With shares trending 51% in the red over the past 12 months, NorthWest Copper (TSXV: NWST; US-OTC: NWCCF) says the British Columbia Securities Commission (BCSC) has agreed to schedule a two-day hearing over allegations that an activist group did not make the required securities law disclosures.
In May, the activist group, led by Grant Sawiak, John Kimmel, and Tony Ianno, put forward an alternative slate of directors they want investors to vote onto the board in an upcoming annual general meeting.
Scheduled to begin on September 12, the hearing will weigh NorthWest’s claims that the activist group concealed their joint actor status for this year’s shareholders’ meeting. Additionally, concerns are rising that the group might pursue a no-premium take-private plan if shareholders elect their nominees.
The nominees include engineer John Theobald, chartered accountant Braam Jonker, geoscientist Jim Steel, public service veteran Maryantoinnett Flumian, lawyer Adam Manna and securities law professional Sawiak.
The activists’ main concerns centre around the board’s apparent strategy of excessive dilution, which has significantly reduced the company’s share value; the board’s proposed further dilution, which is likely to double the currently issued share capital, the board’s lack of response to the problem of share price depression by short sellers, and the board’s alleged general lack of transparency and expertise.
Sawiak proposes a three-fold approach to rectify these problems once the new board takes charge. He proposes a thorough review of NorthWest’s assets to prioritize and decide which ones the company should develop directly and which should be left for third parties, a continuous assessment of the board’s expertise to ensure it remains aligned with the company’s requirements, and securing rational and less dilutive financing as and when necessary.
The other side
Amid this potentially heated proxy battle, NorthWest asserts that the activist group acts against the broader interests of the shareholders. By potentially withholding critical disclosure, they could risk the value of shareholders’ investments in the company.
To ensure shareholders have all the necessary information, NorthWest is considering postponing its annual shareholders’ meeting, allowing them to factor in the hearing’s outcome when voting.
Despite the challenges, NorthWest remains confident that its current board, with its experience and dedication, is the best fit to navigate the company toward future growth. The board and management have expressed concerns about the potential disruption of vital projects if the activist group’s nominees come into power.
The company also highlights the possibility of the activist group using company funds to cover their campaign costs.
On the exploration front, NorthWest on August 29 reported promising results from the Kwanika drilling program. Results show significant copper and gold mineralization in the Kwanika South Zone.
Some assays surpass the current average grades of the South Zone resource estimate. The highlight hole reported was an intersect of 316.9 metres grading 0.3% copper from 307.1 metres depth.
At market close on Thursday, NorthWest shares were down 3.13% at C15.5¢, testing its 12-month lower bound of C15¢ per share, compared with a high of C33¢ and valuing the company at C$29.4 million ($21.7m).
