A group of Guyana Goldfields Inc (GGI) shareholders – including its former Executive Chairman Patrick Sheridan – who are seeking to have the board of the Canadian company removed are disappointed that the meeting to address the matter has been fixed for May 22, months after the request.
Sheridan and the others had submitted their request for a shareholders’ meeting on January 2, 2019. In a statement on Wednesday, they noted that the shareholders meeting will be held 140 days after the request.
Feuding by shareholders has occurred just years after full production started at the Aurora gold mining site in Cuyuni, Region Seven in 2015 and also comes following a sharp drop in the company’s share price and a reprimand by the Environmental Protection Agency here about the unauthorized start to underground mining plans.
The Concerned Shareholders include Northfield Capital Corporation, Robert Cudney , Donald Ross, Gretchen Ross and Sheridan. In their statement on Wednesday they said that they have nominated six experienced and qualified nominees to replace all of Guyana Goldfields’ board of directors at the shareholders’ Meeting in order to fix performance issues at the Company and lead a share price recovery among other things.
“We requisitioned this meeting because we have serious and legitimate concerns about the current Board’s lack of relevant management expertise, irresponsible and potentially misleading statements to stakeholders, questionable decisions and operational blunders,” said Sheridan , one of the largest shareholders.
Sheridan was terminated from his executive position by the Board on July 30, 2018.
“Instead of calling the Meeting in a timely manner to enable shareholders to have their say, the incumbents chose to continue receiving their paycheques and to hire at least half-a-dozen unnecessary consultants to protect them while the value-destruction of the Company and shareholders’ investments continues. This prolonged delay is not in the best interests of shareholders and we are very worried about what entrenchment tactics the current Board might attempt in the meantime”, the statement by Sheridan and the other shareholders said.
The Concerned Shareholders say they have been made aware by a source close to the Company that, as a defensive response to the Concerned Shareholders’ call for a shareholders’ meeting, the current Board has hurriedly begun an ad hoc process to identify and install new directors. The Concerned Shareholders believe that allowing the current directors to handpick their own successors will undermine the real change the Company needs. Even more concerning they say is that the process is taking place behind closed doors without the input of shareholders.
Refresh
“While the Concerned Shareholders would welcome a legitimate attempt by Guyana Goldfields to refresh the Board with qualified, independent candidates with proven track records, delaying the Meeting to allow more time to identify and install incumbent and management-selected preferred replacement directors is a common tactic used by boards struggling to maintain shareholder support. The decision by one director to resign in the face of shareholder outrage does not in any way meet shareholders’ expectation for significant and meaningful change. The Concerned Shareholders believe that, essentially, the incumbent directors are making a last-ditch attempt to save their seats by appearing to make changes”, the statement by Sheridan and other concerned shareholders said.
The statement added that each of the Concerned Shareholders’ 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.
The Concerned Shareholders said that they are disappointed that though the Company has had the Meeting requisition and list of credible nominees for three weeks, it made no attempt to reach out or engage the Concerned Shareholders.
“Tellingly, despite losing Cdn$1 billion in value since 2016, the Company has not added any new directors in the past four years,” Sheridan argued. “Only now, after we requisitioned a meeting, is the Board even considering change. This is clearly an example of a board running out of options. The good news for shareholders is that real change is on its way – despite the delayed Meeting”, he added.
The Concerned Shareholders warned the Board against further attempts to drag their heels on other initiatives.
“Such obstructive conduct will inform shareholders’ views of their competency and suitability to continue as directors such as delaying Roscoe Postle and Associates Inc.’s review of the Company’s resource model”, Sheridan and the other shareholders added.
Consistent
In a statement on Tuesday, GGI said that “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”.
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.
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.
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.
