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Trading in shares of Bermuda-registered Nelson Resources Ltd. is being investigated by the Ontario Securities Commission.

In a Nelson press release Wednesday, the Toronto-Stock-Exchange-listed company said the OSC has advised it that the investigation is prompted by the announcement of the OAO Lukoil transaction on Sept. 30.

Lukoil bought 65 per cent of Nelson directly from four large shareholders for $2.57 a share, a deal first revealed on Sept. 30. Nelson stock closed at $2.96 on the TSX on Sept. 29. On Sept. 15, five Nelson insiders including chief executive officer Nick Zana and president Baltabek Kuandykov sold 4.7-million shares for $2.82.

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In a statement, Mr. Zana said on Wednesday: "As I mentioned in the Oct. 3, 2005 investor teleconference, I welcome an investigation of all of the trading activity that occurred prior to Lukoil's approach. We have presented information to the OSC on this matter and will continue to fully co-operate with the OSC in its investigation."

One of the large Nelson investors that sold directly to Lukoil was Cott Holdings Group Ltd. of St. Kitts-Nevis, which is owned by Mr. Kuandykov.

It has not been said when Cott and the other large Nelson investors approached Lukoil.

"Hand on heart, the answer is really: I don't know," Gilles Thieffry, a Nelson director, said on an Oct. 17 conference call.

Asked if he could find out, Mr. Thieffry said: "The best thing would be, I would suggest, is to ask the question directly to the individuals concerned and to the entities concerned."

Cott has not returned phone calls placed by The Globe and Mail.

The Lukoil offer is being extended to Nelson's other shareholders, accounting for 35 per cent of the total. A vote on the deal is set for Dec. 2. At least 75 per cent support of votes cast is required for the deal to go through. If it doesn't go through, Lukoil still maintains majority control of Nelson.

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