Mining’s old guard needs strong medicine
A new report details subpar investor returns in the mining industry over the last decade, particularly big cap diversified companies which have not adapted to new realities.
A former CEO of Otso Gold (TSXV: OTSO), Brian Wesson, has been detained in Finland and remains in pre-trial custody under criminal suspicion of aggravated embezzlement and payment fraud, the company has disclosed.
The development comes on the same day Otso’s Finnish and Swedish subsidiaries obtained creditor protection, following the Supreme Court of British Columbia’s granting on December 3 of protection from creditors under the Companies’ Creditors Arrangement Act.
Wesson is the managing director Lionsbridge Capital, which until recently was retained by the company to manage the Otso gold mine.
Wesson resigned from Otso on November 30, after representatives of the board, together with Alvarez & Marsal, which is currently providing chief restructuring and chief financial officer services to the company, informed him that they were on their way to the mine site. Clyde Wesson, formerly a VP and a director of Otso, also resigned at the time.
Otso said Alvarez & Marsal was seeking to determine the whereabouts of specific computer devices, files and property that appeared to have been taken from the company at the same time as the resignations.
Alvarez & Marsal was also said to be investigating specific issues and discrepancies relating to the company’s financial transactions and records, Otso noted in a press release.
“The criminal suspicions facing Mr. Wesson are extremely serious. We are grateful to the Finnish authorities for the speed of their response, and we will continue to assist law enforcement in their investigation,” an Otso spokesperson said in a statement.
Under Finnish law, all pre-investigation material and information are confidential, and the precise details of the charges Wesson is facing have not been disclosed publicly.
Trading of the company’s shares remains halted pending a review.
The Otso mine, near the town of Raahe in central Finland, restarted production and completed the first gold pour early in November.
It was the culmination of the completion of all the preparatory works and the hiring and training of over 140 full-time staff with a further 128 contractors retained to provide permanent services to the mine, the company said in a news release at the time.
The Otso gold mine is a fully permitted, open-cut operation with a 2 million tonne per annum gold processing facility. As confirmed by an August technical report, the current mine plan indicates a target grade of 1.54 g/t, 6,000 tonnes per day and a strip ratio of 3.26:1.
The company published a feasibility study for the operation on November 5, outlining a proven and probable high-grade reserve of 5.46 million tonnes grading 1.65 grams per tonne gold for 289,700 ounces gold. Target production is 90,000 ounces, and overall plant efficiency has been stated at 92%.
