Tuesday, February 08, 2005
Copyright © Las Vegas Review-Journal
JOHN L. SMITH: Company dangles lure of diamonds, but transactions hook SEC
For most people, the prospect of investing in a diamond mining venture in frosty Saskatchewan probably seems as remote as that distant Canadian province.
But that is precisely what CMKM Diamonds has proposed to investors from the company's Warm Springs Road office. (If you're like me, you didn't know Warm Springs Road was an outpost of Canadian diamond mining exploration.) And CMKM appears to have had no shortage of sparkle-eyed speculators willing to back the company, which trades at a fraction of a penny per share on the pink-sheet market.
When you learn that the Forte a la Corne region of Saskatchewan is believed to be one of the largest diamond fields on Earth and that the gigantic DeBeers diamond corporation has been exploring the area, the prospect of a local company being a part of the rush to riches becomes all the more intriguing.
Intriguing, if somewhat hard to believe.
Read the company's side of the story, and you might be convinced it's onto something big. CMKM has issued dozens of optimistic press releases, and its Web site showed not only a complicated schematic of its big plans, but its interest in advertising the corporate logo on a top-fuel dragster.
More recently, the company announced that former Howard Hughes aide Robert Maheu had become a member of its board of directors. A nationally recognized authority on security issues, Maheu has credibility in many circles.
I became interested in CMKM recently, and it appears I'm not alone. The Securities and Exchange Commission is downright fascinated with CMKM and has begun to probe the company's numerous Southern Nevada business transactions.
The SEC has subpoenaed bank records related to CMKM's local transactions, an institutional source confirms. The company maintained nearly 100 accounts at a local branch of Silver State Bank alone. A bank employee who handled CMKM's accounts is no longer employed after suspicious activity involving a continuing circle of cashier's checks was uncovered.
By one informed estimate, CMKM is suspected of moving up to $64 million through its Silver State accounts.
Getting an accurate line on CMKM's activity takes a calculator -- and the ability to suspend one's disbelief.
For instance, one company update noted it had acquired 1.9 million acres of mining claims in Saskatchewan. Another stated that company chief executive Urban Casavant has been selling off some of that acreage to fund his business ventures since 1993. That seems like a lot of acreage, but then Canada is a big place.
Although sources conflict, it's conservatively estimated the company sold at least 352.2 million shares of stock with a value as low as 2/1000ths of a cent and a high of just over a half penny.
But that's a grain of sand in Saskatchewan compared to the news in another company-generated news report that listed up to 40 billion shares. Yet another report lists the company's issuing capability at 500 billion shares.
But, hey, the sky's the limit when you're a big diamond mining outfit, right?
All this talk of diamond mining must be getting me dizzy because I'm confused by the companies and characters associated with CMKM. CMKM is formerly known as Casavant Mining Kimberlite International, which became a publicly traded company after a January 2003 merger with Cybermark International.
CMKM's president is listed as Urban Casavant. Another company associated with CMKM is Casavant International Mining, which lists its chief executive as Ron Casavant. In 2003, CIM's president was listed as Urban Casavant, and Carolyn Casavant is also listed as a corporate officer, so it appears CMKM is a family company.
A family company with up to half a trillion shares of penny stock for sale and an ongoing SEC investigation.
CMKM's press releases sound promising, but that investigation could spell trouble.
Of course, much of the company's problems would surely be remedied if it actually discovered a treasure trove of diamonds in far away Saskatchewan.
At the very least it would help to pay for a good lawyer.
John L. Smith's column appears Tuesday, Wednesday, Friday and Sunday. E-mail him at Smith@reviewjournal.com or call 383-0295.
