True North Gems halted trading Friday to stop what was becoming a large-selloff after information about company plans was inadvertently released to the Star last Thursday.

Andrew Smith, the company's chief executive officer, explained this morning that company president Bernie Gaboury mistakenly let it be known to the Star that True North had postponed its plan for a public auction to establish a value for its emeralds.

The information came out before the company had issued a public statement and explanation of the decision, and the result was a large volume of selling Friday, sending the stock tumbling.

Smith said it was the largest volume of trading in a month. It saw the stock fall from $1.02 when it opened Friday to 88 cents per share when trading was halted at 11:02 local time, or two hours before the close of the Toronto Venture Exchange. Approximately 140,000 shares had been traded before trading was stopped at the request of the company.

Because the company had not issued information regarding the auction postponement, it had to take steps to protect remaining shareholders and asked the TSX to halt trading and give the company time to explain its actions, Smith said.

True North shares resumed trading today, opening at 85 cents per share, though they fell quickly to 75 cents but had rebounded to 81 cents a share at noon local time.

'That fall to 75 cents literally took a quarter of our value of our company,' he said, adding the loss amounted to about $5 million in value.

Smith emphasized, however, that True North still has $5 million in the bank. It does not plan to alter its exploration plans to its Regal Ridge property located in the Yukon southeast of Faro.

Smith said the auction has been postponed for a couple of reasons. The work to produce finished cut stones from the rough emerald material took longer than expected, he said.

As well, he added, True North wants to process more of its rough material to expand its sample size so it is large enough to provide an estimated value for each tonne of rough emerald material the company has mined in its exploration work to date.

Smith hopes the per-tonne value estimate is available prior to the beginning of this year's $2-million exploration program at Regal Ridge.

But nothing precludes the company from holding an auction at any time, said the CEO.

Smith said True North has about five more kilograms of rough material that it wants to have cut. It will be divided up into test parcels and shipped to cutters around the world, beginning with a shipment to China tomorrow.

Qualified gemologists will be able to appraise the finished product. What they won't be able to establish is whether the market will pay a premium for Canadian emeralds, he said.

Smith said all of the diamonds produced in Canada fetch a premium of about 15 per cent in the marketplace. Many diamonds mined in Third World countries are referred to as blood diamonds because they were ill-gotten through political instability and such.

Once gemologists have provided a value on the finished stones from test samples, an auction would determine whether the market will pay a premium, he said.

Results from the first test sample cut by Terra Nova Gems Inc., a company owned True North's president, show a five-per-cent yield of finished stones from 712 grams of rough material, says a True North press release issued today.

The stones were cut mechanically, which is a preference for jewelers who are willing to pay slightly more for mechanically-cut stone because of the uniformity, making the emeralds easier to work with.

A smaller sample of four grams was sent to Thailand to be cut by hand and returned with a 20-per-cent yield of polished stones from rough material.

The rest of the material to be cut will be cut by hand, he said.

The CEO said the five-per-cent yield in the mechanically-cut stones was disappointing, as something in the order of 12 to 17 per cent would be preferred.

But the company remains optimistic, particularly with the concentration of emerald and near-emerald grade material it's getting from each rough tonne, he said.

Smith said the company was planning to release later today a preliminary evaluation of the finished emeralds.