- Core Gold has identified disclosure and misinformation
issues by its former CEO to the TSX Venture Exchange and the
British Columbia Securities Commission, including his recent press
release on April 1, 2019 which
constitutes unlawful disclosure of confidential corporate
information
- Disgruntled former CEO's alarming self-interested actions
include:
-
- Repeatedly breaching his duty of confidence
- Acting without Board authority to negotiate two non-binding
letters of intent which would breach Core Gold's contractual
agreement with Titan Minerals Limited
- Unilateral and unlawful disclosure of Core Gold's
confidential information
- Misappropriation of corporate funds
- Former CEO's conduct appears to be driven solely by a desire
to regain and entrench his position as CEO and to prevent the Titan
transaction at any cost which would conveniently leave him as Core
Gold's CEO while leaving Core Gold shareholders to receive no
value
- Former CEO is simply lying about a so-called competing
proposal, which was highly conditional and non-binding, and at no
time was actionable by Core Gold, or superior, or even comparable,
to the Titan transaction; no subscription agreement was ever
executed
- The Core Gold Board continues to support the Titan
transaction as the best value-creator for Core Gold shareholders
and believes that the former CEO's press releases are self-serving,
distractive and potentially harmful to Core Gold and its
shareholders
VANCOUVER, April 3, 2019 /CNW/ - Core Gold Inc. ("Core
Gold" or the "Company") (TSXV: CGLD, OTCQX: CGLDF) is
issuing this press release to correct self-serving, false,
misleading, defamatory and inaccurate disclosures made by its
terminated former CEO, Mr. Keith
Piggott, in a press release issued on April 1, 2019. Mr. Piggott was terminated for
cause by Core Gold in March, 2019. Mr. Piggott remains a director
of Core Gold.
Mr. Piggott's press release misrepresents and omits many
significant and important facts and was issued for entirely
self-serving purposes. Rather than identify some nefarious action
by the Core Gold board of directors (the "Board"), his press
release only serves to show that Core Gold and its Board have acted
with the best interests of its shareholders in mind, while at all
times being mindful of its contractual obligations and its
obligations under securities and other laws, all of which Mr.
Piggott continues to misunderstand, ignore and breach. Mr. Piggott,
through his press release, continues to provide the corroborating
evidence that justifies his termination for cause by Core Gold.
Core Gold therefore wishes to correct the misleading statements
and also to provide additional information which Mr. Piggott has
selectively omitted from his press release.
1. Mr. Piggott's Press Release is a Clear
Breach of his Duty of Confidence as a Director of Core Gold and a
Misuse of Corporate Information solely for his own Personal
Interest
Mr. Piggott does not understand even the basic legal
requirements of being a director of a corporation, and most
certainly does not understand that his press release is a breach of
his duties as a director under Section 142 of the Business
Corporations Act (British
Columbia). As a director, he owes Core Gold a duty of
confidence and he must protect Core Gold's corporate information,
which he is not to use for his own personal interest and gain. His
press release of April 1, 2019 is
completely at odds with this requirement as he is now divulging
confidential corporate information about a possible transaction and
discussions that are not his to divulge unilaterally. This is
consistent with his prior actions as CEO where it is known that he
"tipped" numerous Core Gold shareholders to internal Core Gold
discussions, which is contrary to securities laws and which has
been notified to the British Columbia Securities Commission. Mr.
Piggott seems to believe that he does not have to abide by any
corporate or securities law, or any duty owed at law or
otherwise.
2. Mr. Piggott's Purported Transaction
with a Chinese Mining Company would Deliver no Value direct to Core
Gold Shareholders but would have Preserved Mr. Piggott as
CEO
Core Gold did authorize a $4
million private placement at C$0.45 per share from a Chinese mining company.
However, the Chinese structure would have kept Mr. Piggott as
CEO (which the Titan transaction does not), and so clearly Mr.
Piggott's own personal interest is skewing his perception of a
transaction which was non-binding, highly
conditional, subject to lengthy and uncertain due diligence,
required much further negotiation, and would not deliver value
direct to Core Gold shareholders. Leaving aside the non-binding
and highly conditional nature of the Chinese mining company's
letters of intent, that purported transaction would not have
delivered value directly to Core Gold's shareholders as does the
agreement with Titan Minerals Limited ("Titan"). Rather, it
would have provided new cash into Core Gold (which the Titan
transaction also does) but would not provide a value uplift
associated with the exchange of shares for shares in a larger
consolidated Titan and Core Gold merged group.
3. The Core Gold Board has Authorized an
Additional Private Placement but there is No Signed Subscription
Agreement nor Funds Received from the Chinese Mining
Company
Under the terms of the Titan Arrangement Agreement, up to a
US$8 million private placement into
Core Gold is permitted under an exemption and as such, a
C$4 million investment was authorized
by the Core Gold Board to proceed. However, the Chinese
mining company has neither provided the subscription funds to the
account notified to them nor have they delivered an executed
subscription agreement, which was also provided to them. Mr.
Piggott's assertion that there is a "subscription" is therefore
false, misleading and inaccurate. If the Chinese mining company
executed the provided subscription agreement, the Core Gold Board
would consider accepting this subscription, but to date, and
contrary to Mr. Piggott's assertions, there is no subscription to
accept.
Mr. Piggott has also asserted that the Chinese mining company
"commit[ted]" to invest in excess of US$100
million. This is a patently false and misleading
statement. There is, and was, no commitment for even
C$4 million let alone any higher
amount. There were only extremely brief non-binding letters of
intent, which had subscription amounts (if ever actually agreed in
definitive documentation), would have barely exceeded US$12 million (approximately C$16 million).
4. Mr. Piggott's Purported Transaction
with a Chinese Mining Company was Non-Binding, Highly Conditional,
Subject to Due Diligence, only an Option, Required Significant
Further Negotiation on Key Commercial Terms, and could not have
been considered "Superior" to the Titan Transaction
Under the Arrangement Agreement with Titan, Core Gold had the
ability to consider a private placement equivalent to US$14 million to be a "superior proposal" that
would permit Core Gold to terminate that agreement. However, the
purported transaction brought forth by the Chinese mining company
fell short in size of placement and could not therefore be
considered "superior" leaving all of the many other factors
concerning the non-binding letters of intent aside. As such, Core
Gold could not pursue this transaction without breaching the
Arrangement Agreement with Titan. This was explained to Mr. Piggott
by Core Gold's legal counsel at the Board meeting of March 9, 2019 and documented in an email to the
directors, including Mr. Piggott. Mr. Piggott either did not
understand the contractual arrangements that Core Gold had entered
into (and that he voted in favour of), or chose to simply ignore
them.
As well, the non-binding letters of intent were subject to 45
days of due diligence, were structured as an "option" for the
Chinese mining company to increase its interest (meaning it was
their choice whether to proceed and they would not have been
obliged to further subscribe), required negotiation of the
significant terms (including a full joint venture, rights of board
representation, project cooperation including in management,
design, construction, and finance, and a pre-emptive right and
standstill obligations) and would only have led to a further
non-binding letter of intent. The Titan transaction is a legally
agreed and binding agreement, which had no due diligence condition,
and already in progress. The fact is the proposed investment from
the Chinese mining company was only a non-binding and highly
conditional expression of interest that could not have been
actioned by Core Gold without absorbing vastly more risk of
non-completion than the Titan transaction provides.
5. Mr. Piggott Negotiated Non-Binding
Letters of Intent without Board Authority
Mr. Piggott, acting without Board authority, negotiated two
non-binding letters of intent with the previously mentioned Chinese
mining company. These were negotiated with only limited
notification to the Board and without any oversight from the Board
or its special committee of independent directors, and were only
ever seen by the Board in executed form. Mr. Piggott gave the Board
and its special committee no opportunity to review what he was
negotiating. The resulting non-binding letters of intent paid no
regard to Core Gold's contractual agreement with Titan, which Mr.
Piggott had originally approved and pre-dated these negotiations.
As well, Mr. Piggott determined to negotiate these non-binding
letters of intent without the benefit of any legal advice, or
financial analysis, or assistance from Core Gold's management or
its special committee of independent directors and its advisors.
It was a Keith Piggott one-man
effort with no regard for proper Board governance, process, legal
requirements, financial analysis or the best interest of any other
stakeholder, other than Mr. Piggott.
6. Mr. Piggott Negotiated the Purported
Transaction with the Chinese Mining Company with No Regard for Core
Gold's Contractual Arrangements
The due diligence proposed to be undertaken (including drilling
activities) was not permitted under the Arrangement Agreement with
Titan, and was not even notified to the Board of Core Gold. It
should be noted that the Chinese mining company had the opportunity
to conduct due diligence on Core Gold's Dynasty Goldfields project
in the autumn of 2018, and to review all the data at that time.
What Mr. Piggott purportedly authorized was a 30 person, 3 drill
rig exploration program, which was far from a due diligence twin
hole confirmation, which no company would authorize as part of a
due diligence investigation even if it was able to do so.
Furthermore, Mr. Piggott went to China to negotiate the letters of intent and
invited no director or member of management of Core Gold to these
negotiations; only a shareholder that was not an elected director;
not an officer; not an employee and not even a consultant.
Unfortunately, the Chinese mining company was also the innocent
recipient of another misrepresentation by Mr. Piggott as he clearly
misrepresented the due diligence that Core Gold was permitted to
grant, likely as a result of both his misunderstanding of the terms
of the agreement with Titan that he had voted in favour of, and
simply ignoring those requirements.
Accordingly, Core Gold did not, at its March 9, 2019 Board meeting, permit the due
diligence to proceed because it was not permitted under the
Arrangement Agreement with Titan. Core Gold honored its contractual
commitments, something Mr. Piggott seems incapable of doing. This
is another example of Mr. Piggott being of the view that he has the
unilateral ability to do what he pleases without regard for his
statutory duties as a director, the limits of his authority as CEO
(who reports to the Board), securities laws, and Core Gold's
contractual relations.
Accordingly, Mr. Piggott, in order to serve his own personal
interest in trying to remain as CEO, took actions that exposed the
corporation to potential contractual breaches, "tipped" persons
contrary to securities laws, and were undertaken without any
approval from the Core Gold Board or its special committee of
independent directors.
7. Mr. Piggott's Termination for Cause was
Unrelated to the Chinese Mining Company's Purported Non-Binding,
Highly Conditional Letters of Intent
Core Gold's news release of March 19,
2019 clarified the circumstances of Mr. Piggott's
termination for cause. Mr. Piggott's press release of April 1, 2019 continues to establish that Core
Gold was justified in its action and provides further ample
evidence that Mr. Piggott breached his fiduciary duties, acted
outside of his legal authority, exposed Core Gold to contractual
breaches, misled third parties, took no legal or financial advice,
breached securities laws, and acted in a manner contrary to Core
Gold's contractual arrangements.
8. Mr. Piggott was not Threatened in any
Manner by Core Gold, its Directors, its Management or its
Advisors
Mr. Piggott's press release states: "At the board meeting
held March 9, 2019 directors and
advisors of Core Gold explicitly threatened to terminate me for
cause unless I voted for the Titan amended proposal and agreed to
vote all my shares in favour of the Titan merger. I refused," said
Mr. Piggott.
This statement is false, defamatory and fanciful to a degree
that it hardly merits a response, but it does.
At the Board meeting on March 9,
2019, Mr. Piggott was notified that he was being terminated
for cause and that the Core Gold Board was prepared to deliver that
notice immediately. Mr. Piggott was advised by Core Gold's
remaining directors and legal counsel that the Board had already
made this decision and that he was now merely being notified of
that unilateral determination taken by the other Core Gold
directors following his being put on notice in November, 2018.
However, given the lengthy relationship between Mr. Piggott and
Core Gold and his prior approval of the Titan transaction, Mr.
Piggott was also presented with a mutual termination process
whereby he would step down as CEO and a director, and not be
terminated for cause, and as a condition, he would also enter into
a voting support agreement (as each other director and member of
senior management had agreed to do). Mr. Piggott was not required
to agree to this but he was provided with the option. He was also
given the opportunity to have his personal legal counsel review the
terms of the mutual termination, but as he did not respond with the
timeframe provided, the Core Gold Board provided notice of
termination for cause under his consulting agreement.
Mr. Piggott was not, in any way, terminated because he did
not support the Titan transaction. He was terminated for the
numerous, and now well documented, breaches, circumstances and
events stated earlier and described in Core Gold's news release of
March 19, 2019. The causal link that
Mr. Piggott suggests simply does not exist. Had he agreed to the
mutual termination process, and agreed to sign a voting support
agreement, he would still not be CEO of Core Gold today.
About Core Gold Inc.
The Company is a Canadian based mining company involved in the
mining, exploration and development of mineral properties in
Ecuador. The Company is currently
focused on gold production at its wholly-owned Dynasty Goldfield
project. Mineral is treated at the Company's wholly-owned Portovelo
treatment plant. The Company also owns other significant gold
exploration projects including the Linderos and Copper Duke area in
southern Ecuador all of which are
on the main Peruvian Andean gold-copper belt extending into
Ecuador.
Neither the TSX Venture Exchange nor its Regulation
Services Provider (as that term is defined in policies of the TSX
Venture Exchange) accepts responsibility for the adequacy or
accuracy of this release.
SOURCE Core Gold Inc.