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Joe Grosso's insider trading reports are nothing short of bizarre. Then again, almost everything associated with Mr. Grosso, an Italian tailor turned Vancouver mining promoter who may or may not end up controlling one of the world's great silver deposits, is bizarre.

Mr. Grosso, 67, is the founder and CEO of IMA Exploration, a TSX Venture Exchange company that has fired up the imagination of mining investors, ranging from silver bugs to respected fund managers such as Eric Sprott of Sprott Asset Management. Some think IMA's battle with Toronto's Aquiline Resources over Argentina's Navidad silver play is turning into a rerun of the 1980s gold property war between Lac Minerals and International Corona. Others think it won't go that far, even though the courts are involved. Everyone thinks fortunes are ready to be made, because the size of the deposit is not in dispute. But who to bet on?

Mr. Grosso is the first to admit he's got problems, and not just with Aquiline. One is trying to explain his peculiar trading habits to investors.

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The May 20 edition of the Ontario Securities Commission Bulletin contains 28 pages of Mr. Grosso's trading information, dating back to January, 2004. On almost every business day, he bought and sold IMA shares. On some days, he made seven or eight trades, typically ranging from a few hundred to a few thousand shares. The trading was so rapid and extensive that it's hard to tell whether he has made a profit.

Mr. Grosso has an explanation. "I didn't break the law," he says. Some analysts, among them Paradigm Capital's Don MacLean (who owns no IMA shares), agrees.

The story is that Mr. Grosso is both founder and registered promoter of IMA. As promoter, he is expected to provide liquidity, that is, ensure there are "bid" and "ask" prices for a small, thinly traded stock. Mr. Grosso says the trading was done by First Associates Investments under his name, though not under his direction, and that First Associates accidentally failed to notify his accountant of the trades. (First Associates acknowledges the "oversight.") When the problem was corrected, the trades were reported en masse to the OSC. In his June 9 note, Mr. MacLean said: "While the gaffe is not to be trivialized . . . we doubt the OSC will have any serious concerns."

Certainly, Mr. Grosso doesn't seem worried. For him, retaining ownership of the Navidad silver property is the far bigger issue.

Mr. Grosso was born south of Rome just before the war, emigrated to Canada in 1959 and did what his family had done since the late 1700s -- he got into the clothing business. He made and sold clothing until the mid-1980s, when the business went under, and emerged as a consultant. A few years later, he went to Argentina to visit his sister and had a chance encounter with a former government geologist called Vincente Mendez.

The geologist convinced him Argentina had vast potential for mineral discoveries. They formed a partnership and started to amass land in what Mr. Grosso calls a "sewing to drilling" career switch. IMA, the acronym for Inversiones Minera Argentina, was formed. Today, after several false starts, it has a market value of about $150-million and bills itself as a "Silver Giant In The Making," though Aquiline hopes to take that title itself.

IMA staked the Navidad land claims in late 2002 and early 2003. "We were finding 30,000 grams [of silver]per tonne in some parts, when the average might be 100 grams," he says. "These were astounding numbers."

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Drilling has since indicated IMA's Navidad discovery contains 268 million ounces of silver. More drilling is under way and IMA is to release updated results about the time of its annual meeting on June 23. Analysts expect the reserve figure to grow; Paradigm's estimate is 350 million ounces. If all that silver were to be sold today, it would be worth about $2.5-billion (U.S.).

So far so good? Forget it. Aquiline says IMA made the Navidad discovery using confidential data that IMA did not own. It has filed a suit in British Columbia against IMA. Aquiline contends IMA gained access to the data when IMA was conducting due diligence on a Newmont Mining property in Argentina called Calcatreu, which was for sale. Aquiline bought the Calcatreu property and discovered IMA had staked Navidad.

Mr. Grosso admits IMA used the data, but claims it was given to him as a "gift," suggesting it was not confidential. Furthermore, he says Newmont had ascribed no value to the land. The use of data was at the core of the epic Lac-Corona battle over the Williams gold property. (Corona eventually won.)

The difference in this battle is that neither IMA nor Aquiline wants a monster legal battle that will stall Navidad's development for years. A settlement is possible, but the combatants are not even talking to each other.

Based on IMA's market value, which is three times Aquiline's, investors evidently think Mr. Grosso will win, or at least not lose the entire Navidad property if the judgment goes against him. Even Aquiline CEO Marc Henderson admits bagging half of Navidad in a settlement would be close to a best-case scenario.

So what's the smart money doing? Eric Sprott hedged by taking long positions on both companies, though he owns more IMA than Aquiline shares. Paradigm's Mr. MacLean recommends the same approach. Mr. Sprott says Mr. Grosso's share trading is "goofy," but that's a sideshow. The fact is silver prices are going up and Navidad potentially is a world-class silver mine in the making.

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ereguly@globeandmail.ca

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