Pretium update: Graham Farquharson speaks out

Those interested in Pretium should definitely check out this Financial Post article on the company.  In the article, Graham Farquharson (president of Strathcona) comments on what’s happening and criticizes Pretium’s management.

“Our differences with Pretium management are all about when is public disclosure of material facts appropriate,” he said in an email.

It’s unclear to me what the context of his statement is exactly.  However, I believe that he is saying that Strathcona does not have major disagreements with Pretium over technical matters.  The problem is that Strathcona informed Pretium that there are no mineral resources and no mineral reserves (reserves are resources that are thought to be economic; not all resources become reserves).  Presumably, Farquharson feels that Pretium management should have disclosed those material developments as soon as possible.  An earlier sentence in the article echoes this:

Strathcona President Graham Farquharson criticized Pretium management on Tuesday, saying his firm informed Pretium about its concerns several times and they were not immediately disclosed.

Some background info on Graham Farquharson

In the past, Farquharson was very vocal in criticizing John Felderhof (Bre-X’s head geologist).  He argued that Felderhof must have known that there were many red flags indicating that there was something very amiss with the Busang deposit.  Felderhof even intentionally allowed drillcore to be destroyed, which is an unusual practice as it makes fraud difficult to detect.  (I agree.)

Even after Felderhof avoided legal repercussions, Farquharson continue to attack him.  (I agree.)

I would expect Farquharson to tell it like it is and to speak the truth.  The mining industry needs more people like him.  He has indicated that Strathcona has repeatedly raised issues about the deposit that were material and should have been immediately disclosed to investors.  If Pretium’s management team were ethical, they would have disclosed Strathcona’s concerns to investors.

*Disclosure:  Short Pretium.

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6 thoughts on “Pretium update: Graham Farquharson speaks out

  1. farquharson is an idiot and a fraud and he should do everyone a favor and disapear off the face of the earth. Someone should closely investigate who he may be associated with who were shorting pvg stock. It is slanderous and unproffesional to say the least to make accusations like he did before the data was even processed. I would bet that he has another agenda that is not in pvg’s best interest. Sahreholders and pretium should sue that old senile bastard >

    • Let me guess… you are long this stock? I’m guessing you never read my post on data verification and how Pretium two years ago should have investigated the integrity of their assay database.

    • Snowden’s resource model was overly aggressive (if you follow what Graham Farquharson was saying). Being overly optimistic is arguably a form of fraud. However, it is highly unlikely that anyone would be convicted for it because resource estimation is subjective and judges don’t understand it.

      Quartermain (Pretium’s CEO) is being sued right now. I think that lawyers will argue that he tried to deceive investors into thinking the resource model was ok. He will probably be accused of withholding material information about Strathcona’s concerns about the resource model. He also tried to mislead investors into thinking that the resource model is fine; Strathcona says otherwise. Strathcona said that there should be a large reduction in the tonnage of the deposit. I would say that their argument should damn well be disclosed to investors because it is material.

      What Snowden did is pretty common in the mining industry. It’s wrong but it’s normal. What Quartermain did isn’t normal. The normal thing to do is to disclose material information and then to spin doctor it; this protects insiders against lawsuits. In my opinion what he did crosses the line. I think it’s illegal but I’m no securities lawyer.

      • Mr. Farquharson is no idiot as indicated above. We have used him for years, and he is among the very best.
        Mr Quartermain, similarly is a hghly competent, honest human beng. This is merely an epic dispute. I’m betting on Quartermain
        (long)

  2. Pingback: Pretium’s Resource Estimate filed Feb 3 2014 | Glenn Chan's Random Notes on Investing

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