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Predator Fox Resources put to flightFull Disclosure / Mark Hawthorne
May 1, 2009 Page 1 of 2 Single page view

SMILES as wide as the Nullarbor were spotted coast to coast when news emerged from Perth that Hannans Reward shareholders had effectively snubbed a takeover bid from rival Fox Resources.

Hannans shareholders voted in favour of a capital-raising that was a litmus test of shareholder sentiment.

The capital-raising by the $10 million mining explorer, proposed by the incumbent board, will make Fox's bid much harder to get over the line. The smiles had much to do with the fact the predictors — Frank Cannavo, Terry Streeter and Terry Grammer — had fallen on their faces.

BusinessDay readers may be familiar with the name Cannavo, as his role in the Medic Vision disaster was exposed by the Lancelot column in March.

As Lancelot pointed out, Cannavo was the second-highest paid director at Medic Vision, and ended up with a significant shareholding in the medical training company after it bought a private outfit called Red Paragon — which included Cannavo and his family as owners.

Medic Vision took legal advice on whether Cannavo's association with Paragon was disclosable in the acquisition, and was told that, because the shares were not directly in his name, there was no obligation.

Then came the bid by Pilbara minerals developer Fox, which boasted a mate of Cannavo's on the board in Streeter. It lodged an announcement with the Australian Securities Exchange confirming "intent" to bid for Hannans.

Fox then confirmed it had unconditional pre-bid acceptances for about 18.95 per cent of the the company's shares — including those of Hannans directors Cannavo and Grammer. The other directors of Hannans cried "treason". Cannavo quit and, under after pressure from the remaining board members, Grammer followed soon after.

According to the board of Hannans, neither Cannavo or Grammer told it of their discussions with Streeter. Indeed, the board of Hannans later found that Cannavo and Grammer were involved in promoting the benefits of the proposed Fox bid to shareholders well before the ASX announcement was made.

With yesterday's vote going in favour of the Hannans board — it won 80 per cent of the votes cast at the meeting, and over 50 per cent of the shares on issue — Fox and the two rebel Hannans directors have been left out in the cold.

After claiming to have 18.95 per cent control in Hannans, Fox could only muster 9 per cent to vote against yesterday's resolutions. In addition, Fox's own auditors have questioned if the company can continue as a going concern.

In a final twist to the story, Grammer yesterday resigned from the board of Montezuma Mining Company.

Sources at Montezuma said several significant shareholders had questioned if Grammer could be counted on always to work in the best interests of the company he was representing, given his actions at Fox.

It must be a disappointing day for Grammer, who in 2000 was named joint Prospector of the Year by the Association of Mining and Exploration Companies, along with Tony Rovira, for the Cosmos nickel deposit.

Full Disclosure, and one company Grammer is involved with, have been unable to contact him for comment.