisanal miners to keep the project in good standing.
Jivraj was named President of Tresoro.
But he soon had a falling out with Pierce, and after subsequent move to reduce the amount spent on exploration from $11.5 million to $3 million over three years, he resigned as President in March 2011.
He later stepped down from the board in May 2011, before filing an action in June 2011 alleging that the company owed him money for payment under an alleged promissory note, management fees, expenses and disbursements.
Tresoro denied the claims and counterclaimed for breach of contract, breach of fiduciary duty and misrepresentation. It also alleged that he had resigned and resumed his position as MercerBC in order to assist MercerBC in reacquiring the property interests that had been optioned to Tresoro.
The legal fight continued and in November 2012, Mercer BC moved to try and terminate its agreement with Tresoro by launching an action in B.C. for alleged failure to remit certain payments set out on the April 13, 2010 agreement between Mercer BC and Tresoro (known as the secondary agreement).
On July 31, 2013, the Presiding judge ruled that Tresoro was in default of certain terms of the secondary agreement, and that Mercer BC was entitled to terminate the agreement.
The court later awarded MercerBC $405,821 in recognition of Tresoro’s failure to make option payments on MercerBC’s behalf to its Colombian partners.
Tresoro filed notice of its intention to appeal, but that effort appears to have been abandoned last month.
So all that remains is the defamation lawsuit launched by Pierce, who, as mentioned earlier, had previously attracted the attention of securities regulators.
The B.C. Securities Commission, for example, banned him from securities markets in the province for 15 years in 1993 after he diverted funds from an initial public offering of Vancouver Stock Exchange company Bu-Max Gold Corp.
In 2008, the U.S. Securities and Exchange Commission alleged that Pierce had orchestrated an aggressive spam and newsletter campaign to boost the share price of a bulletin board company called Lexington Resources Inc.
On June 5, 2009, the U.S. Securities and Exchange Commission ordered Pierce to cease and desist from selling securities without the appropriate registration statement.
In the defamation suit, launched in August 2012, Pierce alleges that Jivraj published defamatory statements in a newsletter that was mailed out to over 5,400 market related professionals as well as in emails, online postings and in conversations.
But these allegations have yet to be proven in a court of law, and a court order which resulted in the seizure of Jivraj’s computer hard drive was set aside in October 2013, after a Justice Dev Dley of the B.C. Supreme Court found that Pierce failed to provide full and frank disclosure during an earlier hearing.
Meanwhile, Jivraj said he has been taking the first steps to resume activity on the Guayabales property. “I’m actively sending emails and contacting people,’’ he said.
Step one, he said, will be dealing artisanal miners under the Comunidad Minera Guayabales umbrella.
“At this point the Colombians haven’t been paid and it is our responsibility to remedy that or renegotiate our agreement,’’ said Jivraj. He estimates that the Colombians are owed $590,000 in property payments.
“We have provided them with notice that we would seek to arbitrate if they seek (to do a deal) with other parties or try to terminate the agreement,’’ he said.
That would include Tresoro, which could try to assert its rights under Colombian law, even though the company is virtually defunct after being cease traded in British Columbia in May, 2012 for failure to provide documents as required by the British Columbia Securities Commission.
OTC Markets has place a warning sign on the company’s stock page, saying the Tresoro may not be making information publicly available. On April 3, 2014, the stock was quoted at $0.017, in a 52-week range of $0.024 and $0.006.
Still, after the tallying up the cost of a lawsuit, which he says resulted in an outlay of $850,000 when all the bills are added up, Jivraj said he is seeing signs of renewed activity in Colombia.
He said positive signs include IamGold's recent move to earn a 70% stake in Solvista Gold Corp.'s Caramanta project, which is located in the Middle Cauca Belt, north of Guayabales.
“If I can raise money for drilling, I am confident that we can come up with a resource,” he said.