Here's to the crazy ones, the misfits, the rebels, the troublemakers, the
round pegs in the square holes... the ones who see things differently -- they're
not fond of rules... You can quote them, disagree with them, glorify or vilify
them, but the only thing you can't do is ignore them because they change
things... they push the human race forward, and while some may see them as the
crazy ones, we see genius, because the ones who are crazy enough to think that
they can change the world, are the ones who do.

Steve Jobs
US computer engineer & industrialist (1955 - 2011)

Saturday, September 29, 2012

Expose Alderon Iron Ore Corp - Part 1

Alderon Iron Ore Corp came to everyones attention in the province when former premier Danny Williams was named Special Advisor to the Chairman in 2012. A little known company that was suddenly the next Thompson Consolidated mine. It has been in the press advocating its need for Muskrat Falls power yet we know nothing about it. This series will attempt to answer some of those questions.

It all began with the incorporation of the name Comanche Resources Inc, under the Company Act (British Columbia), March 21, 1978. A little less than a year later, February 28,1979, its name was changed once more to Shawnee Oil Corporation. While it was difficult getting any information on these two names, both reappeared in the United States in later years - now defunct and registered as inactive foreign for - profit corporations. On June 11, 1981 the company changed its name yet again - this time to Enfield Resources Inc. Again, not much information was available, and again the same name reappeared in the United States. Enfield Resources Inc was formed in Delaware, May 20, 1986 and appeared in US bankruptcy court on March 10, 1989. Whether or not there is a reason behind this U.S link or it is simple coincidence is anyone's guess.

The story really starts to take life on June 30, 1989 when the company name is changed one more time - Pacific Summa Capital Corp. The records show one Dennis Kozak President and Director, with an office at Suite 411-850 Hastings Street, Vancouver, BC. It appears for the first time as a publicly traded company on the Vancouver Stock Exchange under the symbol PSU.

The Vancouver Stock Exchange (VSE) was essentially the wild, wild west of stock trading in North America. Wikipedia describes it well during the period:
" In 1991, it listed some 2300 stocks. Some local figures stated that the majority of these stocks were either total failures or frauds. A 1994 report by James Matkin (Vancouver Stock Exchange and Securities Regulation Commission) made reference to 'shams, swindles, and market manipulations' within the VSE. Regardless of the low opinion several held in it, it had roughly four billion dollars in annual trading in 1991."
To be clear, this in no way suggests the companies mentioned in this article were involved in such activities, but it gives you a sense of the backdrop to this story.

On June 28, 1991 Pacific Summa Capital Corp changed its name to Pacific Summa Environmental Corp, and issued a share swap of one old for one new share. It signalled a change in the company's focus as it tried to market two products which it had US patents for: Enviro Hazmate (fire extinguisher); and Zeomix (material for toxic clean up). The company entered into an exclusive distribution deal for Zeomix which was subsequently cancelled. On June 16, 1997 the BC Securities Commission filed a Cease Trade Order against the company due to outstanding annual fees. On September 16, 1997, the Securities Commission banned Kovack from trading in the companies stock, because he failed to file insider's disclosure documents. Other members of the board at that time included Gerald Jardine, John Toljanich, and David Van Dyke. On March 10, 1998, Kovak resigned as President of the company. The company itself was suspended from the VSE on July 16, 1998. The Cease Trade Order was revoked on July, 27, 1998. Gerald Jardine took over as President and the company delisted from the VSE on November 26, 1999. Significantly, Mark Brown took over as CEO. On November 27, 1999 the company joined the TSX venture exchange. Its high value was on the VSE at $3.35 a share, and its low value was $.01 a share on the TSX when it delisted on August 8, 2000.

The next day, Pacific Summa Evironmental Corp was renamed as Traux Ventures Corp. The company by this time was carrying a deficit of $10 million dollars from its previous years, had failed to launch any successful projects, and left many disappointed investors in its wake. To launch Traux the Board of Directors initiated a 30 to 1 reverse share split. That freed them to launch yet another share offering to recapitalize the company. On April 30, 2001 Reza Mohammed took over from Mark Brown.

Reza Mohammed ran a large number of exploration companies from his tiny office in Vancouver. The companies all had the same fax and phone number, and board members - particularily one Anita Algie. Mohammed was a realtor in the Vancouver area, and earned a degree in the mid eighties. Some of the companies he ran included: Tellford Management; Cuda Capital Corp; Titus Capital Corp; Gold Key Capital Corp; etc. The one director that stands out on most of his companies was Peter Born. Born not only sat on Mohammed's boards, but he also sits on the Advisory Board of Forbes and Manhattan - a relationship that will become crucial to Alderon. Mohammed also sat on the Board of Directors of Castillian Resources Corp. Castillian was, and remains, a Forbes and Manhattan interest. It's at this stage of the company's life that Forbes and Manhattan becomes an influentual factor in the company.

Also joining Traux at this time was Senator Edward Lawson. A veteran of the Teamsters Union, Lawson was appointed as an indepedendant Senator by Pierre Trudeau and became a Liberal Senator when Paul Martin won the Liberal leadership. Senator Lawson was very involved in mineral exploration companies. Lawson's lawsuit against Sun media over a story outlining his relationships with stock fraudsters David Ward and Ed Carter created national headlines. Interestingly, the US department of Justice filed suit against the Teamsters executive (Lawson included) alledging the executive, and 26 mobsters, had conspired to hijack the union from its members. The issue was settled when the executive agreed in writing to reform the Teamsters. Lawson took over the role of Chairman of Traux.

Traux followed the path of its earlier incarnations. It achieved little. It traded alot of stock. Its overall deficit remained about $10.5 million. Its highest stock value was $.58 per share on November 17, 2003, and its lowest was $.115 on June 3, 2004. It delisted from the TSX on August 31, 2004.

On September 1, 2004, the company's name changed again - this time to Aries Resource Corp. As had become the norm the Board authorized a reverse share split of 4 old for 1 new share. Members of the Board at this time included Reza Mohammed, Senator Lawson, John Kowalchuck, Anita Algie, and John Harper. Notably, all the original Pacific Summa directors were gone at this point. A significant entry into the company was a 2 million share purchase by Doctor's Investment Group, a Bahamian registered company, owned by Michael W Taylor. Aires made an application at this time to transition into the Business Corporations Act (BC), and on the same day shareholders passed a special resolution to change its authorized capital to an unlimited number of common shares without par value. The next four years proved to be generally fruitless for the company. Its accumlated deficit increased to over $11 million. Thomas Tough, a director of Desert Sun Mining Corp, a Forbes and Manhattan interest, joined the Board. At the annual general and special meeting of September 4, 2008, shareholders passed a motion for a 10 to 1 share reverse and a name change to Alderon Resources Corp.Nineteen days later the stock completely collapsed. Reza Mohammed resigned as president on August 12, 2008. The saviours of the company were to be Emprise Capital Corp who invested in the company, appointed its Jeff Durno as president, and Robert Chisholm as director. In the words of Emprise: " Complete restructure and reorganization (of Alderon)".

The first few decades of the company's life saw it swing from one interest to another. It sold large amounts of shares, did numerous reverse share splits that crucified investors who were unlucky enough to invest, and fed numerous officers with handsome management fees. It went from oil exploration, to mining exploration,to capital fundraising, to environmental promoters, and back to mineral exploration. One thing it did not do was achieve any purposeful, positive return to its shareholders. It ended this era with a sorry $.01 per share worth. In the wild, wild west days of the VSE it behaved as most did. In its transformation to the TSX it did no better. By 2001 it was becoming infiltrated with people closely aligned to Forbes and Manhattan. The stage is now set for the Forbes and Manhattan remake - that is Part II.


  1. Why hasn't the "establishment" media provided us with this information. This is a valuable service you are providing, no matter what the motivation.

    Come on Reporters and Columnists, get with the program! Get off your butts and take your heads from wherever and start digging.

    Good job Brad!

    1. Than you Mike, it took a great deal of time to do the research, and the media today does not seem to want to allocate the resources to do that kind of work.

  2. I do not agree that there is anything important in the research above.

    You do not seem to understand how the Canadian stock market works with the re-cykling of old often listed company names.

    You have a great entrepreneurship in the raw material sector and in its nature that means alot of failed companies that are recykled.

    The story you tell can be told about most successful Canadian companies.

    I have mixed feelings about Forbes Manhattan and especially how they treat minority shareholders but I would say that they are very qualified entrepreneurs and the above does not, in my opinion, give a correct picture of the Alderon on the contrary it is missleading for people that does not know how your seed capital markets work.

    O_B Sweden.

    1. I understand that how these resource stocks, or some would say shell companies work, and how they are recycled, however, many don't. One of the points to writing the articles is to provide that information to people who do not. Another reason to write the series is to give the history of Alderon as a company. In regard to the treatment of minority shareholders, this is not a unique story when it comes to Forbes and Manhattan's stable of companies - it is but one of many.I would argue this is a factual account of their history and people can take from it what they will.

    2. I have become increasingly sceptical of how Forbes Manhattan drains its companies for the benefit of insiders instead of letting all shareholders share the profits.

      Still, as critical I am about them I think they do Canada good by starting companies and my point was strictly that starting Alderon should be a good thing for your province even though it might be stopped for a while due to a probable Chinese slow down.

      My comment above referred to part 1. I found part 3 to be excellent research and interesting reading.

      In my view investors should discount all companies run by Forbes substantially (or avoid them) because they have a proven record of working for the insiders mostly.

      A bit sad because they could probably gain more by having a better reputation and getting a higher valuation of the companies instead as external investors makes money as well.


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