Paul McRae
The core of following was sent to me by A. Reader, who prefers to remain anonymous. However, I have checked out their contents and 100% agree with both the veracity of the evidence and the undeniable conclusion it brings, that Paul McRae, Senior Vice President Projects of Lundin Mining (LUN.to), a director of the company and resident of Portugal, used material non-public information in order to place a trade on the stock market and benefit economically as a result. In short, he’s an illegal insider trader.
The interesting thing is that LUN.to itself has been forced to admit this, in writing, in a published document, because it may have put their deal with Nevsun (NSU) (NSU.to) in jeopardy if they had not and the fact were discovered later. However, we do not know whether Mr. McRae has been reprimanded in any way, shape or form by the company for this obvious breach of its code of conduct, so maybe LUN would like to clarify on that.
I’ll now hand you over to A. Reader and the mail they sent over, late last night (very slight editing done to protect the innocent).
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The following three short paragraphs are copied verbatim from page 38 of Lundin Mining’s Circular dated 26 July 2018 and designed to convince Nevsun shareholders to
tender to their C$4.75/share cash offer. The text is a portion of the
‘Background to the Offer’ section, whereby Lundin Mining outline their
timeline of the events leading up to the hostile bid. I added the
bold type and underlining for emphasis, as the timeline is the smoking gun:On February 7, 2018, Lundin Mining submitted a proposal to Nevsun pursuant to which Lundin Mining
proposed to acquire Nevsun at a price of C$3.75 per Nevsun Share, consisting of C$3.43 in cash and the balance
of the consideration in common shares of a new company to be spun out of Nevsun (the “First Proposal”). The
C$3.75 per share value represented a 44% premium to Nevsun’s closing price on February 6, 2018 on the TSX
and a 34% premium to Nevsun’s 20-day volume weighted average price on the TSX for the period ended
February 6, 2018.
On February 14, 2018, Nevsun rejected the First Proposal and advised Lundin Mining as to its concerns
with the proposal, including the potential value of the common shares of the new company proposed to be spun-
out to Shareholders.
On February 25, 2018, Mr. Lukas Lundin, Chairman of Lundin Mining, and Mr. Kukielski met to
further discuss a potential business combination involving Nevsun and Nevsun’s concerns with the First
Proposal. Subsequently, Lundin Mining submitted a revised proposal to acquire Nevsun at a price of C$3.60 per
Nevsun Share in cash to address Nevsun’s concerns with the structure of the transaction and to provide certainty
on the value of the consideration (the “Second Proposal”). The C$3.60 per share value of the total
consideration represented an approximately 30% premium to Nevsun’s closing price on February 23, 2018 on
the TSX and to Nevsun’s 20-day volume weighted average price on the TSX for the period ended February 23,
2018.On page 43 of the same document, I saw the following text.During the six-month period preceding the date of the Offer, no Nevsun Shares have been traded by the
Offeror or any of its directors and officers, other than as follows: Mr. McRae, Senior Vice President, Projects of
Lundin Mining, purchased 17,000 Nevsun Shares on the facilities of the TSX on February 23, 2018, at a price of
C$2.82 per Nevsun Share, for a total purchase price of C$47,940.So
Mr Paul McRae, after the first non-public bid was rejected,
but days before a second bid was tabled (as he knew that his employer Lundin Mining was
not going to walk), decided to buy shares in the target company knowing full
well that the cash component of the Lundin’s offer was going to be materially higher
than his purchase price.
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Thank you, A. Reader. My mailer also went on to say that it doesn’t matter whether he stood to make a hundred dollars or a million, this is insider trading, period. In fact A. Reader signed off on the op-ed part of his mail with “How much more blatant does it need to be?” and this humble corner of cyberspace fully agrees with that statement. What I find interesting is that, due to the need to be fully compliant during M&A periods such as this, when the other brass found out about McRae’s illegal trading they felt compelled to publish it in order to avoid legal problems later. In other words, we finally get to see one of these scumbags do their scumbaggery. As for the fruits of his trade, as a matter of fact NSU is at C$4.83 today and means (assuming he’s held through) Mr Mcrae has made a little over $34,000 gross on that trade. Nice work if you can get it (anyone want a free SUV?) and by the way, I sure hope for his sake that he held onto the shares.
We should also point out that Paul McRae is not just a director of Lundin Mining, he is also on the boards of Lundin Gold (LUG.to), Filo Mining (FIL.v) and Bluestone Resources (BSR.v). Therefore, not just one but four companies need to ask serious questions of this man, as having an illegal insider trader on your board is no small matter. As for experience, McRae has been in the industry for over 40 years so it’s going to be very difficult to come at us with the “Oh gee shucks, I didn’t know you could do that” spiel. This man knows the rules, knew what he was doing was illegal and still did it.
Which now leaves us with the last piece of this puzzle; Dear Canadian market regulators, IIROC, TSX, BCSC, OSC, ASC, now that you’ve been presented with a lock-tight example of blatant illegal insider trading in securities of a company in your jurisdiction, what are you people going to do about it? It would surely be nice to see you do something for a change, instead of letting this pervasive corruption continue to prosper and slowly kill Canada’s capital markets.