VANCOUVER, Oct. 3, 2013 /CNW/ - Morning Star Resources Ltd. (the "Concerned Shareholder") today responded to Boss Power Corp.'s news release of October 1,
Boss's "offer" purposely attempts to significantly diminish the fair
value of the B claims by relying on a "valuation" that the board knows
is self-serving, biased and unreliable. On its face, the report states
that it is inconsistent with standard reporting requirements. The
valuator doesn't guarantee the report's accuracy. The report values
the B claims at April 24, 2008 - THE VERY DAY OF THE URANIUM
EXPLORATION BAN. The Concerned Shareholder has already demonstrated
that the real market value of the B claims is around $4 million.
The report suggests a market value for the B claims, based on comparable
U.S. properties, at the mid-mark, of US$4.82 million, based on 1.205
pounds of uranium contained in the B claims at US$4.00 per pound. The
report, however, then discounts this US$4.82 million value by 50% because the B claims are in B.C., and then a further 50% because the B claims contain a lower grade historical resource.
However, actual deals to acquire uranium properties in B.C. completed
prior to the Province's expropriation were not discounted like this.
For instance, International Montoro's nearby Cup Lake transaction was
valued at $4.3 million, and was not discounted for being in B.C. or for
containing a lower grade historical resource. Boss's own acquisition
of the Blizzard property was similarly not discounted for being in B.C.
or for containing a historical resource. The two arbitrary 50%
discounts used to cut the value of the B claims from $4.82 million to
$1.22 million are without foundation and contrary to the actual
transactions in the B claims area prior to the Province's uranium
exploration ban. The tactical acrobatics used by the existing board to
assign a significantly reduced value to the B claims is obvious.
Boss's "valuation" also completely ignored the simple fact that, as the
board is aware, Mr. Beruschi had an agreement to sell the B claims to a
third party for $4.1 million immediately prior to the Province's
exploration ban. That deal (that complied with Boss's option
requirements) is clearly the best indication of the real market value
of the B claims.
Boss's "valuation" is another example of the board's willingness to
deceive and manipulate shareholders. Not only is Boss's report
self-serving and biased, but the report itself reveals further
misinformation being spread by the board. For example, the board's
own "valuation" states that the B claims have a historical resource of
more than 1.205 million pounds of uranium. Then why has Boss
repeatedly told shareholders that the B claims have no known uranium
resource? In fact, Boss itself relies on similar historical estimates
in stating that its Blizzard claim has a historical resource of about
10.4 million pounds.
Starting a new, non-transparent arbitration as the existing board has
suggested in the face of the Province's current court application makes
no commercial sense for Boss's shareholders. After waiting 23 months,
Boss's shareholders deserve the simplest and quickest path forward -
for the board to resign, the B claims to be delivered to the Province
and the $30 million settlement proceeds taken out of risk by being paid
into Court. At that point, THE COURT can determine the fair value of
the B claims based on a truly independent valuation. The Concerned
Shareholder will promptly allow the B claims to be delivered to the
Province to close the $30 million settlement once at least a majority
of the incumbent directors are removed as proposed.
Any suggestion by Boss's existing board that a new board will pay more
than an appropriate amount for the B claims is fear-mongering. Not
only would this be a breach of the new board's fiduciary duties, but,
as stated, THE COURT (NOT THE NEW DIRECTORS) WILL DETERMINE THE PROPER
VALUE OF THE B CLAIMS. Any monies paid by Boss to the Concerned
Shareholder for the breach of trust should be recovered from those
responsible, namely certain members of the incumbent board and its
The Incumbent Board Should Immediately Resign
For the past 2 years, the incumbent board has had only one job - to
close the $30 settlement with the Province for the benefit of Boss and
its shareholders. The board has shown that it is not capable of
accomplishing this. The Concerned Shareholder has presented a
straight-forward and simple solution. At a minimum, the majority of
the board must resign and be replaced by independent, qualified
directors nominated by the Concerned Shareholder that are not motivated
by concerns for personal liability. The Concerned Shareholder will
then promptly deliver the B claims to the Province to allow the $30
million settlement to close as proposed. This is in the best interests
of Boss and each of its shareholders.
If the existing board cannot do the right thing and immediately resign
on their own, then Boss shareholders must take it upon themselves to
vote the board out of office at the upcoming annual general meeting of
shareholders scheduled to be held on November 14, 2013.
Information on the names and backgrounds of the Concerned Shareholder's
proposed director nominees, as well as detailed reasons to support the
Concerned Shareholder's position, will be more fully described in a
detailed information circular to be mailed to shareholders and filed on
SEDAR in due course in advance of the November 14, 2013 shareholders'
SOURCE: Morning Star Resources Ltd.
For further information:
Anthony J. Beruschi
Morning Star Resources Ltd.