RE: AGM Updates anyone? Here is an update from the finacial post:
https://business.financialpost.com/2012/06/26/avion-gold-under-attack-from-shareholders-as-mali-coup-hits-stock/
TORONTO • In a brutal market for mining companies, how much should boards and management teams be blamed when stocks perform poorly?
It is a question that came up Tuesday, as dissident shareholders tried to replace the board of junior miner Avion Gold Corp. at the firm’s annual meting in Toronto. Investors voted to keep the incumbent board even though Avion’s two largest shareholders, Sentry Select Capital and Sprott Asset Management, backed a dissident group of nominees.
No one would debate that Toronto-based Avion’s share performance has been abysmal: the stock is down about 75% in the past 12 months on the Toronto Stock Exchange. Even by the standards of its competitors, it has been a rough year.
However, much of the drop is due to a unique event outside the company’s control. On March 21 of this year, a military coup took place in Mali, creating huge disruptions for all the companies working there. Avion’s flagship Tabakoto and Sebali projects are both in Mali.
At the time of the coup, Avion was hard at work on a mill expansion to increase production at Tabakoto. It was forced to halt that activity once the political unrest started, as contractors refused to enter the country. The company slashed its 2012 production guidance to between 90,000 and 100,000 ounces of gold, way down from the prior target of 140,000 to 150,000 ounces.
Since the coup, Avion shares are down 65%, closing Tuesday at 47¢.
“You can look at the graph and see what happened after March 21st,” chief executive John Begeman said after the meeting. He argued that it is hard to blame the company for its execution problems.
That did not stop Sentry Select and Sprott, who own about 28% of the shares, from trying to shake up the board. They did not provide a strategic plan for Avion shareholders; instead, they simply made the vote a referendum on the existing board’s performance.
In the current market conditions, experts expect many more contests like this one as shareholders look to take out their frustrations on someone.
“With the combination of poor markets, lack of capital, pretty aggressive governance guidelines, and [proxy] organizations like ISS and Glass Lewis pushing the agenda, shareholders are going to take advantage,” said Glenn Keeling, a partner at Phoenix Advisory Partners, which advised Avion’s dissident shareholders.
“Stay tuned, there’s going to be a lot more coming.”
For Avion, meanwhile, Mr. Begeman maintained that things are looking up. The Canadian government recently relaxed its travel advisory on Mali, and the contractors are getting more serious about returning to the country. About 80% of the spending on the Tabakoto mill expansion is already done, so the project can be completed fairly quickly once they are back at work.
He is also hopeful that he can regain the support of the investors who voted against the current board. “We want to keep them as shareholders,” he said.