UPDATED: Paulson plans to replace Detour board, explore sale of company
Paulson & Co. will move forward with its efforts to replace a majority of the Detour Gold's board and explore the possible sale of company.
In a letter release today, Paulson also said Detour had been "approached by a major gold mining company interested in potentially acquiring it."
Detour Gold is up 13% to $13.93. The company's 52-week range is $9.11 to $17.86. Paulson & Co. is a large institutional investor in Detour.
In a sharply worded news release, Detour Gold said Paulon & Co.'s claims were misleading and it doesn't want to be forced into an "ill-timed fire sale".
"Paulson, in a desperate attempt to resuscitate its flailing reputation in the mining industry, has once again misinformed the investment community," wrote the company.
"This is not the first time, unfortunately, that Paulson has done so. Over the past several weeks, Paulson has run an aggressive and self-serving agitation campaign against Detour Gold with the sole objective of bullying the Company into an ill-timed fire sale."
Detour Gold (TSX:DGC), an intermediate gold producer with an open pit mine in northeastern Ontario, has clashed with the billionaire hedge-fund manager. Last month Paulson sent a letter to the company asking it to put itself up for sale. Paulson criticized management and poor stock performance.
In today's letter Paulson took issue with how Detour handled a major interested in acquiring the company.
Last Friday Michael Kenyon, Interim CEO of Detour Gold, sent an unsolicited written communication to Paulson selectively disclosing non-public information that the Company has been approached by a major gold mining company interested in potentially acquiring it. As part of the communication, Detour Gold stated it would only sign a confidentiality agreement with the interested party only if both the party and Paulson agreed to a stand-still, even though Paulson has no affiliation with the major mining company. In light of such approach, Paulson requested that the Company’s board immediately disclose such material to all shareholders and the investing public and announce a formal process to evaluate all strategic opportunities. In addition, Paulson & Co. has constructively asked the independent directors of the board to reconstitute the board and to announce a search process for a new CEO simultaneous with a review of strategic alternatives. To date, the Detour Gold board has failed to do so, therefore Paulson is issuing this press release so that all Company shareholders and the wider public have the same information as Paulson.
Detour says there is no sales process in place. Detour accuses of Paulson & Co. of false and misleading statements and asked the Ontario Securities Commission to investigate.
"The Company does not have a sale process in place nor has it received any offers to purchase its shares and remains focused on the life of mine plan, while remaining open (as it has been historically) to value accelerating opportunities," writes Detour Gold.
Creative Commons image of open pit mine courtesy of Mines CERSE. Story was updated to add Detour's response to Paulson & Co.'s letter.