Kinross repeats: No Southridge deal
Tuesday, January 1, 2013
Gold miner maintains it never established any partnership or joint venture in Mexico, despite Southridge's assertions to the contrary
JACQUELINE NELSON
Southridge Enterprises Inc. insists it had a deal to form a joint partnership with Kinross Gold Corp. But Kinross, Canada's third-largest gold miner, repeated Monday that no such agreement was struck for the junior gold explorer's Mexican properties.
Southridge, a penny-stock miner based in Texas, drew the attention of the main U.S. market regulator last week by saying it had a multimillion-dollar mining deal with Kinross - a claim Kinross has rejected as false.
Southridge maintains that it's not clear why Kinross would deny reaching an agreement to form a joint partnership. In an e-mailed statement, Southridge said, "it would be our best guess that they do not want the company's exploration strategy within Mexico to be publicly revealed."
The U.S. Securities and Exchange Commission halted trading in Southridge on Dec. 27. The regulator said it would assess the company's operations and "certain claims regarding a joint partnership and an arrangement to obtain funding and to change the listing venue for Southridge stock," the SEC said. Trading was still suspended on Dec. 31.
"We will confirm once again that we are aware of no communications which establish any partnership or joint venture between Southridge and Kinross," Steve Mitchell, a Kinross company spokesman, said in an e-mail on Monday.
That contrasts with Southridge's most recent account of the deal: "What we can say is that Southridge Enterprises does have two signed agreements from Mr. Martin Moscosa, and we have e-mails ... confirming his direct quotation," according to an unsigned statement from an e-mail address listed on the company's website.
The conflict began when Dallas-based, Mexico-focused Southridge issued a press release on Dec. 26 naming Kinross as the new partner for its Cinco Minas and Gran Cabrera properties in Jalisco, Mexico. It attributed a value of $550-million to $600-million (U.S.) to the agreement. It stated the transaction would be complete by mid-January. Company shares soared.
But one day later, Kinross denied any partnership or investment had been made. Kinross, the Toronto-headquartered company with gold projects in several countries, said it didn't anticipate any such deal would be struck in the foreseeable future.
Southridge's statements were, "to the best of Kinross' knowledge, without any basis in fact," Kinross said. Quotes credited in Southridge's initial release to Mr. Moscosa, Kinross's exploration manager, were incorrectly attributed, Kinross said. Southridge shares plummeted on Dec. 27 to about half a cent - less than the shares traded at before the original press release.
Southridge would not respond to an e-mail on Monday and calls to its headquarters went unanswered.
So where does this leave Southridge? The properties in question are two of three sites in Mexico in which it is involved through its subsidiary Southridge Minerals Inc., according to the company's website. Selling these assets to another buyer may be the best option - a move Southridge said would be less advantageous for shareholders than a partnership with Kinross.
"While we are disappointed that the relationship with Kinross is no longer a viable option, we have interest from numerous other suitors regarding our Jalisco properties, and we will continue to pursue those potential partners," Southridge said.
