NEW YORK--(BUSINESS WIRE)--Marlin Sams Fund, L.P. today released a letter sent to the Board of Directors of Torex Gold Resources, Inc. (TXG:TO; OTC:TORXF) seeking corporate governance review and reform.
The full text of the letter follows:
October 7, 2019
Board of Directors
Torex Gold Resources, Inc.
130 King St., West, Suite 740
Toronto, ON M5X 2A2
Attention: Mr. Franklin Davis, Lead Director
Ladies and Gentlemen:
As significant and long-term holders of Torex Gold Resources, Inc. (the "Company") shares, we are gravely concerned that weak corporate governance threatens to undermine the Company's recent operating and financial success. We are the holder of 3,500,000 (4.1%) of the outstanding shares of the Company as of the date of this letter. We have been shareholders of the Company for nearly five years and significantly increased our position in the Company during the blockade, a reflection of our strong belief in the Company's assets, in its management, and in its strategy (development of Media Luna and Muckahi.) We are long-term, constructive investors who have never previously found it necessary to write to a portfolio company's board. We are sending this letter with some reluctance, but sincerely believe that it is in the Company's as well as its shareholders' interest to address the concerns outlined below.
While at the recent Denver Gold Show, we were disturbed to hear once again that the Company has considered, or is considering, the acquisition of TMAC Resources, Inc. ("TMAC"). We have attempted to ignore this rumor, but have become increasingly concerned because we have heard it repeatedly (independently and from multiple sources) in the market.
These ongoing rumors have led us to focus on the constitution of the Company's board. A review of the Company's board roster shows that three of the Company's directors serve together on the board of TMAC and that Mr. MacGibbon is the Chairman of both companies. Further, a fourth director serves as Chief Operating Officer of INV Metals, Inc., another company for which Mr. MacGibbon serves as Chairman, an interlocking relationship that is not disclosed in the Company's Notice of Meeting and Information Circular. We fear that the coziness of these relationships not only makes suggestions of a possible TMAC deal believable but also, and more important, calls into question the ability of the current Board to evaluate any important strategic matter. Independent board members need to be truly independent and capable of clearly evaluating matters without the fog of competing personal relationships.
It is our view that conflicts of interest and lack of independence lead to poor decisions that destroy shareholder value. They also cause serious reputational damage to the directors involved and expose them to potential personal liability unshielded by the protections afforded to directors who are able to demonstrate true independence. Strong corporate governance must be the bedrock on which the Company's future success is built.
It is disappointing that, in the aggregate, the Company's independent directors own only 0.3% of the Company's stock. It underscores our concern that the Company's shareholders and its board are not aligned.
Addressing these independence and alignment issues should be the board's highest priority. We respectfully but sincerely call upon the Board to do so with urgency.
Very truly yours,
Marlin Sams Fund, L.P.