- In their July 5, 2022 press release, Mr. Cooke and the Canagold
Board continued their tired script of endless excuses for why New
Polaris cannot move into feasibility, despite making a commitment
to do so 25 years ago.
- Canagold completely ignores a 98% decline in shareholder value
since 1994 and a cumulative deficit of over US$51 million in their
assessment of so-called value creation, yet continues to push for
20% option plan to reward their team.
- Both Mr. Cooke and the Board remain silent on Mr. Cooke’s
inexplicable trading activity.
- Institutional Shareholder Services Inc., the world’s leading
provider of corporate governance and responsible investment
solutions and leading proxy advisor, recommends Canagold
shareholders vote FOR change on Sun Valley’s BLUE
proxy only.
- Vote only the BLUE proxy FOR Sun Valley’s
nominees by 5:00 p.m. on Thursday, July 14, 2022. To vote, contact
Kingsdale Advisors at 1-888-213-0093 or at
contactus@kingsdaleadvisors.com.
Sun Valley Investments (“Sun Valley”), a strategic and
long-term focused investor of Canagold Resources Ltd. (TSX: CCM)
(“Canagold” or the “Company”), urges shareholders to
stop the value destruction at Canagold by Mr. Bradford Cooke and
the entrenched board of directors (the “Board”). Canagold’s
potential has been crippled by decades of business and financial
mismanagement at the hands of Mr. Cooke and the incumbent Board.
It’s time for a new chapter – it’s time for The New
Canagold.
CANAGOLD’S ‘RINSE AND REPEAT’ STORY FOR
STAGNATING NEW POLARIS
Canagold’s Feasibility
Fable
In their July 5, 2022 press release, Canagold claimed that New
Polaris “has not been stagnant” and the Company produced a laundry
list of excuses for not advancing this critical project. Canagold
also claimed they will “prepare for the feasibility study” and that
they are “on the path to feasibility.”
Shareholders have heard this story before. Canagold has been “on
the path to feasibility” since 1997, when Mr. Bradford Cooke, then
president and CEO of Canagold (then Canarc), claimed:
“Our aggressive feasibility program
appears to be paying dividends … the base case for production,
which provides Canarc with an attractive return on investment and
would make Canarc an intermediate size gold producer in the next 2½
years….” – March 3, 1997, press release
In that same 1997 press release, Canagold also stated:
“the goals of the current work program are to
… complete a feasibility study in 1998.”
Canagold recycled this story again in 2004, when the Company
(then Canarc) claimed:
“Canarc now plans to move ahead with a more
aggressive development program at New Polaris as part of
management’s focus to accelerate growth in shareholder value. The
goals of the development program will be to complete the in-fill
drilling and a feasibility study.” – October 13, 2004, press
release
So, for 25 years, Canagold has been telling shareholders that a
feasibility study is imminent. This is simple and clear proof of
total stagnation.
Yet there is no credible rationale for why New Polaris has not
advanced in 28 years. Canagold’s claim that the project could not
advance for 20 years until they “discovered” BIOX is just their
latest excuse.
In 1998, the excuse for delay was due to lack of financing,
caused by the BRE-X scandal:
“the Bre-X fiasco caused Canarc to lose the
additional financing needed to complete feasibility.” – May 27,
1998, press release
In 2002, the excuse for delay was due to the gold price:
“The New Polaris project has been on care and
maintenance since 1997 pending higher gold prices.” – February 4,
2002, press release
This new excuse is equally implausible, as Institutional
Shareholder Services Inc. (“ISS”) stated:
“it seems inappropriate to write off the
majority of the company's history, the decline in share value as a
result of multiple decades of financings, and the speed at which it
has been able to advance its core asset as being due to a case [of]
technology needing to catch up to asset complexity”
This is clearly the case as during the last 25 years, while Mr.
Cooke and Canagold did nothing, approximately 20 other projects
built processing plants for refractory ore – most of them using
BIOX.
Add to this that instead of moving forward to feasibility, in
the last 15 years Canagold has conducted five preliminary economic
assessments (“PEA”) or updates to them.
Do Mr. Cooke and Canagold define “success” as doing nothing
or as doing the same thing over and over again without any
results?
Canagold’s ‘Knowledge’ of Feasibility
and Standards
In their July 5, 2022 press release, Canagold claimed that
“Management's Project Plan Follows Industry Standards” and that “A
feasibility study can’t be started without reserves!”
Those two statements are contradictory. Canagold should be
following CIM standards that are an integral part of NI 43-101.
These standards define a mineral reserve as:
“A Mineral Reserve is the economically
mineable part of a measured and/or Indicated Mineral Resource. It
includes diluting materials and allowances for losses, which may
occur when the material is mined or extracted and is defined by
studies at pre-feasibility or feasibility level as appropriate
that include application of Modifying Factors.”
This means that you cannot have reserves without feasibility
studies and, as it is the feasibility study that defines the
reserves, almost all projects start the study without reserves.
Canagold’s statement that you can’t start a feasibility study
without reserves indicates a lack of understanding of standards and
of the purpose of a feasibility study, or perhaps they are
confusing resources and reserves.
Sun Valley’s Plan for the Project vs
Canagold’s
Canagold claimed “The Dissident's "Strategic" Plan is Fatally
Flawed, and Displays Their Ignorance of Industry Standards as
Compared to Canagold's Superior Project Plan”.
They seemed to claim this for two reasons: 1) the totally
erroneous idea that you can’t do a feasibility study without
reserves (as discussed above), and 2) because the environmental
baseline won’t be completed until late next year.
Our schedule was based on the timelines given by Canagold. On
November 24, 2020, Canagold stated that:
“Initial site preparation work has been
completed to facilitate the environmental baseline study and infill
drilling required to advance to a feasibility study…”
“Canarc has contracted Hemmera Envirochem
Inc. and they have initiated twelve months of environmental
baseline studies required to submit an Environmental Assessment
Certificate application”
The baseline studies should have been completed by the end of
2021. However, without explaining the delay, Canagold did indicate
on January 12, 2022, that the studies would be completed this
year.
“2022 Plans:
Complete baseline studies, summarize and
analyze baseline sampling results and complete geotechnical and
engineering work needed to support the Environmental Assessment
application.”
We are somewhat surprised to hear that what was originally a
one-year study vital to starting the permitting will now take three
years without Canagold actually explaining the massive delay in
this critical task to shareholders.
Canagold’s ‘Superior Project Plan’
Shows Zero Knowledge of Canadian and International
Standards
Canagold claims they will do “a more detailed mine plan and
carry out an interim economic study to convert measured and
indicated resources to proven and probable reserves” and that their
“plan follows best practices and industry standards on the path to
feasibility”.
Again, these statements are totally contradictory and show zero
understanding of Canadian and international standards, as well as
zero understanding or willingness to deliver what the project
needs.
An “interim economic study” does not exist in NI 43-101, CIM
or CRIRSCO standards and CANNOT POSSIBLY lead to reserves, because
these standards all clearly state that reserves must be defined in
a pre-feasibility or feasibility study.
This means Canagold’s ‘plan’ is to conduct more useless,
non-standard studies, or maybe “interim economic study” is a
euphemism for yet another PEA, and to be “on the path to
feasibility”. This is the same old “advancing towards feasibility”
promises that they have been making since at least 2015. This is a
promise of a long and winding path to nowhere.
The project needs what it has needed for years, it needs
management that:
- will stop making excuses for lack of progress
- will stop making plans for more PEAs or undefined “interim
economic” studies
- will DO a feasibility study
CANAGOLD DISPUTES THAT A NEGATIVE 98%
RETURN IS NOT VALUE DESTRUCTION
Canagold stated that the Company has invested $33.6 million
directly into New Polaris and that under “Mr. Cooke’s guidance, the
New Polaris gold mine project … has an estimated after tax Net
Present Value of US$333 million.”
Money spent does not equate to progress and a Net Present
Value is not a return on investment.
The truth is, Canagold has destroyed shareholder value for 28
years, with a negative 98% return and an accumulated deficit of
US$51 million. This is not progress.
Despite Canagold’s misleading claims of progress, it is clear
that buyers and sellers of Canagold’s stock disagree as shares are
only worth $0.285 per share or less than $25 million for the entire
Company.1 In contrast, Sun Valley has offered and is still offering
premium financing at whichever is the higher of:
- $0.32 per common share and $0.42 in respect of the issuance of
flow-through common shares, or
- A premium to the weighted average trading price for the 20
trading days before the closing of the private placement of 20% per
common share or a 60% in respect of the issuance of flow-through
common shares.
Canagold is bleeding yet Mr. Cooke and the Board rejected
multiple, premium financing offers so as to maintain control of the
Company.
MR. COOKE AND THE BOARD DISMISS GOOD
GOVERNANCE WHILE REWARDING THEMSELVES AT THE EXPENSE OF
SHAREHOLDERS
Despite the decades of underperformance and ongoing shareholder
value destruction, Mr. Cooke and the Board have rewarded themselves
and the Company’s executives with hefty payouts:
- Mr. Cooke was rewarded with over $2.6 million in cash
- The Board increased 2021 executive compensation plans, with
increases ranging from 173% to 355%
- In 2021, the Board also gave themselves an 1,127% increase in
the value of directors’ fees. Mr. Cooke’s director fees increased
by a whopping 685% to $199,497 from $25,400. Now, the Board is
looking to reload their stock option plan and dilute shareholders
by 20% – a plan that ISS recommended shareholders vote
AGAINST.
- Canagold’s Compensation Committee reviews the compensation of
senior officers and management, and the Board provides approvals,
without any formal objectives, criteria and analysis. Mr. Cooke
sits on the Compensation Committee, contrary to good corporate
governance practices.
This is the same Board that has refused to discuss Sun
Valley’s premium financing offer for the benefit of all
shareholders and has ignored Mr. Cooke’s inexplicable trading
activity, where he sold Canagold shares ahead of a major private
placement opportunity in 2020 then repurchased shares shortly after
at a deeply discounted price – a practice he appears to have done
more than once.
SUN VALLEY’S PLAN TO PUT CANAGOLD AND
NEW POLARIS ON THE RIGHT TRACK
Canagold stated that the Company “requires an independent and
experienced Board” – and we agree. That’s why Sun Valley nominated
three outside, highly-experienced, respected and diverse industry
leaders. Our nominees – Dr. Carmen Letton, Ms. Sofia Bianchi and
Mr. Andrew Trow – bring combined expertise in metals and mining,
strategy and leadership, operations, corporate governance and
finance.
Once elected, Dr. Letton, Ms. Bianchi and Mr. Trow will provide
the much-needed independent oversight to advance New Polaris as
fast as reasonably possible for the benefit of all
shareholders.
The aim is to:
- Ensure Canagold is funded quickly with financing at a premium
to the current values
- Initiate the feasibility study without further delay
- Initiate the permitting process in Q2 2023
- Increase the resource base with a view of moving inferred
resources to indicated resources
- Restructure the Board with highly qualified directors in mining
and governance and focused on shareholders.
VOTE ONLY THE BLUE PROXY
TODAY
Sun Valley has the right plan and the resources to turn Canagold
around. As announced on July 7, 2022, ISS recommends Canagold
shareholders vote FOR change using Sun Valley’s BLUE proxy
only.
Don’t wait, voting is fast and easy. Please vote well in
advance of the proxy voting deadline of Thursday, July 14, 2022, at
5:00 p.m. ET. If you have questions or need help voting, contact
Kingsdale Advisors at 1-888-213-0093 or at
contactus@kingsdaleadvisors.com.
Advisors Kingsdale Advisors is acting as strategic
shareholder and communications advisor to Sun Valley. McMillan LLP
is acting as legal counsel to Sun Valley.
About Sun Valley Sun Valley is a private equity firm
focussed on the precious metals industry with portfolio companies
and branch offices in the Americas, Europe and Asia. Sun Valley
seeks to invest in sustainable development projects and operations
with growth potential, low cash costs of production, or the
operating flexibility to insulate against volatility in the
commodity markets.
Cautionary Statement Regarding Forward-Looking Statements
This press release contains forward-looking information within the
meaning of applicable securities laws. In general, forward-looking
information refers to disclosure about future conditions, courses
of action, and events. All statements contained in this press
release that are not clearly historical in nature or that
necessarily depend on future events are forward-looking, and the
use of any of the words “anticipates”, “believes”, “expects”,
“intends”, “plans”, “will”, “would”, and similar expressions are
intended to identify forward-looking statements. These statements
are based on current expectations of Sun Valley and currently
available information. Forward-looking statements are not
guarantees of future performance, involve certain risks and
uncertainties that are difficult to predict, and are based upon
assumptions as to future events that may not prove to be accurate.
Sun Valley undertakes no obligation to update publicly or revise
any forward-looking statements, whether as a result of new
information, future events, or otherwise, except as required by
applicable securities legislation.
Disclaimer The information contained or referenced herein
is for information purposes only in order to provide the views of
Sun Valley and the matters which Sun Valley believes to be of
concern to shareholders described herein. The information is not
tailored to specific investment objectives, the financial
situations, suitability, or particular need of any specific
person(s) who may receive the information, and should not be taken
as advice in considering the merits of any investment decision. The
views expressed herein represent the views and opinions of Sun
Valley, whose opinions may change at any time and which are based
on analyses of Sun Valley and its advisors.
1 As of close on Friday, July 8, 2022.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220710005052/en/
Sun Valley: Daniel Henao Partner / VP Business Development
Phone: 6042607046 Email: dhenao@sunvalleyinv.com
Kingsdale Advisors: Tom Graham Executive Vice President, Western
Canada Direct: 587-330-1924 Email:
tgraham@kingsdaleadvisors.com
Media: Hyunjoo Kim Vice President, Strategic Communications and
Marketing Direct: 416-867-2357 Email:
hkim@kingsdaleadvisors.com
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