A 33-year-old entrepreneur with an undergraduate degree in cell biology and genetics isn’t the first person one expects as the chairman of a new mineral explorer focused on Brazilian gold.
But after meeting and becoming business partners a few years ago with Mario Garnero, the 73-year-old head of private Brazilian merchant bank Brasilinvest, who claims to have been friends with four U.S. presidents since the early 1970s, Amir Adnani saw an opportunity he couldn’t pass up.
In a telephone interview with The Northern Miner while en-route from London, Ont., to Toronto, Adnani explained the reasons why he helped form Brazil Resources (BRI-V), and why he dove into the rush for gold.
“What seemed quite compelling to us a few years ago, and even now, is that as mineral-rich as Brazil is and as notable as Brazil’s documented gold resources in the ground are, it’s really not a heavyweight player yet when it comes to gold production or serious exploration. The country is actually very much underexplored when it comes to gold.
“Even though Brazil is one of the top 10 countries for gold resources, it’s not in the top 10 for gold production,” Adnani asserts. “That discrepancy made us think that where we are in this gold cycle and given the sort of progressive framework Brazil has for mining, it seemed like an anomaly that there wasn’t more activity there.”
With over $8 million sitting in its treasury, Brazil Resources is now starting work on its only property, Montes Aureos, located in the Gurupi gold belt in the northeastern state of Maranhao.
“It’s an area that’s getting a lot of attention right now,” says Adnani, pointing out Jaguar Mining (JAG-T, JAG-N) recently advanced its Chega Tudo and Cipoeiro gold deposits 20 km north to feasibility, while Luna Gold (LGC-V) put its Aurizona gold mine 80 km away into production last year. Major gold miner Kinross Gold (K-T, KGC-N) has also acquired land in the district.
Brazil Resources plans to spend roughly $1.7 million this year exploring Montes Aureos, with a work program that includes auger drilling and diamond drilling. The company wants to acquire more properties in Brazil, based on work by its technical team of geologists in the country, including a former exploration manager for Kinross in Brazil.
Adnani and Garnero have attracted several notable investors as early shareholders in their new company. Leading New York investment house BlackRock, which manages approximately US$3.7 trillion in assets, currently holds a 10% interest while prominent resource investor Rick Rule partly controls 16% through KCR LLC, a fund connected to the Casey Research Group. (According to Adnani, the “K” in KCR stands for Marin Katusa, Casey Research’s chief energy investment strategist; the “C” stands for Doug Casey, the founder of the Casey Group of newsletters; and the “R” for Rick Rule.)
The Casey Group and Adnani have been familiar with each other for several years, with Doug Casey becoming an early shareholder of Adnani’s first and only other resource company, Uranium Energy (UEC-N), in 2005. The Casey Group weakly recommended buying Uranium Energy during the financial crisis on Nov. 11, 2008, when the stock could be had for 37¢. Casey’s official recommendation was to buy under 25¢. At this time the Casey newsletters really started to toot the Adnani horn.
Shares of Uranium Energy later reached a high of $7.48 in late 2010, prompting the Casey team to allow Adnani into its “Casey 10-Bagger Club” of promoters who reward subscribers with gains of 1,000% or more. Though Uranium Energy has lost some ground as of late, especially after the Fukushima nuclear disaster, it managed to put its Palangana in situ recovery uranium project in Texas into production – the only company to start mining uranium this way in the U.S. over the past five years, Adnani says.
Also last year, Casey Research placed Adnani fourth on its “NexTen” list of men and women to watch in the resource sector who are under the age of 40, with Katusa calling him “a promoter of the likes of Robert Friedland.”
Outside of Casey Research, Uranium Energy briefly made headlines for its hiring of Vancouverite Gordon Brent Pierce to carry out investor relations work. The Vancouver Sun columnist David Baines wrote about Pierce’s checkered history with stock market regulators, which includes a 15-year ban from the British Columbia Securities Commission after Pierce admitted to wrongfully diverting funds from an initial public offering in the early 1990s. More recently, in May 2011, the United States Securities and Exchange Commission (SEC) secured a $7.2-million disgorgement order against two private offshore companies controlled by Pierce in connection with the 2003 and 2004 promotion of Lexington Resources, which once traded over-the-counter in the U.S. but is now defunct. The SEC says Pierce and others sold millions of improperly issued shares after paying for spam and newsletters to tout the stock.
When asked to comment on Pierce’s work with Uranium Energy, Adnani said Pierce was never an officer or director of the company, that the information was disclosed to shareholders, and that it was a brief appointment he made when he was younger and less experienced.
“One of the issues that David Baines highlighted was that he felt maybe having hired Brent Pierce was an indication of our company Uranium Energy having been a pump-and-dump. And you could have looked at it, and maybe made that comment in 2005. But after everything we’ve accomplished in the last six years, and now having emerged as a new uranium producer… I think that our track record now speaks for itself.”
Adnani further notes Pierce is “definitely not involved in any shape or form with Brazil Resources.” The company did, however, recently hire another IR professional who featured prominently at Uranium Energy, Michael Baybak. On May 31, Brazil Resources entered a 12-month contract with Florida-based Michael Baybak & Company to provide investor relations at a monthly fee of US$5,000, and granted the IR firm options to buy 150,000 shares.
Baybak, once a well-known member of the Church of Scientology, has also been the subject of undesirable media attention in the past. In 1991, Time published a cover story which called the church a “global racket” and included an unflattering section on parishioner Baybak and his work with the notorious Vancouver Stock Exchange. Baybak quickly launched a $60-million libel suit against Time, which months later was settled out of court. Time also agreed to publish a statement saying its piece “was not intended to suggest that Mr. Baybak was a ‘front’ for the Church of Scientology or that his actions were in violation of any law or regulation.”
Brazil Resources listed its shares on May 16 after completing a $2.47-million initial public offering of 3.8 million shares at 65¢ each. The company currently has 35.04 million shares outstanding, 4.88 million of which are owned by Adnani. He bought 4.33 million of his shares at 5¢ each and paid 1¢ each for the remaining 550,000. At presstime on June 8, shares of Brazil Resources traded for $1.15, making his $222,000 investment worth $5.6 million.
Garnero controls 2.9 million shares, bought at the same prices through his Brasilinvest Group.