Westfield shareholders react to management sale of assets

A change in the direction of Westfield Minerals (TSE), from a corporation with an interest in a producing gold mine to a holding company, brought a flurry of questions from shareholders at the annual meeting. Particularly vocal was minority shareholder Mike Cahill, who questioned the independence of several of Westfield’s 12 directors. Cahill, with a lengthy list of prepared questions principally for President Danesh Varma, said he and other shareholders “feel we were taken advantage of.”

Last year, Westfield sold its 35% interest in the Choquelimpie gold- silver mine in northern Chile, and other exploration assets, to Northgate Exploration (TSE) for $24.5 million. Largest shareholder of Choquelimpie, a heap leach operation which produced 89,000 oz. gold in 1989, is Shell Chile.

Westfield’s major asset remains its 10% interest in Northgate. Varma told shareholders Westfield plans to boost its holdings in Northgate to at least 20%.

For 1989, Westfield recorded net income of $4.6 million, compared with a loss of $4.2 million for 1988. The company lists current cash assets of $25 million.

An independent valuation report prepared by securities firm Burns Fry concluded Northgate paid too much for the Westfield assets, which Burns Fry valued at $15.7- 18.8 million. The valuation report was commissioned in response to shareholder complaints following the announcement of the sale of the mine and other assets.

Westfield is 51.1% owned by Reveltek Ltd., a wholly owned subsidiary of American Resource Corp. of Bermuda. Varma, an accountant by profession, is president of American Resource.

Both Westfield and Northgate are connected to the Bronfman corporate empire through Hees International Bancorp. Seven of the Westfield directors elected at this year’s annual meeting are listed as having Northgate connections. Northgate President John Kearney, P.J. Hughes, board chairman, two vice- presidents and three honorary Northgate directors sit on the Westfield board.