Davidson Tisdale officers come under fire at meeting

The fiery tartan colours of clan Stuart have finally come back to haunt the board of directors of Davidson Tisdale Mines. At a special meeting of shareholders, mining promoter Charles Stuart, bedecked in his trademark flame red sports jacket and backed by his attorney and several dissident shareholders, launched a vigorous attack against President William Dingwall and Vice-president Kenneth Kent.

Mr Stuart and his associates alleged that Mr Dingwall and Mr Kent tried to make a quick profit from a series of transactions, on which the meeting was going to approve. Mr Stuart’s nominees argued that only their actions resulted in a Toronto Stock Exchange (TSE) order which prevented the orginal deal from going through.

At issue are a series of transactions which will see Davidson acquire control of Vital Pacific Resources, a small junior explorer in Vancouver. The deal proposed to shareholders for approval, was the company’s acquisition of 3.9 million Vital common shares at a price of $1.45 million, or 37 cents per share. Vital will use $1.2 million of the funds to purchase Tisdale’s 100% interest in 18 patented claims north of Timmins, Ont., known as the Broulan property. The end result would be that Tisdale will have paid $250,000 and traded the Broulan property to gain control of Vital Pacific.

Franklyn E. Cappell, an attorney with Kingsmill, Jennings, attacked the proposal. `I ask (Dingwall), that you advise the meeting in the manner that such a meeting comes to be called?” he queried. After failing to get a response from Mr Dingwall, Mr Cappell continued his address, which resulted in Mr Dingwall interjecting, “do you intend to make a speech?” “I’m known as a concise speaker,” Mr Cappell shouted back, to which Mr Dingwall replied “you could have fooled me.” “Few people can,” Cappell jibed. At one time, four shareholders or their proxies, were on their feet demanding answers to questions about the proposed Vital Pacific resolutions.

Mr Cappell argued that D.K. Resource Management, a private company, purchased 800,000 Vital shares at 7.8 cents per share with the intention of reselling the shares to Davidson Tisdale for the price of 37 cents . However, a Supreme Court of Ontario injunction prevented the deal from going through, requesting instead that the TSE review the case. The TSE, Mr Cappell says, ordered that D.K. Resource Management sell the 800,000 shares to the company for the same purchase price. D.K. is the private holding company controlled by Mr Dingwall and Mr Kent. Mr Dingwall refused to respond to the allegations and instead attempted to proceed with the shareholders vote. Despite a plea from Mr Cappell to vote against the Vital Pacific resolution, more than 3.4 million shares were voted in favour of the deal. Mr Dingwall refused to say whether 2.1 million controlling Tisdale shares held by D.K. were voted. Control at stake

The battle, however, is only a sideline to a more serious challange against the Tisdale president and vice president. For years, many in the mining industry have whispered rumours that Charles Stuart was the real master at Davidson Tisdale, pulling strings through his proxies, Mr Dingwall and Mr Kent. And for as many years, both Tisdale executives have worked hard dispelling such rumours, stressing at many investor meetings that Charles Stuart was no longer associated with the company.

Mr Stuart, who was convicted and jailed for fraud and conspiracy resulting from the theft of $300,000 from Stadacona Mines in 1960, now alleges that the 2.1 million controlling shares held by D.K. are really his. A suit, filed by his wife and a holding company, Provost Associated Holdings, demands that the shares be returned in addition to $21 million in punitive damages.

Mr Dingwall argues in a statement of defence that the 2.1 million shares were properly purchased and paid for and that the plaintiffs are acting as Mr Stuart’s nominees. At the time of the purchase in 1983, Mr Stuart was the president of Provost, which sold the shares to D.K.

The fighting has naturally left many shareholders, especially Tisdale’s large European following, upset and confused. Gold production from the company’s main asset, a 50% stake in the Davidson Tisdale property north of Timmins, has been delayed again. Last year Mr Kent noted that gold might be poured by November. However, driving of a decline ramp is meeting with technical problems which have delayed its completion. Mr Kent said that the ramp will be completed by the end of March.

At that time a review of results will lead to a production decision. “We must confirm 300,000 tons in the Main zone,” Mr Kent added. He noted that even at 150-200 tons per day and at current gold prices, the mine would make a healthy profit for the company. The property has probable reserves of 528,000 tons grading 0.26 oz gold per ton in several zones.