Lauren McKeon
Northern News Services
Published Wednesday, February 4, 2009

SOMBA K'E/YELLOWKNIFE - Despite a recent spate of bad news and slowing economy, Vancouver-based diamond exploration company Snowfield Development Corp. says it will follow through with plans to start drilling at its Drybones Bay site this month.

Exploration "has certainly slowed down just because of the inability to raise capital very easily," said Fraser Fleming, head of investor relations and corporate communications at Snowfield.

"Our camp has been just on care and maintenance for the last two-and-a-half months. We just have a caretaker in camp."

Fleming said the move has significantly cut down on monthly expenditures.

Considering Snowfield's financials dated for the six months ending Oct. 31, the move isn't surprising:

"As of Oct. 31, 2008, the company had a working capital deficiency of $2,240,948 and does not have sufficient funds (for) the operations of the company."

The company's president, Robert Paterson, has loaned Snowfield almost $300,000; other companies owned by Paterson, Sevenoaks Properties Ltd. and Devon Group Management Corp. have advanced the company a total of almost $200,000.

Paterson's funds have been on a virtual a merry-go-round state between his several companies over the past few months.

As of the end of October, Devon Group had actually charged Snowfield $47,317 for administration and accounting work and Sevenoaks gave Snowfield a bill of $70,826 for office rent and expenses.

It's hoped Snowfield's plans to begin drilling for kimberlite, a rock composite that can contain diamonds, will turn the company's fortunes.

To raise capital for the work, Snowfield sold 12.5 million shares at two cents apiece to various investors in a private placement, raising $250,000 to drill at 15 priority hot spots on the Ticho Project at the Drybones Bay site.

Fleming hopes news will boost the company's stock, which has hovered around the one-cent mark in recent months.

"Our stock is very cheap right now. We just have to deal with that reality," said Fleming. "Certainly we're not very happy with the price of our stock ... You have to issue a lot more stock to get the same amount of money. That's a big concern to us."

It's not the only troubling news Snowfield has had to deal with.

In November, Snowfield was fined $500 for setting a fire at Drybones Bay near the company's exploration site, burning 393 hectares of forest in June 2007 and damaging graveyards belonging to the

Yellowknives Dene First Nation. In addition to the fine, the company has paid roughly $23,000 out of pocket to restore the site.

A month earlier, Snowfield was ordered to cease trading because it had not filed certain financial documents. Trading resumed in December, but in the meantime angered shareholders slammed the company on the popular online financial chatboard at Stockhouse.com, a leading financial media company.

Under a thread titled "management has zero credibility" posters ragged on the company for everything from slowing exploration to rumours of Paterson buying a Bentley V12 with shareholders money.

"It's not bashing (the company) to admit that you've been taken for a ride, it's just speaking the truth," wrote one poster, with the online handle "NWTSCAM."

"Address your shareholders if you have the courage. Explain to them why they had to lose millions," wrote another, "glassdesigns," addressing Paterson.

Fleming completely dismissed the comments and said he was familiar with the site.

"I haven't looked at it for two years. It was so ridiculous I quit looking at it," he said, laughing over posts about the Bentley.

"I certainly wouldn't place any reliance on anything you read in Stockhouse ever," he added.

Not that Paterson should be unfamiliar with unhappy shareholders - he was ousted in 2000 from his company Falcon Ventures International Corp. by a group of dissident shareholders.

Even so, Fleming said the company keeps in touch with its major shareholders and adds while they aren't always happy, they also aren't posting on the website.

He said those same shareholders also believe Snowfield when it says current financial woes won't cause the company to shut down.

"We always manage to come up with money.

"Sometimes it's just harder than others, but we've never not been able to finance ourselves."