Southeast Asia Mining Corp.

Southeast Asia Mining Corp.

September 24, 2010 19:04 ET

Southeast Asia Mining Provides Update

TORONTO, ONTARIO--(Marketwire - Sept. 24, 2010) - Southeast Asia Mining Corp. ("SEA" or the "Company") wishes to provide an update to its shareholders on its activities, operations and ongoing legal matters. In the Company's press release of February 22, 2010 the Company disclosed certain legal actions involving John Steele ("Steele"), the former President, CEO and a former director of the Company, as a result of measures that were undertaken by the Company to protect its assets in Thailand.

The Company's assets in Thailand are held through its subsidiary, Geotai Exploration and Mining Co., Ltd. ("Geotai"). SEA holds a majority of the voting rights of Geotai and a 99.99% beneficial interest and has a majority of directors on the Geotai Board.

Because of concerns over Steele's conduct, the Company commenced steps to remove Steele and his associates as directors of Geotai, including the convening of an extraordinary general meeting of Geotai in January 2010. Anticipating his removal as a director, Steele, purporting to act on behalf of Geotai but without the authority of its board of directors, filed a number of legal actions against SEA and its directors which are described below. None of the legal actions brought by Steele and his associates have any merit and counsel to the Company has prepared defences and is vigorously defending each of the actions. Following these events, SEA retained forensic consultants in Thailand and, as a result of their investigations, a number of civil and criminal actions which are also described below have been recently filed against Steele and his associates in Thailand.

Legal Proceedings

Registration of Directors

On January 22, 2010, an extraordinary general meeting of Geotai was held at which it was resolved that Steele, Kanok Steele ("Kanok") and Kanchat Thongsombat ("Kanchat") be removed as directors of Geotai. Under Thai law, to be effective, changes to directorships must be registered at the Thai Ministry of Commerce. Steele and Kanchat, purporting to act on behalf of Geotai but without approval of its board of directors, filed an ex parte court injunction at the Ministry of Commerce, preventing the registration of the resolutions passed at the meeting, alleging that the shareholders' meeting had been improperly called.

For greater certainty, a second extraordinary general meeting of Geotai was held on August 6, 2010 and once again a resolution was passed to terminate the directorships of Steele, Kanok and Kanchat. Yet again Steele and Kanchat, purporting to act on behalf of Geotai but without approval of its board of directors filed a threatening letter at the Ministry of Commerce referencing the previous injunction. 

On September 20, 2010, the Court heard an application to lift Steele's injunction, however the hearing was not concluded and will continue on November 15, 2010.

Additional Steele Claims

Steele and Kanchat, purporting to act on behalf of Geotai but without the consent of its board of directors, have brought several other legal actions in Thailand against SEA and/or its directors which are summarized as follows:

  • A civil action by Geotai against the four SEA nominee directors of Geotai, alleging that the directors meeting held on December 21, 2009 and the shareholder's meeting held on January 22, 2010 were invalid and any resolutions passed at the meetings were invalid. These resolutions, among other things: (i) revoked the signing authority of Steele, Kanchat and Kanok, (ii) terminated Steele as managing director of Geotai; (iii) directed Steele, Kanchat and Kanok to turn over all records of Geotai to the solicitors of Geotai; and (iv) removed Steele, Kanchat and Kanok as directors of Geotai. At both meetings, all resolutions had been drafted by SEA's Thai counsel at the time (Baker & McKenzie). This action is being heard in conjunction with the application to lift the injunction prohibiting the registration of the new directors of Geotai which will continue on November 15, 2010.

  • A civil action by Geotai, claiming repayment of debt allegedly owing by SEA to Geotai. SEA's position is that the claim is completely without merit, as there is no debt owing from SEA to Geotai; on the contrary, SEA has outstanding advances to Geotai. As a consequence of incomplete service on the Company and its directors, the Court ordered a postponement until December 13, 2010.

  • A petition for bankruptcy in Thailand brought by Geotai against SEA for debt allegedly owing by SEA to Geotai. SEA's position is that the petition is completely without merit as there is no debt owing from SEA to Geotai, and, in any event, is filed in the wrong jurisdiction. As a consequence of incomplete service of the Company, the Court ordered a postponement until September 28, 2010.

  • A private criminal action (which is permitted under Thai law) launched by Steele and Kanchatt, purportedly acting on behalf of Geotai, against SEA and the four SEA nominee directors of Geotai claiming that proposed inter-company transactions and the passing of certain resolutions at the Geotai directors meeting of December 21, 2009 authorizing those transactions constituted "Cheating and Fraud". The court hearing is set for July 19, 2011. As noted above, all resolutions had been drafted by SEA's Thai counsel at the time (Baker & McKenzie). SEA and its nominee directors of Geotai have filed a private criminal action alleging that Steele committed perjury in filing this complaint.

  • In addition, Steele attempted to place SEA in bankruptcy in Ontario, filing a petition personally on January 18, 2010 for alleged debts owed by the Company. In March 2010, Steele was cross-examined by counsel for the Company with Steele failing to answer many questions about his claim. The cross-examination resulted in numerous undertakings by Mr. Steele's counsel, none of which have been fulfilled to date.

None of the above actions was authorized by the board of directors of Geotai. The Company believes these claims are frivolous and without merit and continues to actively defend each claim. 

Claims Against Steele and Associates

As noted above, as a result of the findings of the forensic accountants retained by SEA in Thailand, SEA filed the following claims against Steele and/or Kanchat within the last six weeks:

  • A bankruptcy petition was filed against Steele for non-payment of a promissory note in favour of Geotai dated December 31, 2007 wherein Steele promised to repay the amount of THB 69,260,015 (CAD $2.3 Million) to Geotai on demand together with interest of 4.073% per annum. The first hearing is set for October 22, 2010. Neither SEA nor its Geotai nominee directors authorized this Promissory Note. A demand for payment was made on behalf of Geotai; however, since the issuance of the promissory note Geotai has not received any repayment of the outstanding amount.

  • A criminal action alleging Perjury has been filed by the Company against Steele and Kanchat for providing false information to the Court in relation to criminal action brought against the Company and certain directors for Cheating and Fraud. The first hearing is set for September 30, 2010.

  • A criminal action relating to a Labour Court Settlement Action has been filed by the Company against Steele and Kanchat for their dishonest conduct and theft of THB 5 million (CAD $170,000). The first hearing is set for September 30, 2010. In addition, an appeal has been filed with the Supreme Court.

  • A criminal action has been filed by the Company against Steele for the misappropriation of THB 2.5 Million (CAD $85,000) in January 2010. The first hearing is set for October 8, 2010.

Counsel is currently finalizing a number of additional actions, both criminal and civil, against Steele, Kanchat and Kanok. Once filed with the Courts, SEA will provide further detailed information to regulatory authorities and to shareholders by way of additional press releases. 

Thailand Operations

Geotai is in compliance with all terms of its agreement with Kanchanaburi Exploration and Mining Co. (Kemco) Ltd. ("Kemco") and Boh Yai Mining Company Limited ("Boh Yai") and fully expects to acquire the 80% interest in the Kemco/Boh Yai lead-zinc mine and mill, as described in its prospectus dated November 28, 2008 (available on SEDAR), and the Company will continue to ensure that Geotai's interests are protected.

Geotai also holds 30 exploration licences in its own name. There are nine licenses which are contiguous to the Kemco/Boh Yai properties in Kanchanaburi, nine licenses for molybdenum in Chantaburi, and another 12 licenses in northern Thailand. The Company is also currently in negotiations to acquire gold claims in Vietnam, and plans to continue its mineral exploration and development operations if it acquires these claims. 

As a result of the actions of Steele, the business and operations of Geotai are effectively suspended while the Thai lawsuits proceed. The Company's current activities are focussed on defending the Geotai actions, asserting control of Geotai, protecting the assets of Geotai and completing the Company's outstanding audits.

With respect to the Company's outstanding audits, Steele has prevented access by SEA and its auditors to the books, records and various physical assets of Geotai, resulting in SEA's inability to file audited financial statements for the fiscal years ending December 31, 2008 and 2009. The failure to file the audited statements has resulted in the issuance by regulatory authorities of the present Cease Trade Order against SEA and has seriously jeopardized SEA's assets in Thailand. SEA has accordingly written down its Geotai assets to $1, even though Geotai has over $1 million in cash in its bank accounts in Thailand and valuable mineral properties in Thailand.

Mr. Kerry Smith, Chairman and CEO of SEA, said, "The Company's focus is two-fold -- on aggressively protecting the encumbered assets of SEA and Geotai by all available means and on continuing its mineral exploration and development operations in the neighbouring countries of Laos, Cambodia and Vietnam."

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