Star DIAM (Wed, 23 Feb) Mentioned - Summary by Will PurcellStar Diamond's ballyhooed new director has an interesting past. Star appointed a new director last week, Larry Phillips, a lawyer and a co-founder of Iamgold Corp. (IMG: $3.98) in 1990. As usual, Star's crew were enthused with the new arrival and his storied past. Ewan Mason, chairman, said that they "look forward to the advice and counsel" of Mr. Phillips as Star Diamond moves the FalCon project forward with its co-venturer, Rio Tinto Exploration Canada Inc. Star's retail shareholders were equally enthused, cheering Mr. Phillips based on his role with Iamgold.
In offering its gushing welcome, Star Diamond pointed to Mr. Phillips's more recent roles, citing the senior positions he holds, including president and chief executive officer of Compass Gold Corp. (CVB: $0.20) since 2017, and president of Corplex Management Services. He also held senior executive positions with Niagara Ventures Corp., a cash shell he launched in the mid-2010s, and Euro Ressoruces SA. Despite the lengthy resume, going back over a decade, a more recent appearance by Mr. Phillips in a company's boardroom, and later in its corner office, went unmentioned by Star Diamond.
Late in 2016, Mr. Phillips was appointed as an adviser to Vishal Gupta's California Gold Mining Inc. The advice Mr. Gupta was seeking covered "matters related to mergers and acquisitions, strategic business development and corporate governance." It must have been sage counsel as a few months later, California Gold nominated Mr. Phillips to the company's board. Investors were clearly receptive to the promotion, as following the annual meeting, Mr. Gupta cheered that all six directors were "elected by an overwhelming majority of the votes cast."
A year later, shareholders appeared less overwhelmed, as Mr. Gupta merely said that all six were elected. After the following meeting, held in 2019, Mr. Gupta said nothing at all about how the vote went. He did have something to say the following year, noting that just three of the company's six directors were re-elected, Mr. Gupta among them. Mr. Phillips was among the three unsuccessful candidates, and he, along with Scott Rasenberg and William Tomlinson, were asked to submit their resignations for consideration by the board.
A month later, Mr. Gupta was still awaiting those resignations, but as it turned out, it was he and not the troika of defeated candidates, who was out on his ear. California Gold fired Mr. Gupta, effective immediately, with Mr. Phillips agreeing to take on the role of president and CEO on an interim basis. Mr. Phillips acknowledged the coup, stating that "since the annual meeting of shareholders, this has been a period of change of leadership for the company." He then promised to focus on "preserving and enhancing shareholder value and addressing certain operational issues" faced by the company.
There was no doubt about his focus: within two months, California Gold had put itself on the block and in the spring of 2021, Kim Tyler's Stratabound Minerals Corp. (SB) stepped up with a share-for-share takeover offer. The bid carried a 104.8-per-cent premium, gushed Mr. Tyler, Stratabound's president and CEO, and Mr. Phillips chimed in as well, deeming it an "attractive offer."
Enough of California Gold's shareholders thought otherwise and they filed proxies depriving the company of the required two-thirds majority needed to approve the deal, but Mr. Phillips and his crew, no strangers to dodging an unfavourable vote, carried on, postponing the company's shareholders meeting while they offered further exhortations to shareholders. In the end, the delay worked, as 71.95 per cent of the company's shareholders agreed to the merger.
The merger closed in the summer of 2021 and while Mr. Phillips moved on, Stratabound added Mr. Rasenberg and Mr. Tomlinson its board. Unfortunately, the ballyhooed premium evaporated like dew on a desert cactus as Stratabound's shares steadily lost value from the 20-cent mark at which they traded at the time of the bid, reaching just 12.5 cents when the takeover closed. Today, Stratabound -- and hence those former California shares -- rose one-half cent to 7.5 cents on 171,000 shares.
Mr. Phillips was also involved in a merger with Compass Gold, where he has been a director since 2012. In 2017, the company agreed to acquire Mali Gold Exploration Ltd., where Mr. Phillips was also a director and shareholder, through a reverse takeover. The merger was deemed a "renewal with former Iamgold Corp. founders," a renewal that saw Mr. Phillips become president and CEO. That combination fared a bit better, but Compass has been slowly drifting off course, deviating southward from the 30-cent mark for the past two years.