St. Elias Mines Ltd. (TSX: V.SLI, Stock Forum) is fighting a group of dissident shareholders who say they have lost confidence in the company’s management team and are pressing for changes to the board ahead of the Vancouver company’s annual meeting on December 27, 2012.
The dissident group is led by Spurce Grove, Alberta-based construction contractors Gilby Hastman and Darcy Hastman, who together hold 1.3 million shares, documents show.
In a dissident information circular that was filed on December 11, 2013, the dissident group has expressed concerns about a plunging stock price and rising costs at St. Elias, a gold focused exploration company with properties in Peru and British Columbia.
For example they point out that the company’s annual travel costs increased to $1.35 million from $14,041 between May 31, 2009, and May 31, 2012, according to financial statements filed on SEDAR.
In the same period, annual stock based compensation to various directors, officers, employees and consultants increased to $7.4 million from $302,666, while annual operating expenses jumped to $16.7 million from $1.1 million. In the same period, the St. Elias’s end of year deficit rose to $51.9 million from $17.2 million.
Meanwhile, the company’s stock price has plunged to 13 cents from a 52-week high of $2, leaving the company with a market cap of $15.2 million, based on 117.1 million shares outstanding.
The dissidents say they are soliciting proxies in a bid to kick out the existing board and replace it with a a group of dissident nominees, including Gilby Hastman, Darcy Hastman, Ted Rutherglen, James Rainbird and Richard Defreitas.
“Each of the dissident nominees is a successful businessman with significant business experience,’’ the dissident information circular states. The dissidents are proposing to limit the number of company directors to five.
However, St. Elias hit back this week, saying the dissident’s disclosure is inadequate and that the dissident nominees do not deserve shareholder support.
“Four of the five do not have mineral exploration, corporate finance or public markets experience,’’ the company said.
St. Elias went on to add that the fifth nominee – James Rainbird – was reprimanded by the Mutual Fund Dealers Association of Canada (MFDA) in 2010 and was prohibited from for five years from acting in a supervisory capacity for any MFDA members.
For details, see St. Elias press release.
St. Elias said it has raised $13 million in challenging market conditions over the past three years and has prudently deployed its capital.
The shareholders meeting is scheduled for 11:00 a.m. (Vancouver time), December 27, 2012, 2900 – 550 Burrard Street.