Southwestern Resources Corp., plunged deep in a mining scandal, is suing ex-CEO John Paterson, accusing him of fraud, breach of fiduciary duties and insider trading after an investigation showed alteration of assay results at its Boka gold project in southern China.
While there were still indications of gold mineralization in drill samples and historical mine workings, Southwestern yesterday said mineral resources were less than previously reported at the Boka project in Yunnan province.
Shares of the junior B.C. miner tumbled 17 per cent in Toronto yesterday to close at $1.70 – a stark contrast to early 2004 when its shares soared past $20 on reports of spectacular gold deposits at the Boka project.
“We are doing the best we can,” said David Black, chair of Southwestern, in response to questions yesterday about the filing at the Supreme Court of British Columbia.
“Paterson engaged in a course of deceitful and dishonest misconduct, in breach of his contractual, fiduciary, and statutory duties” owed to Southwestern, the company alleges.
This resulted in the former chief executive officer “misrepresenting the assay results from the Boka project and delaying the completion of (Southwestern’s) pre-feasibility study for the Boka project to cover up the misconduct.”
Paterson’s actions were not only “fraudulent and improper,” the company claims, but they were also “reprehensible, high-handed, reckless, wanton and callous.”
None of the allegations have been proven in court.