Highlights Roxgold Record of Destroying Shareholder Value
Inappropriate Grant and Extension of Options
Urges Shareholders To Vote BLUE Proxy FOR a
New Experienced Board That Will Maximize Shareholder Value
TORONTO, Sept. 4, 2012 /CNW/ - Oliver Lennox-King, a significant
shareholder of Roxgold Inc. (TSXV:ROG), today filed a letter and proxy
circular urging shareholders of Roxgold to vote for five new director
nominees at the annual general meeting of shareholders to be held on
September 25, 2012.
In the proxy circular, Mr. Lennox-King highlights a history of failed
promises and serious mismanagement under the watch of the current
board. The letter exposes how Roxgold's current directors have seen fit
to grant most of the stock options to themselves even as they paid
themselves outrageous cash bonuses as described in the circular. Their
hand-picked replacement nominees failed their very first test as
Roxgold directors by allowing an exchange of worthless options for a
sweetheart deal that extends their more valuable options for a full
year. Mr. Lennox-King urges shareholders to take immediate action and
vote for five independent and highly-qualified director nominees -
Oliver Lennox-King, Walter Segsworth, Jonathan Rubenstein, Richard
Colterjohn and Joseph Spiteri. The nominated directors bring extensive
experience in the fields of geology, mining, the administration of
public companies, corporate development, corporate governance, and
capital markets. Together, their skills will give Roxgold the resources
to effectively evaluate and define its flagship Yaramoko gold discovery
in Burkina Faso.
"As a shareholder I know Roxgold has great potential for significant
value that the current board and management have failed to deliver. We
will bring an experienced, highly qualified team of independent
directors committed to superior governance and maximize shareholder
value. We urge shareholders to take immediate action and protect their
investment," Mr. Lennox-King said.
Mr. Lennox-King encourages shareholders to carefully review the letter
(included below) and proxy circular and vote only their BLUE proxy in advance of the proxy voting deadline of September 21, 2012 at
12:00 pm (Toronto Time).
Voting Instructions: For questions or assistance, please contact Kingsdale Shareholder
Services Inc. at 1-866-228-8614 toll-free in North America, or
1-416-867-2272 outside of North America (collect calls accepted), or by
e-mail at firstname.lastname@example.org.
YOUR VOTE IS EXTREMELY IMPORTANT - VOTE YOUR BLUE PROXY TODAY.
The full text of the letter follows:
September 4, 2012
Dear Fellow Roxgold Shareholder:
The time has finally come for real change at our company. There can be
no doubt that Roxgold's current board of directors has proved incapable
of creating value and serving your best interests.
The board has repeatedly tried to thwart shareholders' democratic rights
since being notified that holders of a clear majority of Roxgold shares
intended to vote for my slate of highly experienced and capable
They began by postponing the meeting for a virtually unprecedented two
and a half months and re-setting the record date to July 30, 2012.
When holders of a majority of Roxgold shares remained unwaveringly
committed to my slate and proposal, the board reset the record date for
a second time to August 23, 2012.
In a final act of desperation, the board scrambled to find a new group
of directors and management willing to serve under these embarrassing
The search for a new CEO and a nearly full board replacement was
completed in just seven business days, a record for a publicly traded
Unfortunately, as described below, the new management slate put forward
by the outgoing board has already demonstrated a willingness to endorse
the same self-dealing that is so endemic to our company.
This cavalier approach is a stunning betrayal of Roxgold's
shareholders. It is also, unfortunately, just more of the same.
As one of Roxgold's largest shareholders, I am proposing an alternate
slate of highly qualified and experienced directors to bring about
positive, tangible change for the benefit of all shareholders. These
individuals were chosen carefully and will bring a diverse set of
skills and strong governance to move the company forward for the
benefit of all shareholders.
Your vote at the September 25 meeting will help decide whether Roxgold
should be led by a board and CEO cobbled together in mere days under
extreme duress. The alternative is a carefully selected new,
independent board that is aligned with your interests, and has the
commitment, experience and ability to finally unlock and maximize
Roxgold's true potential value. I have millions of dollars at stake in
this endeavour, in contrast to the new nominees proposed by management
who own just 20,000 shares.
Our new board will give top priority to the search for a CEO, but with
the care, thoroughness and attention that such a critical decision
demands. Meanwhile, we are delighted that one of our prime candidates
for the position, John Dorward, has agreed to serve as interim CEO and
president. Mr. Dorward has over 17 years experience in the mining and
finance industries. Mr. Dorward most recently served as Vice-President
- Business Development at Fronteer Gold Inc., and was an integral part
of the team that sold the large Michelin uranium deposit, acquired AuEX
Ventures Inc. and successfully advanced Fronteer Gold's properties
prior to its sale to Newmont Mining Corporation for $2.3 billion in
2011. Prior to his role at Fronteer Gold, Mr. Dorward was the CFO of Mineral
Deposits Limited from 2006 to 2009, where he was responsible for
financing the construction of the Sabodala Gold Project in Senegal,
West Africa. Mr. Dorward was previously CFO at Leviathan Resources
Limited, an ASX-listed gold producer, prior to its acquisition in 2006,
and was Commercial Manager at MPI Mines Limited, an ASX-listed nickel
and gold mining company, until it was acquired in 2004. Before he
joined MPI Mines, Mr. Dorward was Manager, Project Finance at Bank West
in Perth, where he led numerous debt financings for mining project
developments. Mr. Dorward is currently a non-executive director of
Pilot Gold Inc. and Navarre Minerals Limited, an ASX-listed explorer.
If you are concerned about Roxgold's future and would like to know more
about why I have taken the time, energy and expense to propose these
changes, please read the enclosed proxy circular. I am confident you
will agree that the facts speak for themselves, and that the solution
Please then complete the BLUE proxy to vote FOR the election of the shareholder nominees.
In making your decision, consider the following:
Roxgold's dismal share price performance under the current board: Roxgold's shares fell from $2.27 on March 5, 2012, to $0.56 on July 6,
2012 (the last trading day before I announced my intention to replace
the board), a decline of no less than 75.3% in just over four months.
Excessive option grants to incumbents: Since the current board took over in late 2010, it has awarded
approximately 12.5 million options, despite the fact that Roxgold had
only 13.5 million shares outstanding in total as recently as of October
26, 2010. This means that the company has now issued more than 98% of
available options under its rolling 10% stock option plan. The number
of shares outstanding has soared nearly ten times, to 124.8 million
shares as of the record date for the meeting. Incredibly, the current
directors have seen fit to grant most of these stock options to
themselves even as they paid themselves outrageous cash bonuses as
described below. Not only is this a damning example of egregious
self-dealing but the lack of remaining available option capacity has
seriously hampered Roxgold's ability to recruit and develop an
experienced senior management team and technical staff.
The management circular put out by the new management slate trumpets the
fact that the current board has agreed to cancel approximately half the
excessive option grants. This is not only a clear admission of guilt
but a completely disingenuous gesture to mask further self-dealing.
Let's put into perspective the new management slate's so-called "new
direction and focus":
All options the directors voluntarily cancelled were deeply underwater
and had been for some time. The share price on August 22, 2012 was
$0.55 while 3,525,000 of the options cancelled had an exercise price of
$1.25 and the other 1,550,000 options cancelled had an exercise price
of $2.00. Half of the excessive options the directors "voluntarily
cancelled" were the options with virtually no value to them. In light
of the current share price, these options obviously have negligible
value, if any.
None of the other options that were NOT underwater were "voluntarily"
According to the Roxgold stock option plan approved by shareholders at
the last AGM, the surviving options held by the directors that are not
standing for re-election would expire 90 days following the meeting.
But the new management slate, acting in concert with the existing
board, quietly and without notice or support from the shareholders,
approved an amendment to the option plan less than a week ago (on
August 27th). This allowed them to cut a sweetheart deal with the four directors
who were asked to go. Now, options that would have expired in 90 days
will run for an entire year.
To add insult to injury, nowhere was this press released. Nowhere was
this mentioned in the new management slate's letter to shareholders or
in their summary document. Instead, the option plan amendment was
buried on page 14 of the new management slate's circular where they
tried to pull this off as a "housekeeping" matter. The actual reliance
on the amendment and extension of the option terms of the four outgoing
directors was further buried on page 30 of the circular.
Actions always speak louder than words. The new management slate would
have you believe that they bring something new to the table. However
in their very first test as Roxgold directors, they failed miserably by
allowing an exchange of worthless options for a sweetheart deal that
extends their more valuable options for a full year. Why did they not
stand up for shareholders and demand that the current board cease and
desist from these self-serving actions? WE CANNOT ALLOW SUCH EGREGIOUS SELF-ENRICHMENT TO STAND OR BE CONTINUED.
Excessive compensation: In addition to the excessive option grants, the non-executive directors
have also paid themselves aggregate cash bonuses of $240,000 in FY2011.
In addition, the current board has taken the unprecedented step of
paying the CEO $113,000 for serving as a director of the company.
Management concerns: The current board has failed to recruit and develop an experienced
senior management team and technical staff to advance the Yaramoko
project. Roxgold still has only one senior geologist operating on a
rotation basis, and management remains dependent on local geologists
and contractors to undertake roles that should be the company's
responsibility. We are also concerned that the new CEO proposed by the outgoing board
and endorsed by the new management slate was selected in a matter of
days. The selection of a CEO is a critical decision for any company
and requires careful consideration of the best candidates rather than
being rushed through in mere days during a proxy battle over the
company's future direction.
Governance concerns: The current board has exhibited a disturbing lack of concern for
shareholder interests, reflecting its lack of independence from
management, its interest in entrenching itself and management, and the
egregious self-dealing outlined above under excessive option grants and
excessive compensation. Three of the five nominees in the new
management slate are in breach of good governance policies established
by proxy advisory firms. Messrs. Mazur, Jones and Knowles as public
company CEOs are serving on an excessive number of boards. This leaves
little time to focus on the hard work ahead in rebuilding Roxgold.
Contrary to statements made in the management circular, Mr. Richards,
the proposed CEO, is not independent as he was retained by the company
as a paid consultant. The change of control agreement entered into
with the present CEO of the company is a modified single trigger which
allows the CEO to resign from the company in the event of a change of
control and walk away with 12 months' salary. Interestingly, there is
no disclosure in the new management slate's circular of the contract
entered into with Mr. Richards the proposed CEO.
A refusal to compromise: In an effort to avoid the inevitable distraction and unnecessary costs
of a proxy contest, I have repeatedly sought a reasonable compromise
with the current board. For example, we have offered to retain the
services of one of the independent directors and a consulting
arrangement for the current CEO pending the appointment of his
successor. But my proposals have been routinely ignored or dismissed.
The current board clearly remains intent on forcing its will on Roxgold
shareholders, the company's owners, and maintaining its stock options
rather than pursuing the company's best interests. In the singular
pursuit of their own self-interests, they have undoubtedly incurred
considerable costs which will ultimately be borne by the company and
The new management slate picked by the outgoing board is not the fresh
start Roxgold needs: One of the independent directors who oversaw the grossly excessive
option grants remains as a proposed management nominee. The management
circular also discloses that this director, supposedly picked as the
most suitable of the existing directors, served on the board of a
company subject to a lengthy and still continuing cease-trade order.
Technical concerns: We are disturbed by serious deficiencies at Roxgold's flagship Yaramoko
project in Burkina Faso. These include: a persistent assay backlog
which has compromised timely feedback for guiding drilling and regional
exploration activities; inadequate initiatives to address this backlog;
the absence of a systematic, scientific approach to drill hole
sequencing, including high-risk wide step-out holes; and a lack of
timely initiation of other critical project evaluation and community
Strangely, the new management slate is asking you to ignore these
significant failings by endorsing Robert Sibthorpe, the outgoing CEO,
as the new vice-president of exploration. It is obvious that the
company needs to recruit a new senior exploration team rather than
retain the very person who has already failed to advance the Yaramoko
project in a technically-sound manner. This is further evidence that
the new management slate is prepared to perpetuate the current board's
entrenchment strategy in order to get elected.
About my nominees:
Richard Colterjohn: Mr. Colterjohn has over 20 years of involvement in the mining sector, as
an investment banker, director and operator. In 2004, he founded
Centenario Copper Corporation and served as the President and CEO and a
director, until the sale of the company in 2009. Mr. Colterjohn has
served on the boards of six additional publicly traded mining
companies, during which time he has served on many governance, audit
and compensation committees and a number of special committee roles. He
played a key role in the successful defence of MAG Silver Corp from a
hostile bid from Fresnillo plc in 2009, the purchase by AuRico Gold
Inc. of Northgate Minerals Corp. in 2011, and in the sale of five
companies between 2005 and 2011. Mr. Colterjohn currently serves on
the boards of AuRico Gold Inc. and MAG Silver Corp.
Jonathan A. Rubenstein: Mr. Rubenstein is a professional director, with significant board
expertise in the mining sector. Mr. Rubenstein's career in the mining
sector has included playing a key role during the significant
acquisition of Aurelian Resources Ltd. by Kinross Gold Corporation in
2006, Cumberland Resources Ltd. by Agnico-Eagle Mines Ltd. in 2006,
Canico Resource Corp. by Companhia Vale do Rio Doce in 2005 and Sutton
Resources Ltd. (which owned the Bulyanhulu gold deposit and the Kabanga
and Kagera nickel projects in Tanzania) by Barrick Gold Corporation in
1999. Between 1990 and 1999, Mr. Rubenstein was active in Tanzania,
including working on reform to the Tanzanian mineral law regime and the
form of their first fiscal stability agreement. Mr. Rubenstein
currently serves on the boards of Detour Gold Corp. and Eldorado Gold
Inc. He is also the chairman of MAG Silver Corp. where he played a
critical role in the successful defence of the company from a hostile
bid from Fresnillo plc.
Walter Segsworth: Mr. Segsworth, has 40 years of experience in exploration, development
and mining in Canada and overseas. Mr. Segsworth served as a senior
officer of several mining companies including Westmin Resources, where
he was President and CEO, and Homestake Mining Company, where he was
President and COO. He has been a key participant in multiple and
significant corporate transactions over the course of his career. Mr.
Segsworth is currently lead independent director of Alterra Power Corp.
and Pan American Silver. He is also a director of Heatherdale
Resources, Gabriel Resources Ltd., NovaCopper Inc., and Telus World of
Joseph G. Spiteri: Mr. Spiteri is an independent mining consultant. Mr. Spiteri has over
35 years of experience in advanced stage exploration, ore reserve
estimation, feasibility, construction, operations and acquisitions.
Prior to becoming a consultant, he held management or executive
positions with Dome Mines Group, Placer Dome Incorporated, Northgate
Explorations Limited, Lac Minerals Limited and Campbell Resources
Incorporated. He continues to serve as a director on the board of
AuRico Gold Inc. and Marathon Gold Corporation.
Oliver Lennox-King: I have over 30 years of experience in the mineral resource industry and
a wide range of experience in financing, research and marketing. I have
served as the non-executive chairman of the board of Fronteer Gold Inc.
until it was acquired by Newmont Mining Corporation on April 6, 2011,
and currently a Director of Teranga Gold Corporation which operates a
gold mine in Senegal. In the last 17 years I am proud to have held
numerous executive positions and directorships with junior mining
My nominees offer the prospect of a fresh, independent and
highly-qualified board. All have extensive experience as directors or
executives of mining companies. Their experience extends from mining
exploration and development to operations, banking, capital markets and
mergers and acquisitions. The accompanying circular provides more
detailed information on their backgrounds. With these nominees in place, we can begin creating real value together.
My only goal is to maximize the value of Roxgold for all shareholders by ensuring expert guidance and independent governance.
Please read the accompanying proxy circular carefully. I am confident
that you will reach the same conclusion.
Your vote is crucial. Please refer to the instructions in the circular
and sign, date and return the enclosed BLUE proxy no later than September 21, 2012 at 12:00 p.m. (Toronto time).
Even if you have previously signed a management proxy form, the more
recent proxy automatically revokes the earlier one.
If you have any questions about completing your proxy or if you are a
non-registered (beneficial) shareholder holding your shares through a
broker, please contact Kingsdale Shareholder Services Inc. at
1-866-228-8614 toll-free in North America, or 1-416-867-2272 outside of
North America (collect calls accepted), or by e-mail at email@example.com.
Thank you for your support as we move Roxgold forward to a bright
SOURCE: Oliver Lennox-King
For further information:
Kingsdale Shareholder Services Inc. at 1-866-228-8614 toll-free in North America, or 1-416-867-2272 outside of North America (collect calls accepted), or by e-mail at firstname.lastname@example.org