Spring Cleaning Polar Star’s Boardroom

Leading a proxy battle is no easy task, says Polar Star Mining (PSR-V, POSRF-O) president and CEO Douglas Willock, who just got his old job back after launching and winning a proxy battle that led to his dismissal in the first place.

“Let me just say it was painful and it’s not something most people would want to contemplate,” Willock says. “I had to fund things absolutely out of my own pocket.”

Willock, who holds almost 10% of the company’s shares, wouldn’t say how much he spent in total.

“I’m still collecting the bills,” he says. But rallying shareholders, launching a website and covering legal fees from one of Canada’s top law firms wasn’t cheap. The company will be paying the tab in the end for both sides.

“This is a story about shareholders who have said they have had enough and are not going to be pushed around by anybody. It’s their money, their voice, their opinions, and they’ve been heard loud and clear,” Willock says.

High on Willock’s priority list is to let regulatory bodies such as the TSX Venture Exchange know how poorly the current system works.

“Our proxy system, the way we vote, it’s an archaic system and if you are not in Canada or the United States, it’s a very cumbersome system to make sure all your ballots are properly accounted for,” Willock says. “I’m going to try to get feedback to those who would benefit from hearing what it’s like in the trenches.”

Willock was fired in January after he requisitioned for a shareholders’ meeting to overthrow the board. He had already presented a financing opportunity a month earlier that was contingent on executive chairman Stephan G. Roman stepping down. Roman also holds nearly 10% of the company.

In a statement, Roman said it was unfortunate that the voices of individual investors and Canadian institutions that supported the former board were drowned out by a handful of international investors who were brought into the company by Willock.

Willock and Roman put the company together back in 2003. Polar Star went public in 2007 to explore for copper, gold and uranium in Chile, but things went awry late last fall when the board and Willock began to butt heads over management strategy.

Willock had worked out a deal to acquire the remaining 85% interest in the Chepica copper-gold mine — a small outfit that is currently operating at about 80 tonnes per day — to bring in cash to help pay for exploration. The board didn’t think the project was viable and wanted to focus on exploring grassroots projects like the Montezuma property in northern Chile, located near Codelco’s monstrous Chuquicamata open-pit copper mine.

Roman, who has questioned Willock’s ability to run the company because of his background in investment banking rather than mining, said in a statement that time will tell who is right.

“As a significant shareholder, I am concerned that bringing Doug up the learning curve in mining will be a very expensive lesson for all of us.”

In his defence, Willock points out that Kinross Gold (K-T, KGC-N) president and CEO Tye Burt, Barrick Gold (ABX-T, ABX-N) founder and chairman Peter Munk and Agnico-Eagle Mines (AEM-T, AEM-N) president and CEO, Sean Boyd, are also not geologists or mining engineers.

Following the shareholders’ meeting on April 17, Willock wasted no time in putting together audit, compensation, corporate governance, nominating and health, safety, environment, and resource committees. All but the last are made up of independent directors.

Willock says corporate governance wasn’t a priority for the last board. “The executive chairman chaired the compensation committee. I wanted to have this run at the highest levels in terms of corporate governance.”

Up next, Willock says the company will post a National Instrument 43-101 report for Chepica on SEDAR, renegotiate the option agreement and fine tune the operation before carrying out further exploration work.

The company will also continue to evaluate Montezuma, finishing up an induced-polarization and sampling program that wasn’t completed under the former board. Instead, a drill program was completed.

“Once we have all the information together, properly compiled and we are able to rank the drill targets, then we’ll be in a position to go forward,” Willock says. “But no more rushing around scrambling for drill targets to look for a proxy victory.”

The 14-hole, 3,500-metre drill program on Montezuma wrapped up in late March and defined a prospective 5-8 km by 30-km belt centred on the West Fissure Fault system. The highlight of the program was a 6-metre intercept grading 0.32% copper and 44.5 grams silver per tonne.

The property is located 30 km south of the Chuquicamata mine, which has been producing copper steadily since the early 1900s.