Shell Sum­mary for Dec. 7, 2018

Stockwatch Daily - - SHELLS - By Stock­watch Busi­ness Re­porter

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.

(*MKTSHEL)

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