Raging River Capital LP

March 17, 2016 09:17 ET

Raging River Capital LP Files Proxy Circular and Releases Letter to Taseko Mines Limited Shareholders

VANCOUVER, BRITISH COLUMBIA--(Marketwired - March 17, 2016) -

  • Urges shareholders to vote their BLUE proxy in favour of replacing three conflicted, self-interested Taseko directors
  • Outlines plan for change to create value for all shareholders under the direction of new independent and experienced nominees
  • Warns shareholders not to be fooled by the self-interested directors' attempts to distract from the real issues of their conflicts of interest, buddy bailouts and insider trading

Raging River Capital LP ("Raging River") announced today it has filed its proxy circular and letter to shareholders to be mailed in connection with its previously requisitioned special meeting of Taseko Mines Limited (TSX:TKO)(NYSE MKT:TGB) ("Taseko") shareholders to be held on May 10, 2016 (the "Meeting"). At the Meeting, shareholders will be asked to vote on the removal of each of Ronald Thiessen, Russell Hallbauer and Robert Dickinson as directors of Taseko and the election of the following four new directors to the Board: Paul Blythe, Randy Davenport, Henry Park and Mark Radzik.

Early momentum for the new independent nominees continues to grow with overwhelming shareholder support. Raging River has uncovered numerous questionable dealings involving current Taseko directors and another company they are affiliated with, Hunter Dickinson. Raging River is standing up for Taseko shareholders who have been forced to stand by and watch as conflicted directors make self-interested decisions that are destroying shareholder value.

Raging River's independent and experienced nominees have a plan to increase shareholder value and improve performance. Taseko has excellent core assets, the potential of which can be unlocked with the right leadership and the right plan for change, which Raging River explains in further detail in the shareholder letter released today. You can read the full letter below.

Shareholders are urged to read the circular and vote their BLUE proxy by 10:00 a.m. (EST) on May 6, 2016. Shareholders with questions about voting their shares should call Kingsdale Shareholder Services at 1-877-518-6832 or 1-416-867-2272 outside of North America or email contactus@kingsdaleshareholder.com. Shareholders are also encouraged to visit to www.atrustedtaseko.com to learn more about how the right people and right plan can create long-term value for all. A copy of Raging River's information circular is also available on Taseko's SEDAR profile at www.sedar.com.

Letter text:

Dear Fellow Shareholder,

Are you as shocked as I am about the conflicts of interest and misuse of shareholder money at Taseko Mines Limited ("Taseko")?

I have been overwhelmed by shareholders who tell me their Taseko investment has been destroyed while three conflicted directors have padded their pockets at your expense.

Today, we are standing up on your behalf to do something about it. In short, we're going to return trust to Taseko.

Raging River Capital LP ("Raging River"), Taseko's second largest shareholder owning approximately 6.3%, has requisitioned a meeting of shareholders to remove three incumbent directors and elect four new independent directors. In fact, we own more shares than all of the board combined.

Due to buddy bailouts, preferential deals related to another company they are involved with called Hunter Dickinson and a steady stream of unreasonably high payments, we believe it is time for Ronald Thiessen, Russell Hallbauer and Robert Dickinson to go.

Now, be warned: Taseko will tell you the issues we raise are non-issues. That you shouldn't worry because they have a bunch of processes in place to ensure directors don't get rich at your expense and -if those weren't good enough-they've added even more processes since we started asking questions. But none of these solve the problem. They just make it more expensive to manage.

The only way to get rid of a weed is to take it out at the roots and that means replacing the directors who are creating the problem.

Like you, we are a shareholder who believes it is time for change at Taseko. Raging River was formed in response to concerns by a number of like-minded investors who want a Taseko shareholders can trust. We are a team of respected miners and investors who bring the operational expertise and capital markets experience needed to create value for all shareholders.

For too long we've heard from shareholders, analysts, First Nations, and other stakeholders who told us they had deep concerns about how Taseko was being run. Our first choice was to engage Taseko privately and work with them on behalf of all shareholders. Unfortunately, their failure to recognize that apparent insider trading, self-dealing, conflicts of interest and anemic share performance are problems, means the only way to restore trust at Taseko is with a shareholder vote.

THE PROBLEM AT TASEKO: WRONG PEOPLE, WRONG PLAN

Like many of our fellow shareholders, we have been frustrated by a pattern of self-interested decisions that have wasted shareholder money and are disappointed by the sustained underperformance of the company. Here is why change is warranted:

Sustained underperformance and value destruction. Taseko has underperformed its peers losing 95% of its market capitalization and has spent close to $1 billion since 2006 in pursuing high-risk, low-probability projects, mostly affiliated with Hunter Dickinson.

Hunter Dickinson affiliated directors have a disproportionate say in Taseko decisions. Hunter Dickinson is a privately owned mining group with significant influence over Taseko. Hunter Dickinson executives hold three board positions yet owned just 2.76% of Taseko at the time of our requisition.

Hunter Dickinson related entities have received $28.3 million from Taseko. It appears there is a shell game happening with shareholder money. Hunter Dickinson related entities have received unusually high management and service fees of US$5.4 million from Curis Resources Ltd. ("Curis") at the same time as Taseko invested $7 million in Curis. This means more than half of the money Taseko "invested" in Curis has been paid back to Hunter Dickinson in fees.

Taseko bought Hunter Dickinson related company Curis while on the verge of financial distress. Hunter Dickinson related parties owned 11% of Curis. Taseko acquired Curis with little cash, high burn rate and $30 million in debt. Taseko acquired Curis for over $100 million and at a significant premium for a company about to go bankrupt. Unbelievably, Taseko shareholders had no say on this acquisition, despite it representing a significant part of its market capitalization at the time.

There are insider trading investigations reported to Canadian and US authorities. Hallbauer and Brian Battison, Taseko's Vice-President, bought shares when we believe both had knowledge of non-public, material information on the US$70MM financing from Red Kite (EXP T1 Ltd.). A lack of proper board oversight means this is just one example of questionable trading practices.

A TRUSTED TASEKO: RIGHT PEOPLE, RIGHT PLAN

Raging River believes Taseko has excellent core assets, the potential of which can be unlocked with the right leadership and the right plan for change.

We know Taseko has tried to question our motives and scare you about our plan for change so let me be crystal clear: As Taseko's second largest shareholder, we are a shareholder first. We have made a core investment in Taseko because we recognize its potential to create value for all shareholders. Unlike the conflicted Hunter Dickinson related directors who benefit from fees no matter how Taseko shares do, we will get paid, like you, when the stock appreciates.

First, we need the right people on Taseko's board. Not just directors who are free of conflicts, but have the capital markets and industry experience needed to focus Taseko on operating its core business, reestablishing credibility and improving share performance. Our independent and highly qualified director nominees, Paul Blythe, Randy Davenport, Henry Park and Mark Radzik will bring about the positive change needed to create value for all shareholders.

Second, we need a plan to simplify Taseko's strategy and stop abusing shareholder money. We explain our plan in greater detail in the following pages but here are the three key steps that matter most:

  1. Simplify the strategy
    • Focus on the Gibraltar Mine
    • Stop investments in risky development projects
    • Focus on the Prosperity Project as it utilizes core Taseko skills
  2. Evaluate the relationship with Hunter Dickinson
  3. Address Taseko's balance sheet

AS SUPPORT GROWS, CONFLICTED DIRECTORS BECOME MORE DESPERATE

In the military they say when you are taking flack you are over the target. And, based on the lawsuits and other intimidation tactics the conflicted directors are threatening us with, we must be making shareholders aware of something they don't want you to know.

The good news is the more of a spotlight we put on their self-dealing and questions we ask, the more shareholder support we get. In fact, coupled with the expressed support of Vertex One Asset Management Inc., one of Taseko's largest shareholders, early public support for the new independent shareholder nominees is already at 10.2%.

The bad news is as this support has grown, the conflicted directors have become more desperate. They are willing to say and do anything to keep their gravy train going.

While I don't want to legitimize their ridiculous claims by repeating them, I do want to clarify our bond position. We own bonds. In fact, we spent $8,914,060 on them and have openly shared this information. Like other shareholders we've built a bond position to protect against the self-interested incumbent directors and participate in the turnaround of the company.

They have driven Taseko's stock down to the point where no one is trading it, meaning it's difficult to buy lots of shares. Bonds are trading at half their face value for the same reasons and are easier to acquire. When we turn around the company we expect the bonds will return to face value. Bondholders and shareholders are aligned: Bondholders want their interest payments and repayment when the bonds mature. That can only come with the healthy company, healthy balance sheet and strong stock price shareholders want.

At this critical moment for your Taseko investment, I encourage you to read the circular, explore our plan and do not allow the inaccurate noise put out by the conflicted directors to influence your decision.

Please join me in voting the BLUE proxy or VIF "FOR" the independent director nominees. If you have any questions please contact Kingsdale Shareholder Services at 1-888-518-6832 toll-free in North America, or 1-416-867-2272 outside of North America, or by email at contactus@kingsdaleshareholder.com.

Sincerely,

Mark Radzik

Shareholder, Taseko Mines Limited

P.S. To keep up to date with the latest developments visit www.aTrustedTaseko.com.

ADVISORS

Raging River has engaged Norton Rose Fulbright Canada LLP as its legal advisor and Kingsdale Shareholder Services as its strategic and communications advisor and proxy solicitor.

Contact Information