A United States Department of the Interior hearings office has ruled mining claims located over a supposed “desert gold” deposit in southern Nevada are invalid “for failure to make a discovery.”
Administrative Law Judge Harvey Sweitzer ruled that the holders of the Mijo claims, in southern Clark Cty. about 25 miles southeast of Las Vegas, had failed to prove the existence of a mineral discovery and that the U.S. Bureau of Land Management (BLM) had made its case that no valuable mineral deposit existed on the claims.
The decision follows 41 days of hearings spread over three years, and strips the claims from the two private companies that had held them, Pass Minerals and Kiminco, both headed by promoter Ian Matheson.
Matheson was also a significant shareholder in Delgratia Mining, whose gold “discovery” at the Josh property, 22 miles south of the Mijo claims, was discredited in May 1997 after a salting scam was exposed. Delgratia, whose name has since been changed to
The Mijo claims have a large number of links with the salted Josh gold property. They were staked in December 1983 by the late Arby Vincent, a sometime assayer and prospector from Henderson, Nev., who, in 1993, sold a “substantial number” of mineral claims in the Eldorado Valley to Charles Ager, a Vancouver-based geologist. In 1996, Ager vended the Josh property to Delgratia Mining, becoming the company’s president. Ager and Matheson have worked together and held interlocking interests in their Clark Cty. mineral claims for over ten years, and Matheson acts as resident Nevada agent for several of Ager’s companies, including Valley Gold, the holder of the Josh claims.
Mijo and Josh were also parts of a land package covered by a joint venture between Plenty River Mining, an Australian-listed junior, and private companies controlled by promoters Peter Miller and James Roe. Plenty River dropped the joint venture in 1988 after spending about US$6 million on drilling and pilot-plant tests.
Several participants in the Josh exploration program also worked on Mijo. Apart from Vincent, Matheson and Ager, Robert Gunnison — whose unlicensed Energy International laboratory was inconclusively fingered by some investigators as the locus of the Josh salting — analyzed Mijo gravels, finding, in some instances, gold values of over 20 oz. per ton in concentrates.
In both the Mijo and Josh cases the promoters claimed that standard analytical techniques were not capable of extracting gold from samples taken on the property. At Mijo, Matheson relied heavily on assays done by Gunnison and by Utah assayer Jerry Henderson, both of whom, Matheson testified, could find gold where commercial laboratories could not. At Josh, Ager used both Gunnison and Merwin White, who was one of the assayers that provided false assay figures to Naxos Resources — now
White was also one of the assayers used by Intergold Corporation and its subsidiary International Gold at the Blackhawk property in southern Idaho, where another gold “discovery” was exposed as a fraud in January 2000.
Another curious exploration practice at the Mijo property was the use of the “Moore Radiometer” — in fact, a Geonics EM-16 electromagnetic receiver. The inventor, or rather operator, of the Moore Radiometer, Charles Moore, claimed he used the EM-16 receiver to detect gamma rays “emanating from the centre of the earth to the surface.” (The unit measures the field strength of radio waves in the 10-20 kHz range and does not detect gamma rays at all.)
Moore did a series of alleged “mapping” surveys on the Mijo property in 1998, during a time when geophysicist Ager — who might reasonably be expected to know what an EM-16 does — was “working closely” with Matheson.
The exploration program at Mijo also provided cover for the extraction and sale of aggregate to the construction industry — an activity that would normally require the miner to pay the U.S. government an appraised rate for the material. If, on the other hand, the material is being mined to extract “locatable” minerals — the metals, generally — then there is no assessment to be paid. (In the last fifty years several such scams have been run in Arizona, where the operators claimed to be extracting metals when in fact they were only removing aggregate and selling it to concrete companies.)
In 1997 Matheson contracted with a local concrete company, Bonanza Material, and one of its subsidiaries, to provide aggregate for construction on multi-lane sections of U.S. Highway 95 near the Mijo claims. The removal of sand and gravel attracted further attention from the BLM, which issued Pass and Bonanza with a “mineral trespass notice” in January 1999. The agency also alleged that the sand and gravel were being removed without ever being processed for the extraction of metals.
The mineral trespass notice obliged the BLM to show that the property did not contain locatable minerals — gold, in this case — and in early 1999 it sent geologists Burrett Clay and Matthew Shumaker to take surface samples at places designated by Pass Minerals representatives. The samples were sent to three commercial laboratories and the Nevada Bureau of Mines and Geology, and to three assayers appointed by Matheson — Henderson, White, and Metallurgical Research and Assay Laboratory, owned by Donald Jordan.
The four labs chosen by the BLM got uniformly low results on all the samples from Mijo, and returned accurate results on blank samples (material from the front yards of Shumaker’s and Clay’s Phoenix-area homes) and on reference materials of known metal content. Pass’s preferred assayers found concentrations of gold in virtually all the samples; White even returned three of his four highest values on samples of the BLM geologists’ front-yard soil.
In rendering his decision Judge Sweitzer said he had found testimony by Matheson, Ager, Henderson, Gunnison, White, and other witnesses for Pass not to be credible. He said Pass and its witnesses had “typically relied upon unusual analytical methods, often claimed to be proprietary, that produced widely scattered results, frequently with extraordinarily high values. The reliability and representativeness of their data was further undermined by poor record keeping….To the extent that Contestee’s [Pass] witnesses explained their theories why the conventional analytical methodologies would not work, those theories generally were not supported with adequate data and were refuted by Contestant’s [BLM] experts.”
The judge said Ager had engaged in “deceptive conduct” in connection with both exploration and property deals at Josh, and that he had been evasive and possibly biased when testifying in Pass’s favour at the Interior Department hearings. The judge noted that he had arranged to vend the Josh property to Delgratia Mining without disclosing his family’s financial interest in the companies that then owned the Josh property, Valley Gold, Nevada Gold, and Philgold Investment. (Delgratia had, in late 1996, bought a 40% interest in Nevada Gold with cash and shares, and arranged options to take up a total of 30% more of the company.)
The judge was particularly critical of Ager’s behavior in altering a geochemical survey map, which he had at first submitted to Vancouver mining engineer Brian Mountford, who prepared a qualifying report on the Josh property for the board of directors at Delgratia in August 1996. (Mountford did not visit the property and his report relied heavily on information Ager had provided.) The map showed contours of gold concentrations ranging from 1 gram to 30 grams gold per tonne (about 0.03 to 0.87 oz per ton).
Almost a year later, in re
sponse to a request for further information by the Nasdaq, Ager produced a copy of the map on which the contour values had been altered by hand, being reduced by a factor of 10 — they now represented values of 0.1 to 3 grams gold per tonne. Ager told the hearing that he had been the one to make the alterations on the map.
The judge found his explanation that he had changed the numbers to match the grades of the “head ore” — presumably the actual soil that was sampled in the geochemical survey — rather than “concentrate” to be unbelievable. The judge also found — based on the testimony of an expert appearing for the BLM — that if Ager was telling the truth about his alteration of the map, he had originally been deceptive toward Mountford and the Delgratia directors, who would have understood the contours to depict the gold concentrations in the soil, not in a concentrate made from the soil.
Matheson was caught in several cases of false testimony in the hearing, including falsified sample data sheets. He also asserted the existence of a special assay protocol developed by Belgian metal producers Union Miniere (now
The case was further undermined by analytical quality-control results and blind round-robin testing on reference materials and the Shumaker and Clay “front-yard” blanks by multiple laboratories, reputable and otherwise. The hearing heard testimony that the labs Pass had relied on for assays of samples from Mijo provided unreliable results on the reference materials and blanks.
The judge also noted “farfetched statements” made by both Matheson and assayer Merwin White, who both claimed (when confronted with the laboratories’ results on blank samples) that samples all across northwestern Arizona and southern Nevada contained high concentrations of gold.
The decision is subject to appeal to the Department of the Interior’s Board of Land Appeals.
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