Paulson Increases Stake in Detour Gold and Calls for Immediate Resignation of CEO Michael Kenyon and Chairman Alex Morrison
- Additional Investment Made as Share Price Declined From Weak Q3 Results Under Kenyon and Morrison
- Current Board Continues Record of Failure, Refuses to Hold Leadership Accountable, and Has Shown Itself Resistant To Considering All Strategic Alternatives
- Paulson Highlights Gaps in Detour Gold’s Governance Approach in Annotated Presentation
NEW YORK, Nov. 15, 2018 (GLOBE NEWSWIRE) -- Paulson & Co. Inc. (“Paulson”), one of the largest, long-term shareholders in Detour Gold Corporation (TSX: DGC) ("Detour Gold" or the "Company”), announced that it purchased additional shares of Detour Gold after the Company reported its third quarter results and the share price declined. The purchase brings Paulson’s total position in Detour Gold to 9,915,900 shares. Paulson made the investment as it believes in the long-term value of the Company despite the poor leadership being provided by the current Board of Directors.
Company Unsuccessfully Tried To Artificially Inflate 3rd Quarter Results
Unfortunately, Paulson’s serious concerns about the Company’s leadership were underscored by the Company’s recent third quarter results. CEO Michael Kenyon and his team unsuccessfully tried to boost short-term performance in advance of the December 11 shareholder meeting by high-grading the mine’s stockpile, contrary to industry best practices, and by questionably running up its accounts payable to exaggerate cash flows. The market saw through this and Detour Gold’s share price dropped approximately 10% in response.
Directors Kenyon and Morrison Should Resign
There is an urgent need for the immediate removal of the core, longest-serving directors of the Board, including the former Board Chair/current CEO, Michael Kenyon, and the former Lead Director/current Board Chair, Alex Morrison. Both re-shuffled their current positions earlier this year, after the Company’s first quarter release and the subsequent loss of over 30% of shareholder value.
Mr. Kenyon’s indefensible track record of overseeing value destruction as Chairman for nearly a decade has only continued during his unexpectedly extended tenure as interim CEO. Since assuming a management role, Mr. Kenyon has proven to be a polarizing figure and we believe has made a number of highly misleading characterizations to the broader market as well as to the Board of Detour Gold, which has led to an unnecessarily protracted and wasteful fight with the Company’s shareholders. He should resign from the Board immediately and continue as interim CEO only until a replacement is found. In parallel, the Company should embark on an external CEO search process so the Company has a fresh start under new leadership. This will serve as a constructive transition which will allow a newly elected Board to finally make the necessary changes to unlock Detour’s value.
Mr. Morrison should also resign from the Board immediately, with the Board appointing a new Chairman. He has been on the Board since 2010, was formerly Lead Director under Mr. Kenyon, and has proven to be an ineffective leader of the Company. Mr. Morrison’s actions as Chairman demonstrate that he will only serve to perpetuate the same poor corporate culture that existed under Mr. Kenyon. Mr. Morrison has been unable to set aside his self-interests and represent the Board in a conflict-free manner that is in the best interests of the Company. Since becoming Chair, Mr. Morrison has been leading and presiding over an ineffective Board. Paulson believes that a new Board, which shareholders will finally be able to elect next month, will be in a very good position to appoint a Chairman that will bring cohesion and a fresh perspective to leadership and governance.
Based on our discussions with shareholders, an overwhelming majority have expressed to Paulson their own concerns that as long as Mr. Kenyon is CEO and Mr. Morrison is Chairman, the much-needed turnaround of the Company will be further delayed.
Highlighting Detour Gold’s Concerning Approach to Governance
In order to highlight the gap that exists between what Detour Gold purports to be good governance and what it has actually done, Paulson has annotated parts of a recent governance presentation the Company provided. A copy of the presentation, which presents a fuller picture of Detour Gold’s poor governance practices, can be found on www.shareholdersfordetour.com.
Paulson Does Not Favor a Fire Sale
It has always been Paulson’s position that a board should always be open to, and prudently review, all strategic alternatives. The current Board has refused to explore strategic alternatives, and while Paulson is open to all alternatives, it would not support a sale at anything less than full and fair value.
Shareholders are encouraged to continue making their views known directly to the Board. Paulson and many others remain concerned with the ongoing value destruction, as evidenced by the declining share price and the current Board’s continued wasteful use of corporate resources. Paulson sees a better future for Detour Gold under new leadership, which is why it significantly increased its position in the Company in advance of next month’s special meeting of shareholders.
Paulson will be filing an amended and restated circular and proxy card for shareholders to complete in the coming days and recommends that shareholders disregard any management materials related to the meeting and not vote using management’s proxy form.
About Paulson & Co. Inc.
Paulson is one of Detour Gold’s largest investors, exercising control or direction over approximately 5.7% of Detour Gold’s shares. Having first invested in the Company nine years ago, Paulson previously provided C$280 million in direct equity and US$250 million in convertible notes to finance its mine completion. Paulson, along with several other major shareholders in the Company, has grown increasingly frustrated by the Company’s inability to appropriately manage shareholders’ assets, having destroyed billions of dollars of value in the process.
Paulson, founded in 1994, is an investment management firm with offices located in New York, London and Dublin.
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