Hard Core

When Viola MacMillan died of a heart attack on her way to the bank in the summer of 1993, her executors set to work clearing out her home. They found hidden in the attic a ghostwritten autobiography that she’d kept secret.

MacMillan was one of the most intriguing women in Canadian history. Born in 1903, the thirteenth of fifteen children of a farmer, she became a powerful leader in the male-dominated mining industry. It could be argued that she did more to grow the sector in this country than any other. But her rise to fame and glory was abruptly cut short when, at sixty-four, she was jailed for manipulating the stock of Windfall Oils and Mines, one of the junior companies in her stable.

The executors felt MacMillan’s story should be told, even if she did not. In 2001, ECW Press published the manuscript as From the Ground Up, to which I added an introduction and afterword. More than two decades later, Tim Falconer has taken a deeper and less sympathetic plunge into the events leading up to MacMillan’s conviction in Windfall. Using material from archives throughout Ontario, Falconer pieces together a detailed account of how a single borehole drilled in the northern wilds led to a provincial royal commission investigation.

Before her incarceration, MacMillan cherished publicity, and members of the press delivered. They couldn’t resist the incongruity of a prospector who was actually glamorous — and a woman, no less! MacMillan had defied all odds to establish and run the organization that is today’s Prospectors and Developers Association of Canada, now representing some 8,000 members globally. She was as comfortable hauling rocks through thick bush as she was deal making in Toronto, where she lived in a pink penthouse. Even as she aged, sound bites such as “We’ll never be too old to go prospecting, even if we die on the trail” kept reporters begging for more.

As a result, Falconer was able to draw from a rich record as he researched the affair, starting when MacMillan, “using her smarts, instincts, connections, experience and financial acumen,” bought some desirable claims near a significant copper-zinc-silver discovery just north of Timmins that later became the Kidd Creek Mine. The royal commission report alone is a comprehensive examination of the trading shenanigans that followed, including the accommodating behaviour of regulators at the Toronto Stock Exchange and the Ontario Securities Commission. Justice Arthur Kelly, who presided over the investigation, concluded that financiers on Bay Street must have seen the exchange less as a securities market designed to protect investors and more “as a private gaming club maintained for their own benefit.” The report’s findings led to stricter regulatory oversight.

The controversy unfolded over the summer of 1964. Texas Gulf Sulphur, an American company, had announced results of a major base-metal discovery in April. A few days later, Viola and her husband, George MacMillan, considered a dream team in the prospecting world, secured twelve claims near the find. On July 1, they began to drill, and they stopped at 570 feet four days later. George sent some core samples for assay. When he received lab results showing only trace amounts of valuable minerals, he stayed mum.

Although Viola MacMillan hated being called a promoter, preferring the term “developer,” the Windfall story had all the hallmarks of a juicy stock promotion: the Windfall claims contained an indicator of the possible presence of metals, were omitted from Texas Gulf’s original staking only because of a mapping error, and were close enough to the discovery to plausibly host a pod of similar value.

Predictably, the rumour mill started to churn. At one point, Viola was receiving more than 100 calls a day from reporters, investors, and friends wanting to know what the drill core revealed. But concrete information was scarce. Despite pleading and threats from the president of the stock exchange, the MacMillans refused to issue a statement that would either corroborate or refute rumours of a strike, even though George (and probably Viola) knew the rock was worthless. By July 21, the stock had soared to $5.70 from pennies per share in June.

Under pressure from regulators, Windfall finally issued a release on July 30 stating that the core contained nothing of commercial value. The inevitable plunge in share value cost investors as much as $2.7 million (the equivalent of $26.6 million today). Viola was charged with fraud and eventually convicted of wash trading — or buying and selling stock to give the false impression of market activity. She had pocketed an estimated $1.46 million.

Falconer skillfully relates the events leading up to MacMillan’s downfall. For the first eight chapters, he weaves her rise to fame in among fascinating vignettes of Canadian history, including the tale of how Roy Thomson, a radio station operator in northern Ontario, became head of an international media conglomerate and an account of the advances in electronics that helped prospectors “see” beneath the surface to detect potential ore bodies. And so the reader enjoys not only a comprehensive overview of the scandal but the context in which it took place.

Starting in chapter 9, Falconer stretches the timeline to create dramatic tension. The next few chapters are a daily, sometimes hourly account of what transpired in boardrooms and core shacks alike. As Falconer lays bare what was said and done, it becomes obvious that the MacMillans “took advantage of their enviable record as mine developers, of human greed and of the power of rumours to keep quiet and let investors believe what they wanted to believe.” Still, some considered Viola a scapegoat of the corrupt mine finance system that existed at the time. She was released from jail after serving just seven weeks of a nine-month sentence, pardoned from the conviction of wash trading in 1978, and appointed to the Order of Canada on her ninetieth birthday, a few months before her death.

The nature of mineral exploration and the resulting speculation that drives investors to take huge risks for potentially big rewards have long drawn promoters and even fraudsters to the sector — as occurred with Bre‑X Minerals in 1997. Windfall was one of the more lurid cases. Readers seeking to understand the characters and machinations behind such roller-coaster rides will enjoy Falconer’s anatomy of a scandal.