Former Executive Chairman was fired over conflicts of interest
Goldfields power struggle
– oversaw development of faulty Aurora gold mines estimates
An investment disclosure report filed by Guyana Goldfields with Canadian regulators has revealed exactly why the company parted ways with its former Executive Chairman in July of last year.
The document, a Management Information Circular (MIC), was filed in the System for Electronic Document Analysis and Retrieval (SEDAR), a database run by the Canadian Securities Administrators (CSA).
In the Circular, the company documents its grievances against former Chairman Patrick Sheridan, who is at the forefront of a proxy battle for the management of the gold company. According to the company, its list of grievances includes a report compiled under Sheridan’s watch in 2012 which it says mislead persons about the gold reserves at Aurora.
The company related that the 2012 resource model overestimated the actual ounces of gold at the mining site. Goldfields commissioned an independent technical report, carried out by Roscoe Postle Associates, which concluded that the gold reserves were as much as 38 per cent lower compared with the previous figure.
“As CEO and interim [Chief Operations Officers] COO, Sheridan was ultimately responsible for overseeing the preparation and development of the Sheridan Resource model,” the MIC states. “It has been conclusively determined that the model significantly overestimated the contained ounces at the Aurora gold mines. This is the most significant operating challenge the company faced in the past year.”
“Mr Sheridan also resisted efforts to re-direct the company’s exploration towards near mine brownfield targets which could supplement the Aurora Mine’s reserves and resisted undertaking the work necessary to update the Sheridan resource model,” the company also stated in its report.
According to the company, Goldfields also suffered poor governance and a dysfunctional dual reporting management structure. The company also spoke of conflicts of interests which occurred under Sheridan’s watch.
Here, Goldfields pointed to the company’s 2011 sale of its Peters Mine Gold project and Aremu Gold property for US$2.4 million. These projects were sold to GPM minerals, another Canadian company, which eventually sold them to a company named Bartica Investments Limited.
While Goldfields alleged Sheridan was also shareholder of GPM at the time of the transaction, this publication was able to confirm that Sheridan was at some point in time contracted as a consultant with GPM… a contract he held as of 2018.
Goldfields alleged that as recent as 2018, the Peters and Aremu properties were purchased by another gold company, G2 Goldfields Incorporated. This publication was able to verify that Sheridan sits as the Executive Chairman and CEO of G2 Goldfields.
“Of course, Mr Sheridan’s interest in a competing exploration company in Guyana also represents a serious commercial conflict with the company,” Goldfields stated, noting that based on these records Sheridan backed candidates should not be put in positions of power in the company.
Sheridan and former Goldfields Country Manager, Violet Smith, were recently sent packing in a major shake-up in the company. Sheridan and a number of shareholders, have been pushing for the current Board of Directors to be replaced owing to declining share values.
In a statement on January 11 of this year, the concerned shareholders had formally written the Toronto Stock Exchange, asking the body to monitor any proposal made by Guyana Goldfields for signs of entrenchment, shareholder dilution or attempts to structure around regulatory shareholder approval requirements.
According to the missive, Guyana Goldfields has lost over CAD$1 billion in value since 2016 because of the Board’s operational failures, irresponsible actions and risky decisions.
To add insult to injury, it added, while shareholders have lost over 80 per cent of their investment since 2016, the Board has continued to reward itself handsomely and has offered no plan to turn things around.
These matters are expected to come to a head at a special company meeting scheduled for May 22.