Mining firm’s reorganization stuck in litigation
December 28, 2004
GoldSpring mining company’s founding president, who resigned four months ago, staged a coup d’ état over the board of directors and has regained the position of president and chief executive.
But now Steve Parent, a 20-year mining veteran, has a restraining order against him, preventing him from doing anything at GoldSpring but daily operations.
GoldSpring owns the Plum Mining Co. of Gold Hill, 15 miles east of Carson City, which produces gold and silver with the only permitted cyanide heap leach on the Comstock Lode.
Parent said his company has been in turmoil for months, but he is in control again after ousting seven members of the board of directors.
Rob Faber, the deposed chief executive officer and before that its chief financial officer, said control of GoldSpring will be settled in court.
After Parent resigned, Faber was appointed president Sept. 9. Parent said he resigned as president because the board was uncooperative. He retained his seat on the board of directors.
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“I didn’t want to have a fight with the board in a publicly traded company,” he said. “It’s more important to protect shareholder values than to say who is running the company.”
Parent said a San Francisco-based brokerage firm placed several directors on the GoldSpring board whom he alleged were uncooperative. He said the firm attempted a “hostile takeover of the board and a recapitalization scheme.”
According to a GoldSpring news release, the board of directors authorized a recapitalization plan that could have given majority shareholder control to the brokerage firm, which had financed GoldSpring through a $10 million- equity private placement in March.
Parent said the recapitalization plan was “an attempt to convert $10 million in equity into $12 million of new debt.”
With the backing of two other directors and the majority of the company’s common shareholders, he signed a resolution Dec. 10 which removed seven members of GoldSpring’s board, including Faber as CEO.
Jubilee Investment Trust in London, which holds about 20 percent of GoldSpring’s shares, backed Parent. Jubilee is the second-largest stockholder of the company, after Parent.
Only a month before, GoldSpring executives filed a lawsuit in the Superior Court of Arizona accusing Parent of racketeering, fraud, negligence and theft. Parent said the lawsuit will be dismissed, and it was designed to tarnish his image so Jubilee wouldn’t side with him.
Faber said Parent is the “purported CEO,” and that he has not followed federal rules concerning a publicly traded company. He said the board acted in the best interest of the company’s shareholders when it authorized the recapitalization plan.
Faber filed a temporary restraining order against Parent, which was granted by the district court in Phoenix in late December. The restraining order prevents Parent from withdrawing from GoldSpring bank accounts other than what is necessary for the daily operation of business. Parent was also ordered not to rescind or interfere in any way with transactions approved by GoldSpring’s board prior to Dec. 9.
John Hay, Parent’s attorney, said the temporary restraining order was granted after Parent and his two-member board rescinded the recapitilization plan.
“All the (restraining) order did is leave both parties at a standstill under a hearing on Jan. 5,” Hay said.
But Parent said it still feels good to be back in command.
“Goofy things were happening in the company before,” he said. “When you found a company like this, it’s almost like your daughter, and it’s been very difficult to bite my lip.”
At the Plum Mining Co. Christmas party in Virginia City, Parent’s return was celebrated by the singing of “Back in the Saddle Again,” he said.
The district court will decide Wednesday if the temporary restraining order should be extended.
Contact reporter Becky Bosshart at email@example.com or 881-1212.
GoldSpring has $18.4 million in assets, $5.5 million in cash and $800,000 in debt. It also owns Eco-Vat Copper Nevada in Winnemucca, which mines 25 million pounds of copper.
It also has assets in the Gold Canyon placer deposit in Storey and Lyon counties and the Spring Valley claim in Lyon County.
It owns the Plum Mining Co. of Gold Hill, which produces gold and silver. Plum Mining employs about 15 people to open pit mine the Billie the Kid claim and process the precious metals.
For information visit http://www.goldspring.us
GoldSpring is based out of Scottsdale, Ariz., but was incorporated in Florida.
The board of directors: Steve Parent, Rana Medhi and Jerrie Gasch.
– Source: GoldSpring’s company biography