St. George Metals revived to join pink sheet promotion
2004-09-16 09:12 ET - Street Wire
Also Street Wire (U-CMKX) CMKM Diamonds Inc
Also Street Wire (U-UCAD) US Canadian Minerals Inc
by Lee Webb
St. George Metals Inc., a recently revived Nevada-incorporated shell that can trace its lineage to the former Vancouver Stock Exchange (VSE), has become the latest patron of Urban Casavant's pink sheet company, CMKM Diamonds Inc. St. George will ante up $10-million (U.S.) and a whopping 200 billion restricted shares for a five-per-cent stake "in any and all mineral claims" held by CMKM. (All amounts are in U.S. dollars unless otherwise indicated.)
As with many things involving CMKM, exactly how many mineral claims the company holds is a matter of some conjecture. Based on sketchy information provided by the company, it appears that CMKM may have varying interests in claims covering between 1.4 million acres and 1.9 million acres in Saskatchewan.
Most of the company's prodigious promotional and modest exploration efforts centre on its heavily touted diamond prospects in the Fort a la Corne area where there are two advanced diamond projects, one owned by a group headed by De Beers Canada Corp. and Kensington Resources Ltd. and the other owned by Shore Gold Inc.
Notwithstanding the many years and many millions of dollars spent by the De Beers and Kensington group and Shore Gold, neither of those projects has yet been established as economically viable. Nonetheless, they provide some promotional mileage for CMKM, which purports to be "racing to find more diamonds" in Saskatchewan.
It remains to be seen whether the cash infusion from St. George will give some traction to the racy CMKM promotion, widely touted as the "stock play of a lifetime."
CMKM reports that it has already received $5-million in two equal payments from St. George, the most recent on Sept. 13, and expects two additional payments of $2.5-million over the next 30 days.
At this point, the source of that $10-million is a mystery, and it may well remain so. Like CMKM, the resuscitated St. George trades on the unregulated pink sheets, free from the burden of even rudimentary disclosure requirements.
Another CMKM backer, U.S. Canadian Minerals Inc., trades on the OTC Bulletin Board and is subject to reporting requirements with the U.S. Securities and Exchange Commission (SEC).
So far, U.S. Canadian Minerals has peeled off 7.5 million shares in exchange for five per cent of CMKM's mineral claims and has made two cash payments totalling $5.5-million under a one-year option agreement allowing it to purchase an additional 10-per-cent interest for $15-million.
Nearly penniless U.S. Canadian Minerals, flagged with a going-concern warning, executed an initial $3-million purchase under its option agreement with CMKM on July 28. An Aug. 23 SEC filing disclosed that the source of the $3-million was a subscription agreement for 600,000 shares of U.S. Canadian Minerals priced at $5 per share from an otherwise unidentified "related party to CMKM Diamonds."
After announcing on Sept. 8 that it had secured a further $3-million by way of a private placement, U.S. Canadian Minerals doled out another $2.5-million to CMKM on Sept. 9. The participant or participants in the Sept. 8 financing have not been even vaguely identified yet, inviting speculation among some skeptics that a party related to CMKM may have been involved in that private placement, too.
Meanwhile, questions have also surfaced regarding a relationship between Mr. Casavant's CMKM and the company's newest patron, St. George. According to a recent article by Dow Jones reporter Carol S. Remond, however, Mr. Casavant claims that he has nothing to do with St. George and knows nothing about it being a dormant shell.
The recently revived St. George is now headquartered in Vegreville, Alberta, a farming community with a large Ukrainian presence and several nearby Hutterite colonies. With a population of approximately 5,800, Vegreville is not known as a financial hub, but it does lay claim to being the home of the world's largest Easter egg.
Vegreville is reportedly also home to Mark Giebelhaus, president of St. George and the only identified officer of the company at this point. A directory search returns a surprising 21 Vegreville telephone listings for the surname Giebelhaus, but no public listing for Mark Giebelhaus.
St. George's investor relations spokesperson Vicki Curran also lives in Vegreville, as does her father, Victor Casavant, who happens to be Urban Casavant's brother. In a Stockwatch interview, Ms. Curran readily acknowledged that she was Urban Casavant's niece.
According to Ms. Curran, Victor Casavant is not involved with St. George. While he may not be directly involved with St. George, it does appear that he is at least "close" to the play.
A call to Victor Casavant's telephone number and a request to speak with Vicki brought the response that she was on another phone. Moreover, it appears that St. George at least briefly used a Vegreville postal box that has also been used by Victor Casasvant, including appearing below his signature on a 1995 settlement agreement with the Alberta Securities Commission.
Victor Casavant evidently ran afoul of Alberta securities regulators in connection with an illegal distribution of shares of a non-reporting issuer, Striker Minerals Ltd. The terms of the settlement agreement, a $1,000 (Canadian) fine and an acknowledgement of "the requirement to be more diligent when raising capital in the future," suggest that it was considered a relatively minor breach of securities regulations.
Ms. Curran told Stockwatch that she is new to St. George, but has about 13 years of experience in investor relations with other companies, both public and private. She would not disclose the names of the companies she was previously involved with, however, telling Stockwatch that the information would be provided in press releases issued over the next week.
While reluctant to discuss her specific background when contacted by Stockwatch, Ms. Curran offered some information regarding her former husband without any prompting at all. According to Ms. Curran, Kevin Curran served a brief stint as investor relations representative for Northern Star Resources Inc.
It is not clear why Ms. Curran volunteered that information regarding her ex-husband, but perhaps it had something to do with the fact that VSE-listed Northern Star was the successor to Petro Plus Inc., a company once headed by her uncle, Urban Casavant.
Mr. Casavant took charge of Petro Plus in November of 1995 when the stock price was languishing at about 15 cents. Under Mr. Casavant's guidance the share price climbed above $1 within a matter of months, amidst much nattering in news releases about "visible gold" in drill samples from one of the company's properties.
Petro Plus's stock price subsequently collapsed as quickly as it had risen and Mr. Casavant abruptly and rather intriguingly parted company with Petro Plus on Oct. 25, 1996. Petro Plus, which was halted at the time of Mr. Casavant's surprise departure, did not even bid him a fond farewell.
Three weeks after Mr. Casavant either jumped or was shoved out of Petro Plus, the company, which was still halted, served up a few more details about the affair including a share sale agreement between Mr. Casavant and the company's new president, Randy Studer. Under the agreement reportedly signed shortly after his departure, Mr. Casavant sold more than 1.9 million shares and more than one million warrants exercisable at 20 cents per share to Mr. Studer.
"Contemporaneously with the share sale agreement, an agreement was entered into between the company and Urban Casavant and certain extended family members to terminate any formal relationships or positions (excepting the rights under certain mineral claim option agreements)," the company went on to report in its Nov. 13, 1996, news release.
Petro Plus did not identify the "certain extended family members" whose formal relationships or positions with the company were terminated, so there is no way of knowing whether any of them are among the 22 Casavants disclosed as holding shares in CMKM. In any event, regulatory filings and various court documents related to litigation involving the Casavants suggest that family members are frequently associated with Mr. Casavant's enterprises.
Petro Plus closed out its news release with a rather curious statement.
"The transaction between Randy Studer and Urban Casavant was a positive agreement for all concerned and will now enable the company to focus on the business of mineral exploration," the company declared, perhaps raising the question of just what business the junior exploration company had been focusing on during Mr. Casavant's tenure.
As it turned out, the newly enabled focus did little for the company or the share price. With the stock changing hands at a Canadian penny in January of 1999, Petro Plus consolidated its shares on the basis of one new share for each five old shares and changed its name to Northern Star. Just over a year later, with the stock trading at five Canadian cents, Northern Star executed a similar rollback and changed its name to Odaat Inc.
Odaat, still under the direction of Mr. Studer, limped along until January of this year before executing yet another share consolidation, this time on the basis of one new share for each four old shares, and changed its name to Explor Resources Inc. Explor trades thinly and sporadically, sometimes going days between trades. It last changed hands on Sept. 9, registering a volume of 250 shares and closing at 34 Canadian cents.
While the Petro Plus affair is long behind Mr. Casavant, he at least briefly teamed up with his Petro Plus successor and current Explor president Mr. Studer again last year. On Aug. 27, 2003, CMKM awarded a reported $3-million mineral exploration and drilling contract to Mr. Studer's privately held Durama Enterprises.
Just how long that ballyhooed contract lasted and how much money changed hands, if any, are open questions. CMKM's last mention of Durama came in an Oct. 30, 2003, news release announcing that the company's Fort a la Corne diamond exploration had been delayed due "to unexpected magnetic storms caused by 'sunspots.'"
Meanwhile, some of the unanswered questions regarding CMKM's latest associate, St. George, should be answered over the next few days, according to Ms. Curran.
Among other things, Ms. Curran told Stockwatch that information regarding St. George's "brand new board of directors" would be released this week.
Ms. Curran would not disclose whether St. George had already raised the full $10-million needed to complete the announced deal with CMKM. Remarking that "it's definitely raising some flags to the investors," Ms. Curran said the "explanation will be in all the reports" to be issued this week.
According to Ms. Curran, "a handful of press releases" to be issued this week will provide the background of the company, where it is going, "levels of priority" and other information. A new Web site is also scheduled to be operational this week.
"I kind of feel like I'm helpless right now just because there is not a whole lot I can release unless it's public knowledge," Ms. Curran said.
At this point, there is very little information in the public domain regarding the revived shell.
According to company information provided on the pink sheets Web site, St. George had approximately 16.9 million shares outstanding as of Sept. 6. With a staggering 200 billion restricted shares comprising part of the deal with CMKM, that figure will see an astronomical revision. St. George is authorized to issue 950 billion shares, so the outstanding share total could be subject to more massive revisions.
While such lofty share figures are beyond the experience of most investors, they are old hat to shareholders of CMKM, which recently bumped its authorized share total to 800 billion. Based on information provided by the company regarding a dividend-in-specie distribution of 7.5 million shares of U.S. Canadian Minerals scheduled for Sept. 24, CMKM has more than 779 billion shares outstanding.
Notwithstanding the fact that the dividend ratio was first provided to regulators as required under U.S. securities regulations by CMKM's much touted lawyer, D. Roger Glenn, and subsequently revised by the company at about the time it raised its authorized shares to 800 billion, many of the hundreds of cult-like Internet followers of Mr. Casavant's promotion dismiss any suggestion that CMKM has issued more than 779 billion shares.
Indeed, some CMKM shareholders are prepared to argue, speculate and theorize at painfully convoluted length that there are really only a few billion shares outstanding. Others go even further, claiming that there are no real shares outstanding at all.
Given that fantasies trump facts among many of the starry-eyed CMKM shareholders, the dearth of information regarding the revived St. George may be much more of a boon than a bane for the company's imaginative devotees.
While there is little in the way of information regarding the current St. George, there is a considerable amount of historical information available regarding the former VSE-listed company. Some select and dated snippets regarding St. George caused quite a tizzy among CMKM's cultish followers.
Legend and History
Just how the former VSE-listed company came to be named is probably lost in the dustbin of history, but many people will undoubtedly associate the name with the legendary dragon slayer and patron saint of England, St. George.
The notion of dragon slaying may resonate well with many CMKM shareholders, particularly the band of loyal followers who congregate by the hundreds on PalTalk, an Internet chat site that provides participants with both text and audio communication.
Among the "dragons" that fantasy-loving CMKM shareholders would like to see vanquished are the market makers they believe are shorting this sub-penny pink sheet stock. The fantastic estimates of the size of the imagined short position, served up repeatedly by the PalTalk faithful, range from hundreds of billions of shares to a trillion or more.
The belief in a huge short position is evidently shared by CMKM's investor relations representative, Melvin O'Neill, affectionately known as Uncle Melvie. Mr. O'Neill is a frequent participant in the PalTalk palavers; indeed, he checks in almost daily.
"This company is being shorted to the bejeesus," Mr. O'Neill proclaimed on Aug. 12, much to the delight of the assembled throng. He went on to claim that Mr. Casavant and Mr. Glenn, the company's highly touted lawyer, are both convinced of the same thing.
According to the CMKM faithful, Mr. Glenn will be taking care of the shorting "problem," and many believe that Vegreville-based St. George will play a role in that trumpeted problem-solving exercise.
While the popularized exploits of St. George are widely known, including Disneyfied tales of his legendary dragon slaying in England, the actual historical figure never set foot in England. He was martyred in Palestine around 300 AD and pilgrims and crusaders carried the already embellished stories of his deeds back to England several centuries later.
Among the accounts of St. George that eventually found their way into manuscripts are tales that he was put to death three times, chopped up and buried, but resuscitated to carry on with his mission of converting heathens to the true faith. While the substance of those tales is generally discounted, some parallels might be drawn with the corporate history of the newly revived St. George.
St. George Minerals Inc., which was little more than a garden-variety VSE-listed junior mining company, began trading more than two decades ago. Among the early participants in St. George, however, were two people whose names have caused a tizzy among the excitable CMKM followers: Stewart Blusson; and Ross Blusson.
Stewart Blusson has near-legendary status among those familiar with Canadian diamond exploration. Along with the perhaps more widely known Chuck Fipke, Stewart Blusson discovered the diamond deposit in the Northwest Territories that became Canada's first diamond mine, the Ekati mine.
Alas, at least for the excitable CMKM fans, Stewart Blusson's association with St. George Minerals was fleeting and distant. He is recorded as receiving shares of St. George Minerals to satisfy a debt, something that occurred long before the company completed its makeover into St. George Metals in January of 1991.
Ross Blusson's association with St. George Minerals was more extensive and direct. He, too, received shares for debt, but he also participated in a private placement and served a stint as a company director.
Alas, again, at least for the CMKM fans excited by the very mention of the name, Ross Blusson was long gone before St. George Minerals executed its 1991 transformation into St. George Metals.
The liquidation of St. George Minerals and the amalgamation with its U.S. subsidiary was proposed by the company's five-member board of directors, which did not include anyone with the name Blusson, in January of 1990. The proposal received shareholder approval at the annual general meeting on May 31, 1990.
The liquidation and consolidation was consummated on Dec. 31, 1990, and St. George Minerals was delisted from the VSE on Jan. 29, 1991.
With St. George Minerals laid to rest, St. George Metals began trading on the VSE on Feb. 1, 1991. The resuscitated St. George Metals boasted seven directors, none of whom were named Blusson.
In less than a year after being called to trade on the VSE, St. George Metals racked up 12 delinquent filer notices before being cease traded by the British Columbia Securities Commission.
The company cleaned up its filings and the cease trade order was rescinded on Dec. 30, 1991, but less than six months later it was again being cited as a delinquent filer.
St. George soldiered on for a time, but the cash-strapped company ceased operations at its Dean Mine in Nevada in September of 1993. After tallying another eight delinquent filer notices, it was finally suspended from trading in 1995 and then ignominiously delisted from the VSE early in 1996.
Before its recent awakening, the shell traded sporadically on the pink sheets, eking out only occasional trades over the past year, most at one-10th of a penny. That changed rather dramatically following the Sept. 2 news release regarding the $10-million deal with CMKM.
On Sept. 8, St. George hit a dizzying high of 75 cents before settling back to 35 cents on a volume of more than 650,000 shares. More than 2.4 million shares changed hands the following day, but the price slid a bit further, ending the session at 26 cents. With just over one million shares trading on Sept. 10, St. George climbed back up to 37 cents.
The trading volume has dropped off this week as investors, including CMKM's faithful and excitable shareholders, await the promised announcements from St. George. None of the handful of information-packed news releases that were to be issued this week has yet appeared.
With a more modest 57,530 shares changing hands, St. George closed at 44 cents on Sept. 15.
Meanwhile, CMKM's share price has not enjoyed any lift at all from the deal with St. George, much to the consternation of the company's faithful followers. Indeed, the share price has been under some pressure, dipping as low as two-100ths of a penny over the past couple of days.
With more than 2.1 billion shares changing hands, and thanks to yet another of the rather frequent 50,000-share trades at the daily high logged at the bell, CMKM closed at four-100ths of a penny on Sept. 15.
The saga will continue.