St. Elias Warns Shareholders: Dissidents Want Reprimanded Financial
Salesperson On the Board And Have Failed To Provide Adequate
Disclosure
VANCOUVER, British Columbia,
Dec. 13, 2012 /PRNewswire/
-- St. Elias Mines (TSX-V: SLI)
(U.S. Clearing Symbol: SELSF) (Frankfurt Exchange: EKL) today
responded to a dissidents' circular issued by Gilby Len Hastman and Darcy Kim Hastman. Based on a preliminary
assessment, St. Elias believes the dissidents' disclosure is
inadequate and that the dissident nominees do not deserve
shareholder support.
St. Elias believes that the biographies in the dissident
circular confirm that none of the five dissident nominees should be
elected to the Board. Four of the five do not have mineral
exploration, corporate finance or public markets experience. This
alone should be enough to alarm shareholders but there are even
more serious issues with the fifth dissident nominee, James Rainbird, a reprimanded financial
salesperson.
The dissidents want Mr. Rainbird on the St. Elias Board despite
his admitted past misconduct. As disclosed in the dissidents
circular, as a result of his transgression the Mutual Fund Dealers
Association of Canada (MFDA) in
2010 not only reprimanded him but also prohibited him for five
years from acting in a supervisory capacity for any MFDA
members.
However, the dissidents failed to disclose the nature of Mr.
Rainbird's misconduct, which involved hundreds of victims, millions
of dollars and flagrant breaches of securities laws over a period
of four years. This omission is very misleading. Only with a full
description of the transgression can shareholders begin to
understand the depths of the problems that St. Elias may face under
the control of the dissidents.
"Shareholders should be concerned," said Lori McClenahan, President and CEO of St. Elias
Mines. "The details of Mr. Rainbird's infraction suggest that he is
not capable of identifying and managing risk and may not act in the
best interests of St. Elias shareholders. Even worse is the failure
by the dissidents to disclose these details. This must be corrected
immediately. What else are the dissidents hiding? And what does
this say about the dissidents' likely conduct if they were on the
St. Elias board?"
Continued Ms. McClenahan, "The dissidents have not provided any
details of how they intend to advance St. Elias' portfolio of high
potential properties, nor do they have proposed a management team
to operate St. Elias or the ability to raise capital. The
combination of inadequate disclosure, lack of plans and
inexperience means that the dissidents do not deserve shareholders'
support."
Details of James Rainbird's
Reprimand and Transgression
Mr. Rainbird was reprimanded by the MFDA even though he
cooperated with its investigation and admitted to misconduct. He is
prohibited for five years from acting in a supervisory capacity as
a mutual fund salesperson. The MFDA demonstrated its lack of
confidence in Mr. Rainbird by also requiring that he be subject to
retraining and a six-month period of "close supervision."
According to MFDA disciplinary documents that the dissidents did
not disclose, Mr. Rainbird, four associates and various others
under their supervision sold to 656 clients a total of $50.2 million of high-risk debentures issued by a
company called FactorCorp. Financial Inc. The sales occurred
between June 25, 2003 and
April 1, 2007. Shortly afterward,
FactorCorp went bankrupt.
Mr. Rainbird personally sold the debentures to 167 clients and 7
people that he supervised sold the debentures to 226 clients. For
virtually all of these clients the purchase was unsuitably risky,
based on "know-your-client" information collected at the time of
purchase. According to the MFDA, these debentures could only be
sold to wealthy or sophisticated investors who qualified for an
accredited investor exemption. At the time of purchase, none of
these clients qualified.
These details and more are described in the MFDA disciplinary
documents, which shareholders can find at www.steliasmines.com
under the AGM tab and at the MFDA website under
http://www.mfda.ca/enforcement/cases08/200827.html. St. Elias urges
shareholders to read these disciplinary documents carefully.
Why shareholders should be concerned
Given that Mr. Rainbird and his fellow-dissidents are now
standing for election to the Board of a high-risk junior mineral
exploration company, St. Elias believes the details of the
transgression, and the dissidents' failure to fully disclose it, is
disturbing. The dissidents attempted to downplay the gravity of Mr.
Rainbird's transgressions by referring to them only as "allegations
[that] were centered around the aspects of inadequate training,
compliance and supervision."
Shareholders of St. Elias deserve more fulsome disclosure from
the dissidents. Shareholders should also be troubled by dissidents'
hypocrisy, given the high disclosure standard that the dissidents
are suggesting they will establish. In their circular, the
dissidents claim that their vision is based first and foremost on
"timely, open and candid communications with the shareholders."
Clearly, the dissidents have already failed to meet their own
standard. They have made the decision that candid communications
excludes a description of Mr. Rainbird's misconduct. They think
shareholders don't need to know. We think this disclosure decision
by the dissidents is strong evidence that they don't deserve your
vote.
The inadequate experience of the other four dissident
nominees
As noted above, St. Elias believes the experience of the other
four dissident nominees is sorely lacking. None of them have
disclosed any experience in mineral exploration. St Elias also
notes that:
- Dissident nominee Ted Rutherglen
has held five jobs in the past six years and his career has moved
steadily backwards. Since 2011 he has had the title of Manager, a
more junior position than Director, the title he had from 2007 to
2011 and also more junior than the title of Vice President, which
he held for less than a year between 2006 and 2007. His career path
does not invite investor confidence.
- The experience of dissident nominees Gilby Len Hastman and Darcy Kim Hastman involves a closely-held
electrical contracting business and the experience of dissident
nominee Richard Alexander Defreitas
involves a closely-held oil services business. These businesses
have little or no relevance to St. Elias, a publicly-traded mineral
exploration company.
- In addition to downplaying Mr. Rainbird's inappropriate
conduct, the dissidents made a misleading claim in Mr. Rainbird's
biography regarding his role at Intigold Mines. The Circular states
that Mr. Rainbird. was the President and Chief Executive Officer of
the TSXV-listed Intigold Mines Ltd. ("Intigold") from August, 2007
to December, 2010, and claim that he was also the Founder of
Intigold. This is false. Mr. Rainbird was not the Founder of
Intigold and was only the President and Chief Executive Officer of
Intigold Mines Ltd. from October 26,
2010 to December 3, 2010, a
period of about 5 weeks.
- Mr. Rainbird and Mr. Defreitas are not eligible for election
under the Company's articles because they failed to provide their
consent to act as directors of the Company within the specified
time frame.
The dissidents don't have a plan for St. Elias, just
criticism
The dissidents have not provided any plans for St. Elias and
don't say who will lead the Company. Meanwhile, the
dissidents have leveled unfair criticisms at the Company's nominees
and management. Members of this team have assembled St. Elias'
impressive portfolio of mineral properties and have acted prudently
to explore and finance them.
In the mineral exploration business there is always a risk that
drilling results will disappoint. The key is to know when to adjust
strategies as new facts emerge. This is precisely what the Board
and management of St. Elias has done, specifically with regard to
the Company's flagship Tesoro gold project in Peru.
Nowhere do the dissidents say how they would advance the
Company's high potential exploration properties. In fact, nowhere
in their materials do they even mention that St. Elias is a mineral
exploration company. They also deliberately distance
themselves from the operations of the Company, saying that all of
the dissident nominees will be independent and none expect to be
employed by the Company.
St. Elias has not hidden a gold discovery
According to internet conspiracy theorists who appear aligned
with the dissidents, St. Elias has fraudulently hidden a giant gold
discovery at Tesoro. It is only possible to jump to such an absurd
conclusion if the critic doesn't have any knowledge of how value is
created in mineral exploration.
Consider these facts:
- Management disclosed accurate and full drilling results in
compliance with the National Instrument 43-101 rules that govern
mineral exploration disclosure. The results were disappointing but
accurate.
- If the deep drilling at Tesoro had really discovered a giant
gold deposit, it would have been in management's best interest to
disclose it. Disclosing positive results would have enhanced
the value of St. Elias and opened up potential new opportunities to
advance the Company and its properties.
- Management stopped its deep drilling program at Tesoro because
it was the responsible thing to do when early results did not live
up to expectations.
- The 3D geophysical images that showed anomalies at Tesoro were
tools to inform mineral exploration. However, one cannot really
know what is in the ground before drilling commences.
- In the months following the decision to stop deep drilling at
Tesoro, St. Elias has sought expert advice to inform a new
exploration and development strategy. St. Elias expects to disclose
more about that strategy to shareholders once fully developed and
likely prior to the Annual General and Special Meeting.
St. Elias: successfully financed in challenging
conditions
St. Elias raised $13 million in
challenging market conditions over the past three years and has
prudently deployed its capital. This is a significant
accomplishment that speaks to the experience of the management team
and potential of all of the Company's exploration projects. The
dissidents claim that these funds have been misused for promotion.
Consider these facts:
- Exploration is a capital-intensive business. Management needs
to take a long-term view and ensure that there is a steady pipeline
of funding to advance future phases of exploration. This requires
outreach to a wide net of potential investors, which calls for
travel and marketing efforts.
- The dissidents' criticized St. Elias for increasing costs over
the four-year period ended May 31,
2012 but failed to mention this took place during a period
of significantly increased exploration activities. In fact, for the
year ended May 31, 2012 exploration
expenses totaled $5.2 million, up
1,860% from $266,074 in the year
ended May 31, 2009. It was unfair and
misleading of the dissidents to isolate travel and operating costs
without mentioning the corresponding increase in exploration
activity.
Vote for an experienced and capable Board
The nominees put forward by the Company are experienced and
capable. Under their supervision, the current management team will
advance our exploration properties and raise awareness of St. Elias
in a prudent and measured fashion – all with a view to surfacing
value for our shareholders.
- Don't put your faith in dissidents who omit crucial details
from their disclosure, whose only nominee with any public company
experience is a reprimanded financial salesperson, and who won't -
or can't -provide any exploration of financing plans for the
Company.
- Recognize that investing in a junior exploration business comes
with risks. Opt for a Board that has the right experience and is
capable of minimizing risk and maximizing the opportunities
ahead.
This is not a short-term game. The Board and management of
St. Elias are in it for the long-term and remain committed to
creating value for our shareholders. Please vote your WHITE proxy
today.
Vote the WHITE proxy for an experienced board
Please review the Management Information Circular at
www.steliasmines.com or www.SEDAR.com and vote only the WHITE
proxy. Vote today. If you have questions or seek assistance with
voting your WHITE proxy, please call our proxy solicitation agent,
Georgeson toll free at: 1-888-605-8412 or askus@georgeson.com.
About St. Elias
St. Elias is a gold-focused
exploration company led by an experienced management team and
active in Peru and British Columbia. St Elias' properties have
high potential and are located in two of the most prolific mining
regions of the world. For additional information on St. Elias and
its projects, please visit us at
www.steliasmines.com or call Danny Aaron at 1-888-895-5522 (toll free US and
Canada).
If you have questions or need assistance voting your shares,
contact our proxy solicitation agent, Georgeson Shareholder
Communications Canada Inc. at 1-888-605-8412 (North American toll
free) or email: askus@georgeson.com.
ST. ELIAS MINES LTD.
(signed "Lori
McClenahan")
Lori
McClenahan, President, CEO and Director
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
This News Release may contain forward-looking statements
including, but not limited to, comments regarding the timing and
content of upcoming work programs, geological interpretations,
potential mineral recovery processes, etc. Forward-looking
statements address future events and conditions and therefore
involve inherent risks and uncertainties. Actual results may differ
materially from those currently anticipated in such
statements.
For more information contact:
St. Elias Mines LTD.
P: (604) 669-4677
Toll Free: 1-888-895-5522
SOURCE St. Elias Mines Ltd.