Kaiser poised to control Madeleine

Oaklahoma-based Kaiser-Francis Oil recently boosted its stake in Madeleine Mines (TSE) to 32%, fuelling speculation that Chairman George Kaiser is about to succeed Patrick Sheridan as president of Madeleine.

In a press statement, Kaiser-Francis said it had acquired 1.4 million Madeleine common shares on Sept. 30 through a private placement from five related corporate shareholders. (One of them is rumored to be Sheridan.) The fifth largest privately owned natural gas producer in the U.S., Kaiser-Francis now owns 2.9 million of Madeleine’s 8.8 million issued shares as a result of the transaction.

Madeleine’s chief asset is a 50% stake in the Lac des Iles palladium-platinum project near Thunder Bay, Ont., where development was stalled after Sheridan and the company were charged with violating Ontario’s environment laws. Pummelled by the recent slump in platinum prices and confusion over the status of the Lac des Iles project, Madeleine shares recently fell to a low of $2 after trading as high as $6.50 this year.

Two weeks ago, Madeleine declared that some of its shareholders had been forced to sell their shares.

Many U.S. investors who bought into Madeleine because of Lac des Iles, the largest known platinum deposit outside South Africa, have become disenchanted with Sheridan’s failure to bring the mine into commercial production. “We hoped the company would have been generating cash flow for some time now,” said Andrew Brichant, senior analyst at New York-based Feeley & Wilcox, who has acquired stock on behalf of clients in the U.S. “Why the hell nothing has happened is beyond me,” he said.

Neither Sheridan nor Kaiser could be reached for comment on this story. Before the transaction was announced, Sheridan controlled Madeleine through Anyox Metals (ASE) and Zenmac Zinc (ASE), each with 14%. Kaiser-Francis is a wholly owned subsidiary of GBK Corp., a Delaware company wholly owned by George Kaiser.