RCMP investigates Getty property transaction, directors

Vancouver – A Royal Canadian Mounted Police investigation into two directors of Getty Copper (GTC-V) has cast the media and a regulatory spotlight on the company, its directors and a past business transaction with a related party.

The story surrounding the case remains somewhat vague so far. Three unnamed individuals, two of which are directors of Getty Copper, are under RCMP investigation for unspecified reasons. The company itself is not under any investigation.

The RCMP’s Integrated Market Enforcement Team commenced its investigation in June, having served and conducted several search warrants.

Getty announced in early-July that they became aware of certain information that caused it to re-examine a 2002 related party transaction with Robak Industries. Robak, a company owned and controlled by Getty director and then CEO John Lepinski, agreed to the transfer 100% interest in the Getty Central and Southwest mineral properties and 50% of the Getty South property, all in the Highland Valley area, to Getty in exchange for 12 million pre-consolidation Getty shares and a 1.5% net smelter royalty. The company was also required to carry Robak’s 50% interest in Getty South through to production.

An independent valuation and fairness opinion was conducted by Ross Glanville & Associates (Glanville), deeming the transaction (treasury share issuance for property interest) to be fair. Shareholders subsequently approved the acquisition.

Earlier this year, Robak offered Getty the opportunity to acquire the remaining 50% of the Getty South property. The company once again elicited an opinion from Glanville regarding the transaction. In the course of the review, Glanville became aware of resource information data pertinent to the 2002 report that was not presented or available at that time.

The 2002 Glanville opinion was based on a Getty South inferred resource estimate of 36 million tonnes grading 0.47% copper. The recently materialized resource information casts doubt on this estimate, according to Glanville.

In light of this new data, Glanville now offers the opinion that a 100% interest in Getty South has a valuation of $1.75 million, a fraction of the previous estimate of $5 million.

Glanville further suggests that the carried interest provision for Robak’s 50% in the 2002 opinion constituted a major portion of the valuation at that time; and its removal, upon the proposed acquisition by Getty of a full 100%, further contributes to the reduction in the total project valuation.

Getty Copper also announced, in early-July, that the Board of Directors has appointed Vic Preto as interim President and CEO, replacing John Lipinski.

The company’s main mineral project, Getty North, is unaffected by these property transactions presently under re-examination.

As of the latest reported figures, the company has 27.7 million shares outstanding. The two largest reported shareholders are Robert Blankstein (9.1%) and John Lepinski (28% directly and through controlled companies).The issue remains halt traded by the exchange pending clarification of company affairs. The last trading price for the shares is listed at 63.