June 15, 2011
June 15, 2011 (Toronto, Ontario) - The Concerned Shareholders of Klondex Mines Ltd. (TSX: KDX) (“Klondex”) (the “Concerned Shareholders”)
held an investor conference call today. The call will be available for
replay at 1:00 p.m. (Toronto time) on Wednesday, June 15, 2011 and will
run through midnight (Toronto time) on June 28, 2011.
The number to access the Investor Conference Call replay is Canada &
USA Toll Free: 1-800-319-6413 or 1-604-638-9010. The passcode for the
replay is 4832. A replay of the call will also be available at
Highlights of the call:
Malcolm Shaw, Vice President, K2 & Associates Investment Management
Inc., led the call and discussed how the highly qualified and
independent proposed Board is planning to take a two-pronged approach to
strengthening Klondex’s operations and surfacing shareholder value.
Consequently, the new Board will:
- Address the corporate governance shortfalls prevalent in Klondex
that currently undermine the Company’s credibility in the capital
- Add the technical and capital markets oversight necessary
for Klondex to maximize its chances of unlocking value for shareholders
as the Fire Creek project moves ahead.
The Concerned Shareholders have identified several areas of Klondex’s
operations where significant improvements will lead to greater
Focus on Results
: Mr. Shaw emphasized Klondex has been actively
drilling since 2004, but has yet to file any independent NI 43-101
compliant assessment of the project’s economic value. It was noted that
comparable companies have advanced their projects through the various
stages of project development in much shorter time frames.
Market Acceptance and Capital Markets Expertise
: It was noted
that Klondex’s share price appears to be impacted by a lack of market
visibility, which can increase a company’s cost of capital.
Additionally, inadequately addressed technical questions and lack of
development experience within the Company have historically led Klondex
to trade at a depressed valuation relative to its peer group. Mr. Shaw
also stated that while the gold-backed debt facility from April 2011 may
have been slightly less dilutive than an equity raise, it required that
the Company pledge all of its assets as collateral without a NI 43-101
compliant economic evaluation, thereby raising the Company’s risk
profile and potentially limiting its access to future capital.
Mine Development Expertise
: The Concerned Shareholders are of the
view that as Klondex begins building a mine, the team managing the
development needs to have guidance from professionals who have taken
deposits through development and into production - on time, on budget
and with high standards. The proposed Board will add the requisite
experience with two key nominees, Andre Douchane and Tim Janke, both of
whom have extensive mine development and operational experience in
Enhanced Corporate Governance
: In addressing matters surrounding
the corporate governance of Klondex, Mr. Shaw draws on support from
Glass Lewis and ISS, which are both leading, independent corporate
governance analysis and proxy voting firms. Both have issued reports
about Klondex’s poor corporate governance in the past year. In
particular, the Glass Lewis Report from 2011 recommends that
shareholders withhold votes for five out of six of Klondex’s incumbent
Mr. Shaw raised additional points regarding Klondex’s corporate governance, noting:
- Despite being a TSX-listed company, Klondex does not have a corporate governance committee;
- Klondex’s compensation committee is comprised
of the Chairman/CEO, the COO and the Treasurer, who were also the
highest paid people in the company in 2010. The Chairman/CEO’s total
compensation in 2010 was approximately $1.8 million and the other two
members of the compensation committee made approximately $406,000 and
- Since at least 2006, the majority of the Board has not been independent;
- There is no nominating committee to provide succession planning for the Board and management;
- This year, the independent Directors have not had any meetings without the attendance of the non- independent Directors; and
- The Board has no written mandate, nor are there
any position descriptions for the Chairman of the Board, the Chair of
any committees, or the CEO.
To bring Klondex’s corporate governance up to acceptable standards, the
Concerned Shareholders have nominated Warren Moysey, a past President of
CIBC with a wide range of institutional and Board experience who is
well-versed in corporate governance best practices.
New Board Perspectives
: The proposed Board nominees, put forward
by the Concerned Shareholders, represent a team of highly experienced
individuals who are independent. The director nominees are fully
committed and focused on enhancing long-term value.
- Mr. Bohren has 20 years of experience working with
high-growth public and private companies in the areas of capital
raising, strategic management, and mergers and acquisitions. He has
participated in over 40 mergers and acquisitions and financing
transactions. Mr. Bohren has been an executive in two corporate
turnarounds that resulted in successful M&A exits for over $700
million in consideration.
- Mr. Douchane has extensive experience in
managing and developing mines in Nevada. Mr. Douchane was the General
Manager of the Round Mountain gold mine in Nevada and was subsequently
Vice President of Operations for Battle Mountain Gold and President,
Battle Mountain North America, where he was responsible for six mining
operations world-wide. He was also responsible for putting together the
team that permitted, designed, engineered, developed, constructed, and
managed the operations for Franco-Nevada’s Ken Snyder mine, a high grade
underground gold mine and mill in Nevada (a deposit similar to
Klondex’s Fire Creek).
Tim M. Janke
- Mr. Janke is an award winning General Manager with
a broad range of expertise in gold mining operations throughout the USA
over his 35 year career, with significant experience in Nevada. He is a
past Director of the Nevada Mining Association and has served as
General Manager of numerous mines for both Homestake Mining
Company/Barrick Gold Corporation and Goldcorp Inc.
- Mr. Matlack was involved in several world-class
gold discoveries with Santa Fe Pacific Gold Corp. (now Newmont Mining
Corp.) and Gold Fields Ltd. spanning a 20-year career in exploration. He
also has 13 years experience in metals and mining equities, including
equity research positions with BMO Nesbitt Burns and Salomon Smith
Barney. He currently specializes in metals and mining investment banking
with Scarsdale Equities LLC.
- From 1962 to 1990, Mr. Moysey was at the Canadian
Imperial Bank of Commerce, with his last position as director and one
of three Presidents of the bank. Subsequently, he held senior positions
at numerous financial institutions, including being Chair and CEO of CI
Mutual Funds Inc. from 1994 to 1997. Mr. Moysey is currently a member of
the Independent Review Committee of Toronto Dominion Asset Management
Inc. and a director of a TDAM Mutual Fund.
- Mr. Williams is a professional engineer and was a
highly ranked institutional equity analyst with 11 years of investment
research experience covering the gold and precious metals sector. Prior
to this, he was a Senior Gold Analyst and eventually the Head of
Investment Banking at Blackmont Capital Inc. He was most recently the
President and Chief Executive Officer at Victoria Gold Corp. from 2007
to 2011. He continues to be a director of Victoria Gold Corp.
Shareholders are asked to vote their YELLOW
form of proxy today FOR
the Concerned Shareholders nominees and enable them to maximize
shareholder value, strengthen corporate governance and enhance Klondex’s
technical and financial expertise.
Shareholders Please Contact:
Kingsdale Shareholder Services Inc.
Kingsdale Communications Inc.
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