Controversial Barkerville back in action

Recent discovery boosts stock price of once-troubled Cariboo project

One-time Barkerville Gold Mines boss Frank Callaghan’s claim that the company had found extensive gold deposits ran afoul of B.C. securities regulations, but more recent discoveries under new ownership have bumped up the company’s stock price | BIV files

The ongoing saga of Barkerville Gold Mines (TSX-V:BGM) continues to churn out interesting plot twists, with a recent discovery at the Cariboo gold project triggering an impressive jump in the company’s stock price.

Shares in Barkerville rose over 16% after exploratory drilling unveiled a network of high-grade veining in the Island Mountain area of the company’s tenures, which cover 1,164 square kilometres along a 60-kilometre-long deposit that includes several former hardrock mine sites in the historic Barkerville gold mining camp near the town of Wells, B.C.

“These intersections are some of the best to date on Island Mountain, [which] continues to produce new zones of higher grade, wide zones of gold mineralization,” Chris Lodder, president and CEO of Barkerville Gold Mines, said in a press release.

There has been lengthy debate around whether company founder Frank Callaghan had been justified in making the expansive claims about the property that led to his downfall.

Callaghan first made headlines when the then-CEO advised that one of his properties, Cow Mountain, had indicated resources of 10.6 million ounces of gold at grades of 5.26 grams per tonne.

The BC Securities Commission (BCSC) immediately challenged these claims and halted the company’s shares for over a year while it commissioned a new resources estimate. The new report compelled the company to retract its earlier claims, causing Barkerville’s shares to dive from $1.22 per share to $0.21 per share.

Callaghan, who did not respond to Business in Vancouver’s request for comment, resigned as CEO of Barkerville in 2014, and as a director of the company in 2015. He later agreed to pay a $30,000 fine and serve a one-year ban from capital markets after the BCSC accused him of violating disclosure rules.

The question now remains: was Callaghan right after all?

In a sense, maybe, says Mickey Fulp, publisher of the Mercenary Geologist newsletter.

“These new drill holes they have are in the Island Mountain area and those were never explored during Callaghan’s tenure,” Fulp said. “It is a past-producing gold mine, but this is essentially a new discovery based on the very good geological understanding of the current gold mineralization.”

Mineral exploration company Osisko Mining Corp. (TSX:OSK) took a 17% stake in Barkerville in 2016 and can be credited with reignited interest in the area. Osisko Gold Royalties (TSX:OR), a separate but related company, now owns roughly 55% of Barkerville Gold Mines.

“[Osisko] controls 60 to 70 kilometres of potential ground in the Cariboo mining district,” Fulp said. “They put in a very good geological team, and once that happened it kind of piqued my interest.”

Barkerville stock is up 148% in 2017, with most of the gains coming in the last month.

John Burzynski, president and CEO of Osisko Mining, declined to comment on the history of the Callaghan mine but noted that Osisko has been successful in revamping mines that had gone stale.

He said there is ample precedent in Canada when it comes to young companies investing in initially fruitless mining deposits that are later successfully exploited by another company. 

Fulp noted that the recent Barkerville discoveries are largely unconnected to earlier claims.

“This is a prospective area for gold mineralization, and this new area that Osisko is drilling now is all new discoveries; it has nothing to do with anything Callaghan ever did.”

“One thing I will say about Callaghan is that he assembled the land positions,” Fulp added. “You have to give him credit for that.” •