Facebook on the Hot Seat.

A lot of attention is being paid to Cambridge Analytica and one of its founders, Christopher Wylie.

He spoke at the latest Cambridge conference – Extraordinary Future 18 – and I had a chance to ask him a few questions.

He got his start by volunteering for work with a Canadian political party, and things developed amazingly quickly thereafter.  Still a young guy – he hasn’t hit 30 yet – but he’s had enough adventures to form the basis for a barnburner of a movie.

There is a lot of interesting detail in this excellent article in The Guardian. https://www.theguardian.com/news/2018/mar/17/data-war-whistleblower-christopher-wylie-faceook-nix-bannon-trump

New Version of the old Wild West VSE

A company trades at under $0.20.
1) It announces it’s going drilling.
2) Ten days later it announces that it has taken 50 rock samples from an area identified by geophysics and is sending them for rush assays.
3) About a week later, the price is at $0.49 and IIROC asks why.
4) The company says it does not know.
5) Three days later, it closes a previously announced $200k private placement (“pp”) at $0.14.  Eight placees: no insiders, no pros.
6) The same day, it announces closing of a second pp raising $720k at $0.18.  Four lucky placees: no insiders, no pros.  Really.
7) Three days later, it announces a pp to raise $667k.
8) One day later, it revises that announcement and ups the pp to $934k.
9) Three days later, it announces that it will commence diamond drilling and that it has closed the $934k pp with certain strategic investors. Canaccord gets a small finders fee. What did Canaccord tell its “strategic investor” client[s]?
10) The same day, it announces that there are nine placees including one member of a pro group.  A Canaccord person, perhaps?
Note: Still no results from those “rush assays”.
11) Six days later, the start of drilling is announced.
12) One week later when the stock is trading at $0.91, the company announces that its first drill hole (stepped out from the main area) has hit 176 meters of mineralization.  It also announces a proposed pp to raise $6M at an average of $072.
Note: Wouldn’t it be wonderful to have an XRF to get a quick and accurate idea of the nickel-copper values in that core?  Really no need to wait for assays to get a pretty good picture of what is happening.
13) Twenty-five days later, with the stock now trading at $1.83!, the company announces that the TSXV has made it raise the average price of the $6M pp from $0.72 to $0.88.  Must have been a tough negotiation.
14) The same announcement reveals the granting of 200,000 incentive options at $1.50 ($0.33 under the market price the same day?)
15) One week later, a SEDAR Early Warning Report is filed, stating that Eric Sprott already owns 3.3% of the company (5.6% on a fully diluted basis) and that after closing the presently announced pp, will own 10.7% (14.6% on a fully diluted basis).
Did Mr Sprott know something the rest of us didn’t?  If so, how did he find out?
16) Eight days later, the stock was halted for 5 minutes due to a “single-stock circuit breaker”.  WTF is that?
17) Two days later, it is announced that all 11 holes after the first one have hit interesting sulfides.  An XRF has been used, but no results are given. Instead the phrasing is “supports the very high tenor of the sulfide…as previously announced by the company”.  Who knows what that means?  Let the mystery continue. BTW, still no results from those ‘rush assays’.
18) Three days later (yesterday), a pp of $10M @ $3.15 is announced, and is ‘expected to close shortly’.

It appears that the Garibaldi Resources Corp team is to be congratulated for making a major discovery in the last three months.
More power to them.
It also appears that the overpaid obstructionist nitpickers at IIROC and the TSXV have dropped the ball on the concept of full disclosure.  Why?

Date

Sym

Company

Price

Type

Headline

2017-10-16 17:46

GGI

Garibaldi Resources Corp

3.38

News Release

Garibaldi Resources arranges $10-million financing

2017-10-13 06:57

GGI

Garibaldi Resources Corp

2.69

Resume Trading

Garibaldi Resources to resume at 6:58 a.m. PT

2017-10-13 04:35

GGI

Garibaldi Resources Corp

2.69

News Release

Garibaldi hits sulphides in 11 holes at Nickel Mtn

2017-10-11 06:56

GGI

Garibaldi Resources Corp

2.13

Resume Trading

Garibaldi Resources to resume at 6:56 a.m. PT

2017-10-11 06:55

GGI

Garibaldi Resources Corp

2.13

Halt Trading

Garibaldi Resources halted at 6:51 a.m. PT

2017-10-05 01:04

GGI

Garibaldi Resources Corp

2.19

News Release

Garibaldi closes $3.49M final tranche of placement

2017-10-03 07:52

GGI

Garibaldi Resources Corp

1.97

SEDAR Early Warning Report

SEDAR Early Warning Report

2017-10-02 16:54

GGI

Garibaldi Resources Corp

News Release

Garibaldi closes $2.5M first tranche of placement

2017-09-29 16:33

GGI

Garibaldi Resources Corp

1.89

SEDAR Interim Financial Statements

SEDAR Interim Financial Statements

2017-09-29 16:33

GGI

Garibaldi Resources Corp

1.89

SEDAR MD & A

SEDAR MD & A

2017-09-26 16:24

GGI

Garibaldi Resources Corp

1.83

News Release

Garibaldi revises financing terms, grants options

2017-09-01 10:18

GGI

Garibaldi Resources Corp

0.91

News Release

Garibaldi intersects 176 m of mineralization at E&L

2017-08-24 03:24

GGI

Garibaldi Resources Corp

0.68

News Release

Garibaldi Resources starts drilling at E&L

2017-08-18 13:50

GGI

Garibaldi Resources Corp

0.69

Private Placement

Garibaldi Resources 2,031,998-unit private placement

2017-08-18 08:27

GGI

Garibaldi Resources Corp

0.60

News Release

Garibaldi to begin diamond drilling at E&L

2017-08-15 12:59

GGI

Garibaldi Resources Corp

0.60

News Release

Garibaldi Resources revises private placement

2017-08-14 12:55

GGI

Garibaldi Resources Corp

0.58

News Release

Garibaldi Resources arranges $667,000 private placement

2017-08-11 13:22

GGI

Garibaldi Resources Corp

0.58

Private Placement

Garibaldi Resources 1.43-million-unit private placement

2017-08-11 13:19

GGI

Garibaldi Resources Corp

0.58

Private Placement

Garibaldi Resources four-million-unit private placement

2017-08-08 12:52

GGI

Garibaldi Resources Corp

0.49

News Release

Garibaldi Resources does not say why trading is up

2017-07-27 08:26

GGI

Garibaldi Resources Corp

0.175

News Release

Garibaldi Resources finds mineralization at E&L

2017-07-17 23:22

GGI

Garibaldi Resources Corp

0.175

News Release

Garibaldi to begin drilling at E&L

 

A chance for the TSXV to explain how “zombies” meet CLR

Last year, in response to the publication of the Spring 2015 Zombie List , The TSXV was quoted as follows: TSX Venture Exchange consistently and carefully reviews the companies that are listed on its exchange to ensure they comply with its continuous listing standards. It is absolutely false to suggest that there are 600 companies that fail to meet our standards,” the company said in an emailed statement.

John McCoach recently sent me an email regarding all the negative working capital companies listed on the TSXV. “our position is that TSXV is currently, and has consistently, applied our continued listing standards as outlined in our policies.”

I answered his email with the following:

I would appreciate it very much if you would share with me the specifics of how the TSXV ” is currently, and has consistently, applied our continued listing standards as outlined in our policies.” because my reading of the TSXV’s CLR indicates that the CLR are not being enforced.  I will be happy to change my opinion once you have explained your stated position.

How I reached my present conclusion:

As what I consider any reasonable person would do, I have been going to Policy 2.5 http://apps.tmx.com/en/pdf/Policy2-5.pdf and starting off with

1.1 “Each Issuer must meet the CLR standards applicable to its category in order to remain listed in either Tier 1 or Tier 2.”

then

2.1 Working Capital “adequate Working Capital or Financial Resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months” (TS: negative working capital obviously is not adequate to meet either ‘need’)

then

2.1 Assets and Operations: “no requirements generally although the Exchange retains discretion to declare that an Issuer no longer meets Tier 2 Continued Listing Requirements if, in the Exchange’s opinion, the Issuer or its principle operating subsidiary substantially reduces or impairs its principal operating assets, ceases or discontinues a substantial portion of its operations or business for any reason” (TS: spelling – oops)
then

2.1 Activity

either A or B below:

A) For the Issuer’s most recently completed financial year: i) positive cash flow; ii) significant operating revenue; or iii) $50,000 of exploration or development expenditures.

B) In aggregate, for the Issuer’s two most recently completed financial years, $100,000 of exploration or development expenditures.

(TS: another test that is relatively simple to measure and apply)

then

3 Inability to Meet CLR

Tier 1 could go to Tier 2 so looking at 3.2:

“A Tier 2 Issuer which is unable to meet one of the Tier 2 CLR will not immediately have its listing transferred to NEX. The Exchange will notify the Issuer in writing (the “Tier 2 Notice”) as to the Tier 2 CLR that it does not meet and will allow the Issuer six months from the date of the Tier 2 Notice to meet the requirement. During those six months, the Issuer will trade as a normal Tier 2 Issuer. If, after that six-month period, the Issuer does not meet all applicable Tier 2 CLR, the Exchange may either, at its discretion, suspend and delist the Listed Shares of the Issuer or transfer its listing to NEX.

(TS: While “discretion” is given to the TSXV, that discretion is not the equivalent of magically causing a company to meet Tier 2 CLR standards.)

then

3.2 (e)

The Exchange uses discretion and flexibility in applying Tier 2 CLR. If an Issuer has a viable business, the Exchange may determine that it is not appropriate to transfer the Issuer to NEX even where the Issuer is unable to meet all Tier 2 CLR. The Exchange will, for example, consider the seasonal or other cycles which affect an Issuer’s business. If an Issuer’s Working Capital is low because of seasonal or other temporary conditions, the Exchange may delay enforcement of this Policy but will continue to monitor the Issuer.

(TS: This “discretion and flexibilty” was designed – rightly – with exploration companies in mind. It could easily be possible for a company to be inadequately financed after it paid its bills at the end of an exploration season and before it announced results and raised money for the new season.

3.2 was obviously not intended to be used to allow companies to spend years with negative working capital and doing nothing except racking up G&A expenses.

I see no other discretionary clauses, so what is the TSXV relying on when it says “is currently, and has consistently, applied our continued listing standards as outlined in our policies.”?

If you can provide me with an explanation, I will include it in my next posting so that others, and there are many who are as confused as I am, will also understand what is going on.

Thank you for your attention.

++++++++++++++++++++++++++++++++++++++

The questions above are fair and detailed. Did I get any answers?

Complying with CLR – or just being given a dispensation?

Last year, in response to the publication of the Spring 2015 Zombie List , The TSXV was quoted as follows: “TSX Venture Exchange consistently and carefully reviews the companies that are listed on its exchange to ensure they comply with its continuous listing standards. It is absolutely false to suggest that there are 600 companies that fail to meet our standards,” the company said in an emailed statement.

John McCoach recently sent me an email regarding all the negative working capital companies listed on the TSXV. “our position is that TSXV is currently, and has consistently, applied our continued listing standards as outlined in our policies.”

I answered his email with the following:

I would appreciate it very much if you would share with me the specifics of how the TSXV “is currently, and has consistently, applied our continued listing standards as outlined in our policies.” because my reading of the TSXV’s CLR indicates that the CLR are not being enforced.

I will be happy to change my opinion once you have explained your stated position.

How I reached my present conclusion:

As what I consider any reasonable person would do, I have been going to Policy 2.5 http://apps.tmx.com/en/pdf/Policy2-5.pdf and starting off with

1.1 “Each Issuer must meet the CLR standards applicable to its category in order to remain listed in either Tier 1 or Tier 2.”

then

2.1 Working Capital “adequate Working Capital or Financial Resources of the greater of (i) $50,000 and (ii) an amount required in order to maintain operations and cover general and administrative expenses for a period of 6 months” (TS: negative working capital obviously is not adequate to meet either ‘need’)

then

2.1 Assets and Operations: “no requirements generally although the Exchange retains discretion to declare that an Issuer no longer meets Tier 2 Continued Listing Requirements if, in the Exchange’s opinion, the Issuer or its principle operating subsidiary substantially reduces or impairs its principal operating assets, ceases or discontinues a substantial portion of its operations or business for any reason” (TS: spelling – oops)

then

2.1 Activity
either A or B below:
A) For the Issuer’s most recently completed financial year: i) positive cash flow; ii) significant operating revenue; or iii) $50,000 of exploration or development expenditures.
B) In aggregate, for the Issuer’s two most recently completed financial years, $100,000 of exploration or development expenditures.
(TS: another test that is relatively simple to measure and apply)

then

3 Inability to Meet CLR
Tier 1 could go to Tier 2 so looking at 3.2:
“A Tier 2 Issuer which is unable to meet one of the Tier 2 CLR will not immediately have its listing transferred to NEX. The Exchange will notify the Issuer in writing (the “Tier 2 Notice”) as to the Tier 2 CLR that it does not meet and will allow the Issuer six months from the date of the Tier 2 Notice to meet the requirement. During those six months, the Issuer will trade as a normal Tier 2 Issuer. If, after that six-month period, the Issuer does not meet all applicable Tier 2 CLR, the Exchange may either, at its discretion, suspend and delist the Listed Shares of the Issuer or transfer its listing to NEX.
(TS: While “discretion” is given to the TSXV, that discretion is not the equivalent of magically causing a company to meet Tier 2 CLR standards.)

then

3.2 (e)
The Exchange uses discretion and flexibility in applying Tier 2 CLR. If an Issuer has a viable business, the Exchange may determine that it is not appropriate to transfer the Issuer to NEX even where the Issuer is unable to meet all Tier 2 CLR. The Exchange will, for example, consider the seasonal or other cycles which affect an Issuer’s business. If an Issuer’s Working Capital is low because of seasonal or other temporary conditions, the Exchange may delay enforcement of this Policy but will continue to monitor the Issuer.

(TS: This “discretion and flexibilty” was designed – rightly – with exploration companies in mind. It could easily be possible for a company to be inadequately financed after it paid its bills at the end of an exploration season and before it announced results and raised money for the new season.

3.2 was obviously not intended to be used to allow companies to spend years with negative working capital and doing nothing except racking up G&A expenses.
I see no other discretionary clauses, so what is the TSXV relying on when it says “is currently, and has consistently, applied our continued listing standards as outlined in our policies.”?

If you can provide me with an explanation, I will include it in my next posting so that others, and there are many who are as confused as I am, will also understand what is going on.

Thank you for your attention.
++++++++++++++++++++++++++++++++++++++

The questions above are fair and detailed. Did I get any answers?

TSXV Performance

For investors and speculators, the TSXV has been an epic disaster for the last seven years. It has by
far the worst record of any stock exchange in the developed world.

It is misleading to reference the TSXV/S&P Index, which is as artificial and stacked for favorability as can be. Here’s how it is calculated. http://web.tmxmoney.com/assets/docs/indices/VXSC/Methodology_VXSC.pdf  Continue reading “TSXV Performance”

BCSC sent this out today

Cooperative Capital Markets Regulatory System: Comment Letters Posted.

In French? why?

Aside from that little faux pas, you can bypass anything you don’t understand and just head straight to the pdf list.

There are 50 listed. Read a few and get a sense of what problems being generated by the regulators are being exposed by the comments.

A good example is this one by Blake, Cassels Graydon LLP.