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Detour Gold, Paulson & Co. fail to reach settlement as proxy war looms

Detour Gold Corp. and Paulson & Co. Inc. remain locked in a disagreement over the strategic direction and the composition of the company's board of directors ahead of a special meeting called for by Paulson & Co.

The gold miner has faced increasing pressure from Paulson & Co. and other shareholders to put itself up for sale and consider alternatives.

The two sides have held talks to see if they could reach a settlement, but in dueling Oct. 12 news releases, they made it clear that no solution was in sight.

Detour Gold said it would agree to put a new Paulson & Co. nominee on the board other than Marcelo Kim, a Paulson & Co. partner. It also agreed to change another "legacy" director, bringing the number of directors that would have been turned over during the past couple of months to four out of nine.

The company also said it would work with the Paulson nominee to inform them of the work it has done in considering selling the company "and the current state of play in this challenged mining M&A environment."

Further, Detour Gold said interim CEO Michael Kenyon would step down by the next annual general meeting, and it would drop litigation against Paulson & Co.

"I am disappointed that this latest very reasonable offer was rejected by Marcelo Kim," company Chairman Alex Morrison said in a prepared statement. "Demanding a wholesale change of the board as a condition to negotiating a settlement is neither practical nor responsible."

But Paulson & Co. said two alternatives that it presented to the company were "rejected out-of-hand" by Detour Gold's directors "via the media rather than to Paulson directly."

Paulson & Co. wants to reshape the Detour Gold board and, failing a settlement with the company, aims to do so at a Dec. 11 special meeting of shareholders.

"The alternatives called for the specific removal of certain of the longest-standing board members to be replaced by a different combination of directors from the Paulson slate," Paulson & Co. said in an Oct. 12 news release.

Paulson & Co. has said it owns about 5.4% of Detour Gold's shares.