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7/5/11

Bayfield Ventures (BYV.v) from IKN113

I'm getting queries and questions about the post on Bayfield Ventures (BYV.v) yesterday, so rather than actually think on this fine Tuesday morning, here pasted out is the piece on BYV.v from IKN113, out last Sunday. 

Bayfield Ventures (BYV.v), an exercise in red flags
I’d like you to go to the footnotes list and make a point of linking through to link (13) and then take a good read of its contents because it is a salutory reminder of what you, the retail investor, need to avoid in this sector. However here’s the top of the NR published by Bayfield Ventures (BYV.v) last Thursday to make sure you at least get the gist of what’s going on:

Press Release Source: Bayfield Ventures Corp. On Thursday June 30, 2011, 7:50 pm EDT
VANCOUVER, BRITISH COLUMBIA--(Marketwire - June 30, 2011) - Bayfield Ventures Corp. (TSX VENTURE:BYV - News; FRANKFURT:B4N - News; the "Company") is issuing this news release as a result of a review by the British Columbia Securities Commission in order to clarify certain details of its technical disclosure of drill results on its Burns Block property and of its disclosure of resource estimates at Rainy River Resources' gold project adjacent to Bayfield's Burns Block.
Rainy River gold properties claims map: http://www.bayfieldventures.com/i/pdf/BYVRRArea.pdf
The Company restates certain drill intervals (listed below) reported in news releases dated September 8, 2010, December 14, 2010, February 16, 2011, and June 27, 2011. The original averaged gold and silver grades over these intervals are all correct and the total amount of gold and silver mineralization is the same; however the drill results are potentially confusing as certain larger intervals were reported by diluting high-grade intercepts over longer intervals of lower grade gold and silver mineralization.
The higher grade gold and silver intervals reported in the effected news releases identified above, and re-reported here, are enclosed within the much wider envelopes of anomalous level gold mineralization (and accompanying variable silver values). We therefore revise the portions of the previously reported intervals for which questions of potential economic viability cannot currently be assessed by Bayfield. Such an assessment would require identifying likely mining methods and establishing many other parameters that are well beyond the scope of our exploration project at this point in time.
The following is a list of the holes that report longer drill intercepts which are being restated:
- Previously reported larger intervals in hole RR10-18 (September 8, 2010 news release)
- Previously reported larger intervals in hole RR10-52 (December 14, 2010 news release)
- Previously reported larger intervals in hole RR11-1 (February 16, 2011 news release)
- Previously reported larger intervals in hole RR11-70 (June 27, 2011 news release)
- Previously reported larger intervals in hole RR11-71 (June 27, 2011 news release)

Bayfield Ventures (BYV.v) is a company I’ve mentioned on more than one occasion on the blog because it checks off so many of the boxes that shady junior mining companies check off. There’s the promotional aspect, the suspicious relationship it has with market moving commentators who have little or no idea about geology (and yes I know that’s true for me too but at least there’s no false pretences) and the cutely timed insider sales and rounds of financing that seem to benefit everybody bar the end user. The NR put out last week caps off a whole round of doubtful promotion that stretches back nine months, as BYV.v was forced by the BCSC to retract previous news releases it has made regarding its drill results. Please go and read the whole thing to get a fuller picture, but in a nutshell BYV.v has been slapped on the wrist for “smearing”. This is when a small, high grade intercept is used to make a larger width of the same drill core look like it’s all potentially mineable rock when in fact only a small part of what’s on offer could ever be construed as economically mineable. It’s a subject we looked at in IKN94, that piece also found its way onto the blog (14) and by sheer coincidence, the example used was that of BYV.v. I’ll leave you to check out that note at your own leisure (and if you have further questions I’m only too pleased to hear from you) but rather than do the same info twice over, I’d like to point out a couple of things about the latest BYV.v NR that has announced the forced retraction and adaptation of drill results. What follows is directly related to the dates of the news releases as they appear in the paste-out above.

  • The September 8th NR was the high point of a very aggressive promotional campaign for BYV.v that got many new investors into the stock. That day the company traded over 9m shares, which is many multiples more than its normal traded volume and without looking too far back into the company records is most likely a record. The share price peaked at $1.38 that day and to give an idea on the type of move it put in, the previous day it was trading at 83c.

  • On the back of that Sept 8th NR and market reaction, BYV.v just a couple of days later announced a $5m non-brokered private placement of flow-through shares priced at $1.40 (15).

  • At the exact same time, company Chairman and CEO Jim Pettit decided it was a great time to do some insider selling and make over $100,000 on the sales he made in the next few days. Other insiders also cashed in at that time (15).

  • Meanwhile, much the same pattern was repeated on December 14th when the NR that day which has also been retracted due to ‘smearing’ of results saw BYV.v stock jump over 10% the next morning.

  • The February 16th NR also saw the stock jump over 10% by way of reaction, all on twice normal volumes. This was the very NR we covered in our IKN94 note about smearing (14).

  • The share price reaction from the most recent June 27th NR was even more dramatic, with the stock climbing over 50% and 6.9m shares changing hands. Just four days after an intraday peak of $1.02 that morning, BYV.v is now at 76c and fading fast.

But as well as this highly coincidental NR-plus-PPS-plus-Volume-plus-Promotion action, we should also note the way in which Bayfield has announced its correction last week. It has done so on the evening of June 30th, at 7:50pm, when most all of the market is not paying attention and is unlikely to do so through Canada Day (July 1st Friday) and perhaps even US Independence Day (July 4th Monday), even though Canada’s markets are open for business tomorrow. That stinks, frankly. If it were an isolated case of convenient timing from a junior with a better track record of transparency that type of detail wouldn’t matter so much. But when it comes to a company like BYV.v, it matters a great deal.

It’s at times like these when your author reminds himself of the odds of a junior exploration company actually ever getting an asset into production (either via in house efforts or via selling it to a third party) and because those odds are so very small indeed, any small sign that a junior is out to mine the market (Mickey Fulp’s preferred expression) instead of the rock will always go down as a red flag. But when the signs come think and fast from a company and are backed up by dubious promotional techniques from dubious “research” houses, it’s difficult to imagine seeing the phrase CAVEAT EMPTOR writ any larger.

DYODD. I'm looking forward to Lobito...c'mon dude, pump it again, don't let us down. And oh yeah, full disclosure: No position in BYV.v (IKN highlights these scummy stocks for love, not money).

UPDATE: And the BYV.v insiders sell in droves just before the BCSC news hits! YOU HAVE TO BE SHITTIN' ME HERE, DUDES! Well, at least they're consistently scumbags, not just on every other day.