Elliott Investment Management LP is pressing Northern Star Resources for significant changes to its board, arguing that years of execution and governance problems have contributed to the Australian gold miner’s underperformance despite record gold prices and a portfolio of high-quality assets.
Elliott, which manages funds holding an investment of approximately 5.6 percent in Northern Star, outlined its demands in an Aug. 12 letter to the company’s Board of Directors. The investment firm said Northern Star needs a substantially strengthened board to support the incoming chief executive officer and oversee what it described as an objective and thorough strategic and operational review.
“The size of our investment reflects our conviction in the quality of Northern Star’s assets and our commitment to realizing their full potential,” Elliott executives John Pike, partner; Mark Cicirelli, senior portfolio manager; and Chris Singh, portfolio manager, wrote.
Elliott said Northern Star has world-class mines and a skilled workforce operating in two of the top gold-mining jurisdictions. Given the current gold-price environment, the firm said the company should rank among the strongest performers in its sector.
“Yet over the past several years, Northern Star’s total shareholder return has severely lagged that of its peers,” the Elliott executives wrote. “This gap is a reflection of execution and governance failures over this period, not the quality of the company’s assets or the people who mine them.”
The Elliott executives said they have spoken since June with several Australian and international shareholders who share its concerns and they think significant change is needed at Northern Star.
The investment firm first communicated its views to Northern Star in early June. In a June 10 letter, Northern Star’s board said it welcomed Elliott’s engagement, agreed with its suggestion to enhance the board, and offered to consider director candidates proposed by Elliott, according to the Aug. 12 letter.
“Since then, we have met with the company to discuss the candidates named in this letter and were unable to agree on a path forward,” the Elliott executives wrote. “We are writing again now, and publicly, to introduce this highly accomplished group of independent director candidates, so that all shareholders may weigh in.”
Elliott is proposing six independent director candidates whom it says would add experience in operations, finance, governance, and technical disciplines to Northern Star’s board.
According to Elliott, the candidates have held leadership positions at Anglo American, AngloGold Ashanti, Arcadium Lithium, Detour Gold and Stillwater Mining, while one has served as chief financial officer of Barrick and Randgold Resources. The candidates also have experience operating large-scale gold mines across Australia, Africa and the Americas and executing major mining projects, Elliott said.
Several candidates also have Australian corporate-governance experience, including service on the boards of Woodside Energy and multiple ASX-listed mining companies, according to the letter.
Elliott said it is not seeking board control or representation by its own employees.
“To be clear, we do not seek to add any Elliott employees to the board and do not seek control of the board,” the executives wrote. “Rather, we look forward to further discussing these candidates with the company and to agreeing on a framework for substantial board change.”
The firm said it has worked over the past 15 years to add more than 150 directors to corporate boards, in almost every case through agreement.
“We have recruited a broad and complementary pool of candidates because we believe the scale of change required is significant,” the executives wrote.
Elliott said its objective is to strengthen Northern Star and its board over the long term and help the company realize the potential of its mining assets and workforce.
“A stronger Northern Star is better for everyone with an interest in it — for shareholders, for the company’s workforce and the communities it supports, and for the Australians whose superannuation is invested in the company,” the Elliott executives wrote. “All stand to lose if underperformance is allowed to continue.”