Barkerville (BGM.v) and the burden of proof (from IKN166)

This from IKN166, out yesterday:

A simple comment on Barkerville Gold Mines (BGM.v)

The junior mining story of the last week was without doubt Barkerville Gold Mines (BGM.v), its announced 43-101 compliant 10.6m oz of indicated level gold at Cow Mountain, its “resource potential" of between 65m and 90m oz gold and the doubts thrown up by the investment community about the validity of the new resource, led up by Quinton Hennigh’s excellent thinkpiece that we managed to get onto the blog (21) to show a wider audience on Tuesday evening.

I’m not going to make any comment about the geological critiques of Hennigh, nor am I going to pick apart the rather dubious past history of BGM the company, the “overly promotional” (let’s be diplo) manner of its CEO Frank Callaghan or even the sudden appearance of paid-for pumping we’ve seen in the stock that brings its own red flag. What I want to comment here is simply about the burden of proof.

There have been many criticisms of the news release from two Thursdays ago that saw BGM climb hard and then come back down to earth, but one common denominator of nearly all of them is the lack of proof and evidence that’s been offered up by BGM and its chosen 43-101 compiler Peter T. George. Now for sure under the 43-101 rules, once a press release of the type we saw from BGM is out the company has a maximum of 45 days in which to file the full report to SEDAR. However, it’s also normal under these circumstances, especially those in which a resource jumps from (let’s say) 1m oz to (let’s say) 10m oz gold, to offer up more than the scant amount of proof that's been used to compile the data and resource conclusions. When not just one or two things, but a whole list of things are open to obvious criticism, the simple fact that BGM and its 43-101 compiler haven’t been as forthcoming as they could be is its very own red flag. And let’s not forget that although BGM has a maximum of 45 days to file the document, it could if it wished (and many other companies do) file the document immediately and get the doubts settled one way or the other. So it’s not just the substance that can be called into doubt around this story but the style, too. Put bluntly it looks shady, and shady junior companies are precisely the ones we should run a mile from until otherwise proven.

The world of the junior mining company is not the world of the court of law. There are no rights or privileges of “innocent until proven guilty” in this sector and if anything, the wary investor who cares about avoiding the marginal story companies as well as the outright scams should take the exact opposite view and be cynical, doubting and assume guilt of an unknown party until proven innocent. The way in which BGM has gone about unveiling its apparently massive new resource has made for more questions than answers, more doubt than certainty, more heat than light. Until the hard facts are presented in the form of the official 43-101, the phrase here has to be “caveat emptor”.