RESOURCES

Noront agrees to board shakeup

ANDY HOFFMAN

MINING REPORTER

October 28, 2008

A bitter proxy battle for control of Noront Resources Ltd. ended in a last-minute compromise that will split representation on the board equally between nominees from the company and those of a hedge fund that had sought to replace the entire slate of directors.

Richard Nemis, the junior miner's president and chief executive officer who spearheaded the fight against Toronto hedge fund Rosseau Asset Management Ltd., is stepping down, but has been named "chairman emeritus of Noront for life." The title is largely symbolic and Mr. Nemis will not be on the board. He will, however, remain a special adviser to the new directors, including three nominees from Noront and three from Rosseau.

"It was either that or give control to the hedge fund. We had a toss-up. The vote was that close so we really had to make a decision," Mr. Nemis said in an interview.

The 70-year-old steered Noront to prominence last year when it discovered a series of promising nickel, copper and chromite deposits in the James Bay Lowlands area of Northern Ontario that has been dubbed the "Ring of Fire." Rosseau, which owns about 9 per cent of Noront's stock, had sharply criticized the company and Mr. Nemis for wasting shareholder money, exaggerating the deposit's potential and failing to properly develop the property. Noront stock had plunged 85 per cent in a year.

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"Since the beginning of the year we started losing faith in Noront's management and the board. We felt changes were needed to make the most of their significant nickel and chrome discoveries, and it turned out quite of few other shareholders agreed with us," Rosseau president Warren Irwin said.

The deal, which will see Noront's new board commence an immediate search for a new CEO who is expected to fill the seventh spot on the board, came after a marathon round of weekend negotiations. Shareholders were set to vote today on either the Noront board nominees or the Rosseau slate, which included several former executives of Aurelian Resources, the miner taken over by Kinross Gold Corp. in a controversial deal earlier this year.

Rosseau had won the support of several prominent Noront shareholders, including Sprott Asset Management, Pinetree Capital Ltd. and mining industry investors including Pierre Lassonde and Rob McEwen, sources said.

However, scores of Noront retail investors used online chat groups and Internet and phone campaigns to rally support for votes against the dissident proxy challenge.

It was reminiscent of an ultimately unsuccessful online campaign by Aurelian retail investors against the Kinross deal. In both cases, former Aurelian CEO and new Noront director nominee Patrick Anderson was the target of retail investor anger.

Mr. Nemis said that the ex-Aurelian managers "certainly would not have been my first choice," for board seats because Aurelian shareholders "got shafted" in the Kinross deal.

NORONT RESOURCES (NOT)