A former CEO of the Mining Association of British Columbia has withdrawn from providing a keynote address January 26 to mining students at the University of British Columbia (UBC), after the Alberta Securities Commission implicated his company in a widespread share distribution scandal.
This week, Michael McPhie, a prominent voice and advocate for the province’s mining sector, told Scott Dunbar, head of UBC’s mining engineering department, he would not be the keynote speaker in light of the cease trade orders.
“Mr. McPhie is a longtime supporter of UBC mining engineering and his support is greatly appreciated. He has chosen to withdraw as speaker and has informed the student organizers of the event of his decision. The organizers are working to confirm another speaker for the event,” Dunbar told Glacier Media in an email.
Last February, after holding a director position since July, 2017, McPhie became CEO of Prize Mining Corp., a junior mining exploration firm listed on the TSX Venture Exchange that was cited by the Alberta Securities Commission (ASC) on January 3. A cease-trade order against Prize is now in place.
“Staff is investigating whether Prize contravened Alberta securities laws relating to, among other things, continuous disclosure and capital raising exemptions,” an ASC notice read.
“In summary, Prize entered into a deal to obtain $6,500,000 in private placement money contingent on the payout of approximately $5,500,000 to 18 ‘consultants,’” the ASC noted.
Among the ASC’s unproven allegations against Prize are: “Prize failed generally to disclose the Deal, and to provide disclosure of a material change or changes; Prize omitted to state a fact or facts about the deal necessary to make other statements not misleading; [and] Prize engaged in conduct that was clearly abusive of investors and the capital market.”
Additionally, the BC Securities Commission (BCSC) issued a cease-trade order against Prize on January 7 for failing to file its 2018 financial statement.
The transactions are said to mirror those that are being investigated by the BCSC. They involve a number of consultants/investors who belong to what the BCSC dubbed the “BridgeMark Group,” for their close ties to BridgeMark Financial Corp. and its principal, Anthony Kevin Jackson, a respondent to the ASC notice, along with associates Justin Liu and Cameron Paddock and his wife, Lisa Jackson.
This week BridgeMark Financial Corp. itself was cleared of its temporary trade orders from the BCSC when a panel ruled there was insufficient evidence against seven of 11 cited Canadian Securities Exchange-listed companies. Those (including Jackson) dealing with the four other companies, whose bank records revealed “cash swaps,” remain under temporary and limited trade orders until a BCSC investigation is complete. A hearing in the case is tentatively slated for April 9.
The CSE-listed companies are alleged to have sold shares under consultant exemptions to BridgeMark Group members, who then quickly sold them at a discount to retail investors. Concurrently, the members received prepaid consulting contracts but didn’t actually perform such work, the BCSC alleged. Meanwhile, the companies, such as Prize, publicly touted investor interest.
McPhie told Glacier Media he and Prize intend to defend themselves at a February 1 ASC hearing.
“I can’t respond to what groups did or didn’t do with the shares,” said McPhie. “My expectation is the commission will look quite heavily at trading activity.”
Prize has no revenues but McPhie said it has two “very active drill programs.”
Prize claims to be focused on the exploration and development of the Manto Negro copper property in Mexico and the Kena gold property in British Columbia.
When asked why the company would prepay for $5.5 million in contracts for the likes of marketing, advertising and investor relation activities, McPhie said the company needed to generate more investment in a cool investor climate for the industry.
He said the proposals were for a “sophisticated social media and active marketing campaign.”
McPhie said Prize cancelled a number of contracts in October worth $1.1 million.
“We had no indication as to the extent of what’s being suggested,” he said. “We feel we’ve been misled.”
Prize has a history with Jackson. He became Prize CFO on Sep. 26, 2016 but left January 31, 2017. For his four months he received $28,350 plus $69,606 in options.
In 2017, CEO Feisal Somji earned a salary of $85,000 with $261,024 worth of share options. Somji resigned as director in December.
One respondent to the BCSC BridgeMark case, Preveceutical, is suing BridgeMark Financial Corp., Liu and convicted securities fraudster Aly Babu Mawji for what it claims is a “conspiracy” against the company.