“Concerned shareholders” of the Region Seven-based Guyana Goldfields, including Founder and recently ousted Executive Chairman of the company, Patrick Sheridan, are calling for a special meeting to be held by March, to facilitate the replacement of the current Board of Directors.
In a release issued on Wednesday, the group called for “ a new board capable of fixing performance issues, leading a share price recovery, and executing a value maximizing transaction”, citing an over CDN $1 billion loss in shareholder value which it says is attributable to the current Board of Directors.
“The Concerned Shareholders are requesting that the current Board of seven that has been responsible for the loss of over CDN$1 billion in shareholder value since 2016 be replaced with six independent, highly-qualified and accountable directors who bring significant mining, operational, public company, financial and legal experience,” the release stated.
“…Given the current Board’s inability to stop the freefall of Guyana Goldfields’ share price — and a series of continued irresponsible statements and decisions that have instead accelerated the share price decline — the Concerned Shareholders request that the special meeting be held promptly, by no later than March 12, 2019,” it was stated.
According to the release, Sheridan accused the Board of rewarding themselves “handsomely” and failing to make operational changes to the Aurora goldmine in Region 7, even though shareholders have suffered a CDN billion dollar loss.
“Without an immediate change in direction and a new board elected with a mandate to aggressively pursue a strategy to maximize value for all shareholders, we have serious doubt Guyana Goldfields will remain a going concern. The path for shareholders to recoup the value of their investment is clear: optimize operational performance, repair the relationship with the Government of Guyana, turn the share price around and execute a value-maximizing transaction,” Sheridan was quoted as saying.
The shareholders, in their statement, also stipulated that there be an ethics committee set up to ensure the ethical conduct of the company’s business, that a special committee be put in place to undertake a strategic review of the company and that a leading Canadian bank be engaged to act as a financial advisor on the aforementioned review.
The group, which includes Northfield Capital Corporation, Robert Cudney, Donald Ross, Gretchen Ross, and Sheridan, reportedly together own no less than 5% of the issued and outstanding shares of the company.
Sheridan himself was terminated by the Board in his capacity as Executive Chairman on July 30, 2018, Stabroek News had previously reported. He was replaced by René Marion, who assumed the responsibility of non-executive Chairman of the Board, after gold production for the company’s Aurora, Region Seven operations had declined within the second quarter of last year.
The group, in their grounds for the removal of the Board, stated that the Board has been “misrepresenting or incompletely disclosing the reasons for the Company’s poor results, using such excuses as the rainy season, slow equipment mobilization and, most recently, problems with the resource model”.
“On a conference call on October 30, 2018, management this time largely blamed the further revised guidance on problems with the resource model, thereby throwing into question the gold resource itself. While some variance in the resource model is common and is to be expected, and certainly nothing new for the Aurora Mine, management’s statement threw into question the viability of the mine itself. In the Concerned Shareholders’ view, this was an incorrect, misleading and irresponsible statement and it caused the market capitalization of the Company to fall by almost CDN$250 million, or about half, in one day,” they said.
“The Concerned Shareholders believe the reality is that these statements and excuses were made to cover up poor mining practices, including in particular the shortfall in stripping the deposit which remains many months behind schedule. The Concerned Shareholders believe this is largely due to the initial stripping contract being awarded to an underqualified and inexperienced local contractor. There was no RFP process and no attempt to seek competitive bids,” they opined.
Meanwhile, the shareholders have proffered their own list of suitable nominees for the positions of directors of the board, individuals they hold to be “Fully Independent, Highly-Qualified and Accountable Nominees”.
Those persons are attorney Carmen Diges; Professional Mining Engineer, Declan Franzmann; Geologist and Director of Avidian Gold Corp., Chakana Copper Corp., Kenadyr Mining (Holdings) Corp., Lepanto Consolidated Mining Company and Manila Mining Corporation, Doug Kirwin; Mining Engineer, Luc Lessard; Director of Northfield Capital Corporation and Neo Lithium Corp, Thomas Pladsen; and Managing Partner of Baynes & White Inc, James White.
“The Concerned Shareholders’ nominees (the “Nominees”) are committed to fixing the operational issues that have plagued Guyana Goldfields. Each of the Nominees has held senior leadership positions at leading Canadian and international companies including Alio Gold Inc., Falco Resources Ltd., Ivanhoe Mines Ltd., Minnova Gold Corp., Atacama Pacific Gold Corporation and Osisko Metals Incorporated and have significant mining, operational, public company, financial, and legal experience. While the Nominees will act as independent fiduciaries, they have all indicated support for the Concerned Shareholders’ plan to optimize Guyana Goldfields’ assets and pursue a transaction to maximize value for all shareholders,” the statement highlighted.
In November last year, on the heels of an announcement by Guyana Goldfields Inc that it had started underground work at its Aurora gold mine in Region Seven, the Environmental Protection Agency (EPA) issued cease orders to the company as the necessary permit has not yet been granted.
“In spite of notice given to not commence activities, you have blatantly disregarded the Agency’s directives, and [have] been in direct contravention of the Agency’s laws and regulations,” the EPA wrote in a letter to the company, which was seen by the Sunday Stabroek.
GGI’s Chief Executive Officer Scott Caldwell confirmed receipt of the letter.
Section 15 (1) of the Environmental Protection Act states, “Every person who fails to carry out an environmental impact assessment or who commences a project without obtaining an environmental permit as required under this Act or the regulations shall be guilty of an offence and shall be liable to penalties prescribed under the Act.
“In the circumstance, you are hereby advised that all activities for operations development of an underground mine located at Aurora, Region No. 07 must be immediately ceased, until such time you are furnished with an Environmental Permit by the EPA,” the letter advised the company.
Caldwell said then that the Canadian company had complied with the EPA and all works were ceased.
“We will follow the letter one hundred percent with the EPA and we would with any governmental…and regulatory agency. We may not agree, but we will absolutely comply,” he added.
The underground operations are aimed at extracting more than 2 million ounces of gold. Aurora has a total gold resource of 6.25 million ounces in the measured and indicated categories, as well as an additional 1.79 million ounces in the inferred category.
The mine achieved commercial production in January, 2016 and produced 160,000 ounces of gold in 2017. To be able to move underground, Guyana Goldfields is investing more than US $120 million.
On November 9th, the company announced that it had started the underground works at Aurora.
“Guyana Goldfields Inc. (TSX: GUY) (the “Company”) is pleased to announce that the Company has commenced underground development at the Aurora Mine completing the first blast on the Mad Kiss portal,” a release on its website stated.