De­tour notches loss as Glass sup­ports chair­man re­moval

De­tour Gold Corp. dis­si­dent share­holder Paul­son has re­ceived sup­port from Glass Lewis & Co. Glass Lewis says De­tour’s board ap­pears “to have been de­fi­cient in their over­sight func­tion.” The firm also rec­om­mends share­hold­ers re­move De­tour’s chair­man.

Stockwatch Daily - - FRONT PAGE - An anony­mous rep­re­sen­ta­tive of Paul­son, a dis­si­dent share­holder, re­ports

GLASS LEWIS & Co., an in­de­pen­dent proxy ad­vi­sory firm, has is­sued an ex­ten­sive re­port ad­mon­ish­ing De­tour Gold Corp.’s board and core, long-term di­rec­tors for ap­pear­ing “to have been de­fi­cient in their over­sight func­tion.” Paul­son & Co. Inc., one of the largest, long-term share­hold­ers in De­tour Gold, says it is time for share­hold­ers to take ac­tion or ac­cept re­spon­si­bil­ity for risk­ing fur­ther losses. In rec­om­mend­ing that De­tour Gold share­hold­ers vote for “fun­da­men­tal change” t o the com pany’s board of di­rec­tors on the gold proxy, Glass Lewis noted the fol­low­ing.

On the need for sub­stan­tive change

“We ul­ti­mately see va­lid­ity in Paul­son ’s cen tral the sis that, for sub­stan­tive change to take hold at the Com­pany, cer­tain of the core and long-term di­rec­tors who have presided over value de­struc­tion and over­seen tech­ni­cal fail­ures of prior mine plans need to be re­placed. “Ul­ti­mately, we find that the sit­u­a­tion sur­round­ing De­tour re­quires fun­da­men­tal change due to a loss of in­vestor con­fi­dence in the over­all cred­i­bil­ity and qual­i­fi­ca­tions of the in­cum­bent di­rec­tors. “Given the sig­nif­i­cant re­vi­sions re­quired to the Com­pany’s LOM plan two years in a row, we agree with Paul­son’s as­ser­tion that the board either does not have the req­ui­site skills to ques­tion the as­sump­tions con­tained in the plans and to man­age po­ten­tial risks, or it lacks the abil­ity to at­tract the right peo­ple to en­sure the plan is ful­filled.”

On con­cerns with en­trench­ment and core, long-term di­rec­tors John Kenyon and Alexan­der Mor­ri­son “Per­haps un­der­stand­ably, Paul­son viewed the board’s de­ci­sion not to pub­licly an­nounce a strate­gic re­view process and not to move for­ward with a CEO search process ear­lier this year as an in­di­ca­tion that the board is en­trenched. Paul­son’s con­cerns were con­founded by Mr. Kenyon step­ping in as in­terim CEO with Mr. Mor­ri­son, who Paul­son de­scribes as Mr. Kenyon’s pro­tege, be­ing el­e­vated to chair­man, which in the Dis­si­dent’s view per­pet­u­ated their con­trol of the board.

“... we ques­tion whether Mr. Mor­ri­son is the best in­di­vid­ual to lead the board go­ing for­ward, given De­tour’s sub­par per­for­mance and gov­er­nance con­cerns aris­ing dur­ing his ten­ure as lead di­rec­tor and now chair­man. We be­lieve Mr. Mor­ri­son could per­pet­u­ate the same cul­ture and lack of ac­count­abil­ity that seems to have in­flicted the Com­pany over the past few years ... we have not seen per­sua­sive ev­i­dence to sup­port Mr. Morri son’s c ont i nu e d ser­vice on the board. “We might ques­tion whether he [Di­rec­tor Kenyon] needs to re­main on the board at this junc­ture, par­tic­u­larly given his planned de­par­ture.” On sus­tained value de­struc­tion at De­tour Gold

“... the main take­away may be that, through the un­af­fected date [June 21, 2018], De­tour’s to­tal stock re­turns were al­most uni­formly neg­a­tive dur­ing the one-, two-, three-, five-, seven- and 10-year pe­ri­ods, and also in the post-com­mer­cial pro­duc­tion pe­riod, and in gen­eral sig­nif­i­cantly un­der­per­formed the av­er­age and me­dian re­turns of the Com­pany’s peers and the re­turns of the GDX over those pe­ri­ods, ex­cept for a few ex­cep­tions when De­tour’s per­for­mance was roughly in line with those bench­marks.” De­tour Gold di­rec­tors warned to re­frain from at­tempt­ing to delay or cir­cum­vent share­holder democ­racy Paul­son is com­mit­ted to pro­tect­ing the in­ter­ests of all share­hold­ers. It has writ­ten to De­tour Gold on a num­ber of oc­ca­sions to con­firm cer­tain pro­ce­dural mat­ters re­gard­ing the pend­ing spe­cial meet­ing of share­hold­ers, which are stan­dard in Canada and de­signed to en­sure that the meet­ing takes place with in­tegrity, and that the com­pany’s share­hold­ers are not dis­en­fran­chised. Th­ese re­quests have been met with de­lays in hold­ing this vote, the waste­ful use of sig­nif­i­cant re­sources on mer­it­less lit­i­ga­tion and ob­struc­tion­ist strate­gies fur­ther­ing en­trench­ment and

ig­nor­ing share­holder in­ter­ests. Paul­son has con­sis­tently re­minded the com­pany’s board that it has a fidu­ciary duty to act in the best in­ter­ests of the com­pany and to treat all share­hold­ers fairly. The board has been put on no­tice that any ac­tion in re­gard to the Meet­ing that is not demon­stra­bly in the best in­ter­ests of De­tour Gold and fair to its share­hold­ers and/or at­tempts to delay or cir­cum­vent the will of the com­pany’s own­ers will be vig­or­ously op­posed, and that di­rec­tors may be held per­son­ally ac­count­able.

Mo­men­tum is be­hind the con­cerned share­hold­ers but time is run­ning out to vote

A num­ber of large share­hold­ers have al­ready voted for whole­sale change to the board of di­rec­tors, based on their be­lief that real change and value cre­ation will only take place when the core, long-term di­rec­tors — in­clud­ing for­mer chair and cur­rent in­terim chief ex­ec­u­tive of­fi­cer Michael Kenyon (who is re­ceiv­ing two times the salary of the for­mer CEO), cur­rent chair Alex Mor­ri­son and the chair of the tech­ni­cal com­mit­tee Ed Dowl­ing (who has over­seen tech­ni­cal fail­ures of the mine and owns zero com­mon shares) are re­moved and re­placed. Th­ese core di­rec­tors have proven they are not able to cre­ate the value De­tour Gold’s op­er­a­tions should have, and that share­hold­ers ex­pect. De­spite Paul­son’s re­peated at­tempts to avoid a waste­ful proxy bat­tle and achieve a share­holder friendly set­tle­ment, the cur­rent board has re­sisted real change at ev­ery turn. Share­hold­ers must now pro­tect their in­vested cap­i­tal by vot­ing!

For share­hold­ers who have not yet voted, to en­sure your vote is counted, please vote now us­ing the gold form of proxy or VIF and sub­mit prior to 5 p.m. Toronto time on Thurs­day, Dec. 6, 2018.

Please vote all gold forms of proxy or gold VIFs that you re­ceive to en­sure that all of your com­mon shares are counted. You should dis­card any blue man­age­ment prox­ies or VIFs that you re­ceive. For more in­for­ma­tion, please go to the Share­hold­ers for De­tour web­site.

About Paul­son & Co. Inc. Paul­son is one of De­tour Gold’s largest in­vestors, ex­er­cis­ing con­trol or di­rec­tion over ap­prox­i­mately 5.7 per cent of De­tour Gold’s shares. Hav­ing first in­vested in the com­pany nine years ago, Paul­son pre­vi­ously pro­vided $280-mil­lion in di­rect eq­uity and $250-mil­lion (U.S.) in con­vert­ible notes to fi­nance its mine com­ple­tion. Paul­son, along with sev­eral other ma­jor share­hold­ers in the com­pany, has grown in­creas­ingly frustrated by the com­pany’s in­abil­ity to ap­pro­pri­ately man­age share­hold­ers’ as­sets, hav­ing de­stroyed bil­lions of dol­lars of value in the process. Paul­son, founded in 1994, is an in­vest­ment man­age­ment firm with of­fices lo­cated in New York, Lon­don and Dublin.

We seek Safe Har­bor.

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: 175,304,093

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