Hello all,
This is a long post, so skip by unless you?re interested in my thoughts on SUF?s board of directors.
As many of you may know, I?ve been upset with the board for a long time now, specifically for their dithering and slow action and re-action to adverse events affecting shareholders, and the obvious lack of alignment of the board?s interests with shareholders due to the abysmal level of share ownership among this group (outside of Dr. Jennings).
For those in attendance at the AGM last year, you?ll recall me as the fellow who asked the question about the directors' individual contributions and level of share ownership. You may recall that I was brushed off by Dr. Jennings without any kind of reasonable answer. I was very surprised that no one else picked up on these concerns at the time, so I figured that maybe I was incorrect to be so concerned.
With the share price, charitably, in the $1.50 range, I think that investors, institutions, the street, analysts, whatever, have deserted the stock, voting with their feet, and leaving those of us who remain as long-SUFfering (pun intended) shareholders looking for hope. Many contributors on these threads may disagree as to the recent management changes, future direction, etc., but it seems clear that we would all prefer to see the share price better reflect the intrinsic value of the properties SUF possesses. This will happen only when investor confidence is restored.
My concern, like last year?s, is whether or not that this board has its interests properly aligned with that of shareholders. A year ago, Dr. Jennings assured me that this was the case. One of the directors even chatted with me after the official part of the meeting about evaluating the performance of the directors going forward. While this hasn?t been done publicly, I think its high time for some frank discussion on this topic, especially with the expected mailing of this year?s AGM materials and proxies sometime soon.
Whatever criteria one uses, the only "judge" that really matters is the share price. Clearly SUF?s board deserves very harsh criticism for the performance of shareholder?s investment assets, allowing the market to erode over 73% of shareholder?s investment equity since last year?s AGM (from $5.50 to $1.50). My concern, given the assurances that I repeatedly received last year from various directors, is whether the board has the competence or ability to fix the problems that they have allowed to destroy shareholder?s investment equity.
Rather than specify many of the problems over the past few years, I decided to look at SUF?s own words. Below is an excerpt from last year?s annual meeting mail-out package, pages 11 and 12 of the Information Circular:
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"Statement of Corporate Governance Practices
The Toronto Stock Exchange Committee on Corporate Governance has issued a report (the "TSE Report") setting out a series of guidelines for effective corporate governance. These guidelines deal with matters such as the constitution of and independence of corporate boards, their functions, the effectiveness and education of board members and other items dealing with sound corporate governance. The TSE requires that each listed company disclose on an annual basis its approach to corporate governance. The Corporation?s approach to corporate governance is described below.
The board of directors for the Corporation has considered the guidelines for corporate governance adopted by the TSE and believes that its approach to corporate governance is appropriate and works effectively for the Corporation and its shareholders.
Mandate of the Board
The Corporation?s board of directors is responsible for the supervision of the management of the Corporation?s business and affairs. Under its governing statute (the Ontario Business Corporations Act), the board is required to carry out its duties with a view to the best interests of the Corporation. The Board specifically recognizes its responsibilities in the following areas:
(a) reviewing and approving the Corporation?s strategic and operating plans;
(b) reviewing and approving the Corporation?s exploration expenditure policy as well as those which exceed the limits for management approval;
(c) reviewing and approving significant operational and financial matters and providing direction to management on these matters; and
(d) reviewing and approving corporate objectives and goals applicable to the senior management personnel of the Corporation.
The frequency of the meetings of the board of directors as well as the nature of agenda items change depending upon the state of the Corporation?s affairs and in light of opportunities or risks which the Corporation faces."
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Looking at the above statement, I can?t believe that any director would give even a passing grade to individual or collective members of the board.
In fact, the removal of Dr. Jennings from the president position, to put a new face on the corporation and attempt to restore investor confidence, seems to be the only forward-looking activity that the board got right. Clearly, the money blown on Camafuca, the dilution for the Messina acquisition, and the expected further dilution for the capex at Messina, demonstrate that the board?s performance in the past year was a complete failure, either because the strategy was poor/flawed or the execution was not competent.
Given the new management team, it would seem that the board has decided that management competency was the issue, and has taken what they feel to be corrective action.
I?m not sure that I agree with the board. The failure of Camafuca to live up to expectations has obviously pressured all aspects of SUF?s operations, and going forward, will continue to negatively affect shareholder value simply because of the dilutive effect of raising capital. The decision to pay $US6.5 million for the purchase of Camafuca last April, with Messina ready to be announced, stands out as a horrible strategic decision that the board needs to be accountable for.
(I agreed, at the time, that Camafuca should be pursued because of its huge potential, but I?m just an investor, not a competent mining executive member of the board with years of experience, responsible for shepherding shareholder investment equity. Nor was I told that the expense of Camafuca would lead to the financing necessary for the Messina acquisition, a simple budgeting issue that the board should have been aware and in control of.)
As I see it, this board, our board, either lacks the competency to properly execute SUF?s strategy, or they have screwed up horribly. How could any new investor, big or small, have confidence that this board will any better than it has over the past couple years?
Regards,
Confluence
PS As another thought, why would any board member, especially one with zero shares, and options that are well under water, want to continue on SUF?s board? What is the motivation for continuing? |
