It won’t take so long as the U.S. presidential election, but the battle for that hearts and minds of shareholders of Taseko Mines, underway for two months, has two months to run before the final showdown on May 10.
And halfway through, Chicago-based shareholder Raging River Capital – which is leading the charge to have its four director nominees elected, all part of an agenda to alter Taseko’s direction – argues its campaign has an effect.
In an interview Friday, Mark Radzik, managing partner of Raging River, said “you realize that you have hit the right spot when you get a violent reaction. And we are seeing that,” added Radzik when talking about the volley of releases, some corporate governance changes and amendments with a corporate policies produced by Taseko, a business that represents Raging River’s entry into Canadian proxy battles.
Radzik argues the Taseko response is part of its plan “to distract from the real issues” which he argues are poor share price performance (over the past five years the shares have declined by almost 90 per cent); and corporate governance.
“Underperformance is often the symptom, not the cause,” said Radzik. “I would posit that the cause is insider deals and conflicted directors.”
Earlier he said “making preferential, related party deals inside a difficult macro cycle further destroys shareholder value.” By his calculations, in the last 3 years Taseko has spent $28 million in “investments to related companies and costs.”
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Radzik was referring to the role played in Taseko played by Hunter Dickinson (a personal company which has “acquired, advanced and developed mineral properties,” for 3 decades and which employs some Taseko executives) and also the company’s late 2014 purchase of Curis Resources. Radzik claimed Friday the purchase of that “near bankrupt company, having a technology that’s not tested,” was “ridiculous.”
In fact, if Radzik wins the proxy battle it’s not inconceivable he might provide the Curis mine back to the executives who organized the purchase – as long as they pay the $100 million valuation. “It’s a difficult situation, the greater they argue it isn’t worth $100 million, the more they indict themselves.”
His firm, which has a 5.1 percent equity stake and a 7.95 per cent curiosity about a Taseko bond issue – both bought late this past year – added shareholders, including a number of long-suffering retail investors, also have reached out.
One institutional manager Vertex One Asset Management which has a 3.1 per stake, said it “would be supportive of Raging River’s plan to focus Taseko’s business strategy, assess the relationship with Hunter Dickinson and address Taseko’s balance sheet.”
So let’s assume that Raging River, which said “it’s a shareholder first,” and that has written to Taseko advising against shareholder dilution and has provided to backstop a rights offering, wins what would Taseko seem like within a few years? Radzik said it is a matter of “getting the best strategy (by) focusing on the core operating assets, and re-engaging with the First Nations to ensure that we build trust.”
Taseko said Friday that like a major bondholder, Raging River includes a conflict. “Raging River’s nominees could be incentivized to accelerate repayment of Taseko’s debt by liquidating Taseko’s assets, even at the bottom from the market.”
Taseko added it “benefits from Hunter Dickinson’s quality and cost-effective services. Taseko’s disclosure is transparent and the relationship follows proper governance. There isn’t any conflict.”
Financial Post
bcritchley@nationalpost.com
