Trio Resources Inc (TRII)

[elvisonfire]

Whether or not TRIO was intended as a scam, it serves the same end. TRIO has little chance of success, even if the land was covered in solid silver.

A little preamble: Regardless of any opinion about environmentalists or their efforts, in the last 30 years, there has been a tremendous change in the impact of environmental regulations. Today, it is hard to even breath without some kind of environmental permit allowing you to do so, much less operate a mining operation.

The Duncan-Kerr property appears to be an environmental disaster. It was first mined in the days of minimal permitting requirements. It went BK and shut down for decades and any potential "grandfathered" permits likely expired. To get permitted again requires compliance with current regulations. Unlike a new mine that can be started with those requirements in mind (assuming compliance is affordable), the existing site has almost a century of operations necessary to "redo". Now fast forward to today and what do we see?

1) Mining land with ZERO permits
2) A terrible history with the permitting Agency
A) The ministry demands Reid clean up the land
B) Reid ignores them
C) So the ministry takes Reid to court and obtains a Court order to clean up the land
D) Reid ignores them
E) So the Ministry goes back to court and obtains sanctions against Reid
F) Reid ignores them

Reid can't even pick up a rock and ship it off the site without permits. And he will never get permits until he "cleans up" the site to current standards IMO. Even then, given his history, it is doubtful he will easily obtain a permit and even if he does, it could take years...up to 5 or more and there would likely be substantial "clean up bonds" required in possibly the tens of millions of dollars category. Why do you think he stopped shipping the "concentrate" two years ago? Likely because the authorities found about it and slapped him down. So lets look at where we are today:

Reid's 10K disclosure on the subject:

Permits from a variety of regulatory authorities are required for many aspects of mine operation and reclamation. We cannot predict the extent to which these requirements will affect our company or our Property if we identify the existence of minerals in commercially exploitable quantities. In addition, any changes in the areas of regulations as referred to in the risk factors or future new legislation and regulation could cause additional expense, capital expenditure, restrictions and delays in the exploration of our Property.

and:

Damage to the environment could also result from our operations. If our business is involved in one or more of these hazards, we may be subject to claims of a significant size that could force us to cease our operations.

Mineral resource exploration, production and related operations are subject to extensive rules and regulations of federal, provincial, state and local agencies. Failure to comply with these rules and regulations can result in substantial penalties. Our cost of doing business may be materially affected by the regulatory burden on the mineral industry. Although we intend to substantially comply with all applicable laws and regulations, because these rules and regulations frequently are amended or interpreted, we cannot predict the future cost or impact of complying with these laws.

Environmental enforcement efforts with respect to mineral operations have increased over the years, and it is possible that regulations could expand and have a greater impact on future mineral exploration operations. Although our management intends to comply with all legislation and/or actions of local, provincial, state and federal governments, non-compliance with applicable regulatory requirements could subject us to penalties, fines and regulatory actions, the costs of which could harm our results of operations. We cannot be sure that our proposed business operations will not violate environmental laws in the future. In addition, we face potential exposure due to fines and currently unresolved removal obligations imposed by the Ontario Ministry of the Environment on the former owner of our site. If the former owner defaults on its obligations under this order we may face liabilities and expenses that may have a material adverse effect on our liquidity, financial condition and prospects. See also “Legal Proceedings” elsewhere in this report.

Our operations and properties are subject to extensive laws and regulations relating to environmental protection, including the generation, storage, handling, emission, transportation and discharge of materials into the environment, and relating to health and safety. These laws and regulations may do any of the following: (i) require the acquisition of a permit or other authorization before exploration commences; (ii) restrict the types, quantities and concentration of various substances that can be released in the environment in connection with exploration activities; (iii) limit or prohibit mineral exploration on certain lands lying within wilderness, wetlands and other protected areas; (iv) require remedial measures to mitigate pollution from former operations; and (v) impose substantial liabilities for pollution resulting from our proposed operations.

The exploration and development of mineral reserves are subject to all of the usual hazards and risks associated with such activities, which could result in damage to life or property, environmental damage, and possible legal liability for any or all damages. Difficulties, such as unusual or unexpected rock formations encountered by workers but not indicated on a map, or other conditions may be encountered in the gathering of samples and information, and could delay our exploration program. Even though we are at liberty to obtain insurance against certain risks in such amounts we deem adequate, the nature of those risks is such that liabilities could exceed policy limits or be excluded from coverage. We do not currently carry insurance to protect against these risks and there is no assurance that we will obtain such insurance in the future. There are also risks against which we may be unable, or may elect not to insure. The costs, which could be associated with any liabilities, not covered by insurance or in excess of insurance coverage or compliance with applicable laws and regulations may cause substantial delays and require significant capital outlays, adversely affecting our financial position, future earnings, and/or competitive position.

So what are these "removal obligations" imposed by the the Ontario Ministry of the Environment? (Referring to this: http://www.solidwastemag.com/environment/leaving-waste-costs-toronto-company-45-000-fine/1001988823/)

As part of the sentencing, a Court Order was issued requiring the company to remove all metal hydroxide sludge and waste catalyst from the site and to maintain the material in a secure manner.

So what does this entail? Only Dunky knows, but it could be tens of millions. What we do know is that it is enough that Dunky has "allowed" TRII to sit idle for 18 months and personally be found in contempt of the Court rather than deal with the issue.

TRII will never happen unless the price of silver spikes enough to be attractive enough for someone to "buy out the company" and still be able to afford the environmental issues. Right now the price of silver barely covers the cost of processing and smelting.

One last, and very important issue that is self explanatory from the following statement in the 10K:

We are heavily dependent on our management and a loss of any member of our management, particularly J. Duncan Reid, our chief executive officer and chairman of the board, would be severely detrimental to our prospects.

We have a very limited management and number of employees. We are highly dependent on all members of our management, in particular Jeffrey Duncan Reid, our chief executive officer and chief financial officer and sole director. Our future performance will be substantially dependent on the continued services of our management and the ability to retain and motivate them. The loss of the services of any of our officers or directors, particularly those of Mr. Reid, would materially and adversely affect our business and operations. If he were to resign, there can be no assurance that we could replace him with qualified individuals in a timely or economic manner, if at all. At the present time, we do not maintain any “key-man” life insurance policies. Our inability to attract and retain capable leaders and key management and professional personnel could have a material adverse effect on our business, financial condition and/or results of operations.

Well...one comment: Dunky has no idea what he is doing, the most experienced minors would have trouble dealing with these issues, And Dunky has no money to hire anybody experienced enough to do it. Simply put, Reid doesn't even know enough to know what he doesn't know. He naively thinks that since there is silver there he is rich.

Having silver is worthless if you can't sell it. No need to even worry about potential profit.

Reid to "indemnify" TRIO from the remediation costs, the sole purpose being to avoid having to disclose the magnitude of those potential costs in the 10K.

sec should revisit that last statement--