Chase president, director resign after VSE probe

Following an investigation of Chase Resources (VSE) by the Vancouver Stock Exchange, company president Lynn Wilkinson and director Edward Nealon have resigned. The resignations stem from the disclosure of a share-pooling agreement arranged by Wilkinson and promoter Bruno De Vincentiis.

Wilkinson represented a group of investors holding about 47% of Chase’s outstanding shares. This block of stock, along with the 750,000 escrowed shares owned by Wilkinson, left a maximum float of only 770,000 shares, or about 27% of the outstanding capital. The VSE is investigating the possibility of other connected blocks of shares which would have resulted in an even lower share float.

Under the terms of the pooling agreement between the group of investors, Wilkinson and De Vincentiis, 233,000 shares of the pooled stock were deposited into a brokerage account controlled by Wilkinson and De Vincentiis. Profits from the sale of the shares were to be split between the shareholder group and De Vincentiis, who was responsible for promoting the stock.

The investigation disclosed that Vincentiis was named in a court action by the Australian National Companies and Securities Commission with respect to trading irregularities in Golden Bounty Resources, a company listed on the Australian Stock Exchange.

The limited number of shares in Chase’s public float provides some explanation for the meteoric rise in the price of the company’s shares in December, 1990, and the difficulties short sellers had in covering positions.

Chase was the most actively traded issue on the VSE during December, rising from below $1 per share to a high of $8. The ini- tial increase in the company’s share-price was tied to Chase’s option to purchase a 52.9% interest in Taysan Copper, a company which owns a large copper-gold porphyry deposit in the Philippines. During the course of the run-up to the $5- level, the short position in the stock jumped to more than 300,000 shares.

Short sellers borrow stock and sell it in the hopes it can be bought back at a lower price. However, with such a small float, a shortage of physical stock arose and the shorts were forced to buy back, subsequently pushing the stock to a high of $8.

Ian Rozier, a director of Chase, will take over as president of Chase and Paul Ray has been appointed as a director. The company expects to put in place an independent director acceptable to the VSE in the near future.

Nealon and Wilkinson have been ordered to resign from any Vancouver-listed companies they are involved with, and pay investigation expenses totaling $10,000.

In addition, Rozier must attend and complete the Simon Fraser University course entitled, “Organizing and Managing a Public Company.” The exchange also ordered Chase to withhold further public distribution of a promotional brochure relating to the Taysan project in the Philippines. Chase said the exchange’s concerns stem primarily from reference to a company interest in the Taysan property as opposed to an option to purchase 52.9% of the out- standing shares of Taysan Copper, the company which owns the property.

Joseph Charland, a director, said the company views the matter as closed and does not see it affecting the planned development of the Taysan deposit.

Chase intends to conduct an infill drilling program on the deposit to prove up preliminary reserves totaling 400 million tons grading 0.01 oz. gold per ton and 0.3% copper. This will be followed by a detailed feasibility study which the company hopes will attract a major mining company as a partner or out-right buyer.

Chase entered into a fiscal agency agreement with Yorkton Securities and Robert Sibthorpe, the firm’s mining analyst recently returned from a visit to the Taysan property.

Following a review of technical data, Sibthorpe said he was satisfied with Chase’s representation of the property. He noted its large size and proximity to infrastructure such as power and a nearby deep-water port. But he did not give an opinion on the stock, and said Yorkton management was reviewing its position as fiscal agent in light of recent developments.