TORONTO, April 22, 2019 /CNW/ - Guyana Goldfields
Inc. (TSX:GUY) (the "Company" or "Guyana Goldfields") today
announced that it has filed a Letter to Shareholders together with
its Management Information Circular and a GOLD form of proxy
(collectively, the "Proxy Materials") in respect of the upcoming
Annual and Special Meeting of the Company's shareholders (the
"Meeting").
The Proxy Materials, which can be found on SEDAR (www.sedar.com)
and the Company's website (www.guygold.com), are being mailed to
the Company's shareholders. The Company has also posted to its
website a short video explaining the key proxy fight issues. The
video is available at this link:
https://www.guygold.com/annual-and-special-meeting-of-shareholders/default.aspx
As previously announced, the Company called the Meeting to
address its ordinary annual meeting business as well as to address
a requisition received from a group of dissident shareholders led
by Patrick Sheridan, who was
terminated as the Company's Executive Chairman in July 2018 (the "Sheridan Dissidents").
In the Proxy Materials, the Company presents compelling reasons
for its shareholders to vote using the GOLD form of proxy
and/or voting instruction form to support the election of Guyana
Goldfields' seven nominees to our Board of Directors at the
Meeting. The Company also explains why shareholders should
not support the Sheridan Dissidents.
The Meeting is being held at 10:00
a.m. (Toronto time) on
Wednesday, May 22, 2019 at Vantage
Venues (formerly St. Andrew's Conference Centre) 150 King Street
West, 27th Floor, St. Andrew's Hall S1, Toronto, ON M5H 1J9.
The proxy voting deadline is 10:00
a.m. (Toronto time) on
May 17, 2019 or, if the Meeting is
adjourned or postponed, 48 hours (excluding Saturdays, Sundays or
statutory holidays in the Province of Ontario) prior to the time and date
to which the Meeting is adjourned or postponed.
Shareholders with questions about how to vote their common
shares of Guyana Goldfields at the Meeting should contact the
Company's proxy solicitation agent, Laurel Hill Advisory Group, at
1-877-452-7184 (North American Toll Free); or 416-304-0211 (Collect
Outside North America); or by email at
assistance@laurelhill.com.
Guyana Goldfields urges shareholders to read the Proxy Materials
carefully and recommends that shareholders vote the
GOLD form of proxy and/or voting instruction form for
Guyana Goldfields' nominees.
Guyana Goldfields' Letter to Shareholders is provided verbatim
below.
Dear Guyana Goldfields Shareholder,
You have an important decision to make. It is one that will
affect the value of your investment in Guyana Goldfields now and for years to
come.
A group led by Patrick Sheridan,
whom we terminated last year as Executive Chair, wants to replace
your experienced Board with an underqualified group of his
friends.
Most of them have little or no experience as directors of
producing miners. They have no coherent business strategy for the
Company and no actionable business plan.
The Board has a strong plan to move forwards. Don't let Mr.
Sheridan take us backwards.
We Have Turned the Page
Over the past year, we have met and dealt with a number of
serious challenges and developed a new strategy to create
sustainable value for our shareholders:
- We improved mining and milling rates at the Aurora Gold
Mine
- We eliminated an inefficient and costly dual reporting
structure
- We strengthened our management team and refreshed the
Board
- We enhanced our governance practices
- We restructured our local office in Guyana
- We developed a new resource model and life-of-mine ("LOM") plan
to deal with our biggest challenge: the over-estimation of
contained ounces in the Aurora Gold Mine's 2012 resource model
- Throughout all of this, we have continued to lead safe
operations at the Aurora Gold Mine
We recognize that these challenges – particularly the revised
resource model – have taken a toll on our share price. But had we
not faced them, the toll would have been much worse.
With the revised resource model now complete and with a
strengthened management team, we are hard at work on a strategic
plan to rebuild value for shareholders. We discuss this plan
below.
Throughout this challenging period, we have been transparent and
forthright with shareholders. Mr. Sheridan criticized our
transparency as "irresponsible." He would have kept shareholders in
the dark.
A Better Team
When shareholders take time to compare our experienced,
well-qualified nominees and Mr. Sheridan's inexperienced,
underqualified nominees (the "Sheridan Nominees"), the contrast is
stark, as can be seen below.
The Resource Model Update
Our just-completed independent technical report, carried out by
Roscoe Postle Associates Inc. ("RPA"), concluded that contained
gold reserves were 38% lower (after mining depletion) compared with
December 31, 2017.
Notably, the prior reserves were based on a resource model
developed in 2012 under Mr. Sheridan's watch as CEO and interim COO
of the Company. Now we know that the 2012 model overestimated the
contained ounces at the Aurora Gold Mine.
The unavoidable consequence is that the net present value of our
reserves is lower than it was. But there are opportunities
ahead.
A Better Plan
We are already hard at work on a recovery plan to rebuild value
for shareholders. Our plan includes, but is not limited to:
- Prudently managing our balance sheet and liquidity
- Executing on the new LOM plan
- Pursuing cost efficiencies and optimization opportunities
- Replacing and growing our reserves
- Engaging with our stakeholders
- Evaluating potential value creation opportunities
The accompanying Guyana Goldfields Management Information
Circular contains further details on our strategic plan and details
on a workshop we will host in early May regarding the strategic
plan.
If you vote for the Sheridan Nominees you don't know what you
will get. And given their inexperience, they likely don't know
either.
Mr. Sheridan Had to Go, and He Should Stay Away
Mr. Sheridan's role as the spokesperson of the dissident
shareholder group makes it very clear who is behind their
proposals. Mr. Sheridan's history with the Company and the reasons
for his termination as Executive Chair are highly relevant to your
evaluation of his proposals.
The Company terminated Mr. Sheridan due to poor managerial
performance, conflicts of interest and ethical lapses. His
termination was the first step in the Board's renewal effort. The
Company must look forwards, not backwards.
Shareholders are asked to support the new vision for the Company
proposed by the Board, instead of retreating to the old,
unproductive management practices propagated under Mr. Sheridan's
ineffective leadership.
The Sheridan Nominees are Underqualified &
Inexperienced
The Sheridan Nominees are underqualified to lead the Company and
inexperienced. Consider these facts about the Sheridan
Nominees:
- Limited board experience with producing miners:
Collectively, they have just 6.8 board-years of such experience.
Indeed, more than half of the Sheridan Nominees have never
been on the board of a company involved in mineral production.
Contrast that with our nominees, who have 65.6 board-years of
experience, nearly 10 times that of the Sheridan Nominees.
- No experience on boards of large producing miners: In
total, the Sheridan Nominees have board experience with only four
producing miners, of which three are smaller than Guyana
Goldfields. The average market capitalization of all four is just
C$100 million, significantly less
than the value of Guyana Goldfields. Contrast that with the
C$3.1 billion average market
capitalization of our nominees' producing miners. That is more than
30 times the value of the Sheridan Nominees' producing miners.
- Value destruction: During the Sheridan Nominees' limited
tenure as directors, value was destroyed at three of the four
producing miners on which they served, an average of -27.3% value
destruction. Contrast that with the 50.1% average value
creation for our nominees with producing miners.
Clearly, our nominees have a deep understanding of the mining
industry. Don't take a chance on the Sheridan Nominees, four of
whom have never served on the board of a producing miner.
Now is not the time for them to learn on the job.
Our Liquidity and Fiscal Responsibility
Our balance sheet remains strong. We reported an unaudited cash
balance of approximately US$73
million at March 31, 2019 and
our total debt has been reduced to US$35
million.
We are also actively pursuing cost efficiencies at our
operations, including:
- Optimizing the LOM plan to spread working capital over more
years
- Pursuing prudent near-term cost control initiatives, with
targeted cost savings of US$10
million or more on an annual LOM basis and US$15 million or more in the first year
- Improving working capital management by accelerating value
added tax (VAT) refunds
- Reducing and optimizing stores inventory (capital spare parts
and operating supplies)
- Rationalizing and disposing of certain non-essential capital
assets
- Selling our Twin Otter and tender charter aircraft
services
Under our strategic plan, we will maintain approximately
US$35 million to US$40 million in available cash at all times
during the transition to underground mining at Aurora (based on
gold prices of US$1,200 per
ounce).
The Board has demonstrated fiscal responsibility. Four of the
Sheridan Nominees have never served on the board of a producing
miner. They are untested.
Open to Strategic Alternatives
Contrary to the dissidents' false claims, our nominees are not
entrenched. They take their fiduciary obligations seriously and are
open to all value maximizing opportunities, including a potential
sale of the Company.
In fact, earlier this year the Board formed a committee of
independent directors to, among other things, review, assess and
examine available strategic alternatives, while the Company
continues to execute on its standalone business plan.
As part of this review, the Company has entered into more than
15 confidentiality agreements with credible mining companies who
are in various stages of conducting due diligence regarding the
Company. There is no certainty of a transaction, but the
Board is open to the right one if it makes sense for
stakeholders.
Many of our nominees have been involved in value maximizing
opportunities on the boards of other companies. They have
experience that the Company needs. And we have the better team and
better plan if no suitable transaction surfaces.
Support our Nominees
On behalf of the Board of Directors, I urge you to support our
nominees. Since terminating Mr. Sheridan we have already
delivered:
- A new mine plan based on a new and more reliable resource
model
- Improved cost controls and efficiencies
- A brownfield exploration focus (surface and underground) to add
reserves adjacent to the mine
- An improved and more effective reporting structure (single
instead of dual)
- A strengthened management team
- A refreshed and more diverse Board with improved
governance
Our nominees are highly qualified and are able to effectively
oversee the execution of the Company's long-term strategic
objectives.
There is no easy path to overcome the reduction in reserves, but
our nominees and management team have the experience and strategic
plan that Guyana Goldfields needs at this crucial time. They are
positioning the Company for future success.
The issues we face date back to Mr. Sheridan's watch. He does
not have the best interests of the Company and its stakeholders at
heart. If his nominees are elected, they will keep you unaware
while they disrupt the progress our Board has made.
We encourage you to read the enclosed Guyana Goldfields
Management Information Circular and visit our website at
www.guygold.com for further details on the matters raised in this
letter. It is very important for you to ACT TODAY to protect
your investment.
Vote FOR our nominees. Vote your GOLD proxy
today.
Thank you for your ongoing confidence.
Yours truly
"René Marion"
René Marion
Non-Executive Chair
Guyana Goldfields Inc.
About Guyana Goldfields Inc.:
Guyana Goldfields Inc.
is a Canadian based mid-tier gold producer primarily focused on the
exploration, development and operation of gold deposits in
Guyana, South America.
Forwarding-Looking Information
This news release
contains "forward-looking information" which may include, but is
not limited to, statements with respect to the Board continuing to
strengthen the management team; the Company's plan going forward;
and that the Company's nominees are positioning the Company for
future success. Often, but not always, statements containing
forward-looking information can be identified by the use of words
and phrases such as "will" or variations of such word, or state
that certain actions, events or results "will" be taken, occur or
be achieved. Forward-looking statements are based on the opinions
of management as of the date such statements are made and are based
on various assumptions. Forward-looking statements
involve known and unknown risks, uncertainties and other factors
which may cause the actual results, performance or achievements of
the Company to be materially different from any future results,
performance or achievements expressed or implied by the
forward-looking statements. Such factors include, among others,
those factors discussed in the section entitled "Risk Factors" in
the Company's annual information form. Although the Company has
attempted to identify important factors that could cause actual
actions, events or results to differ materially from those
described in forward-looking statements, there may be other factors
that cause actions, events or results to differ from those
anticipated, estimated or intended. Forward-looking statements
contained herein are made as of the date of this news release and
the Company disclaims any obligation to update any forward-looking
statements, whether as a result of new information, future events
or results, except as may be required by applicable securities
laws. There can be no assurance that forward-looking statements
will prove to be accurate, as actual results and future events
could differ materially from those anticipated in such
statements.
SOURCE Guyana Goldfields Inc.