Proxy votes rejected at Minefinders meeting

The recent annual meeting of Minefinders (VSE) was a lively affair, with a group of dissident shareholders seeking to install a new management team and board of directors.

In an information circular sent to shareholders before the May 26 meeting, Arthur Dalfen’s “committee of concerned investors” alleged that Minefinders is “grossly mismanaged by inexperienced people, with no significant stake in the company”.

Specifically, current management was criticized for not starting drill programs on the La Bolsa and Dolores properties in Mexico, projects described by the committee as having “potential to be world-class gold deposits”. La Bolsa, in particular, was described as having targets identified by geochemistry and surface sampling that warrant drilling.

About 1.9 million votes were cast in favor of the new slate, compared with about 1.4 million for existing management. Chairman Paul Henderson ruled, however, that all proxies solicited by Dalfen’s committee were obtained “by means of comprehensive misrepresentation” and were therefore “null and void”.

As a result, current management, including President Jack Belton (not present at the meeting) and Chairman Paul Oulahen, is still in place. Henderson, appointed chairman one week before the meeting, did not stand for re-election. He explained that Oulahen had stepped aside so that he (Henderson) could assume the position on a temporary basis in order to assist at the annual meeting.

During the meeting, Henderson provided shareholders with his analysis of the Dalfen committee’s information circular. In the 15-page document, Henderson criticized the integrity and conduct of certain individuals nominated by the committee. He also gave to shareholders copies of past media coverage related to Dalfen’s involvement with public companies, including Harvard Technologies and its failed french-fry venture.

Henderson said that he alone took responsibility for the analysis, and that most of the other directors and officers had not read the document before the meeting.

Shareholders questioned why Henderson had not made his report available before the meeting, and why he had not brought the alleged

“misrepresentations” of the Dalfen committee to the attention of regulators or independent legal counsel. “If I had gone to them (the regulators), I would have got an answer in maybe three years,” Henderson said.

The cross-fire of accusations that prevailed for much of the meeting prompted some heated remarks from shareholders, including one who called the meeting “a facade”. Henderson dismissed criticism that he was “unilaterally disenfranchising” almost 2 million votes cast in favor of the new slate, and denied that he was acting out of self-interest.

“The circular does not meet the standard of full, true and plain disclosure,” he said. “It is the chairman who decides the validity of the proxies, and his decision is binding unless challenged by court.”

At presstime, Dalfen’s committee made an application to the Ontario courts to have the election of the management’s slate of directors set aside and its (Dalfen’s) slate elected.

The parties are in the process of scheduling a hearing of this dispute. The proxy votes obtained by the committee are being held by R-M Trust in trust pending the appeal.