A B.C. junior exploration company, Bam Bam Resources (CSE:BBR, OTC: NPEZF), is facing a securities commission hearing for allegedly misleading investors.
The BC Securities Commission (BCSC) alleges the company and two of its former directors misled investors when, in 2018, they announced the precursor company, New Point Exploration Corp., had raised $6.2 million through two separate private placements – an announcement repeated after the company changed its name to Bam Bam Resources.
What the company neglected to disclose was that $4.9 million of the money raised through private placements had been spent or committed to consulting fees, despite having issued a press release in May 2018 that said the money raised was to finance exploration and development on a copper property it planned to acquire.
The allegations have not yet been proven. A hearing is scheduled for October 13.
“New Point did not disclose that it retained only $1.3 million,” the BCSC says in a hearing notice. “By announcing the proceeds from the private financings in news releases but failing to disclose that it would not be keeping all of the funds, the BCSC alleges that New Point made statements to investors that it knew – or ought to reasonably have known – were misrepresentations.”
The BCSC alleges New Point’s former CEO, Bryn Gardener-Evans of Calgary, and New Point’s former CFO, Norman Wareham of North Vancouver, committed violations of the Securities Act. Gardener-Evans was a director of New Point when both news releases were issued. Wareham was a director when the first news release was issued, the BCSC states.
On August 9, 2018, New Point announced it had closed on a second private placement of $4.6 million, but did not disclose that it would only retain $678,000 because $3.5 million had been spent on consulting fees, and owed another $490,000 for consulting fees, according to the BCSC.
According to Bam Bam's most recent interim financial statements, the company spent $1.8 million on investor relations and had a net loss of $4 million for the three-month period ending March 31, 2021.
