Board tweaks aren’t enough for un­happy share­holder

De­tour Gold in­vestor Paul­son re­jects set­tle­ment of­fer

Stockwatch Daily - - FRONT PAGE - Mr. Alex Mor­ri­son re­ports

DE­TOUR GOLD Corp. has re­sponded to nu­mer­ous share­hold­ers who have en­cour­aged a con­struc­tive di­a­logue and ne­go­ti­ated set­tle­ment with Paul­son & Co. Chair­man Alex Mor­ri­son has re­leased the de­tails of De­tour Gold’s lat­est of­fer of set­tle­ment of Oct. 9 that was re­jected this morn­ing by Marcelo Kim of Paul­son.

This set­tle­ment of­fer re­flects the board of di­rec­tor’s con­tin­u­ing open­ness to change and will­ing­ness to reach a rea­son­able com­pro­mise that re­flects the de­sires and in­ter­ests of the com­pany’s share­hold­ers. De­tour Gold re­minds share­hold­ers that it has al­ready made sig-

nif­i­cant changes to its board with the ad­di­tion of three new nom­i­nees and the res­ig­na­tion of two long-serv­ing direc­tors. De­tour Gold un­der­stands from its sig­nif­i­cant share­hold­ers that, while some fur­ther change may be wel­comed, it is not nearly to the ex­tent pur­sued by Mr. Kim. With­out whole­sale board change, Mr. Kim con­tin­ues to de­mand his pres­ence on the board. These de­mands are com­pletely out of line with the feed­back re­ceived from share­hold­ers. As fidu­cia­ries of the com­pany and rep­re­sen­ta­tives of both share­hold­ers and cor­po­rate in­ter­ests, the board can­not pos­si­bly ac­cept such a pro­posal.

The prin­ci­pal terms of the set­tle­ment of­fer are as fol­lows:

• New nom­i­nees: In ad­di­tion to the three new direc­tors ap­pointed in Au­gust (one of whom, Jim Gowans, was ap­proached to be on the Paul­son slate), one ad­di­tional nom­i­nee of Paul­son ap­pointed im­me­di­ately to the board. Based on abil­ity to pos­i­tively con­tribute, De­tour ex­pressed a pref­er­ence for ei­ther Chris Ro­bi­son or Dawn Whit­taker from the Paul­son slate but re­mained open to meet­ing ad­di­tional can­di­dates. Mr. Kim was not in­cluded in those pre­ferred as De­tour Gold does not be­lieve his can­di­dacy has the sup­port of the com­pany’s share­hold­ers.

• Re­moval of le­gacy direc­tors: As part of the com­pany’s con­tin­u­ous board re­newal ef­forts, in ad­di­tion to the two le­gacy direc­tors who were re­moved in Au­gust, one ad­di­tional le­gacy di­rec­tor to leave the board for a to­tal of three le­gacy direc­tors leav­ing the com­pany. Pro forma for these changes to the board, four of nine, or 44 per cent, of De­tour direc­tors will have turned over in the past six weeks.

• Nom­i­nee ap­pointed to com­mit­tees: Place­ment of the ad­di­tional Paul­son nom­i­nee on the cor­po­rate gov­er­nance and nom­i­nat­ing com­mit­tee and the spe­cial com­mit­tee.

• New chief ex­ec­u­tive of­fi­cer: Michael Kenyon will step down as in­terim CEO by no later than the up­com­ing an­nual gen­eral meet­ing and the new Paul­son nom­i­nee can be­gin work im­me­di­ately with the cor­po­rate gov­er­nance and nom­i­nat­ing com­mit­tee on an open global search for a new CEO.

• Sale of De­tour Gold: While De­tour Gold dis­agrees with Mr. Kim and Paul­son on their cen­tral the­sis — the sale of the com­pany now — the Paul­son nom­i­nee would im­me­di­ately work with De­tour Gold’s ad­vis­ers and the spe­cial com­mit­tee to un­der­stand the work that has been done in this area and the cur­rent state of play in this chal­lenged min­ing merger and ac­qui­si­tion en­vi­ron­ment.

• Paul­son pre­sen­ta­tion to the board: Ac­cess by Paul­son di­rectly to the board for presentations dur­ing a stand­still pe­riod on any ideas for change they may have.

• Civil claim: De­tour Gold would drop its tip­ping and mar­ket ma­nip­u­la­tion civil claim against Paul­son.

• Non-dis­par­age­ment and stand­still: Paul­son and De­tour Gold would en­ter into an 18-month stand­still and mu­tual non-dis­par­age­ment.

“I am dis­ap­pointed that this

lat­est very rea­son­able of­fer was re­jected by Mr. Kim. De­mand­ing a whole­sale change of the board as a con­di­tion to ne­go­ti­at­ing a set­tle­ment is nei­ther prac­ti­cal nor re­spon­si­ble. Given the crit­i­cal stage we are at in ex­e­cut­ing the life-of-mine plan, now is not the time to throw the com­pany into chaos and start from scratch, es­pe­cially fol­low­ing the sig­nif­i­cant changes the board has al­ready made. Such changes would limit the over­sight the board could pro­vide and put our op­er­a­tions at risk,” said Alex Mor­ri­son, chair­man. “Our board has de­cided to keep our rea­son­able set­tle­ment of­fer open to Paul­son. We ask our share­hold­ers and other key stake­hold­ers to as­sist us in achiev­ing a sat­is­fac­tory con­clu­sion for all par­ties.”

Ad­vis­ers

The com­pany has re­tained Kings­dale Ad­vi­sors as its strate­gic share­holder and com­mu­ni­ca­tions ad­viser BMO Cap­i­tal Mar­kets as its fi­nan­cial ad­viser, and McCarthy Te­trault LLP and Nor­ton Rose Ful­bright LLP as its le­gal ad­vis­ers.

About De­tour Gold Corp.

De­tour Gold is an in­ter­me­di­ate gold pro­ducer in Canada that holds a 100-per-cent in­ter­est in the De­tour Lake mine, a long-life, large-scale, open-pit op­er­a­tion. De­tour Gold’s shares trade on the Toronto Stock Ex­change un­der the trad­ing sym­bol DGC.

Lisa J Col­nett, Ed­ward Camp Jr Dowling, Robert Em­met Doyle, An­dre Roger Fal­zon, In­grid Jo-Ann Hib­bard, John Michael Kenyon, Alexan­der G Mor­ri­son, Jonathan Arn Ruben­stein

(DGC) Shares: 175,299,093

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