DOING SOME DIGGING Honesty is the Best, but Least-profitable Policy

Companies listed on public stock exchanges in Canada and elsewhere are required by law to make complete disclosure...
Companies listed on public stock exchanges in Canada and elsewhere are required by law to make complete disclosure of their activities and the results of those activities. That may seem like a no-brainer, but it wasn't always so.

Many readers will remember the free-wheeling penny mining stock market of the 1960s. Rumour, innuendo or a knowing wink could send a stock price skyrocketing. In many cases there were no drilling results to support the stock activity, and speculators were left with only empty pockets and anger to show for their investment. Finally the Ontario Securities Commission stepped in with full disclosure regulations, and investors had some measure of protection from unscrupulous promoters. The regulations have been refined over the years and now include supervision of reports by a qualified person.

Today's industry observers expect no less than timely, accurate information from mining and exploration companies. And we get it, even if the news is downbeat.

The Stephens Lake project is a joint exploration effort of DONNER MINERALS ( and FALCONBRIDGE ( Donner was on its way to earning a 50% interest in the project, but activity has come to a screeching halt. A press release issued by Donner on May 12 said, "No ultramafic rocks were intersected in any of the drillholes, and all conductors were explained by graphite, iron sulphides or oxide iron formation in metamorphic rocks. No significant assays were returned from any of the drillholes." It went on to state, "Donner and Falconbridge have no plans to carry out any further work on the Stephens Lake project at the present time."

The Stephens Lake property is located in an area of northern Manitoba thought to be an extension of the Thompson Nickel Belt. The area has a high potential to host another large nickel deposit, but Donner and Falconbridge must have picked the wrong spot to drill.

The thing that struck me about Donner's announcement of its non-results is that the press release was so brutally honest. The honesty is refreshing. The brutal aspect is that no one is going to invest another penny at Stephens Lake for a long time.

Vancouver-based Donner has other base metal exploration projects on its books, in particular near the Voisey's Bay deposits being developed by Inco and near Noranda's Raglan mine on the Ungava Peninsula of Quebec. It is a junior company with high hopes and a little bit of cash, but it enjoys the backing of three very major shareholdersFalconbridge, NORANDA and TECK COMINCO. Ken Thorsen, who retired as general manager of advanced projects at Teck Cominco, was recently elected to the Donner board.

Better luck to the Donner drilling team next time, I say. When the company has promising results to report, I will be doubly pleased for them because I will remember that not every exploration program hits the mark.


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