Wednesday, March 22

Activist investor calls for board overhaul at Iamgold over ‘chronic underperformance’

RCF puts forward three new directors to address what it calls ‘massive value destruction’ of Canadian miner

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Canadian miner Iamgold Corp. is facing the threat of a proxy battle with Denver, Colorado-based investor RCF Management LLC, which has put forward its own slate of three independent directors to address what is calls “massive value destruction and chronic underperformance” at the company.


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RCF, which owns 5.2 per cent of Iamgold’s issued and outstanding shares, wrote an open letter Tuesday calling for immediate leadership changes at the Toronto-based miner, which has operations in North and South America and West Africa.

The investor said it first attempted to engage with the company behind closed doors, but took the fight public after concluding in the past few weeks that there was a “pattern of bad faith interactions” by the “entrenched” directors.

RCF, which focuses on mining investments, said in its letter that it has conducted due diligence on Iamgold and consulted with other shareholders holding nearly 40 per cent of the stock, as well as turnaround experts.

It urged Iamgold’s board to halt its strategic review, which includes a search for a new CEO, until changes are made to the board of directors.


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The company could not immediately be reached for comment but told BNN Bloomberg that is has “engaged extensively in good faith” with RCF and agreed to “almost all” of the demands put forward by the investor. However, Iamgold suggested the investor was seeking “ de facto control” of the company and “to further its own interests at other shareholders’ expense.”

There have been a series of departures from Iamgold in recent weeks. Chief executive Gordon Stothart announced he was leaving in mid-January. And board chair Don Charter announced his retirement Jan. 29, in what the company said was a “longstanding” plan.

Chief financial officer Daniella Dimitrov, a former investment banker and partner at Sprott Capital Partners, was installed as interim CEO and president.


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In its open letter, RCF claims Iamgold’s assets and capital — both human and financial — have been “mismanaged” for years, and that the company “has been one of the worst performers in its industry, racking up losses in record gold markets and failing to attract, retain and manage talent.”

The miner is underperforming peers on most metrics, the investor said, adding that Iamgold’s shares “suffer a significant discount relative to peers.”

The slate of board nominees put forward by RCF include Maryse Belanger, David S. Smith and Lawrence P. Haber, who the investor group said would provide “deep mining, operations and governance experience the current board desperately needs” to reach its full potential.

“Our nominees are independent and accomplished world-class directors who bring vast mining experience and knowledge,” said Martin Valdes, a partner at RCF who runs one of their funds.

“They also share a common and very achievable goal: to create a much-needed culture of operational excellence, integrity and accountability at Iamgold, which is essential if Iamgold is to reach its full potential.”

The investor hopes to install Belanger as chair of the board.

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