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Sherritt investors reject activist’s bid to revamp board

Toronto-based Sherritt International Corp. operations are seen in this file photo.

Rogelio V. Soli/AP Phot

Sherritt International Corp. shareholders threw their support behind management and rejected an activist investor's quest to overthrow the board of the Canadian mining company and oust its chief executive.

Shareholders voted in favour of Sherritt's nine directors and defeated George Armoyan's three nominees, which included himself.

But investors and Sherritt's chairman credited Mr. Armoyan for improving the company. The miner's stock has gained nearly 20 per cent since the proxy fight was launched late last year, largely benefiting from a surge in nickel prices.

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After the vote, Mr. Armoyan said he was disappointed and vowed to continue to push for change. "We will be watching them. We will be the official opposition," the chief executive of investment firm Clarke Inc. said on the sidelines of Sherritt's annual meeting in Toronto on Tuesday.

Mr. Armoyan, whose Halifax-based firm and affiliates control 5.4 per cent of Sherritt, started agitating for change in December after the miner's stock had dropped 40 per cent.

A nasty battle ensued with Sherritt saying Mr. Armoyan could not be trusted and the investor accusing the board of not doing its job and destroying shareholder value.

A number of investors had publicly said they did not want Sherritt to use some of the proceeds from its $1-billion coal sale to make an acquisition – an idea that the miner's chief executive had suggested was an option.

The Toronto-based miner, which owns energy operations in Cuba and the large Ambotovy nickel mine in Madagascar, clarified that it is not looking to buy mining assets this year.

"We are not out looking for an acquisition," Sherritt's chairman Hap Stephen told reporters at the meeting. "Our priorities are pretty clear, we are going to reduce debt, we are going to get Ambotovy working and we are going to invest in our existing assets," he said.

Mr. Stephen said the proxy fight sped up the company's decision to overhaul a provision that compensated directors for the Helms-Burton Act, an American law that penalizes those who do business in Cuba. Now Sherritt will only provide additional compensation to directors who are prohibited from entering the United States.

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At the end of the two-and-a-half-hour meeting, a number of shareholders stood up to voice continued concerns, including with board members not having enough financial exposure to the company.

One shareholder, Don Cross, told the meeting that he was holding the company's chief executive and chairman accountable for Sherritt's "lousy performance."

So far this year, Sherritt has benefited from a nearly 30-per-cent surge in nickel prices. Indonesia's ban on raw mineral exports has triggered fears of a shortage of the metal, which is used to make stainless steel.

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Economics Reporter

Rachelle Younglai is The Globe and Mail's economics reporter. More

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