In a rare move, B.C. Securities Commission enforcement staff have invoked their “public interest” mandate to force promoter Ross Stanfield of Calgary to provide an independent technical report on the Gallowai Bul River mine.

In a May 6 notice of hearing, BCSC acting executive director Martin Eady noted that Stanfield’s companies, Gallowai Metal Mining Corp. and Bul River Mineral Corp., have raised $229 million from almost 3,000 investors over the past 30 years, and the property is still not in production.

Eady does not allege any specific breaches of the B.C. Securities Act. He simply argues that after so much time and money, it’s time Stanfield produced an independent report that complies with National Instrument 43-101: Standards of Mineral Disclosure.

“I expect this application will put the Stanfield Mining Group under the microscope,” says investor Russ Renneberg of Edmonton. “And it’s about time.”

The BCSC’s application is being made under Section 161 of the act, which provides that the BCSC’s executive director, if he deems it to be in the public interest, can require an issuer “to disseminate to the public … any information or record relating to the affairs of the registrant or issuer that the commission or the executive director considers must be disseminated.”

BCSC enforcement staff have invoked this clause in only one other case: in the late 1990s, a group of brokers at First Marathon Securities Ltd. (acquired by Montreal-based National Bank Financial Ltd. in 1999) were deemed to have acted against the public interest by concurrently acting as promoters and brokers for a junior exploration company called Cartaway Resources Corp. Specific breaches of the securities act were also alleged.

The Gallowai Bul River disclosure problem arises from the fact that Stanfield owns all the voting shares of both companies. He has sold only non-voting shares to inves-tors, who are mainly from Alberta, under exemptions from registration and prospectus requirements. Since these companies are private issuers, they are not subject to the same disclosure requirements as public companies.

For years, Stanfield has told investors the property is fabulously rich in gold, platinum and feldspar, and on the verge of production; but nothing ever seems to happen. That raises the question: does the property have an economically viable deposit? And, if so, why hasn’t he put it into production?

In 2007, a group of 12 dissident shareholders, all from Alberta, began seeking answers to those questions. Stanfield has refused to give them any meaningful response.

Last year, the dissidents stepped up the pressure by filing a petition in the B.C. Supreme Court seeking to remove Stanfield from his position of authority. That case had dealt with corporate governance issues only, not whether the property is viable. In February of this year, Judge Peter Leask ruled against the dissidents. They are appealing that decision.

Although the petition did not address the viability of the deposit, court filings contained many indications the property may not be viable. Among them:

> Stanfield used unconventional assay methods and assayers who were not deemed credible by BCSC mining consultants.

> Geologists from the B.C. Geological Survey Branch of the B.C. mines ministry twice conducted check assays that contradicted the high assay values previously reported by Stanfield.

> Stanfield’s former consulting engineer, Philip de Souza, was disciplined by his professional association for making claims about the property that could not be supported.

> Stanfield has promised on at least two occasions to provide shareholders with technical reports that are compliant with NI 43-101, but has failed to do so.

These points beg another question: if the hearing panel orders Stanfield to produce a report, and it shows there is no economic deposit, will he be subject to disciplinary action?

Says BCSC enforcement director Lang Evans: “We’ll deal with that when we get there.” IE</b