Shares of Liberty Silver have rebounded following a recent trading halt imposed by Canadian and U.S. regulators. How long can this last??
Just days after trading in Liberty Silver Corp. (TSX: T.LSL, Stock Forum) (OTCQB: LBSV, Stock Forum) resumed in Canada, the stock has bounced back to $1.10, leaving the junior with a market cap of $91.7 million, based on 83.4 million shares outstanding.
This is the same company that was hit with a cease trading order by the U.S. Securities and Exchange Commission on October 5, 2012, news that sent the stock down 39% to 97 cents when the shares were allowed to trade for about 30 minutes in Canada before the halt was imposed.
At that time, the company said it appeared to the SEC that there is a lack of current and accurate information concerning the securities of Liberty Silver because of questions concerning publicly available information about Liberty Silver, the control of its stock, its market price, and trading in the stock.
On October 12, the company confirmed that a cease trading order had also been issued by the Ontario Securities Commission. It added that this was a reciprocal measure to the SEC order.
When trading resumed in Canada on Monday, Liberty Silver had issued a statement saying it has never provided any form of compensation to a newsletter writer or anyone else for investment research or to recommend investment in the company’s shares.
It also said the company has no contractual or other relationship with Robert Genovese, BG Capital Group or any other company owned or controlled by Mr. Genovese other than a subscription or private placement in November 2011 by a company controlled by Mr. Genovese.
Genovese is the “brainchild” of BG Capital Group, which has a corporate office in Nassau, Bahamas. According to published reports, he has been associated with other stocks that trade over the counter in the U.S., including American Lithium Minerals Inc. (OTO: AMLM, Stock Forum), which traded this week at $0.0119.
Regulatory filings say Liberty Silver raised $3.25 million in November 2011 by issuing subscription receipts at US50 cents each to Genovese company Look Back Investments Inc.
According to the National Post, an anonymous investigative report accuses stock promoter Genovese of holding undisclosed control of over 40 million Liberty shares.
Meanwhile, Liberty Silver’s stock will not be listed, or traded on any of the OTC Markets in the U.S.
For its part, the company said it is taking steps to meet requirements necessary to permit its stock to resume trading on the OTC Bulletin Board. Until that happens, the stock may trade in the U.S. on the “grey market’’ or through U.S broker dealers who have access to the TSX.
When Stockhouse checked to see what information was available on the OTC Markets website, a buyer- beware skull and crossbones warning was attached to the company’s stock page.
“As a matter of policy, when it has come to the attention of OTC Markets that a security has been subject to promotional activities and adequate current information regarding the issuer is not publicly available, OTC Markets will label a security as “Caveat Emptor,’’ OTC explained in a statement.
“Promotional activities may include spam email, unsolicited faxes or news releases, whether they are published by the issuer or a third party.”
When Stockhouse attempted to get an opinion from a spokesman with the Investment Industry Regulatory Organization of Canada (IIROC), we received the following response:
“The company resumed trading Oct. 22, 2012 after complying with a request that it issue a statement. We do not comment on compliance matters but continue to monitor as normal course," IIROC said.
Regulatory statements show that Liberty Silver was encorporated in Nevada in February 2007 for the purpose of engaging in mineral exploration.
Saddled with an accumulated deficit of $8 million, the company had $1.7 million in cash at the close of the year ended June 30, 2012 when it reported a net loss of $5.7 million or 8 cents a share. That compared to a loss of $1.5 million or 2 cents in the previous year.
Given that Liberty’s Trinity Silver Project in Nevada does not contain a mineral reserve and is not currently in production, it is hard to see how this is a good investment for people who have bought in at current, or even higher levels.
The 52-week range is $1.58 and 40.5 cents.