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Two Canadian mining magnates are fighting an increasingly heated battle for a tiny junior company, with one accusing the other of “incestuous behavior” within his empire.
Keith Neumeyer’s First Mining Finance Corp. has offered six cents a share (or about $10.2 million) for Coastal Gold Corp., which has a project in Newfoundland. The rival offer for Coastal, from Stan Bharti’s Sulliden Mining Capital Inc., is worth about 2.3 cents.
Given that First Mining’s offer is more than double Sulliden’s offer, one might assume that Neumeyer is convinced he will win. But that isn’t the case. Coastal’s board is currently endorsing the Sulliden bid, and Neumeyer would be surprised if that changes.
“It’s a joke,” he said in an interview. “They are obviously not acting in the best interests of shareholders and exercising their fiduciary duties properly.”
Neumeyer, who previously founded First Quantum Minerals Ltd. and First Majestic Silver Corp., thinks the problem here is inter-relationships between Bharti’s companies. Both Sulliden and Coastal are under the umbrella of Forbes & Manhattan (F&M), Bharti’s conglomerate of resource companies.
“There’s incestuous behavior between all three groups,” he said.
Neumeyer pointed out that every director of Coastal has ties to F&M, as does its chief financial officer and corporate secretary. Some of them even work out of F&M offices and have F&M on their business cards, he claimed.
He believes Bharti and his people are determined to put Coastal and Sulliden together, even if it means rejecting a much higher bid. He noted that Coastal has a good project but needs cash, while Sulliden has cash.
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