2011 BCSECCOM 65


Notice of Hearing

Brookmount Explorations Inc., Peter John Flueck and Zafer Erick Sungur

Section 161 of the Securities Act, RSBC 1996, c. 418

1. On December 9, 1999, Brookmount was incorporated under the laws of the state of Nevada.

2. At all material times:

(a) Brookmount operated from offices in Vancouver, British Columbia 

(b) Flueck was the president and a director of Brookmount

(c) Sungur was a director and officer of Brookmount

(d) Brookmount’s securities were quoted on the OTC Bulletin Board.
3. Flueck is a resident of Alberta.

4. Sungur is a resident of British Columbia.

5. In or about February 2005, Brookmount acquired from Flueck a mineral property in Peru known as the Mercedes 100 Project (the Mercedes Property).

6. The Mercedes Property was a key property for Brookmount.

7. Effective July 15, 2007, Brookmount moved its offices from Vancouver, British Columbia to Bellingham, Washington.

Reports on the Mercedes Property
8. Brookmount possessed written reports that were prepared between 1997 and 2005 and that contained mineral deposit information and economic assessments for the Mercedes Property.  Some of these reports included information from older reports on the Mercedes Property that Brookmount did not possess (collectively, the Reports).

9. The Reports were inconsistent and discredited each others’ conclusions about the mineral deposits on the Mercedes Property and its economic viability.  One Report concluded that no resource calculations could be made without resolving survey data problems on the Mercedes Property.

10. In 2005 and 2006, Brookmount filed documents with the United States Securities and Exchange Commission (the SEC) which stated that the Mercedes Property had no reserves.

Publication of News Releases
11. From February 2005 to June 2007, Brookmount issued nine news releases about the Mercedes Property that included mineral estimates and economic forecasts taken from the Reports.

Misconduct
Misrepresentations
12. In the news releases, Brookmount disclosed selected mineral and economic information from the Reports, but omitted these material facts:

(a) that mineral estimates in the news releases were discredited and unreliable

(b) that economic forecasts in the news releases were based on discredited and unreliable mineral estimates

(c) that the news releases contained favourable information from some Reports, while omitting less favourable and contradictory information from other Reports

(d) that mineral estimates for the Mercedes Property did not comply with the standards for reserve estimates in National Instrument 43-101 – Standards of Disclosure for Mineral Projects (NI 43-101) or the Canadian Institute of Mining (CIM)

(e) that Brookmount had filed documents with the SEC stating that the Mercedes Property had no reserves.
13. By issuing the news releases without stating these material facts, Brookmount made misrepresentations contrary to section 50(1)(d) of the Act.

Breach of National Instrument 43-101
14. By issuing news releases in 2005, 2006 and 2007, Brookmount breached NI 43-101 because

(a) Brookmount failed to ensure that disclosure of a scientific or technical nature was based on information prepared by or under the supervision of a qualified person, contrary to section 2.1 of NI 43-101

(b) Brookmount disclosed quantities and grades of a deposit which had not been categorized as required by sections 2.2 and 2.3 of NI 43-101

(c) Brookmount failed to include the name and relationship to Brookmount of a qualified person, contrary to section 3.1 of NI 43-101

(d) Brookmount failed to include data verification, contrary to section 3.2 of NI 43-101

(e) Brookmount failed to include exploration information required by section 3.3 of NI 43-101

(f) Brookmount failed to include mineral resource and mineral reserve information required by section 3.4 of NI 43-101

(g) Brookmount failed to file a technical report as required, contrary to sections 4.2 and 4.3 and Parts 5 and 6 of NI 43-101.


Participation of Flueck and Sungur in Brookmount’s Misconduct
15. Flueck and Sungur authorized, permitted or acquiesced in Brookmount’s misconduct.

16. Pursuant to section 168.2 of the Act, Flueck and Sungur contravened the same provisions of the Act and of NI 43-101 as did Brookmount.

Shares Traded During Period of Misrepresentations
17. In the period from February 2005 to June 2007 when Brookmount was issuing the misleading news releases, investors traded a total of 25,400,954 shares of Brookmount with a market value of USD$9,929,185.08.

Breach of Cease Trade Order           
18. On June 20, 2007, the Executive Director ordered under section 164(1) of the Act that all trading in the securities of Brookmount cease (the CTO).

19. Flueck and Sungur breached the CTO by selling shares of Brookmount in July and August of 2007.

¶ 5 February 4, 2011

¶ 6 Paul C. Bourque, Q.C.
Executive Director