Market punishes Randsburg after cease-trade lifted

It’s been a rough ride for Randsburg International Gold (RGZ-V, RBGDF-O) over the last 10 months.

An extended period on the sidelines of the market was ordered by the British Columbia Securities Commission (BCSC) after it found the company’s disclosure practices lacking.

The cease-trade order came down on Aug. 9, 2006, and Randsburg shares were only allowed to resume trading on the TSX Venture Exchange on May 14 of this year.

Not surprisingly, the long hiatus took a heavy toll on the exploration company’s share price. Its shares fell nearly 500% since May 2006, when they were trading at $2.89. Since the beginning of June 2007, they’ve been trading between 45 and 60.

While a company release at the time of the initial cease-trade order blamed the halt on its failure to submit a National Instrument 43-101 report on its Titan iron-titanium-vanadium property in northern Ontario, a release in mid-April this year clarified that the suspension was also connected to its primary asset — the Victory Strike diamond project in Brazil.

The BCSC had three concerns with the Brazilian project.

First, the company failed to comply with Canadian Institute of Mining, Metallurgy and Petroleum (CIM) guidelines for reporting diamond samples. Instead of reporting the number and total weight of each size class, Randsburg used the terms “micro” and “macro,” which are no longer considered the industry standard.

The company said it would follow the CIM guidelines in future.

The second issue arose around the source of the diamonds. Randsburg had mistakenly reported that the source of the diamonds was bedrock composed of eclogite. While it had corrected that information prior to the cease-trade, the company was required to state again that the source was not eclogite, but kimberlite pipes.

Lastly, the BCSC addressed security issues at the project, requiring Randsburg to revise and strengthen security in the field.

Randsburg says field parties at the project are accompanied by police due to conflicts with local landowners, but their presence also keeps non-company personnel away from exploration activities.

While the company did not return phone calls from The Northern Miner, the statement appears to be connected with BCSC concerns that non-personnel were involved in exploration activities.

The company said it had hired an exploration manager to ensure that best industry practices are followed at the site.

Randsburg holds an 85% stake in Victory Strike. It has a 100% stake in Titan and a 50% stake in the Elephant gold and silver project in Nevada, where it is joint ven- tured with Duncan Park Holdings (DPH-V, DCNPF-O).