CALLS FOR INDEPENDENT OPERATIONAL
REVIEW
TORONTO, June 9, 2016 /CNW/ - Resolute Performance Fund
("Resolute" or "we"), an investment fund managed by Resolute Funds
Limited, the largest shareholder of Wesdome Gold Mines Ltd. (TSX:
WDO) ("Wesdome" or the "Corporation"), today calls on Wesdome to
commission an independent review to assess the Corporation's mining
operations and to develop concrete solutions to address the
operational issues plaguing the Corporation.
Resolute is the largest shareholder of Wesdome, holding
33,350,000 shares or approximately 25.7% of the outstanding
shares. We are a long-term investor, having made our initial
investment in Wesdome in April 2010. Over the past six years
Resolute has been a huge supporter of the Corporation and our
interest is, and has always been, to maximize shareholder value. We
are a patient investor, but our patience has been stretched to the
limit by Wesdome's failure to address its ongoing operational
issues.
In its press releases and management proxy circular, Wesdome is
trying to deflect attention from its operational issues and make
Resolute, our investment manager Thomas
Stanley, and the Corporation's independent director
Rostislav Raykov the issue. Do
not be misdirected.
The real issue is the operations of Wesdome. Over the last five
quarters, operational results have been poor and are deteriorating.
In 2015, Wesdome lost $0.04 per share
compared to a profit of $0.11 per
share in 2014. Gold production in 2015 dropped to 50,470 oz from
52,757 oz in 2014. This year has started off significantly
worse. Gold production dropped to only 8,036 oz in the first
quarter of 2016. At the same time, the Corporation's cash burn was
$7.3 million. All-in sustaining costs
have soared to $2,501 in the first
quarter of 2016, almost double the $1,368 all-in sustaining costs reported in the
third quarter of 2015.
Wesdome has done three equity financings in the last nine
months. One in October 2015, one in
December 2015, and one in
April 2016, cumulatively diluting the
stock by 17.3 million shares. We fear that if the operational
issues are not resolved and the cash burn continues, more dilutive
financings will be required in the short term in light of
anticipated capital expenditure requirements.
Since October 2015 Resolute has
been trying to get explanations from Wesdome with respect to the
operational issues and to understand the path forward to correct
them. Unfortunately Wesdome has been unwilling, either privately or
publicly, to adequately address these issues. None of the
correspondence we received from Wesdome's Special Committee
addressed the operational issues nor have their press
releases, including their latest one issued yesterday. Resolute
raised its concerns privately with Wesdome several months ago. It
was only Wesdome's failure to provide concrete answers to our
concerns that lead us to reluctantly make this issue
public.
Wesdome failed badly in meeting its 2015 guidance. Despite this,
Philip Ng, Wesdome's Chief Operating
Officer, received a discretionary bonus of $92,000. This concerns us. Wesdome has now failed
to meet its guidance for first quarter 2016. Consequently, we have
concerns about the credibility of Wesdome's guidance for 2016.
Wesdome continues to publicly berate its independent director
Rostislav Raykov. From our
perspective Mr. Raykov has been one director actually focusing on
resolving the operational issues and has been asking the tough
questions. That is why Resolute is supporting Mr. Raykov and
intends to vote for Mr. Raykov's election to the board at the
upcoming shareholders meeting.
Wesdome has accused Resolute of wanting a fire sale. Let us
be clear, we don't desire a fire sale. Resolute is, however,
fully prepared to consider a sale of the Corporation at the right
price. We have seen no concrete plan to address the pressing
operational issues at Wesdome no matter how many times we have
asked. If Wesdome is unable to demonstrate that they have the
ability to run their mines properly, the Corporation should be
sold, at the right price, to someone who can.
In its March 2016 corporate
presentation, Wesdome states that it is "Operating Two of
Canada's High Grade Gold Mines"
with Eagle River underground
ranking second and Mishi Open Pit ranking third. With these quality
assets, it is incumbent on the Corporation to develop a clear
understanding of why operations have fared so poorly and how the
situation can be improved. In light of Wesdome's
apparent failure or inability to do so, we are calling for the
Corporation to commission an independent review to assess its
operational issues, to consider what plans, if any, the Corporation
has to address these issues, and to develop practical concrete
solutions that can be promptly implemented to remedy the
situation.
Wesdome has set the time and date of the upcoming shareholders'
meeting as 11am EST on June 14, 2016 and a deadline for submission of
proxies of Friday, June 10, 2016 at
11:00am EST.
At the shareholders meeting, Resolute intends to vote:
FOR the election of Nadine
Miller, Rostislav Raykov,
Barry Smith and Rowland Uloth; and
WITHHOLD on the election of Duncan
Middlemiss, Charles Page and
Bill Washington.
About Resolute Performance Fund and Resolute Funds
Limited
Resolute Funds Limited, a Toronto-based investment management firm, is
the investment manager of the Resolute Performance Fund, the sole
fund it manages. The Resolute Performance Fund is an open-end
investment trust that was established on June 2, 2005. The objective of the Fund is
to provide superior investment returns over the long term by
investing primarily in Canadian equity securities with growth
potential. Tom Stanley is the President and Chief Investment
Officer of Resolute Funds Limited. Mr. Stanley previously
managed the Resolute Growth Fund, a Canadian public mutual fund,
from December 3, 1993 to June 2, 2006.
Information in Support of Public Broadcast Exemption
Resolute is not hereby seeking to be a proxyholder of any other
shareholder at the upcoming shareholder meeting. Nonetheless,
Resolute is relying on the exemption under section 9.2(4) of
National Instrument 51-102 – Continuous Disclosure
Obligations to make this public broadcast solicitation. The
following information is provided in accordance with corporate and
securities laws applicable to public broadcast solicitations.
This solicitation is being made by Resolute, and not by or on
behalf of the management of Wesdome.
The address of Wesdome is 8 King Street East, Suite 811,
Toronto, Ontario, M5C 1B5.
If proxies are solicited for the Wesdome shareholders' meeting,
they may be solicited by mail, telephone, email or other electronic
means as well as by newspaper or other media advertising, and in
person by managers, directors, officers and employees of Resolute
or its investment manager, who will not be specifically remunerated
therefor. In addition, Resolute may solicit proxies in reliance
upon the public broadcast exemption to the solicitation
requirements under applicable Canadian corporate and securities
laws, conveyed by way of public broadcast, including through press
releases, speeches or publications, and by any other manner
permitted under applicable Canadian laws. Resolute has engaged the
services of The Laurel Hill Advisory Group Company ("Laurel Hill")
to assist Resolute in an advisory role in connection with the
meeting of shareholders of Wesdome, however, Laurel Hill will not be soliciting proxies on
behalf of Resolute. All costs incurred for the solicitation will be
borne by Resolute.
Shareholders of Wesdome have the power to revoke proxies
previously given by them. Revocation of proxies for registered
shareholders of Wesdome can be effected by an instrument in writing
(which includes a proxy bearing a later date) signed by a
shareholder or the shareholder's attorney duly authorized in
writing (in the case of a corporation, such instrument must be
executed under its corporate seal or signed by a duly authorized
officer or attorney for the corporation) which is either delivered
to Computershare c/o Proxy Dept., at 100 University Avenue, 8th
Floor Toronto, Ontario M5J 2Y1,
Canada any time up to and
including the close of business on the last business day preceding
the day of the shareholder meeting, or any adjournment thereof, or
deposited with the meeting Chair prior to the hour of commencement
on the day of the meeting. A beneficial shareholder of Wesdome
who has submitted a proxy may revoke it by contacting the
intermediary through which the beneficial shareholder's common
shares are held and following the instructions of the intermediary
respecting the revocation of proxies.
To the knowledge of Resolute, neither Resolute nor any of its
managers, directors or officers, or any associates or affiliates of
the foregoing has any material interest, direct or indirect, by way
of beneficial ownership of securities or otherwise, in any matter
currently known to be acted upon at the meeting of Wesdome
shareholders other than the election of directors.
SOURCE Resolute Funds Limited