Junior gold company Guyana Goldfields is urging its shareholders to stick with its proposed slate of directors as it seeks to fend off a dissident shareholder group.
In documents filed on Monday detailing its attempts at a turnaround, Toronto-based Guyana said it has “turned the page” with a better mine plan in place, the right people in charge and improved financial controls.
Late last year, Guyana’s share price went into free fall when the company disclosed serious problems with its original mine plan, raising questions about the size and economics of its gold deposit.
Since January, Guyana has been locked in a proxy fight with a group led by the company’s founder, Patrick Sheridan, who is proposing replacing the company’s entire slate of seven directors.
Guyana said in the documents that Mr. Sheridan, whom the company fired last year, “had to go” and “should stay away.”
But in an interview on Monday, Mr. Sheridan shot back and accused Guyana’s chief executive Scott Caldwell of misconduct, which he claims contributed to the meltdown at the company.
Mr. Sheridan also said in a news release on Monday that he had become aware of “suspicious banking activity” pertaining to Mr. Caldwell and his associates, involving millions of dollars in offshore accounts.
When pressed, Mr. Sheridan declined to give more specifics around the allegations, but said he would likely release further details later this week.
“I’m very disturbed by the false allegations,” Mr. Caldwell said in an interview.
He added that Mr. Sheridan’s allegations were “investigated thoroughly” by a committee of the board of directors last year and it found nothing to substantiate Mr. Sheridan’s claims.
Guyana said in a release it interviewed Mr. Sheridan as part of a five-month probe and found him to be sometimes “not co-operative, and at other times not credible.”
The company operates the Aurora mine in Guyana, which went into production a few years ago.
Last month, an independent consultant cut Guyana’s reserves by more than 40 per cent, raised its cost estimates and cut its mine life. The company, which at one point had a market capitalization of more than $1.5-billion, has lost about 90 per cent of its value as questions linger about whether the company’s latest mine plan is viable.
As a holder of 5 per cent of the company’s shares, Mr. Sheridan was able to request a special meeting of shareholders to consider a new slate. The dissident group is proposing seven new directors he says are better qualified to oversee Guyana’s operations and turn the company around. The meeting will be held next month.
Mr. Sheridan founded the company in 1993 and became executive chair in 2013. He was CEO when Guyana approved the building of the Aurora mine, which was constructed off of a flawed technical report.
In July of last year, Guyana terminated Mr. Sheridan owing to “poor managerial performance, conflicts of interest and ethical lapses.”
Guyana is the latest in a series of high-profile proxy fights in the mining sector, which have been driven by disgruntled shareholders agitating for change after periods of poor performance. In December, a campaign led by dissident shareholder Paulson & Co. succeeded in wholesale board change at Detour Gold Corp. Currently, Toronto-based private equity firm Waterton Global Resources is engaged in a proxy battle with base metals company Hudbay Minerals.
Over the past few months, Guyana has parted ways with almost the entire legacy management team, replacing its chief operating officer, government-relations representative and corporate development head as well as bringing in a new vice-president of human resources.