Posted on December 17, 2012 by Steve

The St. Elias proxy fight has been ongoing for months. It has, without doubt, brought the worst out in many St. Elias Mines posters. The line between right and wrong has been obliterated. This is a childish mud-slinging match and is more about destroying Lori McClenahan then control over St. Elias Mines.
For the right or wrong reasons I believe that St. Elias Mines stock holders will win the proxy battle. They will oust Lori. What will become of the company after that is unknown. I hope that the dissident nominees move quickly to hire a new management team with the capabilities to lead this company towards new prosperity. In my opinion, the nominees do not have the skills required to run the company.
When I look back over the past 1.5 years I am amazed at how the majority shareholders have shifted from a total and unconditional love for Lori McClenahan to a total hatred of her.
Over a year ago I started to raise alarms about SLI on Agoracom. First there was the private placement. I was not impressed when Lori did a private placement at $1.80, announcing it on a single day price drop from about $2.00 to which it returned the following day. My complaints fell on deaf ears. Posters argued that it had to be done to keep the stock in strong hands. Then was the financials which indicated that St. Elias Mines was burning more cash in travel and promotion then on exploration. I was offended and complained. Once again my complaints fell on def ears. The travel was rationalized as necessary to have buyers ready in the event of a buyout. My next complaint was the over use of options that where being granted in what appeared to be a very generous behaviour to insiders. This was rationalised as an acceptable way to financing the exploration activities without the need for institutional money. My next complaint was that the idea presented at Agoracom that Kevin from Quantec was in Peru working on Tesoro was just flat-out insane. Posters claimed that this was what Lori told them at the AGM. Not being there I did not have context for the statement. I contacted Quantec directly and found out that they had not talked with St. Elias Mines for about a year or more at that time. Again, my complaint fell on def ears. I was accused of working for the bashers and the shorters. By this time I was already banned at Agoracom on at least one occasion.
Oddly, many of my complaints from a year ago are among the very same complaints being touted by the dissident posters who ridiculed me for having those very opinions. Even more strange is that even after they came to see things in the same light as myself they still wanted to ridicule and discredit me. The reason is that they completely shot past the realm of reality and stumbled into a world of conspiracy and deceit. I refuse to make that leap. It just makes no sense to me.
The conspiracy dictates that St Elias Mines is with holding material information. The news flow clearly indicated that all assays above defined grades had been released. If there was no information for hole X or meters x through y then there was nothing there to report. I don’t think the company lied to shareholders. The conspiracy dictates that St. Elias Mines used field assay tools to grade samples so that they only assay the bad stuff. Again, I refuse to believe this. Firstly, the field assay devices are not highly accurate. Secondly, if St. Elias was hiding the good stuff then why was Lori selling her stock? She had about 4 million reasons to release the good stuff. The conspiracy also dictates that Lori was responsible for the share price to fall. I don’t think that argument makes any sense. Poor drilling results cause the price to fall. St. Elias Mines has no control over what is or is not in the ground. The conspiracy also dictates that Lori is guilty of insider trading. I guess this is for the BCSC to figure out. She certainly sold a lot of stock starting at 90 or so cents. However, many other people sold as well. Once again this, in my opinion, was a logical move for her given that results where not living up to expectations. While she has a responsibility to the company and to shareholders she certainly does not have to sacrifice her own financial situation to please angry shareholders. More recently the conspiracy seems to be dictating that St. Elias Mines has been mining ore and the proceeds have been pocketed. Again, I don’t believe this. Lori held millions of shares. Given good news and strong results her stock would be worth far more than any gold sold over the last 12-18 months. The 43-101 had 4000 ounces defined and there was an old plan to ramp up production to 500 ounces per months. Had St. Elias been able to mine 500 ounces per month this would indicate that the grades remained very high and would have been enough to support the hopes and dreams and thus the share price. Had St Elias mines profited $1000 per ounce over 12 months then the company would have generated 6 million in revenue. The conspiracy seems to suggest this money was pocketed. Lori’s 3-4 million shares where worth far more than 6 million at this high of $2.80 per share and with good drilling results would have been worth far more than $2.80 a share.
The conspiracy theory just makes no sense to me. I was hated for pointing out the problems with SLI in the past which is now generally accepted by everyone but because I never bought into the conspiracy theory the now dissident posters once again ridicule me and claim that I must be working now for Lori directly. My opinions have never changed. I am in the middle between the past ignorant bliss and the now present conspiracy of the dissident posters. Lori, in my opinion, is not the best president and CEO but I refuse to think that she is a criminal as would be dictated by the conspiracy theory.
We have to wonder how stock holders arrived at the conspiracy theory. The answer is very simple. Shareholders band together in glee as they bragged about their good fortune and the future of St Elias mines. Anyone who questioned their over zealous enthusiasm was banned from their circle. They relied heavily on the amateur geological musings of uneducated posters as their main evidence supporting the idea that Tesoro would be a world-class deposit… the worlds largest deposit. What they did not see was that their due diligence was wrong. They focused only on the high-grade bulk samples that were obtained largely from small-scale mining of high-grade veins. Those veins where very narrow and not getting any wider at depth. They focused on a few very small indications of disseminated gold. As I recall the largest area of known dissemination was about 50 meters wide but the grades where below anything necessary to create a mine. Never the less, posters listened to uneducated posters who tried to explain what they did not understand. The areas of dissemination where argued to be the country rock but what they failed to understand is that it was altered country rock. The entire property was not altered rock. In a conversation that I had with Paul Gray, he told me that there was limited dissemination in the host rock. I choose to believe the Doctor of Geology over amateur message board musings. Then there is the matter of Quantec. This exploration tool is grossly misunderstood by dissident posters. They still think that an anomaly must mean that there is gold there. The only growth in their thinking is that they now understand that geophysics’ does not directly measure gold. However, they seem to think that the only thing on Tesoro that it does measure is sulphides. This could not be further from the truth. One thing that still amazes me to this very day is that they brag about how an anomaly lines up perfectly with underground workings. Given the fact that the underground workings are a group of air pockets they are in them selves an anomalous recording in the geophysics. Yes, air space has a different conductivity then the earth around them! There are so many flaws in the uneducated musings of Agoracom posters who have no formal geological training or geophysical training that their conclusions are riddles in error.
Beyond my foresight to see problems with St. Elias mines before the majority and beyond my refusal to agree with the conspiracy theories I believe that my refusal to agree with the incorrect geological interpretation of amateurs is why they hate me so much. I have been very vocally opposed to their top poster who has developed most if not all of the faulty geological interpretations. I have continually chipped way at the faulty logic and for that I believe they hate me the most.
There is so much more to the story that I have not included above but these are the highlights as I seem them. I might end up being wrong about the conspiracy theory and if I am so be it. I might also end up being wrong about the geology but I somehow doubt that bull board posters with no formal education in geology or geophysics is going to be more correct than professionals.
When you vote your proxies this week, vote for the right reasons. Vote based on an apparent wasteful spending on money on travel and promotion, vote based on overly and apparently unjustified grants of options to insiders, vote on what appears to be potential conflicts of interest between options agreements signed with companies owned by SLI management; vote on the inconsistencies in statements regarding Quantecs involvement on the Tesoro property. There are enough legitimate reasons in my personal opinion to be angry with management and to justify needing a new board that will provide the proper checks and balances to have this company run more responsibly. Do not vote because you buy into a conspiracy theory or because you believe the faulty geological interpretations by people with no geological training. If you vote for those reasons then you are setting yourself up for further disappointment. A year ago I did not think that Lori had to be replaced. I thought a proper board of directors was sufficient. However, with amount of distrust in Lori and current management I don’t see any alternative to replacing her.
I wish the best of luck to all St. Elias Shareholders. I think the dissidents will win but no matter which way the proxy fight goes I hope that the company resumes work on all properties and that you are all rewarded with a better stock price.