Cdn. Premium facing proxy battle

A proxy battle is shaping up for control of Canadian Premium Resource Corp., which now is controlled by Mahogany Minerals. A dissident shareholders’ group is soliciting proxies for a new management slate which would include Donald R. Head, Gordon D. Bergman, Steve Radvak Sr, Norman Pezim and David Mooney.

Donald W. Busby, the current president, claims it is the “Pezim group” which is actually trying to take over the company, although Murray Pezim denies any personal involvement in the takeover.

Mr Busby contends the group is only interested in the cash flow from the Jolu property in Saskatchewan’s La Ronge gold belt. That property now is the subject of a major exploration program by the new operator, Royex Gold Mining, which is owned 49% by International Corona Resources. In the past, Mr Pezim has stated that he controls directly and indirectly (through different companies) about two million shares of Corona.

The dissidents point out that they own directly or indirectly approximately 310,000 shares of Canadian Premium while they claim that “management nominees for election as directors have no investment in the company whatsoever.” They also argue that a conflict of interest exists because Mr Busby has a major shareholding in Mahogany, a joint venture partner in the Jolu property.

Noting that Canadian Premium had marketable securities of more than $5 million in early September, which was sufficient to meet its commitment for the property, the group is also asking why shareholders have been told that another $3.5 million is required.

Mr Busby counters by saying he personally owns 88,400 Canadian Premium shares and adds there was only $2 million in unallocated funds available when current management took control. In the event of a merger with Mahogany, he says Coopers & Lybrand will prepare valuations of the underlying assets of both companies to determine a fair ratio for amalgamation. Because Mr Busby is president of both companies, the dissidents claim this represents a potential conflict of interest.

Mahogany controls approximately 1.9 million shares of Canadian Premium and Mr Radvak predicts the dissidents will carry the day at the annual meeting Jan 30. He claims the local brokerage community is behind the group.

Indeed, even Mr Busby acknowledges they will be a major force in the final outcome. Brokerage houses can vote unanswered proxies as they see fit which, he says, is a quirk in Canadian securities regulations. Mr Radvak predicts the group will have more than three million shares at the meeting and claims all the brokers are backing his group.