Texas Gulf Sulphur: The Timmins Ontario Mine Harvard Case Solution & Analysis

TEXAS GULF SULPHUR: THE TIMMINS ONTARIO MINE

INTRODUCTION:

Texas Gulf Sulphur was operating as a mining company and the world’s largest supplier of sulphur. By the year 1957, it was moving to start its new exploration plan in the name of Canadian Shield. Moving ahead with the plan, some test holes were done and their laboratory analysis declared TGS positive about the presence of copper ore there. So, TGS was attempting to acquire an additional land holding. In November 1963, TGS’ President, Stephens askedTGS’ Vice President, Fogarty to keep this fact confidential from all the employees, officers and directors of TGS other than those who were a part of the exploration group. Further tests and analysis in December 1963, made the results more postitive regarding the presence of the ore.

However, an additional land holding plan in the mineral rich area was completed by the end of March 1964 when TGS moved towards the further drilling process to make proper appropriations related to the size of the exploration where it was established that at numerous points very high quality ore was found at minimum lengths and depths. Moreover, it was analyzed that in case parallel drilling at a similar debt was successful, then may also be ore existing in the gap between these parallel lines.

Proper information on daily basis related to the process of drilling was reported to the President Stephen and Vice President Fogarty. On April 7, authentic evidences were founded on the existence of commercially minable ore but on April 10, in the evening full-proof evidences were received about the existence of significant mineralization of copper ore.

Along with the confirmation of copper ore, rumors started to flow all over Canada. Furthermore, print media including “The New York Herald Tribune” and “The New York Times” also expanded these not permitted unconfirmed report related to the drilling for new ore by
TGS. So, to counter the effects of these rumors, a press release was decided and planned by TGS’ President, Stephen and Executive Vice Presdient, Fogarty along with TGS’s Attorney, Huntington with the help of public relations specialist that was issued on Sunday, April 12 and appeared on Monday, April 13 in which Executive Vice President Fogarty stated that these misleading rumors related to the exploration of the ore had rose the company up to the standard that was not originated from the actual operations of the company it is just by the hearsays of the people that did not have any kind of connection with the, Texas Gulf Sulphur and it was also stated that in case any of such act would be successfully projected by Texas Gulf Sulphur, then it would be properly informed to all the stakeholders of the Texas Gulf Sulphur and to the public in an official manner.

Eventually, a Canadian Journalist visited the site of drilling and published a piece of writing confirming the presence of 10 million ton of ore on April 13 and on April 15, an official statement related to the exploration from the press release was sent to the Minister of Mines of Ontario, which Texas Gulf Sulphur had estimated to get throughout the public in 11:P.M on April 15 but fortunately it was not read until even 9:40 A.M on April 16. As the information related to extraction of copper ore had not been confidential so far; therefore, TGS itself issued an official statement including the detailed description of the extraction of not less than 25 million tons of ore, which was read by the financial media of America from 10:00 A.M. to 10:10 A.M or 10: 15 A.M and was expanded to others later on.

Uncovering of confidential information related to the expansion of ore grading by Texas Gulf Sulphur by way of press releases and hearsays, let others to judge the ore grading by Texas Gulf Sulphur and that was the behavior of some Texas Gulf Sulphur’s employees towards the acquisition of more shares and options of the Texas Gulf Sulphur.

 PROBLEM STATEMENT:

The problem that was existed with the Texas Gulf Sulphur related to the exploration of copper ore was that firstly, the company was trying to explore things and expand its ore grading confidentially and accurately, which it was unable to maintain due to the spreading of rumors and flow of information through press releases. Secondly, the wrong quantity of the extraction ore was reported and published by the visitor Journalist of Canada before the favorable time of announcement. Thirdly, rumors were not only expanding through press releases as there were several other reasons that caused media and others to assess the optimistic side of the company. Another reason that led this news out was the behaviors of employees, officers and directors of Texas Gulf Sulphur about the acquisition of shares and options of the company. Even those who had a small quantity of the company’s ..................

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Employees, officers and directors of the Gulf Sulfur purchased or tipped others to acquire ordinary shares or options to and simultaneously with the announcement of a major discovery of ore. The question is whether any of these acquisitions violated any federal securities law, state trust law or ethical standards. "Hide
by Henry B. Reiling, Mary M. Camargo Source: Harvard Business School 4 pages. Publication Date: January 8, 2004. Prod. #: 204114-PDF-ENG

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