Showdown with concerned shareholders expected at Shore Gold meeting
ALEX MACPHERSON, SASKATOON STARPHOENIX
Published on: August 24, 2017 | Last Updated: August 24, 2017 6:00 AM CST
An aerial view of Shore Gold Inc.’s Star-Orion South diamond project east of Prince Albert. SHORE GOLD INC.
A Saskatoon diamond exploration and development company’s annual meeting next month is shaping up to be another showdown between management and a group of concerned shareholders who want to shake up its board of directors.
Shore Gold Inc., which has spent the last two decades working to build a diamond mine east of Prince Albert, recently signed an option agreement with a Rio Tinto Group subsidiary worth up to $75 million in exchange for up to 60 per cent of the project.
However, the head of the SGF Shareholders Association Inc. (SGFSA), which was formed with the aim of improving communication between the company and its investors, said he doesn’t expect the deal to dampen support for its latest attempt to oust some directors.
David Wright said while it’s hard to say how each of the company’s investors reacted to the deal, he believes many are not happy with it and that it has not been reflected in the company’s share price, which hit a five-year-high of $0.44 before the deal was unveiled.
“At the end of the day, the one and only — and ultimate — judge of success or failure of any company is based pretty much entirely on its share price,” Wright said, noting that the company’s share price has since fallen back to just over $0.20 per share.
In a letter sent earlier this month, the SGFSA executive recommended its members on Sept. 6 “withhold” their votes from all but one of the company’s incumbent directors and vote for three new directors proposed by Shore Gold, plus two nominated independently.
At the company’s last annual meeting, Wright led an attempt to oust three of the company’s directors. The vote came within a few percentage points of succeeding but was subsequently deemed illegal by Shore Gold’s chairman, who nevertheless allowed it to stand.
Shore Gold’s executives said in an email to the Saskatoon StarPhoenix that the deal with Rio Tinto “sets the stage for a new phase for the company,” and that the firm’s current independent directors believe the nominees proposed by the firm are an excellent fit.
“Management and the board make decisions for the Company based on their view of the best interests of the company and all shareholders. We are extremely pleased to partner with Rio Tinto to further develop the potential of the project.”
Ken MacNeill, the company’s longtime president and chief executive who is also a non-independent director of the company, added in the email that he is always happy to meet with Shore Gold shareholders and that the same offer has been extended to the SGFSA.
Shore Gold’s shareholders are also expected to vote at the meeting on a proposal to change the company’s name to Shore Diamond Corp. In their letter to members, SGFSA executives recommended voting for the change.