A battle for control of Canadian miner, Guyana Goldfields Inc (GGI) is set to culminate on May 22 and the Board of Directors on Tuesday hit back at accusations that they have mismanaged the company, outlining a number of actions taken since terminating the services of former Executive Chairman Patrick Sheridan.
Sheridan is leading the charge for the current Board of Directors to be ousted and has accused them, among other issues, of being responsible for the loss of over CDN$1 billion in shareholder value since 2016. GGI, a Canadian based mid-tier gold producer, operates the Aurora gold mine in Region Seven here. The shareholders calling for the ouster of the current Board collectively own no less than 5 per cent of the issued and outstanding shares of the company, according to reports.
In a statement on Tuesday, GGI announced that it will hold its Annual Meeting along with a Special Meeting of Shareholders on May 22, 2019. It noted that a meeting was requisitioned by a group of dissident shareholders led by Sheridan, whom it termed the “Sheridan Dissidents.” Sheridan had been terminated from his executive position by the Board on July 30, 2018.
“The Annual and Special Meeting will deal both with normal course matters and matters related to the requisition. The timing is consistent with the company’s history of holding an Annual Meeting in May and will spare shareholders the additional distraction and costs that would be associated with holding two separate shareholder meetings in quick succession,” the statement said.
It added that a special committee of independent directors has been formed for the purpose of ensuring that any action taken regarding the Sheridan Dissidents’ concerns is in the best interests of GGI.
The statement was critical of the action initiated by the dissident stakeholders and hit out at Sheridan. According to the statement, the dissidents initiated a costly and unnecessary proxy fight without any notice to or engagement with the company
“It is unfortunate that the Sheridan Dissidents provided no prior notice or opportunity for constructive engagement before rushing into what will surely be a costly proxy contest,” René Marion, the non-Executive Chairman of the Board, was quoted as saying.
“We welcome the views of all shareholders and would certainly have been willing to speak with Mr Sheridan, who after all was a board member until he resigned less than three months ago, on October 30, 2018,” he added.
Improvements
The statement said that the Board has instituted a series of fundamental operational and governance improvements at the company since Sheridan’s termination.
“It is disappointing that Mr Sheridan refuses to accept any responsibility for the company’s operational, governance and governmental relations challenges which arose over his 20 plus years as the company’s top executive,” said Marion. “Fortunately, the Board has instituted a series of fundamental operational and governance improvements at the company since his termination.”
“As the proxy contest progresses, I want to assure shareholders that the company’s management, many of whom joined after the Board terminated Mr Sheridan, will remain focused on implementing these positive operational and governance changes,” he added.
The statement said that as part of this commitment, in October 2018, GGI appointed Roscoe Postle Associates Inc, an independent firm of engineers and geologists, to assist in the review of the geologic controls and grade variability at the Aurora gold mine. The review will be incorporated into the updated resource and reserves estimates expected to be released in late March, the statement said.
The company also highlighted its efforts with regards to improved accountability and governance. The statement said that GGI strengthened management accountability following Sheridan’s termination. Prior to that, the statement said, the company was saddled with an ineffective dual reporting structure under which Sheridan was responsible for exploration, government relations and the company’s North Road office in Georgetown, where those activities were managed. As Executive Chairman, Sheridan resisted the implementation of a more efficient single-channel structure. Following his termination, the Board implemented the single channel reporting to the President and CEO, a best practice for management accountability, the statement said. It added that the Board also appointed an independent, non-executive Chairman, a best practice for corporate governance.
Mining rate
Meantime, the statement pointed out that GGI recently announced a record mining rate in the fourth quarter of 2018 and throughput levels well ahead of design as a result of mill enhancements, with gold recovery averaging over 2 per cent higher than in 2017. While there is still more work to be done, there is positive momentum in the company’s operations, the statement said.
It pointed out that GGI also strengthened its exploration focus following Sheridan’s termination. The company is now focusing on high quality brownfields targets near its Aurora mine under the leadership of Ron Stewart, Senior Vice President, Technical Services and Corporate Development.
“The company believes these brownfield targets, which Mr Sheridan shunned, provide the greatest opportunities for near term growth to mineral resources and reserves. These targets are more prospective and expected to be more supportive of mine operations than the higher-risk greenfield targets in the distant jungle that Mr Sheridan wanted to continue pursuing,” the statement said.
The company also highlighted the hiring of former United States Ambassador to Guyana, Perry Holloway, as Senior Vice President, Strategy & Corporate Affairs, in an effort to improve relations with the Government of Guyana.
The statement also pointed out that GGI has begun assessing new potential candidates to serve as directors following Sheridan’s resignation on October 30, 2018. GGI also announced the resignation of Alan Ferry as a director. Ferry is the longest-serving director of the company, having joined the Board in 1998. He has decided to step aside to allow for Board refreshment, the statement said, while also announcing that the Board refreshment process will be expanded as a result of his resignation.
GGI also defended the financial position of the company saying that “the Sheridan Dissidents have made a number of misleading, irresponsible and unnecessarily inflammatory statements that could undermine the company’s share price, even going so far as to allege ‘serious doubt Guyana Goldfields will remain a going concern’.”
Shareholders should disregard such wildly inaccurate allegations. The company maintains a strong balance sheet with an unaudited cash balance of US$82 million at December 31, 2018 and total debt balance of just US$40 million, the statement asserted.
It said that GGI is developing a Management Information Circular (MIC) with a more fulsome response to the “inaccurate” statements made by the Sheridan Dissidents. “The company intends to file this response well in advance of the May 22 Annual and Special Meeting. Pursuant to applicable securities laws, the company will not solicit proxies for the meeting until the MIC has been filed,” it added.
