Meridian, Website in tussle over report
The company said the media outlet
was the dupe of short-sellers eager to
spread unfounded rumors.
The media outlet said the company
tried to bully it into stopping distribution
of a negative article.
And at the end of the day, Reno-based
Meridian Gold and the Mineweb, a Web
site devoted to mining news, decided to
call a truce but not before Meridian’s
shares had taken a big one-day hit.
The article still will be published on
Mineweb’s site , but Meridian will be
allowed to correct errors in the report.
The timing of the publication is uncertain;
Mineweb officials said last week the
report will be out “as speedily as possible.”
The truce over the article, announced
as Brian Kennedy, Meridian’s chief executive
officer, opened a quickly called
meeting of analysts at a Toronto hotel,
capped a frenzied five days.
Meridian said in a letter threatening
legal action against Mineweb that it first
saw a draft of the article entitled “Is
Meridian in a Fix?” late on Saturday,
The next Monday, Meredian’s vice
president of investor relations,Wayne
Hulbert, talked with the author, Timothy
Wood, and learned that Wood had discussed
Meridian with a fund manager
about the time he started work on the
Not long after the phone call between
Hulbert and Wood, Meridian’s lawyers
fired off a letter to Mineweb, threatening
legal action on the basis of false and
defamatory statements in the article
The mining company also said it
would request that U.S. and Canadian
securities officials investigate whether the
article was instigated by a short-seller
eager to drive down Meridian shares.
That letter, not surprisingly, didn’t go
over well with Mineweb.
“The brute force of the legal attack
against Mineweb actually has the opposite
effect it compels us to publish our
report for fear of appearing weak in the
face of legal intimidation,”Wood said in
a posting on Mineweb’s site.
He denied that he had personal interest
in shorting Meridian’s stock.
Further, the writer complained that he
believed Meridian was leaking selected
parts of his draft to analysts and brokers
last Wednesday the day before
Kennedy’s presentation in Toronto.
Whatever the source, the markets got
wind of the report, and Meridian’s shares
fell more than 9 percent on Wednesday,
closing at $14.73 before rebounding later
in the week.
Meridian distributed word through
financial wire services that no material
developments accounted for the drop in
the price of its shares.
While the shares were falling,
Mineweb announced it decided to delay
publication of its report while the legal
issues were sorted out.
And after the day’s trading, Meridian
announced that Kennedy and Hubert
would talk about the company’s prospects
in a conference call with analysts the next
As that session opened, Kennedy
announced the agreement to allow
Meridian to review and correct the article.
“We felt the best thing to do was fix
the article before it went out,” he told listeners
to the conference call. Later, he
added, “The letter (threatening legal
action) was a last resort.”
After more than an hour of reviewing
the company’s mining operations and
exploration prospects in Chile and
Argentina work that apparently is the
subject of the 3,000-word Mineweb
report signed off:
“I apologize that there was some
heartburn over the past three days.”
“If you’re going to produce roughly 80,000 ounces (of gold) a year at $800 an ounce … and gold is at $1,900 or $2,000 per ounce, that’s going to create a tremendous amount of cash flow.”