MINING MARKETS & INVESTMENT NEWS — Regulators question Golden Eagle find

Trading in Golden Eagle International has been suspended by the U.S.

Securities and Exchange Commission amid controversy surrounding the company’s claims that it has discovered a large gold deposit in Bolivia.

The SEC cited concerns over the “accuracy and adequacy” of assertions by Golden Eagle that it had identified a proven reserve of 6.4 million oz. on its 2,000-ha Cangalli concession. The company had also stated that the property hosts an inferred resource of 157 million oz. and an indicated resource of 78.7 million.

However, disclosures by the Denver-based company give no indication that a feasibility study was ever conducted on the property; nor has Golden Eagle issued a grade or tonnage calculation for the alleged deposit — only a bulk amount of gold. The resource estimate is based on 107 samples taken from trenches, road cuts, pits and old workings.

The claims appeared just weeks after civil stock fraud charges were leveled against the company by the SEC, which is conducting an investigation into whether or not Golden Eagle issued misleading statements and made false regulatory filings between 1994 and 1996. Said an SEC official when the investigation was launched in early May: “It’s what we call a hype-and-dump.

They issue false press releases, get the market excited and sell a lot of stock.”

Shares traded as high as US$6.25 in mid-1994 before tumbling to 32 cents prior to the halt, which is in effect until July 6. The SEC alleges that the defendants, including former president Ronald Knittle and his wife, Mary Erickson, who owns a large share of the company, made US$662,000 during that period.

According to President Terry Turner, the company has “diligently sought to issue accurate information” in the past months and denies that principals of the company are dumping overvalued stock. “Everyone we’re talking to is in this for the long haul,” he said in a recent interview with a Denver-area newspaper.

Also, Golden Eagle has failed to file its 1997 and first-quarter 1998 financial statements with the SEC. Turner said the delay stems from problems concerning Bolivian and U.S. accounting standards, and added that the reports will be filed soon.

Meanwhile, another company with a controversial precious metals discovery has filed for bankruptcy protection in a Phoenix court. The company, Arizona-based International Precious Metals (IPM), claims to have discovered a multi-million-ounce gold-platinum-palladium deposit on its Blackrock property in the Arizona desert.

Related to the filing was the sale by MG Gold (MGAU-O) of 620,000 of its shares owned by IPM. The shares were bought by a private investment group.