A proxy fight between Guyana Goldfields Inc. [GUY-TSX; GUYFF-OTC] and a group of dissident shareholders that includes the company’s former CEO Patrick Sheridan is heating up again.
On Tuesday, the company issued a news release to address what it described as false and misleading allegations and a threatened derivative action by Sheridan, who was terminated as the company’s executive chairman in July 2018. He is now leading a dissident proxy campaign against the company and its board of directors.
Guyana Goldfields is a Canadian mid-tier gold producer, primarily focused on the exploration and development of gold deposits in the Guiana Shield of South America. The Guiana Shield is the northern part of the Amazon Craton and covers parts of Guyana, Venezuela, Suriname, French Guyana and northern Brazil.
Its primary operation is the 100%-owned Aurora Gold Mine in northwest Guyana, which reached the commercial production stage in January 2016.
In a Tuesday April 23 press release, Guyana Goldfields non-executive Chairman Rene Marion said Mr. Sheridan’s allegations are plainly untrue and his threatened derivative action is entirely frivolous. “This is nothing but a smokescreen to distract shareholders from Mr. Sheridan’s own actions,” Marion said.
Marion was responding to the a April 10, 2019 letter sent to the Guyana board in which Sheridan urged the directors to commence a claim against Guyana Goldfields CEO Scott Caldwell for a “series of disturbing allegations of misconduct at the company’s head office and the Aurora Gold Mine.”
In the letter, Sheridan states that unless the company commences a claim against Caldwell, upon the expiry of the 14 days’ statutory notice period on April 24, 2019, Sheridan intends to see leave of the court to commence a derivative action on behalf of shareholders pursuant to the provisions of the Canadian Business Corporations Act.
Marion responded with the following statement: “If Mr. Sheridan’s concerns were genuine, he had ample opportunity to raise and address them while he was in an executive position with the company. He never did so. It is clear that Mr. Sheridan’s purported concerns are tactical, not genuine, and are being raised in bad faith to further Mr. Sheridan’s goal of acquiring control of the board and the company in the ongoing proxy contest.”
On Tuesday, Guyana Goldfields shares rose 1.09% or $0.1 to 93 cents. The shares are trading in a 52-week range of 88 cents and $5.41.
The share price took a steep drop from $3.30 in October 2018 after the company reduced its production targets to 150,000-155,000 ounces from an earlier target of 175,000-185,000 ounces, which was also below guidance set in January 2018 of 190,000-210,000 ounces.
The company recently said it is on track to produce between 145,000 and 160,000 ounces this year after producing 36,600 ounces in the first quarter of 2019.
As of March 31, 2019, the company said it had US$73 million in cash and total debt of US$35 million.