EDITOR: | September 11th, 2013 | 7 Comments

Flagrant foul called on a convicted felon’s short-selling ‘hit’ on Zenyatta

| September 11, 2013 | 7 Comments

Empty prison cell   Original Filename: 73979720.jpg  empty jail cellBy now, most InvestorIntel readers are likely aware of what appeared to be a hatchet piece released Monday on Zenyatta Ventures Ltd. (TSXV: ZEN | OTCQX: ZENYF). The lengthy article published by Hunter Adams (written by Melissa Davis), an alleged former associate (USA Today) of the Gambino crime family (previously led by reputed gangster John Gotti, the Gambino crime family is one of the five crime “families” that dominates organized crime activities in New York) and convicted felon of a $50-million-pump-and-dump scam, sent shock waves through the investment community following graphite explorers because Zenyatta has become one of the leaders in this emerging sector. The so-called “investigative” exposé was intended to ruin — or, at least, maim, — Zenyatta’s stock price by discounting President and CEO Aubrey Eveleigh and the key distinctions that Zenyatta presents to differentiate its hydrothermal graphite deposit in Northeastern Ontario from its competition. Why? The answer is simple… to short Zenyatta’s stock… and what makes this a flagrant foul — is that they admit it.

As disclosed in this 8-page, single-spaced article, the felon who published it, established a short position on Zenyatta ahead of the article’s publication and stands to profit on any future declines in Zenyatta’s share price. Conversely, the same felon (and alleged mob associate who, apparently, was still on federal probation as of September 2010) purchased stock in three flake graphite companies heavily promoted in the article  — Alabama Graphite, Big North Graphite and Northern Graphite — and stands to profit on any future increase in the prices of those aforementioned companies’ share prices.

Although the Publisher claims to “uncover the dirty little secrets that investors need to know,” the article’s tone was obvious. It was nothing more than a blatant attempt to destroy Zenyatta’s stock price and benefit from a short position, under the pretext of exposing a misrepresented and overhyped company. As if the Publisher wanted to do some sort of public good deed, instead of an orchestrated financial assault. The feature consisted of numerous unsubstantiated claims and insufficient, highly biased research, and strong warnings about Zenyatta from graphite “experts”, such as Mickey Fulp. Fulp admits to being a commodity “generalist” who is new on the graphite scene, stating that he has only been following the commodity since 2011.

Not taking the attack lying down, Zenyatta wasted no time in responding to the article by issuing an announcement this morning, entitled: Zenyatta Clarifies Commentary Related to Recent Trading Activity. In the release the company stated that it is aware of the recent misleading and inaccurate commentary in the marketplace regarding its graphite deposit, which negatively affected its share price. Although Zenyatta would rather stay focused on the continued development of its exciting, one-of-a-kind graphite project, from time to time, it needs to set the record straight from malicious attacks. Eveleigh stated, “Zenyatta intends to vigorously defend itself against negligent misrepresentation. Any unfounded and misleading information about our company will be pursued legally to protect the interests of our shareholders and reputation of Zenyatta.”

Eveleigh further commented: “Zenyatta has discovered a very unique hydrothermal graphite deposit that consists of two large breccia pipes. It is the largest and only known graphite deposit of this type under development in the world. SGS Canada has conclusively demonstrated that an ultra-high purity graphitic carbon (99.99% Cg) can be achieved from a simple and relatively inexpensive caustic bake process. This is extraordinary in the world of graphite upgrading given Zenyatta does not require the traditional and expensive upgrading methods of aggressive acid and/or thermal treatment.”

As the Company stated, the article did have a negative impact on Zenyatta shares on Monday; however, the stock reacted positively to the Company’s news release yesterday as the stock gained on both the US (OTCQX: ZENYF +4.94%) and Canadian (TSXV: ZEN +1.88%) exchanges. The market clearly recognizes a flagrant foul when they see one — and it takes more than an ex-con with a trading game to impart lasting damage on the reputation of an industry leader like Zenyatta.

Tracy Weslosky


Tracy Weslosky is the CEO for InvestorIntel Corp., a leading online source of investor information that provides public market coverage for investors for both investors ... <Read more about Tracy Weslosky>

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  • donnyparks

    I would also like to add that at AGM I asked Aubrey about comments quoted by Stephen Riddle of Ashbury Carbons in the article. Aubrey said at AGM that he had called Stephen Riddle and talked to him about the comments. Stephen said that he had not talked to them and did not say those things

    September 11, 2013 - 9:57 AM

    • Tracy Weslosky

      Thank you Donny Parks for your feedback. This information about Stephen makes me wonder if Mickey was quoted out of context. With the Cambridge House conference next door tomorrow…I will ask him. Thanks again for the feedback.

      September 11, 2013 - 12:41 PM

  • u4eah

    “WOW”; …..and here I thought everybody would “play nice”, in this BIG sandbox !!

    September 11, 2013 - 1:06 PM

    • Ben-at-it

      I know you have been chronicling the “REE Fight Club”…sounds like the graphite sandbox may be just as dynamic – maybe more? The online media challenges that public co’s face is something we could all stand to understand better.

      September 11, 2013 - 2:50 PM

      • Dr. Copper

        graphite outcrop search teams you ought to add but eveything look graphite or so it sounds.

        September 11, 2013 - 7:50 PM

  • Ryan Fletcher

    Lesson from this. Like my mom used to say: “If you don’t have anything nice to say, don’t say anything at all”

    September 14, 2013 - 9:53 AM

    • Tracy Weslosky

      Nice to hear from you Ryan — would like to commend you on practicing what you preach. I have never heard you say an ill word on anyone…

      I have spoken at length with some of the cited principles in this article at utilizing caution and avoiding vitriolic statements or arguably libelous conclusions.

      We all err as we are human, but I feel as if this is the classic ‘Tall Poppy’ syndrome in play — in that a successful leader is being targeted by those envious of their hard earned success.

      Let’s celebrate Zenyatta’s ability to perform in difficult markets, because — we need stories of exceptional success to inspire.

      Thank you Aubrey, Zenyatta — and team.

      September 15, 2013 - 10:34 AM

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