St. Elias sues dissidents, forum posters for defamation
Ticker Symbol: C:SLI


St. Elias sues dissidents, forum posters for defamation


St Elias Mines Ltd (C:SLI)
Shares Issued 117,118,355
Last Close 2/19/2013 $0.10
Wednesday February 20 2013 - Street Wire

by Mike Caswell

St. Elias Mines Ltd. and its president, Lori McClenahan, have launched a defamation suit in the Supreme Court of British Columbia against a number of anonymous forum posters as well as dissident leaders Gilby and Darcy Hastman. The suit complains about posts on Stockhouse and elsewhere that called Ms. McClenahan the "wicked witch of the west" and accused management of fraudulently hiding gold. St. Elias is seeking injunctions barring future messages as well as damages for defamation.


The suit comes amidst an effort by a group of Alberta dissidents to replace Ms. McClenahan and the company's existing board. The dissidents complain that management has taken significant stock-based compensation as the stock has fallen to 11 cents from $2. (The dissidents lost the vote at the company's Dec. 27, 2012, annual general meeting, but they have since filed a court case seeking to overturn the AGM results. They claim that the company unfairly disallowed their proxies, denying them a substantial victory. St. Elias has not yet responded to that case.)

The defamation suit, filed at the Vancouver courthouse on Friday, Feb. 15, complains about a number of messages on Stockhouse, Agoracom and other sites. According to the suit, the messages accused the company of misleading investors about drilling results from its Tesoro property in Peru. Some posts said the company was intentionally drilling away from the mineralized areas, while others stated that management had secretly taken gold from the property.

The defendants, most of whom are not identified by their real names, include a forum poster named "Kherson." The suit quotes one of his posts, dated Dec. 16, 2012, which read: "If the ore that has been mined, has been processed and the monies made have been pockeedt [sic] by someone other than SLI, then yes Lori and the gang will be standing in front of a judge. Whatever is going on behind the scenes with SLI, we need a Forensic Audit ... ."

One defendant, only identified as "Rinky," created a post on Jan. 6, 2013, which accused management of wanting "all the gold for themselves." Then, in a message a few days later, he urged shareholders to vote for the dissidents at the then-upcoming AGM. He said the company needed a plan for salvation from the "Wicked Witch of the West." He also said that Ms. McClenahan belongs in jail, "right along side Bernie Madoff," the suit states.

Another of the defendants, only identified as "jon_doe," created an Oct. 26, 2012, post that read: "I personally would rather have a group of trained monkeys running this company than who we have now. At least they would be honest."

According to the suit, the posts meant that St. Elias had lied to shareholders and had fraudsters and criminals for management. Moreover, the posts meant that directors and officers were involved in a scheme to misrepresent drill results so they could hide a "stash of gold" from shareholders. The posts also meant that Ms. McClenahan is corrupt, is a criminal and ought to be in jail, the suit states.

In addition to the allegations against the forum posters, St. Elias complains about an on-line petition that the dissident group set up. The petition, titled "A Call for Investigation Into St. Elias Mines Ltd.," sought a thorough investigation of the company by regulatory bodies. According to the suit, the petition implied that management had engaged in some sort of "egregious conduct," had published inaccurate news and had acted in a conflict of interest, among other things. The suit identifies those behind the petition as the Hastmans and a former St. Elias director, Murry Braucht, who are all defendants. The actual text of the petition, as quoted in the release, did not state exactly what management had done, only saying that the company's conduct warranted investigation.

The suit also claims that many of the defendants, including the Hastmans and Mr. Braucht, took part in a conspiracy to either damage Ms. McClenahan's reputation or to remove her as chief executive officer. This conspiracy included the intimidation of those who supported management. Among other things, Mr. Braucht allegedly said to one supporter: "I don't get angry. I get even. If you're in with Lori, then you are going down." According to the suit, he also told St. Elias's investor relations man, Donald Ronning, that "if anyone ruins this [the AGM] for me, their day is coming."

The suit seeks an injunction restraining the defendants from publishing defamatory material, as well as general damages, special damages, aggravated damages, punitive damages and court costs. Vancouver lawyer John Sullivan of Harper Grey LLP filed the suit on the company's behalf.

The defendants have not yet filed a response.

© 2013 Canjex Publishing Ltd.