Canhorn stock option plan angers the shareholders

Dissident shareholders had their say at Canhorn Mining’s annual meeting recently — the meeting lasted more than three hours — but in the end a slate of directors and a stock option plan proposed by management was approved by a vote of almost two-to-one.

The stock option plan, providing 223,000 shares to directors, officers and employees, was the main cause for concern among the dissident shareholders. Most of the options were granted more than a year ago at a price that was then greater than the market price, but 80,000 of the options were granted in May of this year at $2.90, a price that was 15% below the lowest traded price of the shares in May, $3.40. In April, the stock traded between $3.05 and $5.50.

Although the price of the options conforms to regulatory requirements, the dissident shareholders felt the price of the second stock options didn’t reflect true market value.

Chairman Herman Becker- Fluegel, of New York, said the options are a commonly used incentive for directors and employees of the company. Robert Reese, an officer of the company when the options were granted and who was elected to the board of directors at the meeting, gained the largest block of the $2.90 options — 25,000. At a recent market value of $5.50, that would amount to a capital gain of $65,000. The other seven recipients of the $2.90 options include two clerical workers earning annual salaries of $18,000 and who stand to gain $5,200 from the options based on recent market prices, a draftsman, a geologist, the company’s secretary-controller, the exploration manager and the treasurer.

James Anthony, a director of the company, says at the time the second stock options were granted the market for Canhorn shares was very volatile for reasons that were not known to the company.

An indication of how the meeting would proceed was evident when Herman Becker-Fluegel, as chairman of the meeting, opened the meeting and asked to dispense with the reading of the minutes, a proposal one shareholder voted against. Resolutions made later in the meeting would not pass so easily.

And while votes were painstakingly tallied for each of six resolutions during the meeting, shareholders milled about in the halls of Toronto’s King Edward Hotel airing their concerns about the company’s management. At one point, a heated discussion developed, led by Eric Hoffman of Dundas, Ont., a geologist and one of the organizers of the dissident group of shareholders, about whether the company’s management is witholding drill results from its Nickel Offsets exploration project near Sudbury, Ont.

Six holes of a proposed 9,000-ft drilling program have been completed on the 56-claim property, but the company is not releasing the results. Grab samples from the dump of a former nickel-copper producing nickel mine on the property and from a recent trench returned combined platinum-palladium values of up to 0.4 oz per ton and gold values of up to 0.19 oz.

United Reef Petroleums has an option to earn a 50% working interest in the property by spending $1.15 million before the end of February.