Leading Proxy Advisory Firms ISS and Glass Lewis Recommend Detour Gold Shareholders vote FOR the Transaction with Kirkland Lake Gold
ISS and Glass Lewis both state that the proposed transaction is in the best interest of Detour Gold’s shareholders.
Deadline to Vote by Proxy is 10:00 AM (Toronto Time) on January 24, 2020
TORONTO–Detour Gold Corporation (TSX: DGC) (“Detour Gold” or the “Company”) today announced that leading proxy advisory firms Institutional Shareholder Services Inc. (“ISS”) and Glass Lewis & Co., LLC (“Glass Lewis”) have each recommended that Detour Gold shareholders vote FOR the proposed transaction whereby Kirkland Lake Gold Ltd. (“Kirkland Lake Gold”) has agreed to acquire all of the issued and outstanding common shares of Detour Gold pursuant to a plan of arrangement (the “Transaction”).
Pursuant to the Transaction, all of the issued and outstanding common shares of Detour Gold would be exchanged at a ratio of 0.4343 of a Kirkland Lake Gold common share per Detour Gold common share. The terms of the Transaction are further described in the management information circular of Detour Gold filed with the Canadian securities regulatory authorities on December 23, 2019.
Mick McMullen, President and Chief Executive Officer, stated: “We are pleased that both ISS and Glass Lewis have recommended that shareholders vote in favor of the Transaction. The support of these leading independent proxy advisors further demonstrates that the Transaction represents a compelling opportunity for our shareholders to participate in the creation of a diversified, low-cost and growth-oriented senior gold producer with enhanced financial flexibility. Their recommendations also acknowledge the very thorough strategic review process run by Detour Gold, which culminated in the Transaction. We are confident that the Transaction will provide our shareholders with compelling benefits, for all of the reasons that were articulated by ISS and Glass Lewis in their reports.”
Proxy Advisory Firm Recommendations
In making its recommendation FOR the Transaction, ISS concluded, among other things, that:
- “The expected diversification of risk will protect shareholders against the significant loss that could result from having all of Detour’s business in just one asset…”
- “Kirkland’s offer does not appear to be opportunistic as it is made during times of multiyear highs for the price of DGC shares and the price of gold.”
- “Ultimately, the proposed deal is the product of a robust process led by a Detour board that has executed a remarkable turnaround, and the merger provides for participation in a diversified company under the leadership of a widely respected Kirkland management team.”
- “DGC shareholders are recommended to vote in favor of the proposed merger. ISS is likewise recommending that KL shareholders approve the transaction.”
In making its recommendation FOR the Transaction, Glass Lewis noted, among other things, that:
- “In our opinion, following the 2018 proxy contest, the reconstituted Detour board and management team conducted a thorough review of the Company’s strategic and transaction alternatives.”
- “…we recognize that a combination involving strategically complementary companies, such as the proposed merger of Kirkland and Detour, presents a mutually-beneficial path for gold producers to achieve greater scale, asset diversification and potential synergies as they strive to deliver greater returns and enhance value for shareholders.”
- “…in considering the interests and likely preferences of Detour’s shareholder base as a whole, we’re inclined to believe that the reduced risk of becoming part of a larger entity with multiple assets, additional exploration and development opportunities, and a lower cost structure presents an enhanced risk/reward profile for the majority of Detour’s shareholders.”
- “…the implied and current market premiums for Detour appear to be fair and reasonable, in our view.”
- “We also note that the implied purchase price for Detour represents a premium of 11% to the consensus analyst estimate of Detour’s NAV per share as of the day before the merger announcement. The implied NAV premium for Detour compares to an average of 2% and a median of 5% paid in the 16 precedent transactions since the beginning of 2011 for which consensus NAV estimates were available (Source: S&P Capital IQ). Given that some of the precedent transactions included in our analysis involved larger-scale, lower-cost, multi-asset producers, we find the implied valuation multiples for Detour, a higher-cost, single-asset producer, to be generally favorable and consistent with the reasonable ranged observed across the prior transactions completed in the industry”
- “Thus, the primary benefits of the arrangement for Detour shareholders include an unaffected one-day market premium of 24%, elimination of single-asset risk, addition of investment exposure to two high-quality mines, significantly enhanced financial strength to fund the continued development of Detour Lake, participation in Kirkland’s capital return program, and the enhanced trading liquidity and capital markets profile of the combined company”
- “…having considered Detour’s status as a single-asset, high-cost producer, the current industry and market conditions which are supportive of consolidation, the strategic and financial benefits associated with the proposed combination for existing Detour shareholders, as well as the generally favorable terms of the arrangement for such holders, we believe the proposed transaction likely represents the best path forward to enhance shareholder value at this time.”
Special Meeting of Detour Gold Shareholders on January 28, 2020
The special meeting of Detour Gold shareholders to consider the Transaction (the “Special Meeting”) is scheduled to be held on January 28, 2020, at 10:00 AM (Toronto time) at Commerce Court West, Suite 5300, 199 Bay Street, Toronto, Ontario. For Detour Gold, completion of the Transaction is subject to, among other things, the approval by at least 66 2/3 percent of the votes cast by its shareholders either voting in person or represented by proxy at the Special Meeting.
The Detour Gold Board of Directors, with the recommendation of a special committee of independent directors, has unanimously recommended that Detour Gold shareholders vote FOR the Transaction.
Shareholders are reminded that the deadline for receipt of proxies for the Special Meeting is 10:00 AM (Toronto time) on January 24, 2020 or 48 hours (excluding weekends and holidays in the Province of Ontario) prior to the time of any adjourned or postponed Special Meeting.
Detour Gold shareholders may contact Laurel Hill Advisory Group, the Company’s proxy solicitation agent and shareholder communications advisor, for questions and assistance in voting their shares:
Laurel Hill Advisory Group
North America Toll Free: 1-877-452-7184
Collect Calls outside North America: 1-416-304-0211
About Detour Gold
Detour Gold is a mid-tier gold producer in Canada that holds a 100% interest in the Detour Lake mine, a long-life, large-scale, open-pit operation. Detour Gold’s shares trade on the Toronto Stock Exchange under the trading symbol “DGC”.
Detour Gold Corporation, Commerce Court West, 199 Bay Street, Suite 4100, P.O. Box 121, Toronto, Ontario M5L 1E2
The Company undertakes no obligation to update publicly or otherwise revise any forward-looking statements whether as a result of new information or future events or otherwise, except as may be required by law. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements.
Mick McMullen, President & CEO
Jaco Crouse, CFO