Barisan Stiffs Shareholders
I wrote about Barisan Gold a number of times in the past, here, here and here. The company had a pair of incredible projects in Indonesia with some of the best intercepts I have ever seen in porphyry projects. But they were in Indonesia. Given the crash in copper and the utter corruption of the political system in Indonesia, Barisan was lucky to keep the doors open.
For those not familiar with the country, Indonesia is run by a bunch of corrupt idiots unlike the United States that is run by a bunch of corrupt idiots. Due to the Ring of Fire the Indonesia is host to many of the best copper and gold mines in the world.
Barisan appears to have spent about $17 million in exploration on the projects but given the country risk, the mineral risk and the devastation in the resource capital markets, Barisan bit the bullet recently and is turning 80% of the project over to a local Indonesian conglomerate and has a carried interest until the mining license is granted. Did I mention that Indonesia is corrupt?
That news was hardly worth noticing except to beleaguered long-suffering shareholders who had watched the shares plummet from $.16 a year ago to $.02 the day of the announcement. What happened next was most amazing.
Barisan announced the news before the market opened on the 30th of September. The shares gapped higher from the previous close of $.02 and shot up to $.045 before closing at $.04 for 100% gain on the day with 5% of the total float trading. Obviously shareholders loved the news. What happened next they didn’t appreciate quite as much.
Barisan announces a private placement. And lest you think management wasn’t ready to step up to the plate, here is what they said, “Certain directors and officers have committed to purchase a significant portion of the private placement.” That comes under the “Well, no shit” clause because with the stock up 100% on the day to $.04, the “certain directors and officers” were getting the shares in the PP at $.02 with a full warrant at $.05 good for two years. If you were a Barisan shareholder and you feel like you were getting stiffed, it’s probably because you were getting stiffed and even you don’t understand how badly you were getting stiffed.
The company intends to raise $500,000. At $.04 a share, the price the day the PP was announced, that means they would issue 12.5 million shares with another 12.5 million shares when the warrants would be exercised. But if they price the shares at $.02, it means they issue 25 million shares in the PP and another 25 million shares when the warrants would be issued.
So a company with 44 million shares outstanding gets diluted by 36% at the completion of the PP and another 26% when the warrants get exercised. In short, “management” and I use the term loosely just handed over half the company to themselves at the lowest price the shares have ever traded. They weren’t about to do the PP at $.04 which would have been good for shareholders, they rammed the PP announcement through so the TSX wouldn’t notice they were doing a PP at $.02 when the shares were at $.04.
One of the reasons the junior mining space has been so totally devastated in the past few years is the extent to which “management” has confused their interests with the interests of all shareholders. If the idiots running junior mining companies keep stiffing their shareholders, there won’t be any shareholders.
I owned Barisan and sold it. I am not participating in the PP and the company is not an advertiser. Do your own due diligence.
By the way, in a final burst of Chutzpah, the company doesn’t even have the balls to put the details of the PP on their website. I suppose they get away with that because the TSX figures that management giving themselves 55% of a company at the biggest discount ever is just normal as hell in Canada.
Barisan Gold Corp