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Iamgold Corp.’s IMG-T biggest shareholder is backing an activist investor’s efforts to overhaul the struggling Canadian gold company’s board of directors.

Last week, RCF Management LLC called on Iamgold to toss out three of its existing directors, and replace them with candidates of its choosing, including installing Maryse Belanger, a 35-year mining industry veteran, as chair. The Denver-based private equity firm said that urgent leadership change was necessary to address “massive value destruction and chronic underperformance” at the Toronto-based gold company. RCF, which owns a 5.2-per-cent stake in Iamgold, had already forced the ouster of long time chairman, Donald Charter, before its proxy battle became public.

Now Joe Foster, portfolio manager with New York-based fund management company VanEck, which has a 9.5-per-cent stake in Iamgold, is lending his support to RCF, and pleading with Iamgold to acquiesce to its demands.

“Iamgold has been mismanaged for many years,” Mr. Foster said in an interview. “It’s got some difficult assets, and management hasn’t been up to the task, and it just seems to be going from bad to worse.”

Many of Iamgold’s mines have problems that can be fixed if the company has better management, he said. Those include difficulties adapting to seismic challenges at its Westwood gold mine in Quebec, persistent operational problems at its Rosebel property in Suriname, and Iamgold’s track record of consistently missing its cost and production guidance.

Shares in Iamgold have fallen 26 per cent in the past three years, while the TSX Global Gold Index, which tracks 25 of the world’s biggest gold companies, is up 49 per cent.

“Management has had ample time to turn the company around and shareholders have been more than patient,” Mr. Foster said.

RCF has a long track record of being a patient and well-intentioned investor in the mining sector, the portfolio manager added, and he urged Iamgold to head off a lengthy proxy fight that otherwise might not get resolved until the annual meeting in the spring.

While proxy fights can eventually result in positive change at struggling companies, while they are in process, they inject uncertainty, distraction and considerable expense into the picture, which can further scare off potential investors. A few years ago, a proxy fight between a U.S. hedge fund and another Canadian gold miner, Detour Gold Corp., took about six months to resolve, and eventually resulted in the ouster of Detour’s chief executive officer and several other directors.

RCF and Iamgold had been in discussions behind the scenes for several weeks, and at one point came close to patching things up before the scrap boiled over into the public domain. Iamgold had agreed to replace two of its directors with candidates put forward by RCF, but it rejected a third nominee. Iamgold also objected to installing Ms. Belanger as chair over concerns she was not sufficiently independent from RCF. Iamgold also did not want to give RCF a major say over who the next CEO of the company would be.

Iamgold’s previous CEO, Gordon Stothart, stepped down with no warning last month. At the time, no reason was given for his departure. Robin Bienenstock, an investment committee member with RCF’s Resource Capital Fund VII, told The Globe and Mail last week that Mr. Stothart and Iamgold’s chief financial officer, Daniella Dimitrov, had major disagreements over strategy, and RCF pointed this out as a huge problem to Iamgold’s then chairman Mr. Charter.

After Mr. Stothart left, Ms. Dimitrov was appointed interim CEO, and the company started a search for a permanent replacement. According to RCF, Iamgold was intending to promote Ms. Dimitrov to the chief executive role on a permanent basis. This was a scenario that RCF found untenable because it deemed Ms. Dimitrov unqualified.

On Tuesday, however, Iamgold made it clear that Ms. Dimitrov will not be the next permanent CEO. Graeme Jennings, Iamgold vice-president, investor relations, said in an e-mail to The Globe that Ms. Dimitrov is not running for the job.

RCF is pleased to hear that Ms. Dimitrov is “no longer a candidate” for the CEO role, Ms. Bienenstock said in an e-mail. She reiterated that “real and meaningful board renewal” must take place, and the right CEO has to be hired “to lead the operational turnaround that Iamgold desperately needs.”

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Study and track financial data on any traded entity: click to open the full quote page. Data updated as of 27/03/24 4:00pm EDT.

SymbolName% changeLast
IMG-T
Iamgold Corp
+3.1%4.33

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