Congratulations, OldBen, for being proactive in trying to get to the truth. You are on the right track and need to go all the way back to when the earliest mention of mining claims valuations began because that was the basis for the valuations of not only the BGI & SCI shares but also, the subsequent valuation of NMGL's Series A & B Preferreds. Without industry level assays (which FFGO never offered to investors), share valuations were all meaningless. I will leave it to the attorneys as to whether or not fraud was involved.
You are also wise to separate what had been said on FFGO's FAQ page & in emails from actual Edgar filings. As I have pointed out most recently, NMGL never legally agreed or even acknowledged those A-H conditions for the dividend declaration agreement, as shareholders had been led to believe.
Pay close attention to what NMGL actually stated in their 8-K filings and you will see that they did fulfill what they had legally committed themselves to, which was a deal with purchasing BGI & SCI shares just from WD. If you look at the language used, they never made an absolute commitment to buy the remaining shares. In short, NMGL will never cancel their role in the dividend process because they don't have to, as they never agreed to participate in it in the first place!
On the other hand, I seriously doubt that NMGL President Ron Lowenthal could plead total ignorance of the info on the FFGO FAQ page. That fact that he never publicly announced any kind of disclaimer speaks volumes should anyone question his participation in the scheme.
I'm sure you already know that none of WY corporations headed by Peter Bezanno have any money and that includes FFGO who had long ago drained from the company every dollar ever collected from selling 75 billion shares or more. Too bad they had never filed a single required financial which have shown shareholders exactly how the money was being used/misused. But FFGO-ers were so mesmerized with the thoughts of getting a 3400% return that none demanded proof of the real value of the Bouse & South Copperstone properties.
As far as all the "touting" of WY permanently dissolving Bezzano's corporations, I hope you were able to confirm the information I provided. Once everyone realizes the minimal costs for maintaining a basic WY corporation and accepts that there is no responsible reason to ever be administratively dissolved the way Bezzano's four companies were, then you begin to understand why claims are always being made that FFGO/Bezzano have run away and abandoned the FFGO, BGI & SCI shareholders.
The actual dissolution dates are important because it means the end of those companies' legal existences, a fact which is indisputable.
I have always been concerned as to your use of the term "sale of gold mines" when the issue has always been the sale of shares in BGI & SCI which held multiple claims on the Bouse & South Copperstone properties...at least at one time. Documents show that the only mines were on the Bouse property and that they had long been abandoned. South Copperstone had never developed beyond the multiple test drill hole stage, which should make anyone wonder why the companies who had done those tests hadn't snatched up those claims themselves.
Here is a good place to start looking into the mining claims valuations (it's re-posted below). I will be the first to say that it is far from a definitive study since I have as much mining expertise as the average FFGO investor. But I did take considerable time to learn what I could about it.
This post shows the last known public status of the BGI & SCI shareholders.
Also, my Wyoming Statute's Effects On The Dividend Processpost.
Finally, I hope you have sent all your findings to the SEC via their Complaint Form since no one knows the status of their FFGO investigation.
How Credible Are FFGO's Mining Property Valuations?
After reading oldminer's post about "Mining Industry Standards for Ore Reserves" and this one entitled "The 258 Million Dollar Question", along with his comment about the Colliston Report not meeting the Mining Industry Standards for Ore Reserves, I decided to do some additional research.
Under the category of "Better Late Than Never", invest a little time to learn the critical differences used in mineral source classifications, the criteria used in the much vaunted Colliston Report.
From Wikipedia
'Mineral resource classification' is the classification of mineral deposits based on their geologic certainty and economic value.
Mineral deposits can be classified as: Mineral resources that are potentially valuable, and for which reasonable prospects exist for eventual economic extraction. Mineral reserves or Ore reserves that are valuable and legally and economically and technically feasible to extract
Mineral Resource
This a concentration or occurrence of material of intrinsic economic interest in or on the earth's crust in such form, quality and quantity that there are reasonable prospects for eventual economic extraction. Mineral Resources are further sub-divided, in order of increasing geological confidence, into inferred, Indicated and measured Categories.
Inferred Mineral Resource is that part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological/or grade continuity. It is based on information gathered through appropriate techniques from location such as outcrops, trenches, pits, workings and drill holes which may be of limited or uncertain quality and reliability.
Indicated resources are simply economic mineral occurrences that have been sampled (from locations such as outcrops, trenches, pits and drillholes) to a point where an estimate has been made, at a reasonable level of confidence, of their contained metal, grade, tonnage, shape, densities, physical characteristics.[2]
Measured resources are indicated resources that have undergone enough further sampling that a 'competent person' (defined by the norms of the relevant mining code; usually a geologist) has declared them to be an acceptable estimate, at a high degree of confidence, of the grade, tonnage, shape, densities, physical characteristics and mineral content of the mineral occurrence.
Mineral Reserves
These are resources known to be economically feasible for extraction. Reserves are either Probable Reserves or Proven Reserves.
A Probable Ore Reserve is the part of Indicated resources that can be mined in an economically viable fashion, and in some circumstances, a Measured Mineral Resource. It includes diluting material and allowances for losses which may occur when the material is mined. A Probable Ore Reserve has a lower level of confidence than a Proved Ore Reserve but is of sufficient quality to serve as the basis for decision on the development of deposit.
A Proven Ore Reserve is the part of Measured resources that can be mined in an economically viable fashion. It includes diluting materials and allowances for losses which occur when the material is mined. A Proven Ore Reserve represents the highest confidence category of reserve estimate.
The value of FFGO's Extraordinary Dividend is obviously based on FFGO's mining claims. The only reference to an actual dollar valuation of those claims linked to a specific report or assay is found in Dr. Colliston's valuation of Inferred Mineral Resources at Bouse. As shown above, Inferred Mineral Resource is an estimate "with a low level of confidence...inferred from geological evidence and assumed but not verified geological/or grade continuity".
Meaningful valuations are based on Probable or Proven Reserve data and you will notice that Searchlight Exploration has zero values in both categories for both properties:
Bouse Property COMMODITIES: Gold, silver, copper. RESERVES PROVEN: None at this time PROBABLE: None at this time INFERRED: 5,000,000 tons @.05 to .1 oz / T at Little Butte
South Copperstone Property COMMODITIES: Gold, silver. RESERVES PROVEN: None at this time PROBABLE: None at this time INFERRED: None at this time
Here is a historical glimpse of the AZ Little Butte Mine in La Paz County shows that it was developed and worked sporadically from the early 1900's through 1955. Total production would be some 5,800 tons of ore averaging about 0.45 oz. gold/ton or about 2600 oz. (Arizona Bureau of Mines file data)
Here is background information for Dr. Wayne P. Colliston (last updated on 7/27/2006)
October 2004 article article about Colliston's Bouse report, perhaps the first documented reference.
Another more comprehensive October 2006 article about Colliston's Bouse report. Here are some excerpts:
NEW YORK, Oct. 26, 2006 (PRIMEZONE) -- Great West Gold, Inc. (Pink Sheets:GWGO) announced that it would be providing stockholders will more detailed data on its various Mining Exploration Projects in order for stockholders to gain a better insight into the value of the Company. Great West Gold, Inc. confirms that the Chairman of its Advisory Committee, Dr. Wayne P Colliston, is continuing with the re-assessment of Great West Gold, Inc.'s Mining assets, and to that end, is releasing this report, compiled in August, 2004 on the 1,300 acre Bouse gold (silver -- copper) property situated in the La Paz area of western Arizona, USA, near the California border. Dr. Colliston is preparing an updated report on this property at this time and upon its completion, this report will be made available to our stockholders.
The Bouse area is an historic gold producer, with the Little Butte open pit and underground mines as known producers. Importantly, the historical grade recovered here averaged over 0.4 oz/ton. Around 2/3 of this production was from the Little Butte Mine, where the Arizona Department of Mines and Mineral Resources has recorded that the results of a 16-hold drilling programme showed about 5 million tons of inferred ore grading between 0.05 and 0.30 oz/ton.
Others areas of interest within the Company's 1,300 acres are the Brindle Claims, the high grade Arrastre Mine, the Blue Slate Mine and the Flat Fault Mine.
At the gold price of approximately US$400/oz (in August 2004), this provides a value estimate for the deposit in the range of up to $600 million. This estimated gold resource is for the little Butte area only, and does not include any potential from the remainder of the property. At the current Gold price of circa US$600/oz, the revised and updated valuation report being prepared by Dr Colliston, will be significantly higher.
Located just north of the Plomosa Fault, The Bouse Property includes 3 historical mines and almost 1,300 acres of project area, with significant inferred reserves of Gold, Silver and Copper. The Burnt Well Property also includes an historical mine within the project area which covers 640 acres which includes inferred reserves of Gold, Silver and Copper.
NOTE: The brown italacized text was not part of Colliston's geology report but clearly inserted within it. It was someone else's undocumented valuation of Dr. Colliston's data regarding the results of a drilling program that showed about 5 million tons of inferred ore grading between 0.05 and 0.30 oz/ton. They multiplied the highest 0.30 oz/ton estimate by 5 million tons (=1.5 million oz) and then multiplied that by $400/oz to get their valuation of $600 million based on 2004 gold prices.
REMINDER:Inferred Mineral Resource is that part of a mineral resource for which tonnage, grade and mineral content can be estimated with a low level of confidence. It is inferred from geological evidence and assumed but not verified geological/or grade continuity.
Another important excerpt from the report:
Starting in 1987, Homestake Mining leased the central part of the district (called the Brindle claims -- these are the core of our present land position) and acquired an option to purchase the smaller patented group to the west called the Paradise Mine, which is not included in our project. Homestake drilled over 50 holes over a 4 year period. They found significant gold mineralization everywhere that Tenneco did at the Little Butte mine and open pit, the Blue Slate Mine and the Flat Fault Mine. They also put down seven drill holes in the vicinity of the detachment fault. Enclosed is a pack which we obtained from Barrick which includes all of Homestake's drill logs and assay results. The map at the rear section entitled "Alteration, Mineralization and Drill Holes" includes all of the drill information for the previous work by Fischer Watt, US Borax and Tenneco.
What does the future hold for this gold deposit? While a gold deposit this big will take a substantial amount of work to turn into a large proven reserve, this should be a simple and straight forward effort if the drill programs focus on the core deposit, rather than concentrating on peripheral areas. The core deposit may be visualized as an inverted "V" with the Little Butte underground mine near the apex, the Little Butte open pit, Flat Fault mine and Blue Slate mine along the left leg, and the Airfield deposit at the bottom of the right leg. If, as we believe, the entire area of the inverted "V" turns out to be a mineable open pit resource this would be a far larger gold deposit than the 1,000,000 +/- oz Copperstone, and may be closer to the 10,000,000 oz size of the Mesquite mine, which is another detachment fault deposit in California.
Trivia: Ever wonder where that 10,000,000 oz of gold number came from that's been tossed around as fact? Well, there it is in context. Judge its validity for yourself.
the “Colliston Report” that is relied on by many on this board, does not meet the requirements of an industry-standard Technical Report. It is more an overview of historical activity and property potential, seemingly intended for promotional purposes. (You won’t find the phrases “if, as we believe,” “turns out,” “may be,” and "closer to” in a Technical Report.)
Dr. Colliston refers to the Little Butte, Arrastre, Blue Slate & Flat Fault Mines along with the Brindle Claims. And while mine searches on the USDOL Mine Safety and Health Administration site did not come up with any info on any of those names being active mines, much less abandoned ones, I checked with MSHA myself and learned that such data on abandoned mines only goes back to January 1, 1995. All active mine data is current and can be found on their website.
QUESTION: Did GWGO/FFGO ever commission an industry standard assay or was Colliston's Report the sole basis in creating FFGO's mining claims valuation?
I've contacted Arizona BLM (Arizona Bureau of Land Management) and they confirmed there is an Assay Report for Copperstone / Bouse, but the company requires them to be kept private so BLM won't release them.
Anyone wishing to verify that info would need to contact AZ BLM directly:
QUESTION: Did GWGO/FFGO ever mention valuations for those properties or furnish shareholders with such documents?
I did find one reference in a 7/25/2008 Press Release:
Fortress Financial Group, Inc. -- Further Clarification Date : 07/25/2008 @ 10:38AM Source : MarketWire Stock : Fortress Financial Group, Inc. (FFGO) Quote : 0.0002 0.0 (0.00%) @ 10:27AM
NEW YORK, NY announced on July 24, 2008 that the Company had resolved to distribute an amount of US$400 million of its Gold Assets to its Stockholders, in the form of an Extraordinary Dividend.
This Extraordinary Dividend equates to an amount of 1.24 cents per share of Common Stock based upon the outstanding shares of the Company's Stock at July 24, 2008. The Company receives an amount of US$500 million in quoted Gold Mining stock ("Goldco") in exchange for its stockholding in the "Bouse" and "South Copperstone" Gold Mining & Exploration companies. This transaction will be consummated in August of 2008. Our calculations of this valuation are contained in the latest Form 8-K filings with the SEC.
The CEO of Fortress Financial Group, Inc., Alan Santini, pledged to stockholders that he would address each of their concerns in this Press Release. The main areas of interest and concern to our stockholders are listed below with Alan Santini's responses. (Note: Only the one relevant question from the PR is shown)
18. HOW DID THE COMPANY VALUE ITS GOLD ASSETS WHEN SELLING THEM TO GOLDCO:
The Company was in possession of historical data, Reports and valuations. These were utilized to ascertain the valuations based upon a Gold price of US$900/oz.
About Fortress Financial Group, Inc.
The Company is utilizing is substantial Balance Sheet of circa US$100 million comprised of quoted and unquoted Gold Mining & Exploration stocks (This is after the payment of the Extraordinary Dividend of US$400 million to stockholders); to aggressively fund a large number of acquisitions in the consumer financial services sector; initially focused in the Mortgage Lending and Banking sectors.
FFGO clearly has valued its Bouse & South Copperstone stockholding at $500 million and does make a reference to "utilizing historical data, Reports and valuations" to ascertain the valuations of its gold assets...but offers no detailed documentation of any industry standard reports or assays. Note that this is a press release and not an SEC filing. I would be curious if anyone knew of FFGO ever declaring the value of their "gold assets" in a filing, complete with exhibits of industry standard reports or assays.
QUESTION: Was that undocumented valuation subsequently the basis for ultimately determining the prices of NMGL's "A" & "B" Preferred Shares of stock along with the shares of Bouse Gold Inc. & South Copperstone Inc. held by FFGO and part of these transactions?
12,096,115 shares of the Series A Preferred Stock at a price of US$16.00 for a total of $193,537,840. These shares were issued in payment of the purchase price for a 23.22% shareholding in Bouse Gold Inc.; this issue being to 1 Accredited Investor (Western Diversified Mining Resources, Inc.)
29,334,212 shares of the Series B Preferred Stock at a price of US$2.20 for a total of $258,073,107. These shares were issued in payment of the purchase price for a 46.84% shareholding in South Copperstone Inc.; this issue being to 1 Accredited Investor (Western Diversified Mining Resources, Inc.)
That is over $450 million dollars of stock for just a minority shareholding!
Of course, those shares are currently unregistered and cannot be registered until NMGL acquires 100% of the shares of Bouse Gold, Inc. & South Copperstone, Inc. according to their own non-negotiable conditions. And those properties must still be sold for those Preferreds to be worth anything:
the current strategy of NMGL is to acquire a 100% interest in Bouse Gold, Inc. and South Copperstone, Inc. and to dispose of these two corporations and utilize the proceeds to redeem the NMGL Preferred Series “A” and the Series “B” shares.
FINAL QUESTION: Who historically profits from using the lowest confidence level Mineral Resource data (aka educated guesses) to create eye-popping mining interest valuations as enticements to investors?
Additional Reading For some valuable tips, read A Guide To Mining Investments offered by the Securities Division of the Arizona Corporation Commission (thanks to Anvil for the pdf file link) Here are some relevant excerpts:
“A gold miner is a liar standing next to a hole in the ground.” The quote, traditionally misattributed to Mark Twain, defines the experience of the many investors who have lost money in dubious Arizona mining projects. The state has a long and glorious history of mining scams, a history that continues today.
Arizona history is inextricably tied to the mining industry. Unfortunately, a lot of the invested money has gone to promoters and projects that had nothing to do with actual mineral exploration and development. The state’s effort to educate the public against mining swindles has been going on for over a century.
An unassayable ore project, for purposes of this article, is a mineral exploration and/or development endeavor whose assay methods do not conform to generally accepted geological or metallurgical industry practices.
Usually, offering materials do provide what the offerers claim to be assays, but beware. Assays are only meaningful if they are based upon a systematic and scientific program of ore sampling. An assay based upon one or two ore samples is essentially meaningless — it takes literally hundreds or thousands of separate ore samplings to properly evaluate the true potential of a mine site.
Statements referring to the attractiveness of a deposit because of its close proximity to a famous producer (perhaps like American Bonanza at Copperstone?) may have the ring of authority but are often pure speculation. There is a reason the major mining companies overlooked a neighboring deposit.
All the regulatory hurdles in the world will not deter con artists from trying to profit from man’s most formidable vice – greed. We can look forward to many more scams so long as precious metals keep their value.
The lesson we learn from recent Arizona mining scams is neither new nor complicated: there is no such thing as a free lunch. Add in the concept that if something sounds too good to be true it probably is and the result is a better common sense fraud prevention system than anything state or federal governments can accomplish. Excessively optimistic promoters have and will use vast mineral wealth to inflame investors’ greed. Arizona’s history and immense existing mining industry make the state an attractive area for mining fraud. The promoters are a fearless and resilient breed.
Another valuable source of info is the Mining Scams article by the AZ Arizona Department of Mines and Mineral Resources (now part of Arizona Geological Survey).
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