When he made the initial investment in EurOmax Resources Ltd. (TSX: V.EOX, Stock Forum) back in May of 2006, Anthony Patriarco says he was attracted by a portfolio of exploration properties that were located in established mining regions of eastern Europe.
Four years later, EurOmax’s biggest shareholder, with an 18.4% stake, is fighting a proxy battle against a company management team that recently launched a civil action against Patriarco (picture at top), alleging that he engaged in improper trading in the company shares.
Reached in Syracuse, New York, Patriarco said he is leaving it up to shareholders to decide the outcome of the proxy battle that pits his dissident shareholder group, against a management team led by Euromax Chairman Robert Power, and interim chief executive officer Christopher Serin (see picture below).
“I believe a lot of what is going on is a distraction from allowing shareholders to voice their opinion,’’ he said.
A 55-year-old Virginia doctor with two Phds., Patriarco said his lawyers have advised him not to comment on the law suit, which has been filed in the British Columbia Supreme Court and alleges that he sold 782,000 EurOmax shares in 13 transactions – from January to March 2010 -- through Blue Ridge Educational Foundation, a entity over which he asserts control.
Proceeds of the share sales generated US$214,015, the suit alleges.
In its civil claim, EurOmax is alleging that Patriarco was aware that the company had filed a confidential material change report with Canadian regulatory authorities disclosing that the company’s application for an extension to its Ilovitza 4 permit had been rejected by Macedonian authorities.
None of these allegations have been tested in a court of law, and Patriarco is presumed to be innocent until such times as he is proven guilty.
“This is pretty emotional for me,’’ said Patriarco, who was a EurOmax director until March, 2010, when he was asked to resign for allegedly trying to control the day-to-day affairs of the company.
Patriarco says it was his own research that first led him to EurOmax and the decision to buy shares came after earlier investments in the Lundin Mining Corp. (TSX: T.LUN, Stock Forum) group of companies, including South Atlantic Ventures, proved successful. He had been a shareholder of Silk Road Resources Ltd. (which recently merged with EurOmax) since December 2004.
A proxy circular filed on July 6 says the dissident shareholders have no confidence in the existing board of EurOmax and believe that the company’s future is in jeopardy under its existing board of directors and management.
The circular says the dissidents are primarily concerned about:
- The rapid depletion of the EurOmax treasury following the sale of the Bulagou property in China to the Chenzhen Mining Group Ltd. for $14.9 million in July 2009.
- The significant decline in the EurOmax stock price since October 2009 and the return to price levels that existed prior to the merger with Silk Road, which was completed in June 2009. The shares traded at 11 cents, Friday giving the company a market cap of $13.2 million.
- The failure of the current board of directors to identify and hire a chief executive officer since the former ceo John Menzies was replaced by interim chief executive Christopher Serin.
The dissidents want to replace the existing board of directors and to install a new management team. The four director nominees are John Nugent, Mark Gustafson, Randal Matkaluk and Donald Siemens.
If shareholders vote in favour of the dissidents at a meeting in Vancouver on August 24, Nugent will be the new Chairman and Gustafson will be the ceo.
For its part, Euromax has countered by saying it believes the dissidents are attempting to take control of EurOmax, its properties and cash.
“Shareholders are urged to disregard any material they may have received from the dissidents and vote in favour of management’s director nominees, the management group said in information circular to shareholders.
Those nominees are Robert Power, Christopher Serin, David Bell, Michael Mason, John Cook and Dimitar Dimitrov.
The management group says its nominees have much more experience than the board that the dissidents are proposing to install. It says Gustafson has no junior mining experience and no experience leading the operation of an organization in the Balkans.
Asked to comment on the proxy fight, former Silk Road chief executive Allen Palmiere said it is bad for the company because it’s expensive, it polarizes the shareholder base, and takes up a lot of management time.
But he said both sides appear to be so entrenched that he doesn’t believe there will be a negotiated settlement until results of the shareholder vote are announced. “There doesn’t seem to be any willingness to compromise,’’ he said.
