White, Thomas hit with injunction and charges

The British Columbia Securities Commission (BCSC) has extended temporary injunctions barring each of two directors of Redell Mining (RDC-V) from holding office as a director or officer of a public company. The injunctions will remain in place until a criminal case involving the company is concluded.

Trading in the company’s shares was halted on May 10, 1996, at $2.75 following a preliminary investigation into the company’s affairs by the Vancouver Stock Exchange (VSE) and the BCSC. David Thomas and engineer Glen White were then charged with 20 counts of breaching the security act, arising from their actions between August 1994 and May 1996, when both were officers of Redell.

During that period, the company raised funds through various exempt distributions, such as offering memoranda, as well as using brochures, newsletters and mailings. That material, which was signed by White and Thomas, is alleged to have misrepresented reserves at the company’s La Forma gold mine in the Yukon. Reserve figures jumped to 850,000 oz. in 1996 from 170,000 oz. in 1994.

Over time, the company’s share price rose to more than $6, with some 16 million shares worth $31 million having traded on the VSE.

The VSE initiated an investigation into the company in May 1996, and requested that Redell obtain an independent audit of its reserves. That work outlined only 70,000 to 90,000 oz. gold — but as a resource rather than a reserve. White later admitted to an official from the exchange that the company’s reserve calculations had not been properly prepared and could not be supported.