Raising The Money

To search for minerals costs money, lots of it. This money, when it does not come out of the coffers of existing, well-heeled companies, is raised by promoters and brokers, usually by selling shares in "junior" mining companies to the public. It has become accepted practice that governments regulate these people, to ensure that the public gets a fair run for its money. To accomplish this, security commissions operate in all provinces. Jim Cawley, who became Deputy Minister of Mineral Resources in 1957, was involved in this area . . . .

At one time, I was on the Advisory Board to the Securities Commission. Mainly, our duty was to see that there was full disclosure and to register the companies for operation in Saskatchewan so that all the conditions of the Securities Act were met - that in propectuses there was full disclosure of the operation.

Full disclosure ensured that the people who were running the company indicated what their interest was in it, what the shareholders' interests were, and the basis upon which the stock was being offered to the public. There were no restrictions as to where the stock might be sold, but to be registered in the Province you had to meet whatever the regulations were at that time.

The main problem was clarifying, making it quite clear to the applicant for registration what the procedure was for getting a prospectus approved. There was no trouble getting it approved, providing there was full disclosure.

Allan Blakeney, now the Honourable Allan Blakeney, Premier of the Province, came to Saskatchewan as a civil servant. One of his early duties was Chairman of the Securities Commission.

Duties as Chairman of the Securities Commission were primarily to attend to the licensing of all investment dealers, brokers, broker - dealers, and salesmen who were selling securities in Saskatchewan to the public, and secondly to qualify the securities - to review the prospectuses to be sure they complied with the rules and laws of the Province of Saskatchewan with respect to disclosure, primarily disclosure regarding financial arrangements, and geological information in the case of mining companies.

The work involved rather routine processing of a fairly large number of companies who were offering shares right across Canada - General Motors, Bank of Commerce, and the like. They would prepare their prospectuses and file them in Ontario, and we would require evidence that they were properly processed in Ontario, because they were all big issues, and thereafter we would deal with them fairly expeditiously here.

Securities regulation was then in its infancy. Our Act, passed in 1954 as I recall it, was untried when I came in. We made many, many changes, primarily regulations, but also in the Act itself, changes in the manner in which companies might offer their shares to the public, how they might advertise, and how they might contact the public.

I think it is not unfair to say that the area of marketing highly speculative shares is a very chancy business. The public is gambling. Most of them, I think, are well aware that they are gambling. All the government can do is to see that the gamble has some element of fairness in it.

The business attracts many people who are good solid mining people, who sincerely want to develop properties and mines. But there is another group of operators who are not nearly as interested in exploiting mines as exploiting the public. I think that if any criticism can be made of my period, from 1955 to 1958, at least in the early part, I think I would have to acknowledge that we were not tough enough in weeding out the bad operators, of whom there were a good number.

There were on the other hand, some people operating in northern Saskatchewan who I felt were thoroughly dedicated, genuine operators, who offered their shares to the public as a gamble, took in the money and spent it fairly and properly on the property; doing the drilling, or assay work, or whatever was needed to be done. Very frequently mines don't develop, but that's no reflection on the sponsor. I thought that there were several legitimate operators and it was for them that we were trying to preserve access to the public.

I certainly remember that some of the more difficult clients came from outside the Province such as Toronto, or Vancouver to name two, and they came from other places as well, because there was a boom here. There were uranium properties with promise and there were oil properties with promise. These people tend to migrate to wherever there is a play on a hot area, where a previous operator or prospector has found a promising show, or where there has been an oil strike. They buy properties around the fringe, claims that may be only marginally adjacent to the uranium, or whatever, we saw lots of that. The trick was to get "moose pasture" which was geographically close to a good show, but geologically a long way from it. There could be a formation that is fairly narrow going east and west let us say, but an area a mile north could be valueless. Promoters tended to acquire properties that looked good on the map.

Gordon Tanner was a stock salesman during some of the years that Allan Blakeney was Chairman of the Securities Commission. These two do not see things quite in the same light, which, perhaps, is understandable . . . .

We'd set up an organization - the Saskatchewan Broker-Dealer Association. This was an attempt to police ourselves. We went to the Securities Commission, on an unofficial basis, and pointed out some of the things we didn't like that were going on in the business. What disturbed me at the time, and still does to this day, was that, under the Saskatchewan Securities Act, the commission had the right to stop some of these things. They didn't have to have legal reasons, or anything else. Their powers were unbelievably strong. But we'd keep getting: "Well if we haven't got the proof, if you don't lay a charge", and so on. What happened was that these people were allowed to carry on and it just got more than the public could stand. There was no way the legitimate operator could keep going. When the reaction came it was an overreaction, it just killed the business. When they killed the promotional business, it killed the prospecting, and an awful lot of exploration.

Another thing, we concentrated on Saskatchewan. Others came in here and were selling stock out of here on British Columbia properties, and Quebec properties At that time the British Columbia Securities Commission wouldn't let brokers sell anything that had properties outside of British Columbia. I think that's one reason they have a few more mines than we have. I doubt that you'll ever see it come back, that a small promoter can get a mining company going.

The late Phil Bodnoff was an extremely active promoter of Saskatchewan operations from a way back. Gordon Tanner had worked with Phil Bodnoff out of Regina . . . .

Phil, of course, was first and foremost a gambler. His whole life was a gamble. He had the knack of making friends with people from every stratum of society, from the local rookie to the Premier of the Province.

His first bit of notoriety in Saskatchewan was the connection between himself and Clarence Fines, one-time Provincial Treasurer, over some land deals and theatres. They were at least partners in the theatres. It ended up being a big foofaraw in the Legislature, a real hot potato.

Phil was the kind of person who, if somebody had an idea (he had a basic belief that people were honest), he would put up the money; sometimes for the most unbelievable projects.

I remember at one stage when I was associated with him we owned an oil drilling company - Porter Drilling. Phil was the major shareholder. We finally acquired two drilling rigs. We blew that one by taking a farm-out from Tidewater Oil when Getty moved from the oil business to the shipping business. They'd spent well over a million dollars in seismic work in Blaine County, Montana - some beautiful indications. So we took the farm out for 10 holes and managed to deal off some pieces. We drilled seven holes - all "dusters", dry holes!

Al Scarfe, Mining Recorder at La Ronge, has met a variety of promoters, and he too agrees that they are necessary, and not always "evil". One of them, William Throckmorton Knox (he is alleged to have opted for "Throckmorton" on the basis that anything is better than Thornhill, his real middle name), a familiar face around La Ronge off and on from 1957 to the present, is seen by Scarfe as one of the most interesting . . . .

Promoters - the men who introduce the property to the money, I've met all sorts of them under all sorts of conditions. As a group, along with other people, they are a necessary "evil". They do sometimes cause trouble, and they do make a very easy living, but they are, generally speaking, a special breed. They have to have an awful lot of self-confidence, a lot of imagination, and no end of nerves - or maybe gall.

These people would take a piece of property that a self-respecting prospector would admit was just marginal and by the time they have built it up to a potential buyer, it's an extremely "hot" property that you have to buy right now, at an exorbitant price, because next week there'll be a headframe on it, a producing mine.

I have met several prospector - promoters, and there are such combinations. But some are pure promoters, and I've met a variety of these and the most interesting and I don't think anyone would question this. The most interesting promoter-person I've ever met, I met right here in La Ronge, and that was W. T. Knox, William Throckmorton Knox, that was a joke. His actual middle name was Thornhill, so I don't blame him for calling himself Throckmorton.

He went through several phases. He was in La Ronge before my time in the late fifties, when the Government released the results of their aeromagnetic survey. He went east and apparently took a beating there; then he and his family came to La Ronge in, I believe 1964, after having been to Mexico and British Columbia. I understand that just before coming to La Ronge another promoter out-promoted him, anyway, Bill was in eastern Canada, and he saw an ad in the paper that they wanted a driver to take a school bus to Saskatchewan. He was paid to take it to Saskatchewan, so he brought his family to La Ronge, along with all his worldly possessions, and the dog, a French poodle by the name of Guillaume.

Bill Knox was my number one customer here in La Ronge because he was always recording claims and claim blocks and somehow selling them to companies you'd never heard of, and might never hear of again, he had consistent sales. He was a most remarkable person, there were more sides to Bill Knox than any person I've ever met. You could meet him some days and he was the sweetest guy on earth, and other days he was miserable and irascible. He could be a beautiful person, or a dud, depending on the circumstances.

He could sell mining properties like nobody else, particularly in combination with his wife Gigi. If a mining representative came to town and went to the Knox's for a drink, or, an evening they would be entertained royally and Bill could sell them anything.

Sure Knox, and other promoters, were making money, but they brought people in to look at and work on properties, people who'd never even heard of Saskatchewan as a mining area before. What are the benefits of Knox's work today? You might say there aren't any, because none of his properties, except for the Rottenstone Mine, in which he played a minor role, ever came into production.

The many properties which he brought people into and which were diamond drilled or had geophysics or other work done on them, perhaps did not produce a mine, but all that work has been done, and we have it on file as a record for people in the future.

I met a larger variety of interesting people when I was in Uranium City, but nowhere have I met a promoter like William Throckmorton Knox.

And how does the prospector see the promoter? Art Sjolander has been in the business since he was a lad and has formed an opinion, which probably represents the opinion of most prospectors . . . .

Most promoters, if you want to use that word, are good, my interpretation of a promoter is a businessman who raises money to put into and invest in, mineral exploration at the grassroots level, not necessarily a partner of the prospector, but involved with him.

In my father's case he would raise money, how, was always a mystery to me. Mostly American - New York City. He'd worked there at one time, there was never any shortage of money for these things. He would hire prospectors, usually on a strict interest sort of set-up, there were no wages - just "grubstake" deals. My father made a living out of it, a good living, it was a split deal and this went on for many, many years. My father's house was always full of prospectors coming and going.

To be a promoter you have to have certain qualities that I don't have. You have to be able to meet people easily. You have to talk persuasively, perhaps at times be a little glib, which I'm not, so I chose the bush in Ontario in 1936.