OSC rethinks Medusa

What could have been? That’s what some Canadian shareholders of MedusaMining Ltd. must be asking this week, now that they’ve been given the green light to sell some or all of their shares in the Australian-based gold producer which has operations in the Philippines.

The regulators, in this case the Ontario Securities Commission, were involved because Medusa was listed on the TSX in 2009 before voluntarily delisting two years later and ceasing to become a reporting issuer. The shares are listed on the Australian Stock exchange (ASe) and the London Stock exchange (LSe.)

This past January, shares were cease traded in Canada as a result of Medusa being delinquent in the filing of its annual financial statements. Apart from being delinquent, the OSC said Medusa “has not paid a fee required by the Act or the regulations.”

That scenario, apparently, is not conducive to Canadian shareholders (who between them own less than 2% of Medusa) selling their stakes through the ASe and using a Canadian broker that has operations in Canada and Australia.

So when one shareholder tried to do that, the word came back: The OSC blocked the trade.

From the outside that action seemed a little over the top given that a dispute between the company and the regulator affected the ability of a non-insider to sell some stock. But in making its decision, the OSC conducted an internal review, and said “in considering the situation, it was necessary to weigh the principles underpinning the compliance regime when an issuer fails to meet its obligations, as well as the interests of all shareholders.” By inference, the OSC ruled that shareholder interests were secondary.

Now comes word that the OSC has changed its view: It will allow such trades. But it only came to that decision after complaints from a Canadian shareholder who also advised this column of the situation.

Why the change? In an email response, the OSC said that “OSC staff have concluded that it would be appropriate under the circumstances to vary the order and have taken steps that will allow Canadian shareholders who are not insiders or control persons of the issuer to sell their shares on either the Australian Stock exchange or the London Stock exchange.”

In the release, indicating the cease trade has been lifted, the OSC said that “the terms and conditions to the cease trade order put Canadian shareholders at a disadvantage relative to nonCanadian shareholders who are free to trade their shares on either of the ASX or the LSe.”

But in a second snub to investors, news about lifting the cease-trade order on Medusa has not been published on the OSC website. Instead the news is contained on the website of the Canadian Securities Administrators. Apparently that site serves as the national CTO database, the location where all jurisdictions post such matters.

Lifting the cease-trade order on Medusa was one piece of good news for its shareholders.

But on the day the cease-trade was lifted, Medusa reported that the project managers for the expansion of its Philippines operation had appointed administrators. In a statement Medusa said it is currently “uncertain as to the timing and the effects on completion of the finishing touches to the mill and full circuit commissioning as dedicated commissioning personnel were scheduled to mobilize to site imminently.”

Medusa closed Monday at A$1.345; one month back it traded at A$2.37.