Quantcast

Jim Letourneau's Blog

Investing, Technology, Travel, Geology, Music, Golf. I think that covers it.

Be Resources Flunks Math

Be Resources (BER.V) shot to the moon on Friday, July 22. Shares opened at $0.095 and closed at $0.75 after trading 49,329,863 shares! They only have 44,696,583 shares outstanding.

They reported outstanding rare earth grades from their Warm Springs project in New Mexico. Specifically, the calculation of total rare earth oxides (TREO) got screwed up badly. On the "best" hole, DH3, the TREO number has been revised from 19.58% down to 1.95%.

The raw assay data received from their lab was correct, but this information has not been released.

Ultimate responsibility for this painful error falls to David Tognoni, PE, the company's president and chief executive officer. According to the requirements of National Instrument 43-101, a qualified person needs to make sure that these kinds of errors don't happen. Togoni is responsible for verification of the data and the contents of both the initial and corrected news release although it appears that the actual calculations were done by a consulting geologist.

As a rule of thumb, most geologists are not math wizards (its not just me). The initially reported results were so outstanding that it might have been a good idea for somebody check their work before releasing it to a rare earth hungry market.

This appears to be the result of incompetence as I can't imagine how anyone associated with the company being able to profit from this without getting caught. However, the majority of Be Resources' new shareholder base are going to be calling for management's blood when trading resumes.