Aurelian Resources Was Stolen By Kinross and Management But Will Not Be Forgotten
The company whose shareholders were better than its management
Message: To the Globe & Mail again
Dear sir,
I have to confess that I am puzzled by the total lack of response of Canada's Premium National newspaper to the proposed merger of Aurelian Resources (ARU) and Kinross Gold Corp. Practically every day I see reports in the Globe and Mail about investigations being carried out by the SEC in the U.S. and/or investigations being carried out by the various regulatory bodies in the U.K. What is surprising is the almost complete, cone of silence, when it comes to Canadian Regulatory bodies, the most important of course, being the OSC.
The fact that the OSC is either a completely toothless organization, or refuses to enforce the regulations that come under its' mandate is an, open for debate, question in itself.
The particular situation that I referred to at the begining of this letter has enough information freely available that one has to wonder why the Globe and Mail has not picked up, at least the hint of a scandal around this merger. I would hope that you have at least one investigative journalist sniffing around the edges, as I am well aware that you have had numerous emails on this matter.
If I may, I would like to refresh your memory on some facts concerning this deal.
Aurelian Resources is a gold exploration company currently active in Ecuador. Nearly two and a half years ago a gold/silver deposit was discovered. The Frute del Norte discovery (FDN). This discovery has an NI 43-101 compliant inferred resource of 13.7m oz AU and 22.4m oz AG. In addition it has been described by ARU CEO Anderson as Blue sky. This discovery has been called one of the richest in the last 15-20 years and that is not counting the Bonza discovery of 500,000 oz of AU and approx 5m oz AG, also there is roughly 30 more targets identified within the companies concessions.
To digress a little. The mining law in Ecuador was extremely lax allowing, 'fly by night' companies to take advantage, amassing large concessions very cheaply with no intentions of exploring, many hoping for a quick flip. The environmental rules were also badly in need of ammendment. On April 18th President Correa called a halt to all exploration for 180 days whilst a new mining law was compiled. This nresulted quite naturally, in a rather precipitous drop in the shares of mining companies active in the area, including ARU.
From what I now understand ARU and Kinross, unknown to ARU share holders have been in communication for over the past year. Kinross being allowed into ARU data room last December.
During the first 3 months of this year there appears to have been considerable divestiture of ARU shares by the BOD and management. At the end of March/begining of April, one of the founders of Aurelian, Dr Keith Barron rather abruptly resigned.
Drilling had been ongoing at FDN until the mandatory stoppage. This drilling, approx 80 holes, was apparently mostly infill, but we really don't know. We are aware that one deep drill in operation, I believe in an attempt to find the western edge of what is called the, 'Pull apart basin,' I also believe that an aerotem had been partially completed. At the AGM last June shareholders were advised that these results would be forthcoming, so far nothing has been publicly announced. It is my opinion and the opinion of many others that Kinross has received these results. As shareholders are we not entitled to the same information as Kinross? Is there not a fiduciary duty of the BOD to divulge that information to all? There is the small matter of the high cut-off grade at 2.3 grams per ton, in light of the richnes of this discovery I find that a bit odd.
Why did ARU approve a private placement of $71m to Kinross, which provided them with 15m ARU shares at $4.75? Especially when ARU did not require the money at this time. The cheap 15m shares, to my thinking, gave Kinross a 15 jump start over any competing bid. Prior to the acquisition announcement CEO's of mining companies active in the area, including Mr Anderson had seen copies of the draft mining law and declared it a workable document. Lets not forget that the Ecuadorian government has publicly said that they want responsible mining in the country. to that end they had worked not only with mining company executives but with advisors from Peru and Chile in compiling this law. It was only after the acquisition announcement that Mr Andersion brought up the political risk bogeyman.
The offer from Kinross was to acquire all of ARU common shares on a basis of 0.317 Kinross shares, and 0.1429 of a $32 Kinross purchase warrant for each ARU share, exercisable in 5 years. (An absolutely worthless piece of paper). The total consideration in their eyes would be $8.20 for each ARU share. This offer was patently ridiculous when made and considering the current price of Kinross absolutely ridiculous now. I might add a small addendum to this letter: Strangely many maps and data have disappeared from the Aurelian website.
I sincerely urge you to look into this affair, as obviously the OSC is once again in sleep mode. Surely some enterprising journalist within your organization can delve further into this matter and try to put some flesh on the bones that I have only outlined here.
Is there a fiduciary failing by Aurelian BOD? Does anything within this deal constitute illegal collusion? I can't say, but i do think that this deal requires a closer examination by those who have the wherewithal to carry it out.
Try reading the Aurelian Directors circular and the Kinross offer to purchase document then please turn to Agoracom.com and look at the ARU Forum.
Thank you very much for taking the time to read this letter,Sincerely, xxxx
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