Due Diligence - Phone call with Warren Hawkins P-E
On March 19 I phoned Richmond Minerals and spoke with Warren Hawkins for an hour. This is information that Warren Hawkins shared with me when I inquired about Richmond Minerals. Sounds promising and a good long term investment. My questions are in bold, respones in plain text (sorry about the fragments and spelling/grammer errors).
1. Who is the plaintiff in the Swayze Property. 1990 is pretty old to bring something up
like this. Richmond is defending itself in the action and expects a resolution later this
year. On October 29, 2012 Richmond staked claims (44 units) in Raney Township in
northern Ontario.
- Lead property was Bondy lake. On the shelf for time being. Swzyae green stone belt.
Trelawney chester complex discovery, acquired by major gold producer Yamana, that is
just down the road. The problem is it goes back to 1990, former owner/operator of
Richmond minerals, he got involved with another project and accused of mis-
appropriating funds. Certificate attending procedure, construction lien on real estate
property, that is currently being litigated, oldest one is Canada. Very close to having a
resolution. Ongoing for several weeks now. We expect the case is quite good, dismiss the
certificates, should know relatively soon. Gold stocks are not in favour at the time being.
But he is bullish on gold, this will be there core focus. West side claims of swzyae gold
project. Far west side of new claim block, there was a drill hole, 6 grams across 16
metres. Swayze 1989 drilling work, obtained very good results, quarter ounce across 3-4
metres. Drilled 12 holes before property stopped, they hit on 8 of them before they got
shut down. More material news in the next…. Motion being made in litigation will be
resolved in a few weeks, then a few weeks of testimony. In about a month time the whole
trial should be over, then wait on judges decision, can take a little longer then a week or
so. To be honest, resolved in 2 months with the decision. 2nd half of this year should be
much better, 1st half in junior exploration has been decimated. No work for 23 years on
this project since the lien. Stale/old, the main legal claim was moving forward, started
last summer, number of pre-trial hearings to have it settled, but in December2012 that
broke down. Then it finally got into court. Long and tedious process. Legal fees about 40-
50 grand, if they prevail, they get costs reimbursed. It’s a tracing claim, 1988-89 project
James Bay Low lend Kayola project was the largest flow through project in Ontario.
Kayola used to make porcelin. The fellow was also the president of black gregor which is
now Richmond minerals. He was running 2 different projects at same time. Kayolin
project too. He alleges that the CEO was Diverting funds from kayolin project to black
greggor project. So far they can’t trace this to fact. In all probability the money was never
used for their drilling project. Driller didn’t get paid. Sued them in 2000. The plaintiff is
a very ‘bad’ person, notorious, known for this kind of stuff. Trying to manipulate to get
into the property. He cannot trace the money to them. Because it was never diverted to
them. 47 units on the west side was done recently, staked claims in new year of 2013,
mineral rights to that property area, not the service rights, the mineral rights belong to the
property. Holding a mining claim, you can do exploration work. Rayney is free and clear.
He wants to call the whole thing the Swayze property. New focus is Swayze area. He
wants to wait until they are in the clear with Swayze property until court/law proceedings
are in the clear.
2. Discuss capital, they've raised money by private placement and selling a property.
What will it be used for and how long will it last? How does one get in on a private
placement? Have they ever been profitable since inception, is there plans to be? Any
recent goals and/or targets to watch for?
- Didn’t want to over-dilute the company so he didn’t publicize the private placement too
much.
- Warrant.
- Untested areas in Swayze he knows have very good potential. A lot of more good news.
- Halley Township property has been sold to surrey capital. Richmond spent $300k
2008-10 in this property. So that Surrey Capital could get listed on the TSX. That’s what
happened.
- they got the stock and Money just on Friday.
- ARC corp can using. They are private, say $0.10 when they go public, couple 200 grand
for Richomnd if they come out at $0.10. ARC corp has potential other property interests.
ARC Corp will be trading on CNSX, they need to do some filings, ARC is presently
doing it now, hope to be trading by May. They would.
- Burn rate is practically NIL, he is not drawing salary. He has other work for other
companies on the side. RICHMOND is blood sweat tears for him. 7 million shares
between his father and himself. Not drawing a salary.
- Burn rate might be 15k per quarter, 5k per month.
- management change, may be coming with Swayze project, then hire investor relations
at that point. It’s important to have a good promotional program in place, it’s important
for success. Money is tight right now. If they get positive decision on Swazaye, much
better position to take on IR. They’d have a real story, emerging gold discovery on
something that had been dormant for so many years. He would think it would have a very
positive impact on their market, entice new investors and be able to raise new capital.
3. Discuss the stock options.
- Stock options are not much of a concern at this time.
4. Stock price low, is the company pursuing any strategic options? ie. reverse split,
marketing, promotion? Discuss current share structure, O/S, float, elaborate on the history of the O/S, gradual increase to pay the bills?
- Float is quite liquid, Franc president own 6 million shares, float around 83 million less
management holdings of 15 million - 68 million float, rough guess. They haven’t issued
too many shares for debt, they did one a few years ago to himself and another president.
Flow through mineral fields investment. 4 different major financings in the last 8 years.
-3 members on the board, but before bringing them on, they wait on the litigation. New
directory, property package vended in and re-birth of the company. Hopefully get up
to 0.05 – 0.10. Whole new management team, build and promote them for Swayze. No
prospect right now to do a reverse split. Never has done a reverse split, he hates it. He too
is a significant share holder. Trying to keep things simple right now, bring in new CFO,
they’ve already identified that person, couple new guys coming on. Ready to go with that
when the Swazye property certificates get cleaned up.
5. Why did Michael Sheridan resign as Director, how long was he there, who replaced
him?
- Michael wanted to do a certain type of debt financing which Warren and the rest of the
company didn’t agree on. So after serving for 1 year, he left. They still have 3 directors/
officers at the moment.
Warren has BEEN WITH RICHMOND SINCE 2005. HE WAS A BROKER before,
GEO-LOGICAL ENGINEER, MINING, MINING EXPLORATION, CAPITAL
MARKETS SINCE 18 YEARS OLD. HIS FATHER WAS INVOLVED IN THE SAME
BUSINESS. HE FOLLOWS IN HIS FATHERS FOOTSTEPS.
GRENVILLE PROVINCE IN QUEBEC WAS FOCUS FOR 5 YEARS, HE RAISED 3
MILLION IN EXPLORATION, SPENT IT ALL. HAD SOME GOOD SNIFFS, BUT
DIDN’T MAKE AN ECONOMIC DISCOVERY YET. SOLD THEM, PUT THEM ON
THE SHELF.
WINTER 1989, DRILLED 13 HOLES, HIT ON 8 OF THEM, SIGNIFICANT
INTERSECTIONS, QUARTER OUNCE WHICH IS 12 GRAMS ACROSS SEVERAL
METRES IN THE COUPLE OF HOLES. 0.17 (6 GRAMS PER TONNE). BACK
IN 1989 WERE VEIN TYPE GOLD AND ONLY REPORTING NARROW
INTERSECTIONS, BUT THERE IS A MUCH WIDER, THERE’S 20 METERS OF A
MUCH LOWER GRADE. NOW LOOKING FOR WIDE ZONES. HIGH PRICE OF
GOLD, CAN MINE WIDE ZONES, MINE AS OPEN PIT, PROJECTS IN SWAZYE
AREA ARE NOW QUITE EXCITING.
Geology Trelawney Project, it was acquired at $3 per share couple years ago by Yamana
(he thinks). It’s in the same greenstone belt. 25km and 10km away from Swayze. He
thinks it has potential for similar deposit. After the court procedure, they want to get into
Swayze right away and test, drill some cores. Now in ONTARIO have to get exploration
permits, that involves dialoguing with local aboriginal people. Would take some time,
don’t anticipate problems. Apparently they are exploration friendly.
