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sands or in the waste tailings that result after the oil sands
are processed. Solv-Ex contended that the value of those
marketable minerals was three times the value of the oil produced
from the oil sands.
Beginning in 1981 with its initial public offering, Solv-Ex
was a public company, and its shares were traded on the NASDAQ
Small Cap Market. Its financial statements reflected its status
as a “development stage enterprise” in accordance with Statement
of Financial Accounting Standards No. 7 (FAS 7), which includes
in the description of such companies a company for which
“[p]lanned principal operations have not commenced * * * [or]
[p]lanned principal operations have commenced, but there has been
no significant revenue therefrom.”
During 1995, Solv-Ex acquired a 90-percent interest in oil
sands leases in Alberta, Canada (the leases). After performing
feasibility studies for development and commercial operation of
the leases, Solv-Ex decided to develop the leases and raise the
capital required to construct an oil extraction and upgrading
plant in Alberta at an estimated cost of $125 million. In 1996,
Solv-Ex was able to raise only $77 million through the sale of
convertible debentures and stock. Because that was less than the
estimated construction cost for the plant, Solv-Ex decided to
modify its plans and build only an initial stage plant in
Alberta, the remaining facilities to be built later. Solv-Ex’s
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