Shell Summary for Dec. 7, 2018
THE TSX Venture Exchange closed up 6.30 points to 572.38 Friday, but it ended the week down 17.14 points. Dr. Pavel Maslovskiy and Peter Hambro have filed a preliminary prospectus to list their first capital pool shell, XAU Resources Inc. The shell plans to sell a $400,000 to $600,000 initial public offering at 10 cents through Hampton Securities Ltd. Dr. Maslovskiy, 61, lives in Moscow and was an associate professor at the Moscow State Aviation Technological University. From 2011 to 2014, he was a member of the upper house of the Russian parliament. His shell-making partner, Mr. Hambro, 73, lives in London, England. In 1994, this duo founded Petropavlovsk PLC, a London Stock Exchange-listed gold producer that now operates three mines in Far Eastern Russia, near the Chinese border. Petropavlovsk, originally called Peter Hambro Mining PLC, changed its name in 2009 and is now named after both founders (Peter and Pavel). From 2002 to 2006, the company’s stock climbed to its all-time high of 5.78 British pounds sterling from about 30 British pence sterling. Petropavlovsk’s stock was still trading above four pounds in 2010, when it began to decline. It has remained under one pound since 2013 and firmly under 10 pence since 2014. It last closed at 5.9 pence.
In June, 2017, Mr. Hambro was forced out as Petropavlovsk’s chairman by a group of unhappy shareholders led by Russian billionaire Viktor Vekselberg’s Renova Group. Within weeks of Mr. Hambro’s exit, his friend and co-founder, Dr. Maslovskiy, resigned as Petropavlovsk’s chief executive officer. Unfortunately for the dissident shareholders, despite the shuffle, the company’s stock barely moved from the vicinity of seven pence. In December, 2017, the Renova Group privately sold its 484 million shares or 14.7 per cent of Petropavlovsk. In May, 2018, another group of unhappy shareholders spoke up, this time led by Kazakhstani millionaire Kenges Rakishev. The shareholder group demanded the return of Dr. Maslovskiy and another alumnus, Roderic Lyne, who retired in 2016 after being a director for seven years. Mr. Lyne was the British ambassador to Russia
from 2000 to 2004. In June, 2018, Dr. Maslovskiy returned to Petropavlovsk as its CEO, while Mr. Lyne became the chairman. Then in September, former chairman Hambro returned as the company’s president. After all this, the stock has still not moved much.
Dr. Maslovskiy, Mr. Lyne and Mr. Hambro have yet to announce any major plans to boost their sixpence company. Petropavlovsk aims to produce between 420,000 and 460,000 ounces of gold this year. It produced 439,600 ounces last year and was profitable. Petropavlovsk also owns 31 per cent of IRC Ltd., an iron ore producer in Far Eastern Russia. IRC, which has 7.09 billion shares issued, trades on the Hong Kong Stock Exchange and last closed at 7.9 Hong Kong cents. Its stock has declined from 27 Hong Kong cents in the past year. Mr. Hambro’s son, Jay Hambro, is the chairman of IRC.
At their capital pool shell, XAU Resources, Dr. Maslovskiy and the elder Mr. Hambro each hold 1,368,000 escrow shares. XAU sold its four million escrow shares at five cents in June. Dr. Maslovskiy’s son, Alexey Maslovskiy, 39, holds 684,000 escrow shares and is a director of the shell. He has held several positions at Petropavlovsk since 2003 including treasurer, head of business development and executive director. The younger Mr. Maslovskiy is also the founder and a co-CEO of WBD Gold Inc., a private gold explorer in Guyana. Joining Dr. Maslovskiy, Mr. Hambro Sr. and Mr. Maslovskiy Jr. on the board of XAU Resources are three more directors: Gairat Gary Bay, Danny Hrushewsky and Dr. Nataliya Hearn. Mr. Bay, 41, is identified as the shell’s promoter, president and CEO. He lives in Toronto and holds 380,000 escrow shares. He is the other co-CEO of WBD Gold. He is also the managing director of Sors Capital Inc., a resource-focused investment firm in Toronto. Besides his junior mining endeavours, Mr. Bay is a licensed real estate agent.
The next shell director, Mr. Hrushewsky, 57, is a chartered financial analyst and investor relations man in Toronto. He holds 100,000 escrow shares of the shell. He is the president and CEO of Sors Capital and is the vice-president of corporate development for WBD Gold. Mr. Hrushewsky has provided his IR services to companies including High River Gold Mines Ltd., which peaked at $3.50 while he was there in the late 2000s. High River has since been taken private by a Russian gold miner, Nord Gold SE. These days, Mr. Hrushewsky is the executive vice-president of Bunker Hill Mining Corp. (BNKR: $0.09), a zinc-lead-silver explorer in Idaho. Bunker Hill’s stock has fallen to nine cents today from $3.15 in January, not the sort of one-year stock chart that an IR man would be proud of.
The final shell director, Dr. Hearn, 51, holds a PhD in materials engineering. She was an associate professor from 1994 to 2008, first with the University of Toronto (for five years) and then with the University of Windsor (for nine years). From 2001 to 2013, she was the chairman and CEO of a pink sheets listing, American Rare Earths and Materials Corp. (AREM: $0.007 (U.S.)). This stock traded up to 55 U.S. cents in 2001 and 2002. It fell during the financial crisis in 2008, rolled back its shares 1 for 20 and never recovered. Dr. Hearn is now the president of a private Toronto company, Link-Tech Inc., a supplier of materials for underground pipe repairs. She holds the remaining 100,000 escrow shares of XAU Resources. Not surprisingly, the shell plans to seek a mining deal for its qualifying transaction.