It’s tough to get anyone to pay attention when you’re running a four-cent stock.
But then the name Sprott Inc. shows up. And Institutional Shareholder Services. And Glass Lewis. And Joe Groia, the lawyer. And Navigator, the crisis management firm. And a wagonload of mud slinging. And a full-on proxy fight with a voting deadline of this week.
All of which leads the reasonable person to ask: what the heck is going on here?
The company in question: Alexandria Minerals Inc., a penny miner with dreams of gold. The agitator: geologist and ousted CEO Eric Owens, who founded the company more than a decade ago. Owens found himself turfed from the firm in February four days after he publicly announced his intention to call a shareholder meeting to remove three board members, in what the chairman of the board calls a “costly and distracting proxy fight.”
Which explains how we come to find Owens in the offices of Navigator in the umbra of Bay Street looking very un-Bay Street like, being self-reflective. “I’m not a shark, as you can probably tell,” he says, to which one can only nod in understanding.
“At the end of the day this is costing me and my family a lot of money and if we lose we’re going to be out of pocket a lot of money.”
What’s a lot of money?
“Half a million dollars, probably. There’s lawyers. There’s Navigator. It’s an industry. The proxy industry is a good-sized industry. There’s lots of people with their hands out.”
There are undisputed facts. As CEO of Alexandria, Owens assembled a property package straddling the Cadillac Break, the east-west fault zone made famous by the long ago gold discoveries of Mgantic and Rouyn-Noranda and others. The resource potential is not just a distant memory, Owens insists. If 100 million ounces have been recovered in the past century, well, there’s a lot more where that came from.
Exploration is expensive. Enter Sprott Private Wealth Management, agreeing to broker a private placement with a goal of a smidgen more than $5 million. That was November 2016. Sprott raised about $5.2 million. Last April, Eric Sprott personally made what Alexandria deemed a $2-million strategic investment through a numbered company.
“My whole history, I would never have thought I was going to be running a junior exploration company,” says Owens, reflecting on the heady days. Not all that long ago he was working as a consultant for junior companies thinking, “I can do it better than those guys are doing it.”
In Owens’s description, what followed was one of those night-of-the-long-knives dramas, except this one went on for weeks. A new chair, Peter Gundy, was brought on. Gundy has served as a Sprott-nominated director at an unrelated company, but did not respond to a query from the Star asking for confirmation that his appointment at Alexandria was advanced by a Sprott partner.
“It seemed like a good idea at the time,” Owens says, fatefully, of Gundy’s appointment. “And so we decided, OK, hopefully this will help move the story ahead.”
By moving the story ahead, Owens says he means support of an aggressive drilling program. He also says that by last December he and Gundy were engaged in a telephone yelling match with each player saying something along the lines of, “No, I’m in charge of running the company.” Gundy chose not to comment on the validity of the anecdote.
It’s complicated. Owens does allow that an alternative strategy, supported by a majority of the board, was one he did endorse, albeit briefly. That plan? To merge the company with another junior miner. “This other company put the proposal in, it was too low and basically I didn’t want any part of it.”
A special committee was struck in December to evaluate potential transactions. Owens voted for its formation. “It seemed on the surface a benign and possibly beneficial thing,” he says. “But in fact what happened was I was not getting the type of control I needed to run the company.”
Owens’s version of events makes him sound guileless throughout.
The board’s version? That Owens pursued his own agenda by raising funds to advance the drilling program, without board approval. That he was ordered, in writing, to stop accepting subscription agreements. (“The board never officially told me to stop,” Owens insists.) That Owens refused to co-operate with a “third party” investigation struck to review Owens’s conduct.
“I refused to co-operate with them,” Owens concurs, challenging the “independence” of the investigation by asserting that the law firm Bennett Jones, which he says already served as legal counsel to the special committee, was in charge of the investigation and thus was not arm’s length. Alexandria declined comment on this point. In February Owens was fired.
In an email, Peter Gundy says this: “Owens was terminated for cause following an internal investigation that uncovered an unauthorized financing scheme whereby he accepted investors’ funds into his personal lawyer’s trust account, without the Board’s approval or knowledge. Mr. Owens’ proposed financing was reviewed by independent financial advisors and found to be dilutive and inferior to other alternatives being considered by Alexandria and not in the best interest of shareholders of Alexandria. Only Alexandria’s nominees have a clear, credible plan and are committed to optimizing shareholder value by funding the Company through available, non-dilutive measures, hiring new management, and focusing on Alexandria’s core asset straddling the Cadillac Break.”
Owens swiftly filed a requisition for a shareholder vote.
And where are the votes? Eric Sprott and Sprott Inc., representing 6.95 per cent and 3.28 per cent of the shares, are behind the board, demonstrating, Peter Gundy said in a press release, that “we were right to turn the page on Eric Owens.” Glass Lewis and Institutional Shareholder Services announced that they do not find the Owens/dissident shareholder case to be “compelling.” Long-time shareholder Agnico Eagle declined comment on its voting intentions.
Together with his family Eric Owens has roughly 2.2 per cent of the stock. Of course, he is spending tireless hours convincing investors to vote his way, or change their vote, which they are entitled to do. The voting deadline is officially Friday at 11 a.m. The special meeting is scheduled for July 24.
Through it all it is Joe Groia, who strikes at the heart of the matter. Owens retained Groia to launch a lawsuit, currently under seal, to prevent the sale of the company prior to the shareholder vote. “What I think is important,” Groia says, “is that the shareholders are now going to have a clear pathway to make a decision here and they’re being presented with really two very stark opportunities for this company … I’m hoping that the meeting will be conducted fairly and appropriately and we’re not going to get into any shenanigans where votes are going to be disallowed and that kind of thing.”
No shenanigans? What are the chances?