mine could become 'biggest of its kind', page-4

Except this it what happened in the end......


Hot copper prospect leaves investors cold

Date
August 20, 2009

full-disclosure
Collins & Spencer

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CHATROOMS buzzed as Proto Resources prepared to release its drilling results for its Lindeman's Bore project to the Australian Securities Exchange.

Those who went online yesterday wanted to know just how much copper Proto had found in the Northern Territory, and day traders had good reason to be excited. In mid-June, Proto chairman and managing director Andrew Mortimer had been effusive about the mineralisation at the project. He said the ''intrusion'' his company had uncovered had the potential to be Australia's ''Norilsk'' - a reference the Siberian mine with the largest nickel, copper and palladium deposit in the world and which supplies 2 per cent of Russia's gross domestic product.

Lindeman's Bore was ''enormously significant'', Mortimer said in June, and Proto could build ''a very large low to medium-grade mine'' that could employ ''at least 400 people''. If a Norilsk-type find was confirmed, Mortimer said the region ''could employ over 10, 20, 30,000 people'', making the region bigger than the Pilbara.

Never mind that the announcement was based on ''visual sightings'' only. Many seized on the chairman's words, and Proto's share price rocketed 15.5¢, or 442.9 per cent, to 19¢.
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Newspaper headlines included ''Junior's big copper discovery'', ''Proto's big copper strike'' and ''Boring on about Siberia''. Full Disclosure was more circumspect, especially when late the following evening an Appendix 3Y ''directors' interest'' statement was released to the ASX - a document that must be lodged whenever directors trade shares in their own company.

On June 3 this year, before Proto entered a trading halt, Mortimer bought 200,000 shares on market at 3.4¢ each. The Appendix 3Y revealed that, at the peak of the trading hysteria in Proto, Mortimer sold a parcel of 200,000 shares at 19¢ each, and a further 600,000 at 16.5¢ each.

Before the release of the first round of drill results, selling 800,000 Proto shares would have reaped the chairman $28,000. Mortimer pocketed $137,000 for them.

Mortimer told Full Disclosure he intended to re-invest the money in the company, which he duly did.

More recent announcements show that on July 3 he spent $62,540 to buy 2.08 million shares in the company's ''pro rata entitlement to shareholders'', and a further $50,000 to buy 1.67 million shares in a placement. To put that another way, Proto investors spent $137,000 to buy 800,000 of the chairman's shares, and the chairman then spent $112,540 to buy 3.75 million Proto shares directly from the company.

Nice deal. If you can get it.

The ASX was certainly interested, too. Mortimer told Full Disclosure he had answered a series of questions about trading in his own company.

Proto this month sold 30 million further shares at 10¢ each, with options attached, via a placement to sophisticated investors. That put another $3 million into the company's coffers.

Proto then went into a trading halt at 9.5¢ a share, and everyone held their breath for yesterday's copper results. The aptly named HotCopper online forum offered a ''Bottle of cheap plonk to the closest guess'', and the guesses were optimistic - ''0.95 per cent copper at a depth of 13 metres'' submitted one; ''I'm only guessing 0.67 per cent at 11 metres'' went another.

Then the results came out - 0.07 per cent copper at a depth of 387 metres. Nice numbers if you're a British secret agent, but not much use if you plan to build a copper mine and employ 400 people.

Optimism turned to anger. One investor lamented there was probably more copper in his backyard.

While investors call the results a disaster, Mortimer was unmoved, despite Proto's share price falling 40 per cent on the news to 6¢.

''I am very happy with what was in the hole,'' Mortimer told Full Disclosure.

''Are you happy with the copper grading?'' we asked.

''No, I'm not happy with that,'' he replied. He isn't alone on that one.

Read more: http://www.smh.com.au/business/hot-copper-prospect-leaves-investors-cold-20090819-eqnr.html#ixzz22NkclzEY