New Brunswick

Financial watchdog mum on 56% jump in Sisson mine shares

The Financial and Consumer Services Commission of New Brunswick won't say whether it's investigating trading activities related to Northcliff Resources Ltd. and the Sisson mine.

Financial and Consumer Services Commission does not confirm any investigations unless violations found

The lifespan of the Sisson mine project would be 27 years. This graphic from a video by Northcliff Resources shows what the project would look like at year 20. (Northcliff Resources Ltd.)

The Financial and Consumer Services Commission of New Brunswick won't say whether it's investigating trading activities related to Northcliff Resources Ltd. and its proposed Sisson mine project north of Fredericton.

The provincial regulatory body never confirms or discusses any investigations unless it concludes there have been violations of securities legislation and it's ready to file allegations against individuals or companies, said senior legal counsel Brian Maude.

"At that point, that becomes public because it's in the public interest for that information to be disclosed," he said.

Earlier this month, CBC News revealed the value of Northcliff's shares increased by 56 per cent between December — when the provincial government and the chiefs of the Maliseet First Nations reached an agreement behind closed doors that would accommodate development of the Vancouver-based company's proposed tungsten-molybdenum open pit mine and processing facility outside Stanley — and Feb. 10, when news of the deal was made public.

During that eight-week period, unknown investors had been buying Northcliff stock and bidding its price up from nine cents per share on Dec. 15 to a new 52-week high of 14 cents per share on Feb. 9, according to Toronto Stock Exchange trading archives.

The Financial and Consumer Services Commission looks for unusual activity, such as a significant increase or decrease in stock prices over a very short period of time, says senior legal counsel Brian Maude. (Submitted by Financial and Consumer Services Commission)
The Financial and Consumer Services Commission typically investigates "any type of unusual trading activity" flagged through data analysis or sometimes tips, including any trading that occurs based on non-public information, said Maude.

It is not legal in Canada for anyone who has confidential information about a company that is not known to the public or other shareholders to act on that knowledge.

"If you're dealing with information that is not public, then you're trading with an advantage, or creating a disadvantage for people who are only relying on public information," Maude said.

The "million dollar question," however, is trying to determine whether there's a direct relationship between stock trading and someone being privy to private information — and whether that information could in fact have a "material impact" on the share price.

"That's why these cases are so difficult to investigate," he said.

As a result, the commission does not divulge any information about ongoing investigations.

"If we say, 'I'm investigating company X. Now, they may or may not have done anything wrong, we're just going to investigate to see whether or not they did,' that's not going to go over well … particularly if it turns out that at the end of our investigation, they didn't do anything wrong," Maude said.

It could have a "really serious impact" on the public company, its stock prices, people who work for the company, as well as the individuals who have invested in that company in good faith, he said.

Since the agreement with the Maliseet chiefs was made public on February 10, Northcliff Resources stock has escalated further — hitting a two year high on Tuesday of 23 cents per share.

If individuals or companies are found to have violated securities legislation in New Brunswick, they can face a maximum fine of about $750,000, said Maude.

Multimillion-dollar deal

Before its recent rally on the markets, Northcliff's stock had been struggling for a number of years, at one point losing 87 per cent of its value since peaking at 65 cents per share in 2012.

Sagging international tungsten and molybdenum prices over the last two years have been hovering well below levels the company envisioned in its 2013 feasibility study for the development, although the Gallant government's faith in the project has never publicly wavered.

Under the recent agreement, the six First Nations — St. Mary's, Woodstock, Oromocto, Tobique, Kingsclear and Madawaska — will receive 9.8 per cent of provincial revenue generated from the metallic mineral tax. The six First Nations will share in:

  • $3 million upon federal environmental approval of the mine.
  • 35 per cent of the first $2 million the province receives in royalties each year.
  • 3.5 per cent of annual royalties above $2 million.

The province forecasts the mine could result in $280 million in mineral royalties to the province over its expected 27-year life.

With files from Information Morning Fredericton