Trader’s battle with Elder appears far from settled

Lawyers almost outnumbered mining executives as a legal battle between Trader and its largest shareholder, Elders Resources Ltd., was played out in a basement room of the Toronto Engineers’ Club.

Trader Resource Corp. is a Toronto based junior exploration company with gold properties in British Columbia and Timmins, Ont. Last month it launched a lawsuit against Elders Resources and Elders’ President, William Blackwell, for alleged breach of fiduciary duty, misrepresentation and breach of securities laws.

Elders, which holds a 34% stake in Trader through subsidiary ERNA Minerals, responded at the annual meeting by voting out four Trader directors and replacing them with five of its own nominees. Among the outgoing directors were ex- President James Stephenson and consulting geologist David Bell.

“Any time you sue your largest shareholder, you aren’t going to last very long,” said Stephenson.

But even though Elders appears to have a firm grip on Trader, it could be at least a year before both companies manage to unravel the legal web in which they have become entangled.

Still to be resolved is a lawsuit involving two Vancouver-based directors of Trader who did not attend the annual meeting.

Former president Tadeusz van Wollen and ex-treasurer Peter Matthews were dismissed last March for allegedly making payments to companies in which they are also directors. The two Trader directors have countersued and a trial is scheduled to be held in Vancouver next January. Meanwhile, they continue to sit on the Trader board.

Also outstanding is the lawsuit launched by Trader against Elders Resources last month. According to Stephenson, Trader is attempting to recover $215,000 which was allegedly paid to Interquest Resources (TSE) after a private placement agreement involving the two companies fell through. Interquest is a Toronto based exploration company which holds about 3% of Trader’s 10.1 million outstanding shares.

While Stephenson defeated a motion to adjourn the annual meeting for a discussion of the company’s financial results, the results are expected to be reviewed at the next shareholders meeting. For the year ended Dec 31, 1988, Trader reported a net loss of $1.57 million or 16 cents per share. It also had almost $1.8 million in cash and short term investments.

“We as an investor group felt dissatisfied when we got a copy of Trader’s 1988 financial statements,” who represented Interquest at the annual meeting. “We hope to see that Trader will prosper under new management,” said Freeman.

ERNA Minerals also appears unhappy with the company’s performance. Since Elders acquired three million Trader shares (representing a 34% interest) at $1.50 each, the price of the shares has fallen to around 33 cents .

According to Freeman, shareholders want to know why a March 9 private placement of 521,951 Trader common shares is not included in the first quarter results. The private placement was arranged with Switzerland based company Tagis Ag. Freeman also plans to question why Trader’s 1988 administration expenses increased to $203,028 from $166,582 the previous year.

“We don’t want to pre-judge anyone until they are given the opportunity to answer our questions,” said Freeman.

Meanwhile, a $400,000 drill program at the Ronnoco Gold Mines (COATS) property near Timmins, has outlined 4.1 million tons of grade 0.103 oz gold per ton. Under an agreement with Broulan Resources (TSE), Trader can earn a 74% stake in Ronnoco by funding the exploration program.

Because the Ronnoco property is located near ground controlled by the Pamour Inc. group of companies, Trader may try to do a deal with Pamour, Stephenson told The Northern Miner.

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