Coastal Pacific may be target of naked short sellers, Alberta regulator says.
By Peter kennedy
Buoyed by a series of promotional stock alerts, shares of Alberta-based Coastal Pacific Mining Corp. (OTC:BB: CPMCF, Stock Forum) soared to a high of 81 cents this week, a move that appears to have enriched Joe Bucci, the company’s chief executive officer and likely biggest shareholder.
The rally was backed by the announcement of option agreements that give the company exploration rights on mineral properties in the central Canadian province of Ontario and Peru.
Having tumbled to 42.5 cents on Wednesday, the U.S. OTC Bulletin Board stock trades in a 52-week range of 82 cents and $0.0008.
That would give Coastal Pacific a market value of $96 million, based the 225 million shares that are currently outstanding, according to Dave Tyson of Holladay Stock Transfer in Scottsdale, Ariz.
“They don’t have any SEDAR profiles, so we have no idea what he [Bucci] is doing down there,’’ said Don Rogers, a spokesman for the Alberta Securities Commission. SEDAR is the acronym for a system that permits investors to access documents filed by publicly traded companies in Canada.
Rogers said Coastal may be the target of naked short sellers, who are collecting money by shorting the stock without actually locating the shares that are being sold short.
When Stockhouse tried to reach Bucci in Calgary via phone and email for clarification, he was unavailable to comment on the stock’s rise and fall or to discuss the company’s financial condition.
Ox Financial Corp.
Regulatory filings say Bucci is a self employed business consultant with Ox Financial Corp. a company that owns 41% of Coastal Pacific, while sharing the same business address as the junior at 927 Drury Avenue, N.E. Calgary, Alberta.
Bucci, who according to company filings, is Ox’s sole shareholder, was named Coastal Pacific’s chief executive officer, chief financial officer and secretary on August 26, following a change of control.
Regulatory filings say Bucci became the company’s ceo after Coastal Pacific issued 39 million shares to Ox to settle an $184,413 debt in June.
Following a 2.5 for one stock split, Ox received an additional 55.3 million shares in June, raising its total holdings to 92.2 million shares, or 41% of the 224.7 million issued and outstanding.
Since the company was unable to file financial statements for the year ended April 30, 2010, it is difficult to see how Coastal Pacific can fund its obligations under any of its exploration agreements.
They include an agreement with privately-owned Alberta company Warrior Ventures Inc. to fund $2 million of exploration costs over a two-year period in order to earn a 40% stake in properties known as the McNeil Prospect near Timmins, Ont.
Coastal Pacific can also earn a 50% stake in the Santa Rita mineral claims in Peru by issuing five million shares to the venture and spending $500,000 on exploration.
In documents filed with the U.S. Securities and Exchange Commission, Coastal Pacific declared that as an exploration stage company, it did not earn any revenues during the fiscal years 2010, 2009, and 2008.
It also said net losses for the period ending April 30, 2010 are estimated to be $210,191. That’s up from $140,425 in the equivalent 2009 period when the company had only $3,702 in cash and receivables, SEC filings show.
Venture Research Warning
In recent regulatory filings, the company did not indicate how much cash is available to fund its operations.
The company said the estimated losses relate mainly to management fees for fiscal 2010 which reached $120,000 in fiscal 2010, up from $60,000 in 2009.
“The increase in fees resulted from us entering into two-year management services agreement with Ox Financial in November 2008 for a monthly fee of $10,000 per month, and this contract spanned the entire reporting period,” the company said in an SEC filing.
The company said it incurred mineral claims acquisition costs of $47,000 during the 2010 fiscal year (compared to $1,906 in 2009). It said these costs were associated with the issuance of 250,000 shares to Warrior Ventures.
Coastal said it also issued another 300,000 shares issued in relation to the extension of another option agreement.
Meanwhile, on November 1, Venture Research LLC of New Orleans, LA, issued a report which described Coastal Pacific as a speculative buy and set a $1.40 target for the stock.
However, Venture Research said a third party paid $35,000 for the report, which it described as an advertisement that should only be used for general information purposes.
“Do not base any investment decisions on this report,’’ Venture Research warned.