Chronicle Journal: Finance

ISS Recognizes Prolonged Value Destruction and Governance Concerns at Detour Gold

  • A number of large shareholders have confirmed to Paulson that they are voting for wholesale change
  • Shareholders urged to vote using only the GOLD proxy and submit prior to 5:00 p.m. (Toronto time) on Thursday, December 6, 2018

NEW YORK, Dec. 03, 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 today that Institutional Shareholder Services (“ISS”), an independent proxy advisory firm, has recognized that following a prolonged period of value destruction, Detour Gold’s Board of Directors has exhibited characteristics of entrenchment, and only started to react when Paulson and other shareholders began to publicly advocate for change.

A number of large shareholders have conveyed their belief to Paulson that real change for the better will only take place when the core, long-term directors – including former Chair and current Interim CEO, Michael Kenyon (who is receiving 2x the salary of the former CEO), current Chair, Alex Morrison and the Chair of the Technical Committee, Ed Dowling (who has overseen technical failures of the mine) are removed and replaced. These core directors have proven they are not able to create the value Detour’s operations should have, and that shareholders expect.

In recommending that Detour Gold shareholders vote for changes to the Company’s Board of Directors, ISS noted:

Governance Concerns

“The dissident [Paulson] makes a valid point that board changes only took place after the dissident and other shareholders publicly criticized the current board. Furthermore, despite the dissident's request for a shareholder meeting no later than Sept. 28, 2018, the board delayed the special meeting until Dec. 11, 2018. These factors seem to reflect a board that was reactive, if not reluctant, in addressing the issues outlined by the dissident.” [emphasis added]


“The company has gone through significant management changes over the past few years which may have contributed to its deteriorating operational performance…This lack of consistency at the top likely contributed to the company’s poor results, given the operational intensity of the mining business. It also raises questions as to whether the board was properly engaged, or appropriately aligned with the interest of all shareholders – a notion the dissident emphasizes by pointing to the low stock ownership among directors. The dissident claims that Alex Morrison (who did not participate in the engagement meeting with ISS) is a protégé of interim CEO Kenyon. It is possible that Morrison, one of the board's longer tenured directors, may not be the ideal choice as chairman, especially in light of the aforementioned management issues.” [emphasis added]

Total Shareholder Return

“In the one-year period prior to the unaffected date [the date Paulson went public with its campaign for change], the company underperformed its peer median and the ETF [NYSE: GDX]. For the period, Detour Gold's TSR stood at (33.3) percent, while peer median TSR stood at (9.2) percent.”


“In the three-year period prior to the unaffected date, the company again underperformed its peer median and the ETF. For the period, Detour Gold's TSR was (30.2) percent, while peer median TSR stood at 1.4 percent and the GDX stood at 21.8 percent.”

While Paulson appreciates that ISS has recognized the obvious need for further change at Detour Gold, it does not believe that its recommendation goes far enough, as peripheral or delayed change will further defer value creation for shareholders. There is no reason to expect the next three years for Detour Gold shareholders will be any better than the last three years if the core, long-term directors who have overseen prolonged value destruction remain. Paulson is pleased that a number of large shareholders have already confirmed that they will be voting for wholesale change of the Company’s Board of Directors.

Momentum is behind the Concerned Shareholders

Paulson appreciates the overwhelming support that it has received during this process and the many shareholders who have already voted for real and substantive change to Detour Gold’s Board of Directors on their GOLD form of proxy or GOLD VIF.  For shareholders who have not yet voted, to ensure your vote is counted, please vote using the GOLD form of proxy or VIF and submit prior to 5:00 p.m. (Toronto time) on Thursday, December 6, 2018. Please vote all GOLD forms of proxy or GOLD VIFs that you receive to ensure that all of your Common Shares are counted. You should discard any blue management proxies or VIFs that you receive. For more information, please go to

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.

Contact Details


MacKenzie Partners, Inc.
Dan Burch & Jeanne Carr



Longview Communications & Public Affairs

Joel Shaffer                                       

Cautionary Note Regarding Forward-Looking Information:

Certain information in this news release may constitute “forward-looking information”, as such term is defined in applicable Canadian securities legislation, about the objectives of Paulson as they relate to Detour Gold, the impact of Paulson’s nominees to be elected to the board of directors of Detour Gold (the “Concerned Shareholder Nominees”), if elected, on the financial condition, results of operations, business strategies, revenue enhancements, competitive position of Detour Gold and other matters. All statements other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by words such as “seek”, “anticipate”, “plan”, “continue”, “estimate”, “expect”, “may”, “will”, “project”, “predict”, “potential”, “targeting”, “intend”, “could”, “might”, “should”, “believe” and similar expressions.

Material factors or assumptions that were applied in providing forward-looking information include, but are not limited to, Detour Gold’s future growth potential; its results of operations; future cash flows; the future performance and business prospects and opportunities of Detour Gold; the election of the Concerned Shareholder Nominees; the ability of the Concerned Shareholder Nominees, if elected, to effect positive change at Detour Gold and execute plans for change (including changes in operational organization); the expected compensation structure of the Concerned Shareholder Nominees, if elected; the response to and outcome of any court applications that may be made against Paulson; the implementation and timing of Detour Gold’s business strategy; the current general and regulatory environment and economic conditions remaining unchanged; the availability of financing for exploration and development activities; operating and capital costs; Detour Gold’s available cash resources; Detour Gold’s ability to attract and retain skilled staff; the mine development and production schedule and related costs; dilution control; sensitivity to metal prices and other sensitivities; the supply and demand for, and the level and volatility of the price of, gold; timing of the receipt of regulatory and governmental approvals for the proposed development of the West Detour project and the continued development of the Detour Lake pit, other development projects and other operations; the timing and results of consultations with Detour Gold’s Aboriginal partners; the supply and availability of consumables and services; currency exchange rates; energy and fuel costs; required capital investments; estimates of net present value and internal rate of returns; the accuracy of mineral reserve and mineral resource estimates, production estimates and capital and operating cost estimates and the assumptions on which such estimates are based; market competition; ongoing relations with employees and impacted communities; and general business and economic conditions.

Forward-looking information contained in this news release reflects current reasonable assumptions, beliefs, opinions and expectations of Paulson regarding future events and operating performance of Detour Gold, and speaks only as of the date of this news release. Such forward-looking information is based on currently available competitive, financial and economic data and operating plans and is subject to known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Detour Gold, or general industry results, to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. Many other factors could also cause Detour Gold’s actual results, performance or achievements to vary from those expressed or inferred herein, including without limitation, the possibility that the anticipated benefits from the election of the Concerned Shareholder Nominees cannot be fully realized or may take longer to realize than expected; the ability of Detour Gold to retain and hire key personnel and maintain relationships with customers, suppliers or other business partners following the election of the Concerned Shareholder Nominees; the impact of legislative, regulatory, competitive and technological changes; the state of the economy; credit and equity markets; availability of credit and other financing; the financial markets in general; gold price volatility; the uncertainties involved in interpreting geological data; increases in costs; environmental compliance and changes in environmental legislation; regulation and policies; support of Detour Gold’s Aboriginal communities; receipt of permits; interest rate and exchange rate fluctuations; mine developments and production schedules; energy and fuel costs; general economic conditions and other risks involved in the gold exploration, development and production industry. Many of these risks and uncertainties could affect Detour Gold’s actual results and could cause actual results to differ materially from those expressed or implied in any forward-looking information provided by Paulson. The impact of any one factor on a particular piece of forward-looking information is not determinable with certainty as such factors are interdependent upon other factors, and Paulson’s course of action would depend upon its assessment of the future considering all information then available.

Should any factor affect Detour Gold in an unexpected manner, or should any assumptions underlying the forward-looking information prove incorrect, the actual results or events may differ materially from the results or events predicted. All of the forward-looking information reflected in this news release is qualified by these cautionary statements. There can be no assurance that the results or developments anticipated by Paulson will be realized or, even if substantially realized, that they will have the expected consequences for Detour Gold. Forward-looking information is provided and forward-looking statements are made as of the date of this news release and except as may be required by applicable law, Paulson disclaims any intention and assumes no obligation to publicly update or revise such forward-looking information or forward-looking statements whether as a result of new information, future events or otherwise.

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