DAY sent an interesting letter to shareholders. What they are saying makes some sense to me, but i would like to hear various view points. Comments anyone?
TIA
Anna
Thursday June 4, 12:43 pm Eastern Time
Company Press Release
Dayton Mining Corporation: Letter to Shareholders
VANCOUVER, British Columbia--(BUSINESS WIRE)--June 4, 1998--Dayton Mining
Corporation (AMEX:DAY - news; TSE:DAY. - news) Dayton Mining Corporation (''Dayton'')
(TSE, AMEX: symbol DAY)
The attached letter was sent out to shareholders of Dayton Mining Corporation on June 3, 1998.
To Our Shareholders:
You have been or may be asked by Manchester Securities Corp. to consider electing a slate of
directors which is an alternative to your current board of Dayton Mining Corporation. You are being
asked to choose who you think can create future shareholder value at Dayton.
Your board of directors and management established a new direction for Dayton in February of this
year. This new direction includes a commitment to improving the operation at Dayton's Andacollo
Gold Mine and specific objectives for becoming an intermediate gold producer within one year and a
senior gold producer within five years.
Your board of directors has carefully reviewed Manchester's dissident information circular. In
particular, we would like to outline for you the following key points:
Minorca Transaction - Dayton has not made, nor does it expect to make, an offer to acquire
Minorca Resources Inc. In any event, Dayton is committed to following the requirements of
Ontario Securities Commission Policy 9.1 with respect to all potential related party
transactions and to provide Dayton shareholders with a vote on all major transactions with
any significant shareholder of Dayton.
Operations - Dayton implemented significant management changes at Andacollo in April of
this year to improve operations which we expect will be reflected in the second half of 1998.
Manchester has not made reference to any plan to improve operations at Andacollo.
Corporate Development - Dayton's Corporate Development Team and its advisors, CIBC
Wood Gundy Securities Inc., have aggressively pursued more than a dozen merger,
acquisition and investment opportunities to enhance shareholder value over the last four
months. Some of these transactions are currently being pursued. Manchester has not made
reference to any corporate development plan.
Board Experience and Stability - Dayton's current board of directors provides stability
through a good combination of senior and experienced directors and senior management at a
time when stability is critical. Manchester has proposed a slate of individuals with good
credentials but they have no experience at Dayton or its operations.
Agenda of Manchester - Manchester only very recently acquired most of their shares of
Dayton. Manchester has not communicated their plan or agenda with respect to Dayton.
Dayton's plan is summarized below.
Based on the above, your board of directors urges you to:
SIGN THE ''MANAGEMENT PROXY'' SENT TO YOU BY US (Please see instructions
on final and back page of this letter)
NOT SIGN THE BLUE PROXY SENT BY MANCHESTER MINORCA
TRANSACTION
Our Guarantees
Your board of directors are considering numerous opportunities and strategies to increase
shareholder value. Indeed, your board of directors has always and will always take this duty very
seriously.
Manchester has advised that it is concerned that your board of directors may focus on a transaction
between Dayton and Minorca, a shareholder of Dayton, which may not give sufficient regard to the
interests of other Dayton shareholders.
For the record, let us state that management of Dayton has considered a possible transaction with
Minorca. It has done so as part of its review of all opportunities to increase shareholder value.
However, as will be described below, that review has not in any way hindered Dayton from looking
at numerous other transactions -- including three significant transactions where offers were made.
Moreover, we confirm that Dayton has not made, nor does it expect to make, an offer to acquire
Minorca.
We note, and Manchester is well aware, that there are well established procedures to enable a
board of directors to address any situation where a transaction is proposed with a related party.
These protections include:
The requirements of Ontario Securities Commission Policy 9.1 and other corporate and
securities laws and rules which govern related party transactions.
The establishment of independent committees. -- The retaining of independent financial
advisors to provide
valuation and fairness opinions to the independent
committees and shareholders.
-- Most importantly, your board of directors confirms that if Dayton were to propose any
transaction with any significant shareholder, including Minorca, that the board would seek
shareholder approval for the transaction.
These protections are designed to protect against exactly the concerns Manchester has raised.
Manchester's Agenda
Manchester has not made reference to their agenda.
If Manchester's agenda is to replace your board of directors in order to block a transaction with
Minorca, we guarantee that if any transaction is ever proposed with any significant shareholder you
will have the opportunity to vote on that transaction. If this is Manchester's agenda, then there is no
need to replace your existing experienced qualified board of directors.
OPERATIONS
Our Plan
To date, Dayton has had operational difficulties at its Andacollo Gold Mine. These results have not
been acceptable to your board of directors and are being addressed.
Since February of this year, management has undertaken a thorough review of all aspects of the
Andacollo operation. The outcome of that review is as follows:
Fred Earnest was hired as General Manager of Andacollo and began work in mid-April. Fred
has a strong background in mine operations and engineering and has over 12 years experience
with Rayrock Mines, Barrick, Behre Dolbear and Pincock, Allen & Holt.
Dave Beling has been retained as an independent consultant to, among other things, review
the Andacollo operation. He spent three weeks on site in May. Dave has over 34 years
experience in mining operations with Hycroft, Azco Mining and others. His recommendations
are currently either being implemented or reviewed.
Harming Rivera replaces a fair balance of unrelated directors and senior management.
Moreover, we believe it is important that your board of directors provide continuity and
stability and that they have knowledge about the past, present and future of Dayton.
AGENDA OF MANCHESTER - UNCERTAINTY
We have no quarrel with the quality of the individuals nominated by Manchester. Indeed, we know
some of them and consider them to be well qualified candidates. However, we, like you, have no
idea as to the agenda of Manchester. In fact, we ask you to consider the following:
Manchester and its affiliates are only very recent shareholders of Dayton. Based upon
regulatory filings, they have acquired most of their shares of Dayton during the last three
months. They have not supported Dayton over a number of years, as have most of our
shareholders.
Manchester and its nominees have no knowledge about the operations of Dayton's Andacollo
Gold Mine and to our knowledge have never visited the site. Manchester has set forth no plan
to improve the operations at Andacollo.
Manchester has set forth no plan as to a corporate development strategy to increase
shareholder value.
It is impossible for us to comment on Manchester's agenda or their plan for increasing shareholder
value at Dayton because they have not shared their agenda or plan with either us or you.
THE CHOICE
You are being asked to decide who can build future shareholder value at Dayton.
On the one side stands your current board of directors which combines long-time directors who are
knowledgable about the business of Dayton with new strong independent directors. Your board of
directors provides stability and has a plan. We believe your board of directors has already put in
place the elements for maximizing shareholder value and has the experience to make it happen.
On the other side, you have Manchester. Manchester and its affiliates are recent shareholders who
purchased shares at substantially reduced prices compared to the majority of our shareholders.
Manchester's short term objectives may not match the longer term objectives of other Dayton
shareholders, your board of directors, and Dayton management who are all focused on adding long
term shareholder value. Moreover, while Manchester's dissident slate is a group of individuals we
respect, they all lack any connection to the history and the current business of Dayton which we
believe is critical to providing stability at this point in the history of Dayton.
We therefore ask you to submit your MANAGEMENT PROXY in favour of management's
nominee board of directors.
INSTRUCTIONS AS TO VOTING YOUR MANAGEMENT PROXY ARE OUTLINED ON
THE FINAL AND BACK PAGE OF THIS LETTER.
Dayton has engaged Georgeson & Company Inc. in the United States and Shareholder
Communications Canada Corporation in Canada to solicit proxies and manage the proxy solicitation
process on behalf of management. As compensation for their services, they will be paid a fee of
U.S.$30,000 and Cdn.$18,000 respectively, plus expenses. These costs will be borne by Dayton.
They, together with the directors, officers and employees of Dayton, will solicit proxies by mail, by
telephone and personally. Dayton may retain other persons, entities or companies to solicit proxies
on its behalf.
Dayton is on the right course. Your board requests your support.
Roland L. Horst Chairman, on behalf of the Board of Directors Dayton Mining Corporation
INSTRUCTIONS TO VOTE BY MANAGEMENT PROXY
The cut-off for the delivery of proxies for the Annual General Meeting is 2:00 p.m. (Toronto time) on
Monday, June 15, 1998 as described in the Management Information Circular previously mailed to
you. In order to ensure that your MANAGEMENT PROXY is delivered in time to be valid for the
Meeting, please: (1) arrange to have your MANAGEMENT PROXY form delivered by overnight
courier or mailed in the enclosed envelope to the address thereon or by hand delivery to any one of
the addresses indicated below so as to arrive not later than 5:00 p.m. (Toronto time) on Friday, June
12, 1998 AND (2) fax a copy to any one of the numbers indicated below:
In the United States:
Georgeson & Company Inc.
Wall Street Plaza
New York, NY 10005
Toll-Free: 1-800-223-2064
Fax: (212) 440-9955
In Toronto:
Shareholder Communications Canada Corporation
Suite 1925
Commerce Court West
Toronto, Ontario M5L 1B9
Toll-Free: 1-800-890-1037
Fax: (416) 366-2476
In Vancouver:
Dayton Mining Corporation
Suite 2393
Three Bentall Centre
595 Burrard Street
Vancouver, B.C. V7X 1K8
Tel. No.: (604) 662-8383
(call collect)
Fax: (604) 684-1329
If you already executed a Blue Proxy prepared by Manchester, you may change your vote to a vote
for the election of your management's nominees by submitting a MANAGEMENT PROXY with a
later date. Only your latest dated proxy for the Annual General Meeting will count at the Meeting.
If you have already executed a Blue Proxy and indicated ''Withhold'' for the election of
Manchester's nominees as a protest against Manchester and its nominees, that proxy will not count
for the election of management's nominees and may invalidate an earlier MANAGEMENT PROXY.
To be certain your vote counts for the election of your management's nominees, please sign, date
and return the MANAGEMENT PROXY and do not return any Blue Proxy. Time is short; please
do not delay.
If your shares are held in the name of a bank or brokerage firm, only that firm can execute a proxy
on your behalf. Since the Annual General Meeting is only a short time away, please contact your
bank or broker to ensure that your directions are given effect.
IF YOU HAVE ANY QUESTIONS OR NEED ASSISTANCE IN COMPLETING YOUR
MANAGEMENT PROXY, PLEASE CALL ANY OF THE TOLL-FREE NUMBERS SET
FORTH ABOVE.
Contact:
Dayton Mining Corporation
Roland L. Horst, 604/662-8383
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