Detour Gold a takeover target despite board changes

The Detour Lake Mine in northern Ontario.

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The Detour Lake Mine in northern Ontario. Source: Detour Gold Corp.

Detour Gold Corp. (TSX: DGC), a company that has been under pressure from an activist investor to make changes at the board level on Thursday announced a raft of changes to its board of directors.

The company said Alan Edwards, James Gowans, and Judy Kirk have joined the board of directors. Ingrid Hibbard and Robert Doyle have stepped down from the board to accommodate the additions. Detour has also appointed Dale Ekmark as vice-president, mine general manager. In a report, Scotiabank said it views the changes as positive as the new members augment the board’s expertise in large scale open pit mining and First Nations engagement. “However, we do not believe strengthening the board at this point is enough to save Detour from takeover proceedings,’’ Scotiabank said.

The announcement means Detour has delivered on a promise to appoint new directors with operational and/or corporate responsibility experience in the near term to replace existing board members. “We remain firm in our belief that the actions we are taking will deliver long-term value to our shareholders,’’ the company said recently.

Detour has faced pressure to make board changes following the recent resignation of former Detour CEO Paul Martin, and increased calls by some investors for a strategic review. That includes Paulson & Co, with a reported 5% stake, which recently said it would urge Detour Gold to call a special shareholder meeting to replace a majority of Detour’s board with independent members committed to exploring a potential sale of the company.

Paulson said it would request that the shareholder meeting be held no later than September 28, 2018.

Detour Gold is an intermediate gold producer in Canada. It operates the large-scale Detour Lake mine in northern Ontario about 300 kilometres northeast of the Timmins.

After reporting second quarter net earnings of $8.8 million ($0.05 per basic share) and adjusted net earnings of $21.3 million ($0.12 per basic share, the company has said it is on track to meet its production guidance after producing 154,385 ounces of gold in the second quarter.

Total cash costs in the quarter were $723 an ounce sold, bringing all-in sustaining costs to $1,104 an ounce.

The company said cash and cash equivalents stood at $150.3 million at June 30, 2018 following the repayment of $10 million of debt.

Detour has said it expects to produce between 595,000 and 635,000 ounces of gold this year.

On Thursday, Detour Gold shares advanced 0.28% or $0.03 to $10.86. The 52-week range is $17.86 and $9.11.

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