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Meridian, Website in tussle over report

John Seelmeyer

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,

Nov. 16.

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

story.

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

morning.

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.”