Darnley Bay Seeking OSC Approval

NNSL (Aug 96) - Darnley Bay Resources hoped to begin exploring its Paulatuk base-metal claim this summer, but has not yet cleared regulatory hurdles.

The company needs approval from the Ontario Securities Commission (OSC) before selling shares on a Canadian stock exchange. The company wants to sell shares for $2 each to raise between $5.2 million and $7 million for exploration work.

The area features the largest magnetic anomaly in the world. Company executives hope that it is caused by commercial quantities of nickel, copper, cobalt, chromium, and platinum group minerals, with gold and silver.

The company aimed to have stock sales approved in February, but that has not yet happened. The OSC questioned the company’s debt load of $1.5 million, and told the company to raise $600,000 privately to pay off creditors before it can proceed with selling shares on an exchange.

The company’s application “was not settled with the securities regulators and has now been withdrawn,” stated a company press release.

If new financing is arranged, the company would file a new application to sell stock on the market.

The exchanges themselves have also raised objections to the company’s plan to sell stock.

The Toronto Stock Exchange told the company it must fully explore the Darnley Bay area before it could be included on its exchange.

The company was also refused by the Vancouver Stock Exchange because the company’s application (called a 'preliminary prospectus') did not follow B.C. codes.

Having spent $1 million on the prospectus, the company decided against a costly rewrite, and turned instead to the Alberta exchange. Approval for sales on that exchange awaits approval from the OSC.

In the meantime, the company paid the Inuvialuit Land Corporation $200,000 (plus $10,000 in interest) on July 15, as called for by an agreement made on Oct. 6.

Leon LaPrairie, chief executive officer of Darnley Bay Resources, told the Inuvik Drum that he is confident the company will soon win the OSC’s approval.

He said the task is taking longer than expected because the company is seeking approval to sell in five jurisdictions at once - B.C., Alberta, Ontario, the NWT and the Yukon.

LaPrairie said once approvals are secured, the company will have no trouble selling its stock. He told the Drum in June the company is a white-hot property to potential investors.

The financial community has expressed interest in investing $12 million, he said.

Darnley Bay Resources was formed in Toronto in 1993, exclusively to study the Darnley Bay anomaly.