Sutton management wins round of proxy fight

The proxy battle for control of Sutton Resources (VSE) is over for the time being.

At a recent meeting, management of Sutton overturned an attempt by James Sinclair to replace the entire board of directors with a slate of his own.

Sinclair needed 75.1% of the vote at the meeting, but received support from only 46% of the 8.66 million shares voted.

The meeting also included a motion by Sutton management to remove Sinclair from the board of directors.

That vote fell short of the 75.1% majority required (at 58.5% in favor) and, a result, Sinclair will remain on the board at least until the annual meeting, which is as yet unscheduled.

Sutton is in the process of clearing a US$22-million financing of 1.9 million units (each of which consists of one share plus half a warrant) and could gain additional support from the new shareholders prior to the annual meeting.

Although a date for the meeting has not been set, Sutton management did receive shareholder approval to postpone it for up to six months after July.

To postpone the meeting, Sutton would still require approval from regulatory authorities.

Sinclair reportedly initiated the proxy fight because of concerns over Sutton management’s plans to proceed with development of the company’s Bulyanhulu gold property in Tanzania without a joint-venture partner.

Sinclair feels the company would be better off with a partner, in particular one with experience in the region.

Sutton President Michael Kenyon disagrees, pointing out that current Sutton management has extensive experience exploring and developing mining projects throughout the world.

Kenyon says Bulyanhulu will attract financing because of its size and relatively high gold grade, and that a joint venture is therefore not required.

Bulyanhulu was last estimated to contain a measured, indicated and inferred resource of 7.2 million tons grading 0.45 oz. gold per ton.

Preliminary scoping studies estimate that a 1,650-ton-per-day mine and mill would produce roughly 200,000 oz. gold per year at a cash cost of US$125 per oz. and an initial capital cost in the region of US$135 million.

Additional drilling is under way at Bulyanhulu in an effort to expand and upgrade the gold resource, as well as test several gold targets.