OSC considers complaints of trading violations against Inco, Teck

In late February the OSC received a letter from a broker in eastern Canada who criticized Golden Knight for not keeping its shareholders up to date with progress at its Casa-Berardi gold property where a $9.7-million underground program is under way.

While only one press release has been issued by partner Inco Gold since September, 93 purchase orders from insiders were received for Golden Knight shares during November and December. Teck Cor (TSE), the Vancouver resource giant, recently increased its stake in Golden Knight to 38.8% from 29% a year ago.

But a spokesperson for the OSC’s enforcement inquiries department declined to speculate on whether or not it will launch an investigation into the share purchases.

“It’s a fairly complicated matter and it isn’t fair to the companies involved for us to discuss it until a decision is made,” said Susan Campbell, deputy director in the OSC’s enforcement inquiries department.

Golden Knight and partner Inco Gold are extending a decline from 200 m to 300 m at the Golden Pond West zone project 60 miles north of La Sarre. Inco Ltd. (TSE) subsidiary Inco Gold is project operator with a 60% interest while Golden Knight retains 40%.

The West zone is located about 1,600 ft northeast of the Golden Pond East zone mine where Golden Knight and Inco expect to produce 60,000 oz gold this year.

On Sept 9, Inco Gold released some results from the West zone underground exploration program, including two holes which intersected 0.852 oz gold per ton over 83 ft and 0.855 oz over 50.5 ft. A 12,000-ton bulk sample was extracted recently and production is being considered.

While a press release issued March 14 refers to a separate surface drilling program, Teck has been gradually increasing its stake in Golden Knight. According to OSC insider trading reports, in January Teck bought 10,000 Golden Knight shares at $8.25 each.

“What is disconcerting to me and my clients who hold Golden Knight shares is the total withholding of all drill results since the major intersections reported six months ago,” said the broker in his letter to the OSC. He asked to remain anonymous.

“Yet those in the know at Teck and Inco continue to pick up Golden Knight shares at bargain basement prices,” the broker said.

“It is only fair that all investors in Golden Knight are updated regularly when the real value of their shares is almost certainly being enhanced by the drill results which compell the insiders to keep buying,” the broker said.

Spokesmen for both Golden Knight and Inco say the claims are unfounded.

“Material information has been made available to shareholders and we have kept everyone up to date,” said John May, Golden Knight’s vice-president, explorations.

Referring to what he called “wild allegations” from dissident shareholders, May said: “Both Inco and ourselves have had it up to here.”

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