Financial Press: Battered Barkerville Bounces Back
Oct 01, 2013 (ACCESSWIRE via COMTEX) -- (Financial Press) - Refinanced, reinvigorated and raring to go, Barkerville Gold Mines (bgm:TSXV) is emerging from the shadows of a controversial year, determined to re-assert its claim as one of Canada's most promising junior mining prospects.
"Our focus has never strayed for 19 years," says company president and CEO Frank Callaghan. "We have always been focused on proving the property as a large deposit, and we are continuing to work towards turning the company into a world-class producer."
Callaghan's optimism has been fuelled by an infusion of $15 million from investor Eric Sprott, a long-time backer of Barkerville. Says Callaghan: "Eric financed our bulk sample test of Bonanza Ledge in 2004 and now he is assisting in financing Bonanza Ledge as a mine."
The company's board has also been immeasurably strengthened by the appointment of Chairman Norm Anderson, former CEO and Chairman of mining giant Cominco, a respected veteran with half-a-century of experience in the global minerals industry.
Despite these key developments, Callaghan still faces the challenge of winning back believers disillusioned by events of the summer of 2012.
Controversy began with what turned out to be a somewhat prematurely optimistic estimate of the resource at the company's 100-per-cent owned Cariboo Gold Project, near historic Barkerville, B.C.
In a submission to the BGM board, veteran Canadian geologist Peter George of Geoex Ltd., estimated a geological potential of between 65 and 90 million ounces of gold on approximately 10 per cent of the property.
A figure that grabbed most of the attention was an "indicated resource" of 10.6 million ounces of high-grade ore at a single location, Cow Mountain, which, if proven, would have made it one of the world's richest gold deposits.
Analysts and industry observers were staggered by the implications of the Geoex report. One said: "Never in my wildest dreams did I anticipate such an outstanding discovery."
Looking back after 15 months, Frank Callaghan, the ebullient president and CEO of Barkerville Gold, admits that he, too, was taken aback by the estimates.
"In hindsight, maybe we should have gotten another opinion," he says. "We had no idea the deposit was going to be that large. But you can't sit on that kind of news. It's going to get leaked. We thought we had to get the numbers out."
The initial response to the published numbers was ecstatic. BGM shares exploded, soaring more than 50 per cent to $1.67.
But red flags began waving as critics voiced doubts about the implied enormity of the resource. Amid heavy trading the stock slumped, shedding more than 25 per cent of its value.
In August 2012, trading in Vancouver-based Barkerville was issued a cease-trade order after a review by the B.C. Securities Commission pending resolution of a number of disclosure and filing issues that it identified resulting from its review of Geoex's filed technical report.
The embarrassment to the company was considerable, but with typical doggedness Callaghan set about repairing the damage.
Additional independent and qualified geologists were hired to audit and re-assess the deposit and a year later, in July 2013, released an updated estimate that provided a "more sober resource" at Cow Mountain of around 4.9 million indicated and inferred ounces.
On the face of it, the new estimate appeared to dull the glitter of Barkerville's gold. But Callaghan sees it differently.
He acknowledges that there was "not enough detail" to justify the initial optimistic estimate, but insists that the numbers were misread - and may turn out to be not far off the mark after all.
