Low-profile Drexel jumps 510% on investment by Mark O’Dea of Fronteer fame

A low-profile shell named Drexel Resources (DX-V) has attracted the interest of goldbugs and investors, after it announced Vancouver-based mining executive Mark O’Dea intends to buy 10.7 million shares in a 24- million-share private placement for a 32.8% stake in the company.

The news sent Drexel’s shares – of which there are only 7.05 million outstanding – up 510% on June 24, to close up 51¢ to 61¢ on 106,000 shares traded. 

O’Dea is best known as the former president of Fronteer Gold, which Newmont Mining (NEM-N, NMC-T) took over in April for $2.3 billion, or $14 a share. Newmont acquired the company for its development-stage Long Canyon gold project in Nevada, near Newmont’s existing operations. 

A 43-year-old Newfoundlander with a doctorate in structural geology from Monash University in Australia, O’Dea got his start in the public mining sphere as president of Fronteer in 2001. He quickly established himself as a successful explorer after he helped the company discover several large uranium deposits in Labrador. The uranium assets were later spun off into Aurora Energy Resources in 2006, which O’Dea led as high as $20.09 in 2007 before the stock was crippled by a three-year moratorium on uranium mining in the area, followed by the 2008 financial crisis. Fronteer bought back Aurora’s assets in 2009 for $190 million in stock, and eventually sold the uranium projects to
Paladin Energy (PDN-T) for $260 million in February 2011. 

As for Drexel, it listed on the TSX Venture Exchange as a capital pool company in September 2010, quickly finding a qualifying transaction by optioning a 60% interest in the Titan copper-gold-molybdenum property near Atlin, B.C., from Eagle Plains Resources (EPL-V). The Titan property last saw drilling in 2004 when an Eagle Plains joint venture partner completed three holes there, all of which returned minimal mineralization.

Leading Drexel as president is 38-year-old Vancouverite Hani Zabaneh, owner of 900,000 escrow shares purchased at 5¢ apiece. He is the former chief operating officer of StockHouse Media from around 1999 to 2006, having left a few years before it went belly up and was sold to undisclosed parties in 2010. These days Zabaneh holds the position of vice-president of administration at broadband Internet provider MetroBridge Networks (MEB-V), and is involved with one or two other shells. 

Drexel’s largest current shareholder with 1.3 million escrow shares is director Vince Sorace, a former broker with Haywood
Securities and PI Financial in Vancouver who is similarly involved with one or two other shells. Rounding out Drexel’s board are: Kyle Stevenson, an investor relations professional with 200,000 escrow shares; Martin Bajic, an accountant doubling as the company’s chief financial officer and the holder of 100,000 escrow shares; and Chuck Downie, a geologist and Eagle Plains’ nominee, being its vice-president of exploration.

Drexel says it is raising up to $2.4 million by issuing 24 million shares at 10¢ each, in a private placement to finance “further exploration on the company’s Titan property, if phase one results justify further work.” However, it also notes the proceeds could be reserved “for future acquisitions.” The news release further states, “Mr. O’Dea is acquiring these shares for investment purposes and may increase or decrease his holdings as future circumstances warrant.”  

As part of the sale of Fronteer, O’Dea negotiated the spinoff of the company’s non-core assets into Pilot Gold (PLG-T), taking with it initial working capital in the order of $10 million. Pilot is now exploring for copper and gold across three projects in Turkey, Peru and Nevada. While most of Fronteer’s management made the move over to Pilot, O’Dea brought in Matt Lennox-King as president and CEO to run daily operations, leaving himself in the position of chairman. 

Besides Pilot and now Drexel, O’Dea seems to be involved with only one other public company at the moment, Laurentian Goldfields (LGF-V), of which he is a director and minor shareholder. 

After listing on April 25, Drexel traded just four times before mid-June, combining for a total of 14,000 shares sold all at the same price of 10¢. It has approximately $215,000 in working capital, not including the recently proposed financing.