Taseko to add new independent directors, give shareholders more say as proxy battle heats up

TORONTO (miningweekly.com) – Base metals producer Taseko Mines will add two new independent directors to its board and make changes to its policies and procedures that will give shareholders more say on the company’s relationship with professional services firm Hunter Dickinson Inc (HDI), a long-time services provider with which Taseko had certain directors and shareholders in common.

Taseko on Monday said that, after engaging with certain larger shareholders, it had amended the Governance Manual to provide Taseko shareholders with a right to vote in two new situations.

These included two advisory say-on-pay resolutions that would be presented yearly to shareholders regarding executive compensation, as well as fees paid to HDI and its affiliates. Further, approval by a majority of disinterested shareholders would be required for any future acquisitions or dispositions in which HDI or any party related to HDI had a financial interest.

Central to activist shareholders’ concerns was the role played by Vancouver-based HDI and that the three HDI affiliated directors had a disproportionate say in Taseko decisions.

The activist shareholders also argued that, since 2012, total fees and investment paid to HDI-related entities totalled $25.8-million. According to 5.1% shareholder RRC, HDI-related entities had received unusually high management and service fees of $5.4-million from Curis Resources over the 2013 and 2014 Curis fiscal years, during which time Taseko invested $7-million in Curis. This meant more than half of the money Taseko invested in Curis had been paid back to HDI-related entities in fees.

RRC approached Taseko – which owned 75% of the Gibraltar copper/molybdenum mine; the second-largest openpit in Canada – in January, requisitioning a special shareholder meeting for which it wanted to nominate its own slate of director nominees. The meeting was scheduled for May 10.

"Let's be clear, if Raging River had not stood up for all shareholders against Hunter Dickinson, the Taseko board would never have added any new directors – the problem though is that the entrenched, self-interested and, we believe, conflicted Hunter Dickinson-related directors remain and will continue to have significant influence,” stated RRC managing partner Mark Radzik on Monday.

The two companies had been slinging mud in a dirty proxy contest, accusing each other of underhanded business practices.

RRC on Monday stated that, in its view, the Taseko board had a pattern of disregarding the interests of shareholders, including setting the acquisition price of distressed Curis Resources below the threshold requiring shareholder approval; launching defamation suits to intimidate opposition; spending more than $120-million on its stalled New Prosperity project, in British Columbia; and now suing the Canadian government to cover its inability to execute the project.

RRC said it had sent a letter to the Taseko board stating that, should Taseko proceed with financing in the near term, it was prepared to provide equity financing of up to C$20-million at a price per security that would be at a premium to the market price of Taseko's common shares. RRC would also be willing to alternatively act as a backstop to a rights offering in favour of all shareholders, in efforts to demonstrate that its interests were aligned with all shareholders, without any underwriting or other fee.

"As the . . . Taseko board swerves erratically to preserve themselves in the form of a highly dilutive transaction, we are putting this guardrail in place to protect shareholders. We are happy to further deepen our equity position and alignment with all shareholders because we are convinced that, with the right leadership, this company has enormous potential. No matter how much they threaten us with lawsuits, we won't be intimidated. Hunter Dickinson won't be running this company in three months,” stated Radzik.