JUNIOR MINING

Discrepancies, denials in C$238m hostile bid for Nautilus Minerals

Fasken Martineau, a major law firm for the mining industry, denies any relationship with hostile takeover or its proponent Michael Bailey.

VANCOUVER, BC (Mineweb) - 

Beleaguered Canadian junior Nautilus Minerals and a major Canadian law firm, Fasken Martineau, have denied claims related to a C$238 million hostile takeover offer made by Michael Bailey via a press release Tuesday.

In the press release Bailey said he was being advised by Gannibal Securities and well known law firm Fasken Martineau on the takeover.

But, in multiple emails and a phone interview, a Fasken Martineau spokesperson denied any representation of Bailey, who in several telephone interviews remained adamant that the law firm did in fact represent him through Fasken Martineau lawyer Virginia Schweitzer.

Not so, said Fasken Martineau Communications Director Stephen Hastings. By email he stated: “To clarify,  Fasken Martineau (which of course includes Ms. Schweitzer) does not represent either Michael Bailey, Gannibal Securities or Nautilus Resources.” (Parentheses not Mineweb’s.)

In response to Fasken Martineau’s denial, Bailey maintained, however, that Schweitzer was his lawyer and  would represent him in the Nautilus takeover. In an exchange by telephone on Tuesday near noon Bailey said he would have Schweitzer contact Mineweb to clarify the discrepancy, a call that did not come.

Following a request from Mineweb to speak directly with Schweitzer, Fasken Martineau’s Hastings, who said he would handle the inquiry, was emphatic in a phone interview on Tuesday that Schweitzer was not Bailey’s lawyer. “As Fasken Martineau’s head spokesperson I can say we do not represent Bailey or his securities firm.”

Later on Tuesday, in a follow-up interview roughly three hours after a previous conversation, Bailey then said he had spoken with Schweitzer in the interim and that it had been decided she and Fasken Martineau would no longer represent him in the takeover. He was adamant in response to repeated questions, however, that Schweitzer and Fasken Martineau did still represent him, just not on the Nautilus takeover attempt.

That claim, however, remains at odds with the statements made by the head of communications at Fasken Martineau on Tuesday.

Another discrepancy over claims that Bailey made arose in the course of talks and correspondence with him and Nautilus Minerals.

In a Tuesday morning (PST) interview Bailey said he had spoken with Michael Joyner, Nautilus Minerals Manager of Investor Relations, also on Tuesday morning to discuss the takeover offer. Joyner, Bailey said, forwarded him on to Nautilus’ corporate head office in Australia by email.

Bailey then claimed, “We will be putting out a joint release after we talk.”

Nautilus spokesperson John Elias confirmed he had spoken with Bailey twice Tuesday morning - though not Joyner, who was unavailable at the time of the request for comment - and that Bailey had emailed Joyner, who then told Bailey to contact the junior’s head office, as Bailey claimed. 

Elias, however, denied any possibility of a joint press release. In a follow-up call to Mineweb Elias, who said he had just spoken with Joyner, stated:“There is absolutely no way they had any conversation about any joint press release.”

In a follow up email a few hours later to Mineweb Joyner also issued a statement that said: “I want to set the record straight and let you know that I have had no verbal contact with Mr. Bailey. I have responded to his request via email correspondence only to let him know that I have passed on his request to speak to Nautilus’ senior management. No joint press release is planned.”

In the follow-up call in which Bailey said he would be changing legal counsel on the takeover, he reiterated that he spoke with Joyner on Tuesday and received an email from him. He was, however, far more reticent to speak about details of the takeover, saying Schweitzer had now advised him not to speak with the press.

In response to questions about the discrepancy between his and Joyner’s account on the possibility of a joint press release, he replied, “like I said before I wasn’t supposed to speak about anything about the deal.”

Deal backers in NY, California, Caribbean

In speaking with Mineweb on Tuesday, Bailey also gave a few more details beyond his press release about the proposed takeover. To fund it Bailey said he had sourced debt and equity financing from firms in the Caribbean, New York and California, though he would not name the specific firms.

Bailey also said that to advance Nautilus Minerals’ underwater mining project, which is ensnared in a dispute with the Papua New Guinea government and where development is stalled, he would bring on board multiple advisors with MBAs and expertise in the region to strike a deal with the Papua New Guinea government to get the project moving forward. Again, however, he would not disclose the identity of his potential advisors.

“That’s all going to come out in press releases,” Bailey said.

In contacting Bailey it also became apparent that he is closely connected to Gannibal Securities, the stated advisory firm on the proposed hostile takeover. Mineweb reached Bailey by calling the Gannibal contact number provided in his press release and Bailey picked up the phone at the firm. He explained that he was a shareholder of the company.

Though Bailey said Gannibal is active in financing and research in the mining sector, it’s history of takeover transactions is clearly very limited. It has four press releases listed on its website, which was only registered late last year. One, the only press release with an active link at presstime, provided a few details about the Nautilus takeover bid. Only one other press release, without a link but with a headline in the press section of the web site, was related to a financial proposal.

In the headline Gannibal states that junior PacificOre Mining had executed an “engagement agreement with Gannibal Securities Ltd (Canada) to raise $35,000,000.”

On Tuesday morning, a spokesperson for PacificOre confirmed it did have a verbal agreement with Bailey and that it would consider equity financings he might bring to the table if they were in the best interest of shareholders. Nothing had been advanced as of yet, the spokesperson said.

Otherwise, Bailey confirmed on Tuesday, Gannibal has not arranged other financings or advised on previous multi-million dollar takeovers.

Bailey has, however, attempted to arrange junior takeovers in the past, including one in 2010 that attracted some controversy. Back in 2010 he proposed to takeover Vaaldiam Resources, which was ultimately bought out by Tiomin, in a hostile deal worth about C$20 million that was rebuffed by Vaaldiam management.

As for how much Nautilus stock he owns, Bailey would not reveal the amount, though he said it was less than 10 percent.