In an effort to curb the deluge of Vancouver stock promotions floated on the OTC Bulletin Board in the U.S., the B.C. Securities Commission is stepping up pressure on the province’s geologists to ensure that their mineral disclosure is accurate in form and substance.

However, the disciplinary record of the professional association for B.C. geologists, the Association of Professional Engineers and Geoscientists of British Columbia, raises questions of whether the APEGBC is willing or able to regulate the activities of its geologist members.

On Aug. 7, the BCSC announced that Vancouver geologist Robert Weicker had admitted that, as a director and senior geologist at Aberdene Mines Ltd., he had issued three news releases in June and July 2004 containing misleading information on the company’s Nevada copper project.

At the time, company president Brent Jardine was heavily promoting the stock through U.S. newsletter writer James DiGeorgia, who sprinkled his report with references to “rivers of molten gold” and “nuggets the size of potatoes.”

The hype had the desired result. The stock, which trades on the virtually unregulated bulletin board, spiked up to US$4.40 in June 2004, then collapsed. It is now trading at about US25¢.

For his offences, Weicker agreed to pay a $30,000 penalty and not prepare any news releases for an issuing company for the next 12 months except under the supervision of an officer and director.

Weicker still has to answer to his professional association. According to APEGBC executive director Derek Doyle, the association has started an investigation into the matter.

“It is important that all APEGBC members remember their obligation under the code of ethics to report to the association any hazardous, illegal or unethical professional decisions or practices by engineers or geoscientists,” he said in a release to members.

However, it is not clear that the association’s investigation will result in substantive action. Since 1989, the association has suspended only two members for exploration-related infractions: F. Marshall Smith and George Krueckl, for six months each.

Those two cases typify the darkest days of the old Vancouver Stock Exchange, when poor-quality exploration promotions and outright scams were the order of the day. Vancouver has recently been spawning dozens of exploration plays that trade on the OTC markets in the U.S. Like the old VSE issues, most are marginal offerings or obvious scams.

With mounting pressure to deal with this problem, the BCSC has been taking action against bulletin board companies that, like Aberdene, do not provide disclosure that conforms with National Policy 43-101 — imposed in the wake of the Bre-X Minerals Ltd. scandal — to formalize and standardize mineral disclosure.

BCSC representatives have also been meeting with professional organizations for lawyers, accountants and geologists to get them to understand that their members’ participation, by providing the professional services that promoters require to float these deals, may be placing public investors in jeopardy.

In the Weicker case, Aberdene announced in March 2004 it had acquired an option on the New York Canyon copper project in Nevada. Under terms of the agreement, Aberdene could earn a 100% interest in the property by paying $460,000 in cash or shares and issuing one million shares, and incurring property expenditures of $2.25 million over the next three years.

Weicker had a 22.5% interest in the property and, therefore, stood to gain from its development.

The New York Canyon property had two known deposits: Long Shot Ridge and Copper Queen. Both had historical mineral resources — that is, estimates of tonnages and grades — that pre-dated National Policy 43-101.

Although the new disclosure rules were in effect, Weicker didn’t adhere to them. In a June 22, 2004, news release, he announced: “A previous study indicated capital costs of $10 million to $15 million, with annual revenue of $22.9 million based on a 0.65% grade; with a 75% recovery and $1.05/lb. Cu price, the Long Shot deposit has excellent potential for near-term production.”

Weicker later admitted that the “previous study” was simply a report prepared by a brokerage firm analyst some 13 years earlier; the $10- to $15-million capital cost estimate was half of Aberdene’s internal estimate of $20 million to $30 million; and the reported 0.65% copper grade exceeded the more current estimate of 0.57%.

The same 2004 release stated the Copper Queen deposit had an “initial mineral resource” of 142 million tonnes of 0.35%-0.40% copper.

@page_break@Weicker admitted this statement was misleading because the mineral resources figures were historical and had not been demonstrated to be current resources under the new disclosure policy. He also admitted the grade of the initial mineral resources was not predictable with accuracy because of lack of data, and the releases he signed did not disclose his personal interest in the property.

What action the APEGBC takes against Weicker remains to be seen. In the past, many geologists who have run afoul of the BCSC have received relatively light punishment from the APEGBC.

For example, the BCSC turfed George Krueckl for 20 years for falsifying work reports for a flow-through share exploration program, but the APEGBC suspended him from the practice of geology for only six months.

But the accountant at the centre of the flow-through share exploration scandal, Piers VanZiffle, was banned for life by his professional organization, the Chartered Accountants Institute of B.C. And the promoter who orchestrated the fraud, Douglas Harris of Likely, B.C., went to jail. IE