Paulson & Co. Inc. (“Paulson”), one of the largest, long-term
shareholders in Detour Gold Corporation (TSX: DGC) ("Detour
Gold" or the "Company”) announced today that Glass Lewis & Co.
(“Glass Lewis”), an independent proxy advisory firm, has issued an
extensive report admonishing the Company’s Board and core,
long-term directors for appearing “to have been deficient in their
oversight function.” 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” to the
Company’s Board of Directors on the GOLD proxy, Glass Lewis noted:
On the need for substantive change:
“We ultimately see validity in Paulson's central thesis 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.” and“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.”
and
“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
Kenyon and 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 protégé, being
elevated to chairman, which in the Dissident's view perpetuated
their control of the board.”
and
“… 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. Morrison's continued service on the
board.”
and
“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 (the “Meeting”), 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
CEO, Michael Kenyon (who is receiving 2x 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 5:00 p.m. (Toronto
time) on Thursday, December 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 www.shareholdersfordetour.com.
About Paulson & Co. Inc.
Paulson is one of Detour Gold’s largest investors, exercising
control or direction over approximately 5.7% of Detour Gold’s
shares. Having first invested in the Company nine years ago,
Paulson previously provided C$280 million in direct equity and
US$250 million 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.
Contact Details
www.shareholdersfordetour.com
Investors:
MacKenzie Partners, Inc.Dan Burch & Jeanne
Carr800-322-2885212-929-5500
Email: Detourproxy@mackenziepartners.com
Media:
Longview Communications & Public Affairs
Joel
Shaffer
416-649-8006
Cautionary Note Regarding Forward-Looking
Information:
Certain information in this news release may constitute
“forward-looking information”, as such term is defined in
applicable Canadian securities legislation, about the objectives of
Paulson as they relate to Detour Gold, the impact of Paulson’s
nominees to be elected to the board of directors of Detour Gold
(the “Concerned Shareholder Nominees”), if
elected, on the financial condition, results of operations,
business strategies, revenue enhancements, competitive position of
Detour Gold and other matters. All statements other than statements
of historical fact may be forward-looking information.
Forward-looking information is often, but not always, identified by
words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”,
“expect”, “may”, “will”, “project”, “predict”, “potential”,
“targeting”, “intend”, “could”, “might”, “should”, “believe” and
similar expressions.
Material factors or assumptions that were applied in providing
forward-looking information include, but are not limited to, Detour
Gold’s future growth potential; its results of operations; future
cash flows; the future performance and business prospects and
opportunities of Detour Gold; the election of the Concerned
Shareholder Nominees; the ability of the Concerned Shareholder
Nominees, if elected, to effect positive change at Detour Gold and
execute plans for change (including changes in operational
organization); the expected compensation structure of the Concerned
Shareholder Nominees, if elected; the response to and outcome of
any court applications that may be made against Paulson; the
implementation and timing of Detour Gold’s business strategy; the
current general and regulatory environment and economic conditions
remaining unchanged; the availability of financing for exploration
and development activities; operating and capital costs; Detour
Gold’s available cash resources; Detour Gold’s ability to attract
and retain skilled staff; the mine development and production
schedule and related costs; dilution control; sensitivity to metal
prices and other sensitivities; the supply and demand for, and the
level and volatility of the price of, gold; timing of the receipt
of regulatory and governmental approvals for the proposed
development of the West Detour project and the continued
development of the Detour Lake pit, other development projects and
other operations; the timing and results of consultations with
Detour Gold’s Aboriginal partners; the supply and availability of
consumables and services; currency exchange rates; energy and fuel
costs; required capital investments; estimates of net present value
and internal rate of returns; the accuracy of mineral reserve and
mineral resource estimates, production estimates and capital and
operating cost estimates and the assumptions on which such
estimates are based; market competition; ongoing relations with
employees and impacted communities; and general business and
economic conditions.
Forward-looking information contained in this news release
reflects current reasonable assumptions, beliefs, opinions and
expectations of Paulson regarding future events and operating
performance of Detour Gold, and speaks only as of the date of this
news release. Such forward-looking information is based on
currently available competitive, financial and economic data and
operating plans and is subject to known and unknown risks,
uncertainties and other factors which may cause the actual results,
performance or achievements of Detour Gold, or general industry
results, to be materially different from any future results,
performance or achievements expressed or implied by such
forward-looking information. Many other factors could also cause
Detour Gold’s actual results, performance or achievements to vary
from those expressed or inferred herein, including without
limitation, the possibility that the anticipated benefits from the
election of the Concerned Shareholder Nominees cannot be fully
realized or may take longer to realize than expected; the ability
of Detour Gold to retain and hire key personnel and maintain
relationships with customers, suppliers or other business partners
following the election of the Concerned Shareholder Nominees; the
impact of legislative, regulatory, competitive and technological
changes; the state of the economy; credit and equity markets;
availability of credit and other financing; the financial markets
in general; gold price volatility; the uncertainties involved in
interpreting geological data; increases in costs; environmental
compliance and changes in environmental legislation; regulation and
policies; support of Detour Gold’s Aboriginal communities; receipt
of permits; interest rate and exchange rate fluctuations; mine
developments and production schedules; energy and fuel costs;
general economic conditions and other risks involved in the gold
exploration, development and production industry. Many of these
risks and uncertainties could affect Detour Gold’s actual results
and could cause actual results to differ materially from those
expressed or implied in any forward-looking information provided by
Paulson. The impact of any one factor on a particular piece of
forward-looking information is not determinable with certainty as
such factors are interdependent upon other factors, and Paulson’s
course of action would depend upon its assessment of the future
considering all information then available.
Should any factor affect Detour Gold in an unexpected manner, or
should any assumptions underlying the forward-looking information
prove incorrect, the actual results or events may differ materially
from the results or events predicted. All of the forward-looking
information reflected in this news release is qualified by these
cautionary statements. There can be no assurance that the results
or developments anticipated by Paulson will be realized or, even if
substantially realized, that they will have the expected
consequences for Detour Gold. Forward-looking information is
provided and forward-looking statements are made as of the date of
this news release and except as may be required by applicable law,
Paulson disclaims any intention and assumes no obligation to
publicly update or revise such forward-looking information or
forward-looking statements whether as a result of new information,
future events or otherwise.