Morning Star Resources Ltd.

October 31, 2013 11:18 ET

Morning Star Resources Ltd.: Concerned Shareholder Responds to Boss News Release

Don't be fooled by Boss's distractions. Anthem's nominees cannot close the $30 million settlement.

VANCOUVER, BRITISH COLUMBIA--(Marketwired - Oct. 31, 2013) - Morning Star Resources Ltd. (the "Concerned Shareholder") today responded to Boss's news release from yesterday.

1. Boss's news release fails to tackle the main issue - unlike the Concerned Shareholder's nominees, Anthem's nominees cannot close the $30 settlement.

The Concerned Shareholder has a clear plan for closing the settlement fairly and quickly. We have set out our plan in our proxy circular, which we urge all shareholders to read. In short, once the Concerned Shareholder's independent nominees are elected, the B claims will be transferred to Boss, the $30 million settlement can close and a transparent and neutral Court will determine the fair value of the B claims based on such information as the Court considers necessary. The Court is inherently independent, qualified and transparent and, one would have thought, above reproach. That Boss is questioning the ability of the Court to be a neutral arbiter in this matter shows the incumbent board's desperation.

Our plan is fair, fast, effective and certain to close the $30 million settlement. Anthem's nominees have no viable plan to close the settlement and cannot close the settlement. Our nominees can.

In Boss's circular, Anthem's nominees have provided a few vague, unsophisticated suggestions, such as continue negotiations with the Province (who has stated they are proceeding with their application for specific performance) or Mr. Beruschi (who, in good conscience, has told the incumbent board that he will not transfer the B claims to a board controlled by Anthem), or, failing that, abandon the hard-earned settlement, proceed to trial and possibly get nothing from the Province. This is no plan.

The incumbent board has already announced its en masse resignation because it knows it has lost shareholder support and that its numerous shortcomings have caught up to it. Anthem's current proposed nominees, which were, in Boss's own telling words, "recruited by Netolitzky" - an insider of Anthem - are simply Anthem's attempt to maintain control.

Boss shareholders deserve the $30 million settlement to close immediately, and for Boss to move forward and create value for shareholders. The Anthem nominees simply cannot close the $30 million settlement. They will continue to attempt to negotiate for the benefit of Anthem to try to pay Anthem handsomely, including for a royalty which Anthem has not earned.

Shareholders deserve a board that can close the settlement. The supposed mining experience of Anthem's nominees is irrelevant if Boss loses the $30 million settlement or goes back to trial. Do not let Anthem take control of Boss and risk the settlement.

2. Boss relies on fear-mongering and conjecture.

Boss continues to offer up a hypothetical scenario about Mr. Beruschi's future role with Boss. The Concerned Shareholder wants to make it abundantly clear: Mr. Beruschi will not play a role in the management of Boss and will not be appointed as CEO or President. The Concerned Shareholder firmly believes that the new board should be independent, and has selected its nominees accordingly. Boss's claims about Mr. Beruschi's future role in management are merely conjecture and made up fantasy.

Upon being elected, the proposed nominees intend to appoint John Skinner as Boss's independent CEO. This is in contrast to Anthem's plan to retain its de facto representative at Boss, Ron Netolitzky, as CEO. The Concerned Shareholder is confident that its proposed board will act in accordance with its fiduciary duties in the best interests of all shareholders in moving Boss forward once the settlement closes. The new board includes Mr. Skinner, a well-respected successful retired investment advisor in the mining industry, and Ray Roland, a lifelong Banker who retired as head of Financial Institution Banking, Western Canada, for the Royal Bank of Canada.

3. Ron Netolitzky has been shown to have attempted to buy votes.

Boss's claim that the Concerned Shareholder is "buying" votes is a bald-faced lie. Boss is obviously trying to distract shareholders from the truth, namely that Netolitzky has personally tried to buy votes by offering to pay for the exercise of options by other parties. Netolitzky has described his offer as "a personal loan to another director in case that director did not have sufficient funds to exercise his options". We know what Netolitzky was doing, and so do shareholders.

On October 9, 2013, approximately 1.5 million options were exercised by current management and the incumbent board. We wonder how many were paid for by Netolitzky's "personal loans".

Contrary to Boss's fabrications, nothing disclosed by the Concerned Shareholder in its proxy circular implies anything about "buying" votes. Boss's use of boilerplate language in the Concerned Shareholder's circular to fabricate a story is truly desperate. The Concerned Shareholder has simply retained the right to do what Boss is currently doing, hire a proxy solicitation firm. So far, the Concerned Shareholder has chosen not to do this. The incumbent board, on the other hand, has hired a proxy solicitation firm, using $125,000 of shareholder's money.

4. The truth about Goldbank and Ron Netolitzky's troubling history at Golden Band.

We recommend that shareholders read the truthful description of Mr. Beruschi's history at Goldbank Mining Corp. starting at page (xiii) of our proxy circular. During his time at Goldbank, Mr. Beruschi personally invested heavily into Goldbank by way of unsecured personal loans in an effort to see the company succeed. For more than 10 years, Mr. Beruschi never received a salary from Goldbank. Goldbank currently owes Mr. Beruschi more than $400,000 in unsecured loans. Mr. Beruschi's private companies are also owed more than $1.6 million from Goldbank for essential exploration work and other services completed on behalf of Goldbank. Mr. Netolitzky is aware of Mr. Beruschi's extraordinary commitment to Goldbank. Boss's attempts to misconstrue Mr. Beruschi's efforts are shameful. The incumbent board hasn't shown nearly the same commitment to Boss as Mr. Beruschi has showed to Goldbank.

Mr. Netolitzky, however, can't be proud of his time with Golden Band Resources Inc. Since 2011, Golden Band's share price has tumbled by over 93%. Last year Golden Band lost over $26 million. Despite these disastrous results, Netolitzky has paid himself more than $400,000 in compensation for his efforts since 2010.

Boss also continues to repeat the lie that Mr. Beruschi was Boss's counsel for the trust agreements pertaining to the B claims. Boss retained independent legal counsel to draft and negotiate the trust agreements with Mr. Beruschi. Mr. Beruschi in no way acted for Boss on the trust agreements. Is Boss really trying to convince shareholders it retained as its lawyer the very person it was negotiating with? It is shocking that the incumbent board is making this ridiculous allegation 6 years later and only two weeks before the annual general meeting of Boss shareholders. The timing is obvious.

5. The Anthem nominees want money for nothing.

The interests of Anthem's nominees are not aligned with current shareholders. If elected, it appears that Anthem's nominees want Boss shareholders to give them 10% of the company as stock options for nothing. If issued, these stock options would significantly dilute shareholders who currently own stock in Boss for no purpose other than to generously reward Anthem's nominees. The Concerned Shareholder's proposed directors will not take any options whatsoever.


The proxy circular and our letter to shareholders, which includes detailed information about our four nominees, has been mailed to shareholders, along with a BLUE proxy or voting instruction form, and is also available via SEDAR at To keep current with further developments and for information about how to vote your shares, we have set up a website at, which we encourage shareholders to visit regularly.

Shareholders should vote their BLUE proxy or VIF well in advance of the voting deadline of 11 a.m. (Pacific Time) on Tuesday, November 12, 2013. For assistance voting their BLUE proxy or VIF, shareholders should contact Valiant Trust Company toll-free at 1-877-699-4880 or 1- 866-313-1872, or by email at

Contact Information

  • Morning Star Resources Ltd.
    Anthony J. Beruschi

    Morning Star Resources Ltd.
    502-535 Thurlow Street, Vancouver, BC V6E 3L2