Searchlight Minerals: Progeny of a Scam
I was recently reading a Forbes feature on hedge fund manager Kyle Bass, who made his name shorting subprime and is now focused on sovereign defaults. Back in the late 90's, he told clients to short Delgratia Mining, a name I wasn't familiar with.
Check out this Fortune piece on Delgratia from 1997. Typical mining scam, with outlandish PR claims of a multi-million ounce gold discovery at their property in Clark County, Nevada. (You can see the drill hole press release that set off the fireworks here .) Here are two sections I want to hone in on:
"In a statement from Delgratia's chairman, Dr. Charles Ager, the company backed off from the claim of five million ounces, saying, "it is premature to quantify the potential of this gold system." The same press release also revealed that Delgratia was increasing its interest in the Nevada property. The unusual admission ? It was acquiring the stake from a company incorporated in the British Virgin Islands that is 50% owned by Ager's family."
and
"In a recent phone call, Delgratia's Ager says his stock was overwhelmed by shortsellers and misinformation. He remains even-keeled and encouraging. "This company has tremendous value," he says. What about that Nevada official's disclaimer of Delgratia's initial test results? "We have reported just four holes of a 75-hole program, and until we get enough holes--I'm an engineer and a scientist--I'm not prepared to tell the world what I think."
This Ager fellow is clearly an upstanding gentleman, in addition to being an engineer and a scientist. I decided to look him up, to see what he's up to now. Funnily enough, my search led me to a company that I've already given the thumbs down here in CAPS: Searchlight Minerals (SRCH.OB)
Here are some snippets from the SRCH.OB proxy :
HOLDERS OF MORE THAN 5% OF OUR COMMON STOCK
Dr. Charles A. Ager 17,045,190 (8)(10) 15.99 %
Nanominerals Corp. 16,000,000 (8) 15.01 %
On January 17, 2006, Nanominerals acquired 16,000,000 shares of our common stock from K. Ian Matheson in consideration of a payment of $4,640.50
"Pursuant to a Schedule 13D filed by Dr. Charles A. Ager, Nanominerals ( website ) is a privately held Nevada corporation which owns 16,000,000 shares of our common stock. Ian R. McNeil and Carl S. Ager, who are our officers and directors, each own 17.5% of the issued and outstanding shares of Nanominerals. Dr. Charles A. Ager, the sole director and officer of Nanominerals, and his wife, Carol Ager, collectively own 35% of the issued and outstanding shares of Nanominerals. Further, Messrs. Ager and McNeil have given an irrevocable proxy to Dr. Ager to vote their respective shares of Nanominerals during the time that Mr. Ager or Mr. McNeil, as the case may be, serves as one of our directors or executive officers. Dr. Ager has sole voting and investment powers over the 16,000,000 shares owned by Nanominerals."
"Nanominerals Corp. (“Nanominerals”) is a private Nevada corporation principally engaged in the business of mineral exploration. We have engaged Nanominerals as a consultant to provide us with the use of its laboratory, instrumentation, milling equipment and research facilities which has allowed us to perform tests and analysis both effectively and in a more timely manner than would otherwise be available from other such consultants. Dr. Charles A. Ager performs the services for us in his authorized capacity with Nanominerals under our consulting arrangement with Nanominerals. Dr. Ager currently is the sole officer and director of Nanominerals, and controls its day to day operations."
"In connection with our February 2005 change of business, on February 8, 2005, we entered into mineral option agreements with the Searchlight Claim owners to acquire 20 mineral claims representing an area of 3,200 acres located in Clark County , south of Searchlight, Nevada."
"in connection with the acquisition of the Searchlight Claims in February 2005, Geotech Mining Inc. and Geosearch Mining Inc., which are affiliates of Dr. Charles A. Ager and his wife, Carol Ager, who were Searchlight Claim owners, have each received 140,000 shares of common stock with respect to the transfer of title to their interests in the Searchlight Claims under the option agreements for the Searchlight Gold Project."
"We acquired the assets consisting of the 50% financial interest in the Joint Venture Agreement with respect to the Clarkdale Slag Project from Nanominerals. (Clarkdale is SRCH.OB's flagship project)
"Messrs. Ager and McNeil are the son and son-in-law , respectively, of Dr. Ager and Mrs. Ager. Dr. Ager, Mr. Ager and Mr. McNeil may be considered promoters of the Company by virtue of their positions in the Company and Nanominerals."
So, there you go. Searchlight is Son of Delgratia, in more ways than one.
