Shareholders of Detour Gold are being asked to cast their vote by Dec. 7 in an effort to settle an ongoing dispute between the gold producer and one of its largest shareholders on how the company should be managed.
Over several months, Paulson & Co. Inc., a New York-headquartered investment management firm that owns 5.7 per cent of Detour Gold’s shares, has been pushing for changes to Detour’s board, suggesting the current slate has created a climate of “entrenchment and self-enrichment,” devalued the company, and refused to consider alternative life-of-mine plans.
Amongst Paulson’s complaints are that the board awarded interim CEO Michael Kenyon a salary of $1.5 million, twice what his predecessor earned, and that the board tried to inflate third quarter results to make it appear the company was doing better than it was. Paulson also wants a new plan put in place for the long-term management of the company.
“The board and management of Detour Gold have long chosen to sell their generous stock rewards rather than hold shares in the company, the best reflection of their belief in their own long-term strategy,” reads a Paulson new release.
Paulson is proposing the number of board members remain at eight, and all eight current directors be replaced with new Paulson-approved members.
Detour disputes Paulson’s account, suggesting the investment firm is trying to force a fire sale of Detour Gold.
In a release, the board said Paulson’s insistence on hastily replacing a new CEO and long-term board members with inexperienced ones is a rash and irresponsible decision that will jeopardize the company’s long-term stability. The board said it would start a search for a new CEO directly after the proxy vote.
“Without directors who understand the past challenges that Detour Gold has faced and the opportunities ahead of it, the company will be mired in revisiting past decisions and making costly mistakes,” the board said in a letter to shareholders.
The Detour board is urging shareholders to vote in favour of electing two of Paulson’s nominees, but rejecting the rest, and it wants the right to expand the board beyond eight members.
Shareholders have until Dec. 7 to cast their votes. A special shareholder meeting to review the status of the company will follow on Dec. 11.
Detour Gold operates a single asset – the Detour Lake gold mine is located within the Abitibi Greenstone Belt, 300 kilometres northeast of Timmins. Gold production started in February, 2013.
The operation has a mine life of approximately 23 years with an average gold production of 659,000 ounces per year, and includes the development of the West Detour project, which is currently being permitted.