St. Elias Warns Shareholders: Dissidents Want Reprimanded Financial Salesperson On the Board And Have Failed To Provide Adequate Disclosure

VANCOUVER, British Columbia, Dec. 13, 2012 /PRNewswire/ -- St. Elias Mines (TSX-V: SLI) (U.S. Clearing Symbol: SELSF) (Frankfurt Exchange: EKL) today responded to a dissidents' circular issued by Gilby Len Hastman and Darcy Kim Hastman. Based on a preliminary assessment, St. Elias believes the dissidents' disclosure is inadequate and that the dissident nominees do not deserve shareholder support.

St. Elias believes that the biographies in the dissident circular confirm that none of the five dissident nominees should be elected to the Board. Four of the five do not have mineral exploration, corporate finance or public markets experience. This alone should be enough to alarm shareholders but there are even more serious issues with the fifth dissident nominee, James Rainbird, a reprimanded financial salesperson.

The dissidents want Mr. Rainbird on the St. Elias Board despite his admitted past misconduct. As disclosed in the dissidents circular, as a result of his transgression the Mutual Fund Dealers Association of Canada (MFDA) in 2010 not only reprimanded him but also prohibited him for five years from acting in a supervisory capacity for any MFDA members. 

However, the dissidents failed to disclose the nature of Mr. Rainbird's misconduct, which involved hundreds of victims, millions of dollars and flagrant breaches of securities laws over a period of four years. This omission is very misleading. Only with a full description of the transgression can shareholders begin to understand the depths of the problems that St. Elias may face under the control of the dissidents.  

"Shareholders should be concerned," said Lori McClenahan, President and CEO of St. Elias Mines. "The details of Mr. Rainbird's infraction suggest that he is not capable of identifying and managing risk and may not act in the best interests of St. Elias shareholders. Even worse is the failure by the dissidents to disclose these details. This must be corrected immediately. What else are the dissidents hiding? And what does this say about the dissidents' likely conduct if they were on the St. Elias board?"

Continued Ms. McClenahan, "The dissidents have not provided any details of how they intend to advance St. Elias' portfolio of high potential properties, nor do they have proposed a management team to operate St. Elias or the ability to raise capital. The combination of inadequate disclosure, lack of plans and inexperience means that the dissidents do not deserve shareholders' support."

Details of James Rainbird's Reprimand and Transgression

Mr. Rainbird was reprimanded by the MFDA even though he cooperated with its investigation and admitted to misconduct. He is prohibited for five years from acting in a supervisory capacity as a mutual fund salesperson. The MFDA demonstrated its lack of confidence in Mr. Rainbird by also requiring that he be subject to retraining and a six-month period of "close supervision."

According to MFDA disciplinary documents that the dissidents did not disclose, Mr. Rainbird, four associates and various others under their supervision sold to 656 clients a total of $50.2 million of high-risk debentures issued by a company called FactorCorp. Financial Inc. The sales occurred between June 25, 2003 and April 1, 2007. Shortly afterward, FactorCorp went bankrupt.

Mr. Rainbird personally sold the debentures to 167 clients and 7 people that he supervised sold the debentures to 226 clients. For virtually all of these clients the purchase was unsuitably risky, based on "know-your-client" information collected at the time of purchase. According to the MFDA, these debentures could only be sold to wealthy or sophisticated investors who qualified for an accredited investor exemption. At the time of purchase, none of these clients qualified.

These details and more are described in the MFDA disciplinary documents, which shareholders can find at www.steliasmines.com under the AGM tab and at the MFDA website under http://www.mfda.ca/enforcement/cases08/200827.html. St. Elias urges shareholders to read these disciplinary documents carefully.

Why shareholders should be concerned

Given that Mr. Rainbird and his fellow-dissidents are now standing for election to the Board of a high-risk junior mineral exploration company, St. Elias believes the details of the transgression, and the dissidents' failure to fully disclose it, is disturbing. The dissidents attempted to downplay the gravity of Mr. Rainbird's transgressions by referring to them only as "allegations [that] were centered around the aspects of inadequate training, compliance and supervision."

Shareholders of St. Elias deserve more fulsome disclosure from the dissidents. Shareholders should also be troubled by dissidents' hypocrisy, given the high disclosure standard that the dissidents are suggesting they will establish. In their circular, the dissidents claim that their vision is based first and foremost on "timely, open and candid communications with the shareholders."

Clearly, the dissidents have already failed to meet their own standard. They have made the decision that candid communications excludes a description of Mr. Rainbird's misconduct. They think shareholders don't need to know. We think this disclosure decision by the dissidents is strong evidence that they don't deserve your vote.

The inadequate experience of the other four dissident nominees

As noted above, St. Elias believes the experience of the other four dissident nominees is sorely lacking. None of them have disclosed any experience in mineral exploration. St Elias also notes that:

• Dissident nominee Ted Rutherglen has held five jobs in the past six years and his career has moved steadily backwards. Since 2011 he has had the title of Manager, a more junior position than Director, the title he had from 2007 to 2011 and also more junior than the title of Vice President, which he held for less than a year between 2006 and 2007. His career path does not invite investor confidence.
• The experience of dissident nominees Gilby Len Hastman and Darcy Kim Hastman involves a closely-held electrical contracting business and the experience of dissident nominee Richard Alexander Defreitas involves a closely-held oil services business. These businesses have little or no relevance to St. Elias, a publicly-traded mineral exploration company.
• In addition to downplaying Mr. Rainbird's inappropriate conduct, the dissidents made a misleading claim in Mr. Rainbird's biography regarding his role at Intigold Mines. The Circular states that Mr. Rainbird. was the President and Chief Executive Officer of the TSXV-listed Intigold Mines Ltd. ("Intigold") from August, 2007 to December, 2010, and claim that he was also the Founder of Intigold. This is false. Mr. Rainbird was not the Founder of Intigold and was only the President and Chief Executive Officer of Intigold Mines Ltd. from October 26, 2010 to December 3, 2010, a period of about 5 weeks.
• Mr. Rainbird and Mr. Defreitas are not eligible for election under the Company's articles because they failed to provide their consent to act as directors of the Company within the specified time frame.

The dissidents don't have a plan for St. Elias, just criticism

The dissidents have not provided any plans for St. Elias and don't say who will lead the Company.  Meanwhile, the dissidents have leveled unfair criticisms at the Company's nominees and management. Members of this team have assembled St. Elias' impressive portfolio of mineral properties and have acted prudently to explore and finance them.

In the mineral exploration business there is always a risk that drilling results will disappoint. The key is to know when to adjust strategies as new facts emerge. This is precisely what the Board and management of St. Elias has done, specifically with regard to the Company's flagship Tesoro gold project in Peru.

Nowhere do the dissidents say how they would advance the Company's high potential exploration properties. In fact, nowhere in their materials do they even mention that St. Elias is a mineral exploration company.  They also deliberately distance themselves from the operations of the Company, saying that all of the dissident nominees will be independent and none expect to be employed by the Company.

St. Elias has not hidden a gold discovery

According to internet conspiracy theorists who appear aligned with the dissidents, St. Elias has fraudulently hidden a giant gold discovery at Tesoro. It is only possible to jump to such an absurd conclusion if the critic doesn't have any knowledge of how value is created in mineral exploration. 

Consider these facts:

• Management disclosed accurate and full drilling results in compliance with the National Instrument 43-101 rules that govern mineral exploration disclosure. The results were disappointing but accurate.
• If the deep drilling at Tesoro had really discovered a giant gold deposit, it would have been in management's best interest to disclose it.  Disclosing positive results would have enhanced the value of St. Elias and opened up potential new opportunities to advance the Company and its properties.
• Management stopped its deep drilling program at Tesoro because it was the responsible thing to do when early results did not live up to expectations.
• The 3D geophysical images that showed anomalies at Tesoro were tools to inform mineral exploration. However, one cannot really know what is in the ground before drilling commences.
• In the months following the decision to stop deep drilling at Tesoro, St. Elias has sought expert advice to inform a new exploration and development strategy. St. Elias expects to disclose more about that strategy to shareholders once fully developed and likely prior to the Annual General and Special Meeting.

St. Elias: successfully financed in challenging conditions

St. Elias raised $13 million in challenging market conditions over the past three years and has prudently deployed its capital. This is a significant accomplishment that speaks to the experience of the management team and potential of all of the Company's exploration projects. The dissidents claim that these funds have been misused for promotion. Consider these facts:

• Exploration is a capital-intensive business. Management needs to take a long-term view and ensure that there is a steady pipeline of funding to advance future phases of exploration. This requires outreach to a wide net of potential investors, which calls for travel and marketing efforts.
• The dissidents' criticized St. Elias for increasing costs over the four-year period ended May 31, 2012 but failed to mention this took place during a period of significantly increased exploration activities. In fact, for the year ended May 31, 2012 exploration expenses totaled $5.2 million, up 1,860% from $266,074 in the year ended May 31, 2009. It was unfair and misleading of the dissidents to isolate travel and operating costs without mentioning the corresponding increase in exploration activity.

Vote for an experienced and capable Board

The nominees put forward by the Company are experienced and capable. Under their supervision, the current management team will advance our exploration properties and raise awareness of St. Elias in a prudent and measured fashion – all with a view to surfacing value for our shareholders.

• Don't put your faith in dissidents who omit crucial details from their disclosure, whose only nominee with any public company experience is a reprimanded financial salesperson, and who won't - or can't -provide any exploration of financing plans for the Company.
• Recognize that investing in a junior exploration business comes with risks. Opt for a Board that has the right experience and is capable of minimizing risk and maximizing the opportunities ahead.

This is not a short-term game. The Board and management of St. Elias are in it for the long-term and remain committed to creating value for our shareholders. Please vote your WHITE proxy today.

Vote the WHITE proxy for an experienced board

Please review the Management Information Circular at www.steliasmines.com or www.SEDAR.com and vote only the WHITE proxy. Vote today. If you have questions or seek assistance with voting your WHITE proxy, please call our proxy solicitation agent, Georgeson toll free at: 1-888-605-8412 or askus@georgeson.com.

About St. Elias
St. Elias is a gold-focused exploration company led by an experienced management team and active in Peru and British Columbia. St Elias' properties have high potential and are located in two of the most prolific mining regions of the world. For additional information on St. Elias and its projects, please visit us at www.steliasmines.com or call Danny Aaron at 1-888-895-5522 (toll free US and Canada).

If you have questions or need assistance voting your shares, contact our proxy solicitation agent, Georgeson Shareholder Communications Canada Inc. at 1-888-605-8412 (North American toll free) or email: askus@georgeson.com.

ST. ELIAS MINES LTD.

(signed "Lori McClenahan")
Lori McClenahan, President, CEO and Director

Neither the TSX Venture Exchange nor its Regulation Services Provider (as that term is defined in policies of the TSX Venture Exchange) accepts responsibility for the adequacy or accuracy of this release.

This News Release may contain forward-looking statements including, but not limited to, comments regarding the timing and content of upcoming work programs, geological interpretations, potential mineral recovery processes, etc. Forward-looking statements address future events and conditions and therefore involve inherent risks and uncertainties. Actual results may differ materially from those currently anticipated in such statements.

For more information contact:
St. Elias Mines LTD.
P: (604) 669-4677
Toll Free: 1-888-895-5522

SOURCE St. Elias Mines Ltd.