Dourado investors to vote on controversial acquisition
* Rebecca Urban * From: The Australian * April 21, 2010 12:00AM
THE recent testimony of Perth-based tenement dealer Dean Scook in the Supreme Court of NSW provides an intriguing insight into the way he goes about business.
Intensely private, Scook does not like his name being linked to deals, has been known to install business associates into companies he controls and his preferred currency is shares -- unescrowed, that is -- so that they can be quickly sold for a healthy profit.
And that was before he was convicted on 158 counts of market rigging and sentenced to three years' jail.
For years, Scook and his associates raked in copious amounts of shares and options, vending mining projects into a small group of mining tiddlers. Now, having serving a minimum 14 months for his crimes, Scook has dived straight back into the lucrative business of finding, buying and selling mining tenements.
However, one company he won't be doing business with is Dourado Resources. Not if the Australian Securities Exchange has anything to do with it.
Formerly based at the terrace house of Scook and his long-time business partner Carol Hardie, Dourado listed on the sharemarket late last year after acquiring a suite of tenements from Scook, his associates and family members, in return for a 30 per cent stake in the company. Concerned about the level of influence that Scook would have once Dourado was listed, the ASX slapped a range of restrictions on future dealings with the businessman, his wife and children.
So when Dourado announced last month that it was planning to acquire a company with prospective mining projects in the Northern Territory, the sharemarket operator was keen to look at the transaction.
Dourado's shareholders will meet in Perth today to vote on the deal that will see the investors of North Minerals pick up 25 million shares and 25 million options in the company. The shares alone have a market value of $6.25 million, which is a stellar return for a company whose assets comprise nine applications for exploration licences, which cost about $500 each to submit to the NT Mines Department.
If the deal gets the green light, the shareholders of North Minerals will end up owning about 30 per cent of the company. Those shareholders include Hardie (4.5 million shares), her son Cameron Hardie (4.58 million shares) and North Minerals' director Richard Samuels (5 million shares) whose private transport business is financed by a $2.5m loan from a company controlled by Scook's daughter, Amy Taylor.
Curiously, several of the tenements within North Minerals' so-called Pine Creek project have been bought and sold by Scook and Hardie in the past. Maps contained in Dourado's notice of meeting show the tenements to be identically located to tenements that were once owned by their company Australian Uranium, which was acquired by Yellow Rock Resources in 2007. The tenements, which formed part of its Money Shoal and Douglas Range project, have since been relinquished.
Dourado, however, appears unconcerned by the links between Scook and its acquisition target.
A spokesman for the company said that "standard due diligence" had been carried out and investors could be assured that the controversial businessman was not a shareholder of North Minerals.
Asked about Hardie's stake in North Minerals, the spokesman said the business partnership between Scook and Hardie had been dissolved some years ago.
That claim, however, is contrary to evidence heard in the October court case between Chameleon Mining and Murchison Metals, which are locked in a dispute over an iron ore project.
Hardie joined Scook in giving evidence and both listed the same Aberdeen Street address as their place of business.
While Australian Securities & Investments Commission records show that Hardie continues to serve on the boards of several private companies from which Scook was forced to relinquish his role following his 2007 conviction, and is co-director on several Scook family companies.
"She is able to invest in and have a shareholding in anything that she wishes," the spokesman said, insisting that Dourado had "satisfied all of the ASX's queries".
The ASX, however was slightly less effusive. "Dourado has affirmed that it is in compliance with its undertakings," the exchange's spokesman said.
Dourado is right, of course. It has complied with its undertakings to the ASX, which prevent it from buying assets from Scook and his immediate family but do not extend to his business associates or his sons-in-law, Tim Leahy and Paul Taylor.
The ASX, however, would no doubt be intrigued by some of the revelations to come from Scook's appearance in the witness box last October. Back in 2004, Scook had struck a deal with Chameleon Mining's former managing director Greg Barnes to sell his Cadetta tenements in return for 8 million shares. Scook told the court that he had instructed two business associates to make applications for the Cadetta tenements, had instructed the incorporation of Cadetta Resources and that he had also instructed the heads of agreement with Chameleon to be signed.
"You obviously took steps not to have those tenements identified with your name?" asked Martin Watts, senior counsel representing one of the respondents.
"That's correct," Scook replied.
"And can you tell the court why that was?" Watts pressed.
"Because I had other holdings in the area, and I didn't want people to know I was buying those tenements."
According to the affidavit of Chameleon's former managing director Greg Barnes, who is in the process of appealing a conviction for misleading the market, Scook had advised him that his associates held an interest in Cadetta for his benefit.
Scook told the court that he was pleased with the substantial profit he made on the deal, reaping shares worth $640,000 for tenements that cost him $12,000.
While Dourado has repeatedly insisted that it is not controlled by the Scook family, the private business activities of its three independent board members do little to help its cause.
Brian Maston, Arlene Mendoza and Daryl Smith are each directors of a company called Tierra Rica, which is ultimately owned by Meroliza, whose own sole director is Amy Taylor. Meroliza is registered at Scook's office.
A spokesman for Dourado has denied the arrangements interfered with their independence.
"They are directors of that company, but it is only a shelf company and has not done anything of note," said the spokesman. "Neither Meroliza or any member of the Scook family is a substantial shareholder of Dourado, therefore any connection that they have with Meroliza or the Scook family is of no relevance to their status as independent directors of Dourado."
At the time of Dourado's listing, Meroliza held 250,000 shares, or less than 1 per cent of the company. And the family has no control over the 20 million shares and 10 million options its Whitvista Pty Ltd acquired before the float.
In an additional undertaking to the ASX, the holding was transferred to an independently controlled trust, escrowed for a period of two years.
The Australian has left numerous messages for Scook, to which he has not replied.
Meanwhile, Dourado is standing by the North Minerals deal.
"As stated in our IPO prospectus, the company has looked, and will continue to look, at opportunities that expand the assets of the company," the spokesman said.
"However, this transaction will ultimately be decided on by the shareholders," he said.
The ASX has said that it continues to monitor the company, including a plan to join with Tony Sage's Cauldron Energy to divest their uranium assets into a separate listed vehicle called Eclipse Uranium. It's an unusual move for a company that only listed five months ago.
CXU Price at posting:
33.0¢ Sentiment: Hold Disclosure: Held
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