SRGE_SEC halts pinky that claimed partnership with Kinross
2012-12-28 17:33 ET - Street Wire
Also Street Wire (U-*SEC) U.S. Securities and Exchange Commission
Also Street Wire (U-SRGE) Southridge Enterprises Inc
by Mike Caswell
The U.S. Securities and Exchange Commission has halted Southridge Enterprises Inc., a half-cent pink sheets listing that claimed it and Kinross Gold Corp. had a "joint partnership" on a $550-million project. (All figures are in U.S. dollars.) The SEC says there are questions regarding the accuracy of the company's news releases. Concerns include "certain claims regarding a joint partnership" as well as the company's plan to move its listing to the OTC Bulletin Board.
The halt comes two days after Southridge issued a Boxing Day news release in which it claimed to have some sort of an arrangement with Kinross on mining properties in Mexico called Cinco Minas and Gran Cabrera. The release stated that the deal valued the projects between $550-million and $600-million, but had few other specifics. Southridge included a purported comment from a Kinross spokesman that contained grammar and typing errors.
Within a day Kinross assured investors that it had no deal with Southridge. In a release issued late on Thursday, Dec. 27, the company said "there is no such joint partnership, joint venture, or other similar such arrangement" and it did not expect to enter any such arrangement in the future. The quote from a Kinross employee was "incorrectly attributed to him," Kinross said.
The purported quote was from Martin Moscosa, an exploration manager for Kinross. It stated, "We have made great and good progress regarding Cinco Minas property. Southridge controls the best area at the Gran Cabrera and there will no problem regarding the influencearea, also, because in case everything will be growing, possible adjacent claims could be incorporated or added to the project." Southridge's release also said that the company was working "hand in hand with Kinross" and that it expected to execute the partnership by mid-January.
The SEC's halt notice says nothing specifically about the news release. It simply says that there is a lack of current and accurate information about Southridge and its purported "joint partnership." As the regulator sees it, a halt is necessary for the protection of investors.
The halt notice lists Southridge as a company "purportedly based in Dallas," but Southridge appears to have connections to Vancouver. In its most recent issuer disclosure statement, dated Dec. 13, 2012, the company said it was originally incorporated in 2004 to explore projects in B.C. In addition, the company's articles of incorporation were filed by Stephen O'Neill. Mr. O'Neill is a lawyer in Blaine, Wash., a small town directly across the border from Vancouver.
The company's present management does not appear to have any local connections, but its former president was Alex Smid. In March, 2010, The Vancouver Sun's David Baines reported that a Vancouver Provincial Court judge issued an arrest warrant for Mr. Smid. The 37-year-old Vancouver promoter had been charged with four counts of tax evasion and tax fraud (none of which was connected to Southridge). The court file does not show any activity after the warrant.
It is not clear from the disclosure statement who controls most of the company's 843 million shares. Southridge said it had issued 723.1 million restricted shares over the prior 2-1/2 years to a private entity called Rockridge Capital Holdings Corp. to settle outstanding debt. The company did not, however, include Rockridge in its list of major shareholders. The only entry in that list was Novamex Mineral SA of Mexico, which had 200 million shares.
The SEC's halt lasts for 10 business days, or until Jan. 11, 2013. Once the 10 days have passed, brokers in the U.S. wishing to trade the company will face an onerous burden. They must keep up-to-date information on the company's financial status and on its insiders. They must also have copies of the company's prospectus, its most recent annual report and any subsequent quarterly reports. In addition, brokers must maintain current information on the company's name, address, state of incorporation, number of shares outstanding, the name of its transfer agent and the nature of its products. Brokers must also know if a price quotation is from another broker or from an insider. They must provide this information to anyone interested in trading the company.
Nobody answered Southridge's phone Friday, and the company did not respond to an e-mail requesting comment on the halt.
The stock, which has a 52-week high of 0.69 cent, was last at 0.49 cent. Southridge traded 419.1 million shares the day of the Kinross news.
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