IKN

idle and fond bondage

Ross Beaty’s illegal broken slot machine

When Pan American Silver (PAAS) decided to sell Juby at the end of 2019, it solicited statements of interest and ran a normal sales process in which many companies took part. Up to 12 went under CA and while they didn’t all eventually bid, several did. Then came Covid-19 and the process, well underway come the end of 1q20, was put on ice. Nothing was heard for a while, then one fine day PAAS told those participating that it had changed its mind on selling Juby (which, to be accurate, is the sale of the Juby project plus its 25% of the “Knight JV” project next door to Juby). That is of course PAAS’s right and with gold at that point moving up hard, it stands to reason that precious metals assets would be re-priced upwards. PAAS would be a bit silly to sell a gold asset in 2q20 at 4q19 prices, no?

However, it seems they are a bit silly. On May 21st Pan American Silver decided to sell Juby. Which is of course weird, but the way it happened was even weirder:

  • Pan American Silver (PAAS) decided that the winner of the tender to buy Juby was a private holding company called “South American Resources Corp” (SARC). SARC agreed to pay PAAS U$10m (and again for accuracy, that was U$9.5m for Juby and U$0.5m for the adjoining Knight JV 25%)
  • At the same time, SARC was bought by Caldas Gold (CGC.v) for 20m shares of CGC.
  • In other words, the buyer of Juby (CGC) paid 20m shares and $10m cash, a total of around U$45m at today’s prices. The seller of Juby (PAAS) received $10m cash. And the 20m shares of CGC currently worth U$35m were given to the private owners of the private company SARC, their identities still a mysterious secret.

In short, PAAS has failed in its fiduciary duty. Instead of negotiating directly with CGC and getting a package worth U$45m for its land assets, it decided to enter and close a deal in which it got $10m…from the exact same seller! What’s more, this desk also is reliably informed that even during the original sales process there were other bids that were substantially higher than the U$10m accepted by PAAS. At this point, you too are probably wondering about the names of the principals at SARC, because it’s for no small reason they want to keep themselves out the picture. The two this desk can confirm are Brian Paes-Braga (Frank Giustra’s mini-me, he who couldn’t keep his big mouth shut) and Tim Young, close friend and business associate of PAAS chairman Ross Beaty. These people have questions to answer.

UPDATE: Could not agree more with the comment from Canuckman, below:

The corporate governance on this deal seems to be non-existent. How could any one of the Caldas board members approve this? Issuing US$35 million in stock so you can acquire a project for $10 million more? Insane. And same for the Pan American board. You approve the sale for $10 million and miss out on the extra US$35 million? Considering the fees these corporate clowns are paid for being blind a___oles – this is really incredible. Did they get kick backs to vote?

9 Comments

    The corporate governance on this deal seems to be non-existent. How could any one of the Caldas board members approve this? Issuing US$35 million in stock so you can acquire a project for $10 million more? Insane. And same for the Pan American board. You approve the sale for $10 million and miss out on the extra US$35 million? Considering the fees these corporate clowns are paid for being blind assholes – this is really incredible. Did they get kick backs to vote?

    Reply

    This would be a great story for an investigative journalist to write in a national paper. I think things could get interesting if the SEC gets involved. We know the OSC is spineless and useless, but this sort of stuff could land you serious jailtime in the US. If nothing else, Brian Douche-Baga should be put behind bars for being a walking, breathing personification of an asshole. I’m surprised he doesn’t sell a potpourri called BriBri on his embarrassing website.

    Reply

    What’s disheartening is that it’s PAAS. You know these things are happening on the microcap side of the business, and you tread carefully there because it’s so filled with landmines. But that even climbing the quality ladder up to the mid-tiers and seniors producers won’t insulate an investor from this kind of crap is frustrating. Yes, I know, shady dealings span all industries, but it’s an unavoidable conclusion that none of these miners are marriage material.

    Reply

    Giustras a criminal, I get it. I just don’t understand the decision making process of Ross Beatty. He’s worth hundreds of millions already. Is the risk of going to jail for 10+ years worth the reward of adding 5% to your wealth, along with the headache that goes with it? It takes one National article or an SEC complaint to make this a reality. Its stupidity, greed and hubris wrapped into one.

    https://www.sec.gov/oiea/Complaint.html

    Reply

      Two suggestions:

      1) they never had weak leak Bri-Bri flapping his gums before.
      2) he knows he gets away with it, so he does it simply because he can. It’s Canada, white collar impunity rules

      Reply

    Why hasn’t the Globe or Post picked up on this? Mark, you have demonstrated how much info you can uncover with very limited resources. It should be noted that PAAS is a NASDAQ listed company so under the jurisdictional oversight of the SEC. I’ll tell you who won’t be protecting Frank and Ross if served a subpoena: Fed Pen arm candy candidate, Bri-Bri, who would roll like an oat if served a subpoena.

    Reply

    Any wonder why this sector continues to display short bull runs followed by longer bare cycles. The abusers will kill it one day as even the good juniors are hurt and have to finance lower and lower.

    Reply

    Any wonder why this sector continues to display short bull runs followed by longer bear cycles. The abusers will kill it one day as even the good juniors are hurt and have to finance lower and lower.

    Reply

Leave a Reply

Your email address will not be published.

Hello, you are not in a chatroom, you are in my living room. Opposing views and criticisms welcome, insults or urinating on furniture unwelcome. Please refrain from swearing if possible, it is not needed.