Barkerville shareholder seeks AGM, new directors Barkerville shareholder seeks AGM, new directors
2012-12-06 13:46 ET - Street Wire
by Mike Caswell
Barkerville Gold Mines Ltd. and its president, Frank Callaghan, are facing an action in the Supreme Court of British Columbia from a shareholder who wants the company to hold its annual general meeting and wants to install three new directors. Rex Harbour, who owns 7.1 million Barkerville shares, says the company has not held an AGM since Aug. 26, 2011. He says that the meeting is long overdue, especially given the company's precarious financial condition, and he is asking the courts to compel the company to hold the AGM.
Mr. Harbour also claims that a group of investors, which includes former Placer Dome Inc. president Peter Tomsett, is prepared to recapitalize the company. One of the conditions would be that the company's five-member board include Mr. Tomsett and two others that he nominates. Mr. Harbour does not say exactly what role Mr. Tomsett would take on at the company, but strongly hints that he would be part of management.
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| BARKERVILLE WEBSITE |
| Frank Callaghan |
The AGM request is contained in a petition that Mr. Harbour filed at the Vancouver courthouse on Nov. 30, 2012. The petition complains that Barkerville is in financial distress, and states that Mr. Harbour has lost confidence in Mr. Callaghan's ability to run the company. Mr. Harbour points out that Barkerville has spent over $100-million on exploration, and has failed to create an economic prospect.
Mr. Harbour blames the company's precarious state on "mismanagement of all aspects of the business." He says that Mr. Callaghan has received $7-million in compensation over the past 18 months, either directly or through a drilling company he controls. He received the money despite the company's poor financial condition. As long as Mr. Callaghan remains in control, Barkerville's ability to raise money is "severely compromised," the petition states.
In addition, Mr. Callaghan has caused the company to be under a cease trade order since Aug. 14, 2012, according to the petition. The order came after the company issued a news release claiming to have 10.6 million ounces of gold, indicated, at its Cow Mountain property. The company said it could have a further 65 million to 90 million ounces of gold in the same trend. The figures, if correct, would make the discovery one of the largest gold finds in mining history.
The problem, as described in the petition, was that the company could not back up the figures. Barkerville filed a technical report on Aug. 13, 2012, on the property, and the very next day the BCSC suspended the company. The regulator said that the report did not support the resource estimate from Cow Mountain.
According to Mr. Harbour, he and other shareholders lost confidence in management after the suspension. The petition singles out Mr. Callaghan in particular, "whom the Petitioner regards as being directly responsible for the events giving rise to the Cease Trade Order."
As Mr. Harbour sees it, the company desperately needs to raise money to continue operating. He says that a group of investors that he supports is prepared to invest in a private placement of between 25 million and 50 million units, at $1. Mr. Tomsett, who the petition describes as a "senior mining executive with the necessary experience," would be entitled to acquire up to 40 million units.
Prior to the financing, Mr. Tomsett will require that the company hold its AGM and elect him and two others that he nominates to the board. As for Mr. Tomsett's role with the company, the petition says that he has the necessary experience to "direct the management of the Company's affairs, and to deal with outstanding regulatory issues, including directing the Company to take the necessary steps to have the Cease Trade Order lifted."
Mr. Harbour says he requested that the company hold its AGM, but the company refused. Barkerville was required to hold an AGM by Nov. 26, 2012, but it has taken no steps to call the meeting, according to the petition. Mr. Harbour asks that the court order the company to hold the meeting, and that the court appoint an independent chair.
Vancouver lawyer Scott Turner filed the petition on Mr. Harbour's behalf.
Barkerville and Mr. Callaghan have not yet responded. The company last traded on Aug. 13, 2012, at $1.22.