Goldcorp throws cold water on stock touts http://www.vancouversun.com/Goldcorp+throws+cold+water+stock+touts/5317132/story.html#ixzz1WF0MWYab
By David Baines, Vancouver Sun August 27, 2011 3:14 AM
Unscrupulous stock tout services have been pumping U.S. junior exploration companies by suggesting that Vancouver-based senior gold producer Goldcorp Inc. is about to buy them out at huge premiums to their prevailing market prices.
The latest tout service to do this is Stock Castle, a wholly owned subsidiary of Fidelity Ltd., which is said to be located in the British Virgin Islands.
Stock Castle has issued an "Urgent Buy Alert" on Lone Star Gold Inc., a junior exploration company based in Albuquerque, N.M.
Stock Castle says Lone Star is "estimated to be sitting on gold and silver worth at least $18.14 BILLION!" which makes it "Goldcorp's NEXT takeover target!"
Lone Star shares are trading at just under a dollar on the dreadful OTC Bulletin Board in the United States, but Stock Castle claims that Goldcorp "could gobble it up for $179 or more per share!"
"Don't wait until Lone Star receives that near-certain takeover offer from giant Goldcorp!" it tells prospective investors.
Stock Castle's premise is that Goldcorp's El Sauzal mine in Mexico is running out of gold, and will be anxious to boost reserves by acquiring Lone Star's La Candalaria project, which is right next door. Goldcorp, for its part, rejects any suggestion that it is about to make a bid for Lone Star.
"This is inconsistent with anything we have said to the market," David Deisley, Goldcorp's executive vicepresident of corporate affairs and general counsel, said in an interview Friday. Deisley said he has asked Goldcorp's U.S. counsel to send a letter to the U.S. Securities and Exchange Commission disavowing any relationship with Lone Star and urging the agency to intervene. "Promoters who do these sorts of things do a disservice in terms of manipulating the market and taking advantage of people. We hope the SEC will take appropriate action to protect the integrity of the market," he said.
So who is sponsoring this nonsense?
The disclaimer at the bottom of Stock Castle's alert states that it was paid $100,000 for distributing the alert, but it doesn't say who paid the money. Lone Star's investor relations person, who declined to give his name, initially disavowed any knowledge of the Stock Castle alert.
He later admitted that several people had mentioned it to him, but he claimed he hadn't bothered to look at it.
"We wouldn't comment on any third-party commentary," he said.
Maybe he wouldn't, but if Lone Star was a B.C. reporting issuer, B.C. Securities Commission enforcement staff might very well require the company to disavow it, as they did with Vancouver-based Kunekt Corp. a few months ago when U.S. newsletter writer Eric Dickson made preposterous claims about that company.
Stock Castle's invocation of Goldcorp's name is not an isolated event. During the past two years, U.S newsletter writers Eric Dany, John Myers and James Rapholz - all well-known stock touts - have promoted American Sierra Gold Corp. or Gold American Mining Corp. on exactly the same premise.
Deisley said Goldcorp also sent a complaint to the SEC about those newsletters, and to the individual newsletter writers. But clearly, it has not had the desired effect.
It is interesting to note that Lone Star and American Sierra were spawned in Canada, and had close connections to B.C.
Lone Star was originally a Calgary-based company called Keyser Resources Inc. It went public on the basis of a B.C. mineral property that was quickly abandoned. It was clearly being packaged as a vehicle for some future promotion.
In March this year, the company was sold to 29-year-old Daniel Ferris, who was a partner in Magnum Communications, a London-based public relations and event management company that went into voluntary receivership in 2009.
Under Ferris's direction, Lone Star acquired an option in the La Candalaria property. Ferris claimed that, according to a 2009 preliminary report (based on surface samples only), the property contained "potential reserves" of 10.3 million ounces of gold at an average grade of .20 grams per ton, and 216 million ounces of silver at an average grade of 40 grams per ton.
These are, in fact, marginal grades and may not be economically viable, but if you ignore all that, and look only at the gross value of the gold, it adds up to the $18-billion figure that Stock Castle was hyping. This is the geological equivalent of fun with numbers, which would never be permitted under Canadian mineral disclosure rules.
American Sierra also had a strong B.C. connection. It was spawned as C.E. Entertainment Inc., a company that would purportedly sell Ukrainian classical and folk music over the Internet.
It was ostensibly based in Seattle, but its president was George Daschko of Delta. This is the one and only public company he has been involved in. When I questioned Daschko on Friday, he admitted he was president in name only. He said the person pulling the strings was Vancouver promoter Talal Yassin. He said Yassin lined up all the component parts, including the seed shareholders.
It's clear that this company was also being packaged as a shell company for some future promotion. Sure enough, within months, it was sold to another group of promoters, who changed the name to American Sierra and acquired the Mexican property that, according to the newsletter hucksters, would soon be gobbled up by Goldcorp.
Alas, Goldcorp never acquired American Sierra or, for that matter, Gold American. The former peaked at $1.42 in the fall of 2009, but has since slumped to three cents. The latter peaked at $1 last fall and is now languishing at five cents. Lone Star is bound to follow the same pattern. It peaked at $1.15 earlier this week and dropped to 99 cents on Friday. In all likelihood, investors who take Stock Castle's prediction to heart will be left standing at the altar, waiting vainly for Goldcorp to walk down the aisle.
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