Re: Response from BCSC & OSC
in response to
by
posted on
Apr 22, 2011 08:38AM
I also received response from both OSC and BCSC. They have asked for additioanl information so I have attached the following concerns and facts that have been brought up by fellow shareholeders and hope that many of you will also raise your concerns to strenghten our investigation....
Hello,
Please review the planned takeover or merger attempt of Century Mining (V:CMM) that has been getting planned for sometime and definately playing with the CMM shareprice. This stock is definately undervalued due to all this manipulation.
Date | Action – Century Mining |
15-Sep-09 | Century announces a C$20 million equity financing with Kirkland ( Max Finskiy) and Gravity (Fran Scola) |
23-Nov-09 | Century shareholders approve an amended $21 million financing with Finskiy and Associates (Scola), hereinafter referred to as “Finskiy”. |
30-Dec-09 | Disclosure: Finskiy holds 121,122,759 shares representing 36.6% of outstanding shares and including warrants, hold 170,497,759 shares representing 44.8% of outstanding shares if all warrants are exercised |
13-Jan-10 | Three members of Century’s Board of Directors(BOD) resign (Burns, Ambrose and Campoy) and two new directors are named – Fran Scola and W. Lamarque, representing Finskiy. This leaves M. Kent, President and CEO, and W. Sheriden, Corporate Secretary and only Canadian on the BOD. |
14-Jan-10 |
A Shareholder’s Agreement is filed on Sedar. Of note are the following conditions of agreement:
|
19-May-10 | Management Information Circular for AGM is issued. Proposed directors are the current BOD plus Campoy and Hulley. Scola, Lamarque, Hulley and Campoy are deemed to be “Independent” directors. M. Kent is to continue as Chairman of the Board because of her knowledge and experience. Comment: This is a violation of the Shareholders Agreement to have 7 directors and a new Chairman and ensures that Finskiy maintains a 50% representation on the BOD. |
11-Jun-10 | Century AGM – all proposed Directors are elected. The BOD now has 4 American directors, 1 UK director and 1 Canadian director. Comment: The constitution of the BOD violates the Canada Business Corporations Act where at least 25% of the BOD must be Canadian residents. |
11-Jun-10 | All 6 Directors are awarded 250,000 options each. |
28-Jun-10 | Century announces the resignation of President and CEO, Margaret Kent, effectively immediately. Director K. Hulley is named as interim CEO while a global executive search is undertaken for a replacement. It is later disclosed that M. Kent is to receive a $1 million payment as settlement for her “resignation”. Comment: Finskiy appointed directors now constitute 60% of the 5-member BOD and are in control. |
29-Jul-10 | Interim CEO and Director, K. Hulley is awarded 300,000 options, presumably as recognition of increased responsibilities. Director R. Campoy is awarded 250,000 options for undisclosed services. |
5-Jul-10 to 9-Oct-10 | Finskiy exercises 22,933,333 warrants to provide $6,880,000 under the provisions of the Shareholders Agreement to provide working capital, leaving 26,441,667 warrants available for exercise. |
16-Sep-10 | Century announces closing of $5 million PP |
24-Sep-10 | Century announces closing of $1.2 million PP |
19-Oct-10 | Deutshe Bank provides $4 million in funding |
9-Nov-10 | Century announces $1.5 million PP and a $2.5 million Flowthrough PP |
10-Nov-10 | Century announces closing of $1.5 million PP. Comment: The PP had one placee and although the identity was not disclosed, the $90,000 finder’s fee was paid to Fran Scola’s new Russian bride. |
12-Nov-10 | Century announces $5 million PP |
16-Nov-10 | K. Hulley discloses in a conference call that Century has no plans to raise additional funds. He also says that the global executive search for a new CEO is continuing. |
1-Dec-10 | Century announces closing of $2.5 million PP |
23-Dec-10 | Century announces closing of $4 million PP ($1 million less than planned). In summary $18,780,000 in funding is raised between 16-Sep-10 and 23-Dec-10 |
4-Jan-11 | Century announces the appointment of a new President, CEO and Director, Daniel Major. Keith Hulley resigns from the BOD. Major’s previous position was CEO and Director of Ecometals. Other members of the BOD of Ecometals include Fran Scola, William Lamarque and Keith Hulley – all Finskiy appointees to Century’s BOD. Comment: The Century BOD continues to be dominated by Finskiy appointees and is still in violation of the Canadian Business Corporations Act. |
2-Feb-11 |
Finskiy disposes of 25,500,000 of his remaining 26,441,667 warrants in a Sedar filing transaction denoted as “97- Other”. Comment: This presumably removes the warrants that are available to be exercised on demand via a “Funding Notice” by the BOD for working capital – a possible violation of the Shareholders Agreement dated January 14, 2010. Finskiy also disposes of 25,000,000 shares in another Sedar filing transaction denoted as “97 – Other”. Comment: It is unclear whether these shares and the exercised warrants above could be counted as “minority shares” in any future merger vote. |
3-Feb-11 | Century issues a news release on 2010 production and 2011 guidance. Although Q4 production was below expectations, there is no suggestion that additional funds are required. |
4-Feb-11 | Century’s new CEO, Daniel Major, hosts a conference call. Comments: He comes across as very competent and professional and extremely upbeat about Century’s operations and production forecasts. He would not respond to any questions about finances because of being “in a blackout period”. |
8-Feb-11 | Century Mining and White Tiger Gold (WTG) enter into an agreement whereby WTG agrees to provide a bridge loan to Century for $800,000 (disclosed in a March 11 news release) |
8-Feb-11 | Fran Scola disposes of 4,900,000 of his 7,142,857 shares in a Sedar filing transaction denoted as “97 – Other”. Comment: See comment above for 2-Feb-11. |
9-Feb-11 | Century experiences failure of its new cone crusher (disclosed in a March 8 news release). The crusher is inoperable for 9 days. Comment: The crusher failure occurred after Century and WTG agree to a bridge loan – calling into question the need for any funding. The mill throughput in January was 944 tpd which should have generated net revenues (after 667 oz paid to Deutshe Bank) of about $3 million (assuming 3.2 g/t and $1400 gold). San Juan is also generating net positive cash flow in excess of $1million/month. |
18-Feb-11 | Fran Scola disposes of 1,250,000 shares in a Sedar filing transaction as “97 – Other”. Total shares remaining = 992,857. Comment: See comment above for 2-Feb-11. |
22-Feb-11 | Century files with Sedar a Notice of a Special Meeting of Shareholders to be held on April 12. An identical notice is filed by White Tiger Gold. Comment: This leads to speculation of a takeover bid or merger with WTG. |
8-Mar-11 | Century issues an extremely pessimistic news release that includes the news of the cone crusher failure on February 9, and it portrays the company as being in a near desperate financial condition. Comment: The news release was issued with the knowledge that an announcement of a “Business Combination” with WTG was imminent and also such a news release would cause a severe negative impact on the stock price. The share price had risen to close at 76 cents on March 6 and on March 8 it closed at 58 cents on extremely heavy volume of over 12 million shares. Follow-through selling on March 9 dropped the closing price further to 51 cents. |
14-Mar-11 | Century and WTG announce a Proposed Business Combination that already has the unanimous consent of both BOD’S and endorsement of their respective third party financial advisors. Among the onerous conditions is that Century will be obligated to pay a termination payment of $13,500,000 to White Tiger in certain circumstances, including if Deutsche Bank does not approve of the Business Combination by March 25. Comment: How can Century’s BOD agree to such a provision – If DB does not agree, Century pays WTG $13.5 million. $13.5 million is an obscene amount to pay for a termination fee. |
15-Mar-11 |
The offer of 0.4 Century shares for 1 WTG share has an implied value of $1.80/share based on the previous day’s closing price of $4.50 for WTG shares. Century’s stock price opens at 77 cents, briefly peaks at 83 cents before beginning its descent to a closing price of 67 cents as shareholders realize that WTG shares are not worth anything like $4.50/share. 3 days later Century shares close at 52 cents. The CEO’s of Century and WTG, D. Major and G. Cowley host a conference call and are confronted by a polite but hostile group of Century shareholders who consider the offer of 0.4 shares for 1 WTG to be extremely unreasonable. It is an exercise in damage control. D. Major states in response to a question that WTG approached Century at the beginning of March. Comment: That response is inconsistent with the actual facts stated above. |
Here are some extra concerns that I and many more shareholders are experiencing:
.Re: Questions about White Tiger Gold’s Proposed Take-Over of Century Mining
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As a Century Mining investor reviewing events and transactions pursuant to the take-over bid of Century by White Tiger Gold described in the joint press release of March 14/11 (“White Tiger Gold Ltd. and Century Mining Corporation Announce Proposed Business Combination” posted at SEDAR), I find I am left with a number of disturbing questions neither company appears willing to address. In my view, minority sh/hs are not being fully apprised of all relevant information set out helpfully in OSC Rule 62-504 Take-Over Bids and Issuers Bids (Rule 62). Gaps in the timing and filing of material changes, unexplained appearances and disappearances of key personnel and, perhaps most troubling, the number and value of share transactions made clearly in contemplation of the proposed merger – all of this suggests to me the need for a formal review/intervention by the Commission "on or before May 12, 2011” when, according to the joint press release, minority sh/hs will vote on the bid.
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The Arrangement Agreement
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To date, contrary to Rule 62/ Part XX of the Ontario Securities Act requirements, aside from the March 14th press release, Century has not advised its sh/hs how to vote the take-over. In fact, the press release represents the only formal notice to sh/hs of such Arrangement Agreement (the Agreement), which is dated March 11/11. Interestingly, the document is not available at Century’s Web site (White Tiger Gold has no Web site) - only at SEDAR and only as of March 21st. It was therefore a revelation, to say the least, to see reference on page one to "a non-binding restated and amended letter agreement dated February 17, 2011 and accepted and agreed to by Century on February 18, 2011 (the “Letter Agreement”) establishing the general terms for such acquisition." As yet, I have been unable to locate this crucial document if it even exists. If it does, why weren’t sh/hs informed?
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The March 14th press release states further, "The board of directors of Century has received a written opinion from Blair Franklin dated March 11, 2011 that, subject to the assumptions, explanations and limitations included in such opinion, the consideration to be received by the shareholders of Century under the Business Combination is fair, from a financial point of view, to such shareholders, other than Maxim Finskiy and Francis Scola." No such opinion has been provided to investors. Nor has the opinion of White Tiger's advisors, Moelis & Co., a New York investment banking firm that will profit considerably if this deal completes. The press release says only that the Moelis opinion will be "included in a management information circular of White Tiger to be delivered to the sh/hs of White Tiger." Are Century sh/hs not to be included? If not, why not?
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The joint March 14th press release provides that the Agreement is fully executed, but how can this be when it’s unclear whether either signatory had authority to sign without first notifying sh/hs that such an agreement was even contemplated?
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A White Tiger announcement Feb. 22/11 of a sh/hs Special Meeting April 12th similarly contained no mention of the Letter Agreement purportedly executed Feb. 18/11 and referenced on page one of Arrangement Agreement. But a White Tiger SEDAR filing dated March 7/11 describes a mysterious guarantee agreement of Feb. 25/11, in which “The undersigned, Andrey Shchetinin, being the duly appointed Corporate Secretary of the Company, hereby certifies for and on behalf of the Company, and not in his personal capacity, that the English language translation referenced above is, in all material respects, a complete and accurate translation of the original Russian language version of the Agreement.” Again, there is no mention of the Arrangement Agreement or of the effect this new contract might have on the proposed Business Combination.
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Appearance and Disappearance of Key Personnel
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The March 14th press release states, “It is anticipated that Maxim Finskiy, currently Executive Chairman of White Tiger, will be Executive Chairman of the combined company, Daniel Major, currently President and CEO of Century, will be President and CEO of the combined company and Dr. Geoffrey Cowley, currently Chief Executive Officer of White Tiger, will be Chief Operating Officer of the combined company." Little or no information has been provided to investors about the background/qualifications of the White Tiger appointees. Those of us who made inquiries of the Century contact listed in the press release discovered to our surprise that Peter Ball, Vice-President of Investor Relations, had been appointed Executive Vice President of Corporate Development at Argentex Mining, “effective March 11, 2011,” according that company’s press release of March 14th. Mr. Ball was long gone by the time the Business Combination with White Tiger was announced! Sh/hs with questions were otherwise advised to join Dr. Cowley on a telephone conferencecall March 15 th, which failed to yield any information of substance. Unfortunately, unlike most gold miners, White Tiger does not maintain a Web presence, so investors have no way, really, beyond SEDAR of acquiring information from or about the company in writing.
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Interestingly, on Jan. 4/11, Century announced in a press release the appointment of Daniel B. Major as the new President and CEO, a significant appointment the rationale for which was never properly explained. Was he hired specifically to negotiate the Business Combination, I now wonder? No mention of the take-over bid either in this announcement or anywhere else until the March 14th press release.
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Interestingly, on Jan. 6th, White Tiger CEO Geoffrey Cowley’s contact information is listed at SEDAR as:
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3rd Floor, 111 Buckingham Palace Road
London, UK SW1W 0SR
Tel: +44 783 344 5961
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In the Jan. 7th release (“Common shares of White Tiger Gold Ltd. to commence trading on TSX at market open on December 31, 2010”), he’s in the Caribbean, where the company is incorporated:
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Craigmuir Chambers, P.O. Box 71
Road Town, Tortola, British Virgin Islands
Tel: +44 783 344 5961
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In a SEDAR filing dated March 2/11 (“White Tiger Gold obtains revolving credit facilities for up to C$23.8 million”), Mr. Cowley records for the first time an e-mail address - drgpc@edcholdings.com.
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Exemption from Providing Independent Valuations
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To date, there has been no information/legal opinion provided to sh/hs to support the extraordinary assertion in the March 14th press release and in the Agreement that "Century is exempt from the formal valuation requirement as its securities are not listed or quoted on a specified exchange as outlined in MI 61-101." Yes, and according to the same press release, "Each of the Business Combination and the Bridge Loans constitutes a 'related party transaction' for White Tiger under MI 61-101. No formal valuation on the part of White Tiger is required under MI 61-101 in respect of the Bridge Loans and White Tiger is exempt, pursuant to section 6.3(2) of MI 61-101, from the requirement to obtain a formal valuation in respect of the Business Combination." Is this true? I would be most grateful for any assurance you might provide. However, even if you accept such statements as true, Policy 5.9 Protection of Minority Security Holders in Special Transactions in the case of valuation exemptions provides that "the Exchange may nonetheless require an Issuer to provide evidence of value to the Exchange." Please do. Similarly, have you any record of any application(s) by White Tiger to the Exchange for a discretionary exemption(s)? I am aware of no such record.
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Questionable Value of White Tiger Assets
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The exemption from independent valuations claimed in the purported Agreement is especially troubling when there are serious questions about the value of White Tiger’s assets. Again, White Tiger has no official Web presence aside from SEDAR, which is unusual in the industry, so there is very little information about the company and its evolution available to investors. Interestingly, it has only been trading at the TSX since January.
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An overview of White Tiger at GoldMinerPulse.com (GMP), a Canadian Web-based firm in Vancouver, B.C. that provides independent analysis of the gold and silver industry (see http://www.goldminerpulse.com/blogs/whiteTigerGold.php), suggests the stock is trading too high. At market closing March 30/11 with an Average Ore Value per Tonne of US$66.06, White Tiger recorded a Market Capitalization per oz of Gold In Situ of US$799.16 - an extraordinary result when gold miners with comparable ore grades were trading with a market cap per ounce of gold equivalent at a modest US$25 to $200. The blog suggests further that resource disclosures at the White Tiger Savkino gold project may not be compliant with (NI) 43-101 requirements. Please advise.
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A White Tiger press release of Jan. 6/11 (“White Tiger Gold Confirms No Corporate Developments”), states that “at the request of market surveillance onbehalf of the Toronto Stock Exchange, White Tiger Gold is issuing this news release to confirm that there are no corporate developments and the Company is not aware of any material undisclosed development that would cause recent movements in the Company's share price.” This suggests the Exchange, too, had some questions about the company and its stock trades. I would be grateful for any assurance from you that any question has been fully resolved.
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Equally troubling is the disclosure of the Loan Agreement (Second Bridge Loan) dated March 11/11, which states: “The Lender and the Borrower have entered into a letter of intent dated January 24, 2011 and accepted by the Borrower on February 8, 2011, as restated and amended on February 17, 2011 and accepted by the Borrower on February 18, 2011 (the “LOI”) pursuant to which the Lender made a non-binding proposal to acquire all of the issued and outstanding securities of the Borrower pursuant to a share exchange take-over bid or plan of arrangement .” What a revelation this was to sh/hs – not just one but two major transactions that would affect a proposed Business Combination not announced until March 14th even though clearly the proposal was well along in its development as early as Jan. 24th.
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Interestingly, a Century Material Change Report of March 5th states that “Century Mining Corporation (“Century” or the “Company”) announced that on February 9, 2011, the mill facility at its Lamaque gold mine in Val d’Or, Québec, Canada, experienced a failure of its cone crusher that placed the total crusher circuit inoperable until February 17, 2011, at which time the Company was able to implement a temporary solution and resume operation. Final repairs and replacement of the cone crusher were completed on March 6, 2011.
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“The losses in mill throughput resulting from the crusher failure has had an adverse impact upon the Company’s cash flow and its available funds. This severe constraint on funds availability forced management to halt the operations of the contractor responsible for the development of access to the North Wall mining area, which is now expected to delay mining in this area until May at the earliest, subject to funding availability.”
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Was this equipment failure reasonably foreseeable at the time the two loan agreements were made? If so, why weren’t sh/hs informed?
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After the announcement of the sh/h meeting May 12/11, there are no further disclosures by Century regarding the take-over bid – apart from a disturbing press release of March 21st (“Century Mining Corporation announces receipt of Deutsche Bank consent to the proposed Business Combination with White Tiger Gold”), which seems to treat the bid as a fait accompli. Is it? Under Ontario securities law, is either company permitted to enter contracts pursuant to a Business Combination proposal that may never be approved?
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Significant Share Transactions Before and After Announcement of Take-Over Bid Agreement
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In view of the above, I am very concerned about the effects of the take-over bid described at page three of a White Tiger Material Change Report dated March 21s, , specifically that :
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“Mr. Maxim Finskiy, the Executive Chairman and a director of the Company, beneficially owns and/or exercises control or direction over approximately 27% of Century’s outstanding common shares and approximately 74% of the outstanding common shares of the Company. Mr. Francis Scola, a director of the Company, beneficially owns and/or exercises control or direction over 992,857 common shares of Century, representing approximately 0.24% of the issued and outstanding common shares of Century.”
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Ultimately, in view of the lack of transparency on both sides of the take-over bid, I question the legality of all share transactions made since January, 2011, all of which must have occurred in contemplation of the proposed Business Combination, which was unknown to sh/hs until March 14th. I would be most grateful for any assurance/clarification you might provide. While I am no expert in these matters, my understanding with respect to take-overs is that the Exchange favors transparency and independent review. I applaud the new reporting requirements created under National Instrument (NI) 51-102 Continuous Disclosure Obligations effective Jan. 1/11, particularly Item 13 Interest of Management and Others in Material Transactions., which would assist investors mightily in this case, in my view.
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I would be pleased to provide any further information at your convenience.
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Thank-you for your kind attention. I look forward to hearing from you.