Barkerville Gold “Mines” (BGM) is the poster child for everything that is wrong with the junior mining sector. Insiders are overpaid, G&A costs are excessive, and they issue inflated technical reports. The stock is currently halted as their latest technical report was massively inflated. The halt was a little late but at least regulators did something for once. The technical report claimed that Barkerville had a Bre-X sized deposit in the tens of millions of ounces and that it had the geological potential for 65-90 million ounces. That would correspond to the largest gold deposit ever found by man. Apparently Barkerville still has credibility.
Barkerville Gold Mines Ltd. (“Barkerville” or the “Company”) is pleased to announce that the Company has entered into a term sheet (the “Term Sheet”) with 2176423 Ontario Limited (as “Lender”); which the Company is informed is wholly-owned by Eric Sprott; respecting a proposed $15 million gold loan facility (the “Facility”) to be provided to the Company by the Lender.
Firstly, I think that it’s appropriate for money managers to invest their funds alongside their client’s. I don’t like that Eric Sprott is unaligning his interests with his clients and shareholders. Secondly, it’s silly to give money to a management team (Barkerville’s) that is clearly lacking in integrity.
At the end of the day:
- Stay away from junior mining garbage.
- Be careful riding the coattails of big name institutional investors. They may not know what they’re doing when it comes to mining. (However, they usually do know how to make money from asset management and from trading against their shareholders.)
I’m not the only person to bash Barkerville as the company is a very easy target.
- IKN – This blunt and honest blog is a good source for news.
- Quinton Hennigh’s comments reposted at IKN
- Financial Post article
- My previous blog post on Barkerville
*Disclosure: No position in Barkerville.