FINEX: October 27-28, 2010

FINEX 10

Chris Hinde, Editorial Director, Mining JournalMINING SCAMSThen and now, and how to spot them

FINEX 10Mining Only industry with promotersScams Deliberate fraud, not: Over-enthusiastic exploration geologists Illegal miners

Industry well suited, with promise of dramatic riches that are currently hidden

Buyer Beware

FINEX 10August 1835 West Tresavean situated just two miles from TresaveanAugust 1885 Limpets and barnacles on honest enterpriseAugust 1909 Prospectus of a mining company commercial traveller, real-estate man and third engaged in variety of pursuitsMJ Archive

FINEX 10John Meech, BC University:Mining disasters, environmental pollution, exploitation of non-renewable resources, greedy people stealing resources from First Nations communities, or moving to remote parts of the world and looting Third World countries of their resources.Also about equity scams people raising capital funds by telling half-truths and lies about moose-pastures and get-rich-quick deals."Public Perception

Monopoly Money

FINEX 10GreedFearEnvyDenialHopeHuman Emotions Key

FINEX 10Exaggerated claims;Few negative results;Little corroborating data;Emphasis on nearby deposits;Confused ownership;No record of management success;Sudden share price changes; andNew technology.

Telling the Difference

FINEX 10Frauds usually look for an angleRipples from Black Monday on October 1987, showed up immediately in scamsArizona took steps to educate the public about the dangers of investing in mining.Arizona Commission want to stop the fools-gold rush before it reaches epidemic levels.Investor alert issued in 1989 by the North American Securities Association.Scams and the Economy

Pump and Dump Scams

FINEX 10State has a long and glorious history of mining scams.Time-honoured method to bilk the public of millions of dollars is the ubiquitous mining swindle. Glamour attached to discovery creates, in the imagination of some people, a relatively easy way to attain fantastic wealth.

Scam Central: Arizona

FINEX 10Promoters proof of an orebody falls into two categories:1. Little, or only crude, evidence2. More sophisticated approachArizona Republic Paper

FINEX 10Bre-X and Busang Best example of salting, and biggest scam of all time. Borneo discovery of 71Moz in mid-1990s, supported by Indonesian president Share price goes from pennies to over US$280 per share in four years Freeport checks, and shareholder value wiped out, almost overnight

Four Case Studies

Bre-X Share Price

FINEX 102. Spenazuma Gold Mining Getting investors in right frame of mind; Doc Flowers. Richest and largest continuous vein of ore ever discovered in the world Deposit found by son of Aztec Emperor Montezuma Stock sold to easterners, who knew nothing of mines and mining

Four Case Studies

FINEX 103. Scottsdale Galleria Mining fraud promoters can always find greedy investors to believe their tales Claim in 1991 that gold was buried under shopping mall in Scottsdale, Arizona Police called when 300 people arrived with spadesFour Case Studies

FINEX 104. IPM and Black Rock International Precious Metals announced sensational gold and PGM grades TSE asked consultant to investigate; no mineralisation found; shares plunged Company delisted but relisted on NASDAQ, and promoted itself on internet Scheme unravelled, shares fell from US$14 to US$2; filed for Chapter 11Four Case Studies

FINEX 10TitleSampling and AssayingCommodityMining MethodInfrastructureRecovery ProcessPermitting and ReportsProfit DistributionSequence

Factors to Consider

FINEX 10MJ Rule:Greater the amount of gold on the promoter the less gold there is likely to be in the deposit

Factors to Consider

Thank You