Rupal Bhansali

Paulson Notes Detour’s Continued Entrenchment And Insider Selling

  • Detour Board forces shareholders to wait five months to vote on new board
  • Paulson alarmed at insiders selling of more than $2.3 million worth of shares in July days after touting an unrealistic plan to deliver long-term value

NEW YORK, Aug. 28, 2018 (GLOBE NEWSWIRE) — Paulson & Co. Inc. (“Paulson”) criticized the decision by the Board of Directors of Detour Gold Corporation (TSX: DGC) (“Detour Gold” or the “Company”) to force shareholders to wait until December 11 before being able to vote on a new independent Board.  The latest entrenchment tactic impedes and delays Paulson’s efforts to hold the Board accountable for ongoing substantial value destruction.  Many significant shareholders have publicly endorsed replacing directors.

 Detour Gold Corporation

“It is inexcusable that the Board delayed the meeting and refused to hold itself accountable to shareholders,” said Marcelo Kim, a Partner at Paulson. “Detour shareholders will finally have an opportunity to end the protracted destruction in shareholder value suffered at the hands of this Board.  The incumbent directors have approved three life of mine plans in three years, each with worsening economics, revealing they are unqualified to question underlying assumptions and evaluate the risks associated with running a world class mine.”

Insiders Selling Shares

Recently and revealingly, insiders questionably exercised options and sold shares, preferring to line their pockets with cash instead of investing along-side with shareholders.  Seven insiders traded and sold 188,427 shares, worth $2,375,767 in the Company starting late July.  These actions demonstrate that the insiders have no confidence in their own plan and serve to highlight the perpetual misalignment of incentives with shareholders.  Paulson, which has been a shareholder in Detour Gold since 2009, has not sold any shares in the Company since January 2017.

Interim Chief Executive Officer Michael Kenyon sold more than $1 million worth of stock days after stating: “we remain firm in our belief that the actions we are taking will deliver long-term value to our shareholders.” The magnitude of share sales by so many insiders, coupled with their already minimal holdings in Detour Gold, is a shocking betrayal to investors who have held the stock only to see the value of it drop significantly.

Questionable Meeting Practices

The voting results from the May 2018 Detour Gold meeting of shareholders are questionable. The Company’s disclosure of revisions to its 2017 Life of Mine plan was made so late in the proxy voting process many shareholders had already voted.  Paulson is concerned that the Company may try to employ similar tactics to try and manipulate the upcoming meeting through procedural tactics, such as “vote buying”, where brokers are paid for shareholder votes they submit.  However, Paulson will continue to explore all options to ensure that this meeting is held in a fair and timely manner for the benefit of all shareholders.

Paulson previously announced the candidates that will stand for election to the Detour Gold Board of Directors and will file a proxy circular in due course.

Annex

The following table highlights recent Detour Gold insider trading and share sales:

Name Date Options Exercised Exercise Price Shares Sold Price Proceeds
Drew Anwyll
Senior Officer
July 30 33,000 $10.53 33,000 $12.54 $413,820
Robert Doyle1
Director
July 31 12,500 $10.53 12,500 $12.82 $160,251
Laurence Gaborit
Senior Officer
July 30 6,000 $10.53 6,000 $12.63 $75,780
Francis Heredia
Senior Officer
July 30 27,000 $3.93 27,000 $12.58 $339,660
July 30 3,600 $10.53 3,600 $12.57 $45,252
Michael Kenyon
Director and
Senior Officer
Aug. 8 90,000 $10.53 82,927 $12.73 $1,055,660
James Mavor
Senior Officer
Aug. 9 8,000 $10.53 8,000 $12.30 $98,400
Aug. 13 6,400 $10.53 6,400 $11.33 $72,512
Jonathan Rubenstein
Director
Aug. 3 9,000 $10.53 9,000 $12.71 $114,432
TOTAL       188,427   $2,375,767
             

[1] Mr. Doyle’s SEDI form appears to show he did not sell any of the Common Shares underlying his Options, however, it lists a unit price of $12.8201 for his exercise of Options. Based on this, it is highly probable he actually sold the Common Shares he received but made an error with his form. The table includes information as if he did in fact sell his underlying Common Shares.

The information contained in this news release does not and is not meant to constitute a solicitation of a proxy within the meaning of applicable securities laws. Shareholders are not being asked at this time to execute a proxy in favour of the Paulson nominees. In connection with the December 11 meeting (for which there is not yet a record date), Paulson may file and mail a dissident information circular in due course in compliance with applicable securities laws.

A copy of this news release may be obtained on Detour Gold’s SEDAR profile at www.sedar.com.

About Paulson & Co. Inc.

Paulson is one of Detour Gold’s most important investors, exercising control or direction over approximately 5.4% 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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