Battle for Coastal Gold takes on new urgency

TORONTO — Two Canadian mining magnates are fighting an increasingly heated battle for a tiny junior company, with one accusing the other of “incestuous behaviour” within his empire.

Keith Neumeyer’s First Mining Finance Corp. has offered six cents a share (or about $10.2 million) for Coastal Gold Corp., which has a project in Newfoundland. The rival offer for Toronto-based Coastal, from Stan Bharti’s Sulliden Mining Capital Inc., is worth about 2.3 cents a share.

Given that the offer from Vancouver-based First Mining is more than double Sulliden’s offer, one might assume that Neumeyer is convinced he will win. But that isn’t the case. Coastal’s board is currently endorsing the Sulliden bid, and Neumeyer would be surprised if that changes.

“It’s a joke,” he said in an interview.

“They are obviously not acting in the best interests of shareholders and exercising their fiduciary duties properly.”

Neumeyer thinks the problem here is inter-relationships between Bharti’s companies. Both Sulliden and Coastal are under the umbrella of Forbes & Manhattan (F&M), Bharti’s conglomerate of resource companies.

“There’s incestuous behaviour between all three groups,” he said.

Neumeyer pointed out that every director of Coastal has ties to F&M, as does its chief financial officer and corporate secretary. Some of them even work out of F&M offices and have F&M on their business cards, he claimed.

He believes Bharti and his people are determined to put Coastal and Sulliden together, even if it means rejecting a much higher bid.

The clock is ticking for Neumeyer, as shareholders are scheduled to vote on the Coastal-Sulliden deal on Wednesday. He wants an Ontario court to delay that meeting, and said the Ontario Securities Commission has been alerted to the situation. He thinks shareholders need a better opportunity to look at his bid.

Bharti has come under fire several times in the last few years from shareholders who claimed he is not acting in their interests. He has been targeted in multiple proxy fights, including one last year from Meson Capital Partners LLC.

Coastal said it is reviewing First Mining’s offer, and will consider delaying this week’s vote on the friendly merger with Sulliden.

Coastal Gold, Sulliden and Bharti all declined to comment as they wait for Coastal’s board to rule on First Mining’s bid.