Crooks Straight Outta the Sneaky Preacher Playbook
Want to invest in an oil royalty company making millions per quarter? You’ll want to stay far away from these wolves then. Newport exploration cares as much for shareholders as the empty promises of sneaky prosperity preachers.
Take Joel Osteen, for example. If you don’t know who Joel Osteen is, he’s the “Pastor” of a stadium-size, ultra-mega-church in Houston,Texas. It’s called Lakewood Church. Lots of people like it because it’s the kind of place where you can go, as Osteen puts it, “to live your best life now.” You know, as opposed to eternity?
If you go to Lakewood Church looking for value, you’ll definitely feel good. You’ll feel as close to heaven as the dopamine rush of a shining smile, and the promise of health, wealth and prosperity can take you. The empty promises will extend out into your arms, fingers, and then deep into your wallet.
(Osteen on a Private Jet. Source: Twitter)
What I’m saying is that there are people with a message that doesn’t line up with the value they promise. Anyone in business knows these people and keeps their distance with a long 11’ cattle prod.
They make no apologies for hoarding wealth intended to benefit others. Pastor Joel Osteen makes no apologies for his wealth, or his $86 Million jet. In fact, he takes no salary from his church, but manages to go on tour, charging $850 a ticket in 2014. Tickets to hear the “free” gospel of repentance, and salvation will only cost you $30-$50 nowadays, but if you want to see Osteen smile up close and personal, front row tickets still cost $700 USD. Remember, no apologies.
Like these prosperity preachers, with the wrong management, a junior mining company can promise you wealth and then find multiple ways to NEVER share it.
So goes the story of Newport Exploration.
Newport Exploration launched in 1996. The company and Mr. Rozier cast a vision of finding oil, and other mineral interests in key locations all around the world. By 2002, Newport’s future wasn’t looking good, reporting losses of $3.6 Million. The saving grace? Halting operations. Rozier and the rest of the crew managed to cut losses to just a few hundred thousand two years later.
Nothing much happened after that except for a few more unproductive purchases in random exotic destinations.
Barbara Dunfield, the company’s CFO seemed to enjoy the globe-trotting adventures. In 2014, Business in Vancouver reported on her career as one of BC’s “most celebrated, and influential women”:
“Barbara Dunfield has enjoyed the travel opportunities it offers. From evaluating oil and gas projects in Australia to gold developments in Bolivia, Dunfield has seen a lot.”
Ironically, the image source caption reads: “Barbara Dunfield, CFO of Newport Exploration and Sennen Potash; “somewhere along the line we have all been extended a hand, whether it’s improved your lifestyle or just the conditions in your life.”(source: Business in Vancouver)
Conveniently, 2014 is the same year Newport Exploration revealed its sudden and outrageously large royalty revenue to shareholders. For almost a year, Newport failed to report a jump in royalty revenues from an underperforming, obscure oil producer in Australia. In one quarter, the royalty jumped from about $10,000 per quarter to over $500,000, then more.
For almost a year, Mr. Ian Rozier and Ms. Barbara Dinfield went about setting themselves up for maximum profit. As an aside, this wasn’t the first scheme Mr. Rozier was involved in.
In May 2014, Bob Moriarty reported on Newport Exploration’s efforts to hide earnings from shareholders and prepare insiders to profit as much as possible.
Here’s how they did it:
Step One: Don’t Tell Shareholders About Your New Revenue and Cut Out Directors You Don’t Like…
Whenever you see regular news releases and reporting from an organization, it’s a good thing. But if you check their website, and you get the bare minimum, or you might see the phrase “as reported in the financial statements”, where cash on hand continues to grow and share price continues to flatline, it’s not a good sign.
Moriarty writes: “For their year end 2010 their company had just under $7 million in cash assets or over $.12 a share and were selling for $.12 a share. The 2nd ace up their sleeves was a 2.5% royalty on some obscure oil/gas projects in Australia. That royalty contributed $10,742 in their 2009 results but none in 2010.
It became obvious to shareholders that perhaps the royalty was a pretty good deal when Newport announced on April 29, 2014 that the royalty from Australia had rocketed from none in 2010 to over $1 million per month or $.015 per share per month in the first quarter of 2014.
Actually the royalty probably became material by the end of the April 30 quarter 2013 when it went up to $570,000 for the quarter. There was no press release talking about it then. That’s interesting because as of April 30, 2013, the company had $.11 a share in cash and was selling for $.04…There was no press release announcing the windfall then.”
According to British Columbia Supreme Court public documents(search by org.), Mr. Rozier went to war with one of his directors. Rozier hedged his own shareholdings in the company issuing two millions shares to Dunfield and himself while only giving a minuscule 50,000 shares to the plaintiff. Additional legal claims in the civil case included oppression, conspiracy, liability for secondary market disclosure, insider trading, and unjust enrichment of then, Reva Resources, and unjust enrichment of the D&O defendants. All this is further outlined below.
Step Two: Give Yourself and Other Insiders More Shares Before They’re Worth More.
Now for the age old wisdom of “buy low, sell high” applied to pure crookery.
Moriarty writes: “Ian Rozier began to add to his share position buying at least 300,000 shares between $.04 and $.045 in August, long before shareholders figured out what was going on.
During August, the slowest month of the trading year, a stock that had been moribund all of a sudden woke up. Some 2.5 million shares traded when only the directors knew the royalty payments were up to $900,000 per month and the company was selling for less than $.29 on the dollar.”
Step Three: Pad Insider Ownership with an External Shell Company You Own
Newport buys a property from another shell company(Reva Resources Ltd) run by two of their own directors with $1.5 million in shareholder royalty cash, then gives the company 5,436,000 Newport shares. Now, the company’s name has changed to Grosvenor Resources.
According to Grosvenor Resources latest 2022 Annual Financial Statement, Grosvenor continues to collect dividend income from Newport’s royalty:
And Mr. Rozier continues to collect a cool $48,000 annually as the CEO of shell company, Grosvenor Resources:
Padding insider shares through a shell company and hiding that income by changing corporate names isn’t the only issue here. It’s the regular old conflict of interest between management and shareholders. It’s the self-serving set up of it all.
Step 4: Let Old Options Expire. Issue New Insider Options Before the Stock Price Goes Up
Everyone needs a helping hand and Barbara was willing and eager.
Moriarty writes: “Ms. Barbara Dunfield announced the company was granting just over 6 million options to directors and officers at a price of $.05 good for five years.
What Ms. Barbara Dunfield didn’t bother announcing was that on December 18, 2013, the day before, some 5,450,000 options granted to directors and officers at $.10 expired worthless. After all, who in their right mind would pay $.10 a share for a stock that had $.20 a share in cash and the cash was going up by $.015 a month?”
BONUS: The Saga Continues and shareholders strike back…
In late 2018, Newport Executives became aware that they managed to piss someone off (if not, the ex-communicated board member). It seems as though someone started reading Newport’s MD&As after four years of zero exploration, zero value creation, and zero attempts by management to create any value out of their new found income. They started rallying up the troops. Maybe an initial investor in the IPO? Maybe a former director?
By the end of 2015, the company had more cash in the bank than they could possibly know what to do with – say $20 Million and counting. And for all Mr.Rozier’s hard work he received $90,000 in management fees. Ms. Barbara Dunfield received $75,000 among other income.
A 2019 news release outlined Newport’s enthusiasm for exploration, quarterly dividends and protection against “hungry corporate predators”:
“The Company reported…that it was aware of rumors of a possible bid for the GOR and/or a possible hostile takeover attempt of the Company as a way of acquiring the GOR(Royalty). No formal offer for the GOR was made…
As shareholders are aware, hostile activist campaigns are increasingly ‘homing in’ on companies with valuable assets to acquire, cash flow to dispose of, and businesses to separate…”
“Management is able to secure the long-term interest of all shareholders and not succumb to corporate predators hungry for quick returns.”
Yes, all shareholders (As of 2019, insiders owned 35% of the company. Not to mention shell company holdings). And with great moral authority Mr. Rozier continued to promise:
“Management will continue to search for and identify other potential assets for acquisition but refuses to rush into buying anything just for the sake of it; this disciplined approach has resulted in market-beating returns in the long run compared to most other Canadian royalty paying energy stocks in recent years.”
Newport Exploration has reported zero execution on this promise ever since. For a time, quarterly dividends have been distributed at $0.05 per share, throwing water on the fire.
Now, in 2022, as gas prices and oil revenues continue to rise. It appears as though Mr. Rozier needs to bring the revenue back to daddy. According to a statement by Ian Rozier, President and CEO in Newport’s MD&A on Aug.12, 2022:
“As a result of Beach’s maintenance work, delays and disruptions caused by extensive flooding earlier in the year, and the resulting decline in oil production from the GOR licenses, the Company felt it prudent to lower the dividend back to $0.01 this quarter.”, stated Ian Rozier, President and CEO of the Company.
The decline in quarterly dividends had actually been going on for several quarters. With a reported $2 Million AUD plus in royalties for the 3rd quarter of 2022, the wise and discerning Mr. Rozier decides to further reduce dividends.
It appears other income opportunities have spiked for Rozier and Dunfield in the last several years. Mr. Rozier has managed to increase his fees up to $48,000 per month, while Ms. Barbara Dunfield receives almost $33,000 per month.
In addition to his $572,000 annual management and consulting fees, Mr.Rozier currently owns about 21,000,000 shares of Newport Exploration, which makes his dividend income at $0.01 per share is $210,000 annually (not including income from fees and dividends at Grosvenor Resources).
It’s obvious to see who’s side Newport Management is on – themselves. Sometimes it’s not so clear though. You need to figure it out for yourselves before you give your hard earned money to an organization in a high-risk industry like junior mining exploration.
Don’t be Fooled. Look at these indicators.
Ask these questions:
- Will management be able to find another good property even if the property doesn’t turn out to have value?
- Does the company have qualified people to raise the funds for exploration?
- Does the company have qualified people to manage technical work?
- Is the board well-rounded?
- Are there any past successes?
- How involved are the board members?
- How focused is management on the company (what resources?)
Ask these questions and you can avoid wolves like Newport Exploration altogether.
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