Northern Star, Elliott Tit-for-Tat Escalates
Gold miner and activist fund trade public barbs
Hostilities between Northern Star Resources (ASX: NST) and Elliott Investment Management escalated this week.
On Wednesday, Elliott publicly released a letter it had sent to the board of Northern Star, proposing six potential candidates to join the gold miner’s board.
It suggested Iluka Resources director Susie Corlett, former Anglo American CEO Mark Cutifani, former Arcadium Lithium CEO Paul Graves, former Detour Gold and MAC Copper CEO Mick McMullen, former Orion Resource Partners managing partner Peter Rozenauers and recently departed Barrick Mining Corporation chief financial officer Graham Shuttleworth.
“These director candidates would strengthen Northern Star’s board, bringing experience across operations, finance, governance and technical disciplines,” Elliott said.
“Elliott believes that – after multiple years of execution and governance failures – the company needs a substantially enhanced board that is equipped to support the incoming chief executive and to oversee an objective, thorough strategic and operational review.”
On Thursday morning, Northern Star announced it had appointed former BHP director Terry Bowen as a non-executive director.
It follows the addition of former Perseus Mining CEO Jeff Quartermaine as a director last month, as well as the appointment of a new CEO, Suresh Vadnagra, and the promotion of deputy chairman Michael Ashforth to chairman later this year.
Later on Thursday, current Northern Star chairman Michael Chaney publicly released a letter in response to Elliott.
He noted that Elliott’s 5.35% economic interest in Northern Star (through cash-settled swaps) was not currently accompanied by a disclosed shareholding or voting interest.
Since Elliott kicked off its campaign against Northern Star in early June, Chaney said engagement between the pair had comprised five video calls, several written exchanges and a private site visit to the company’s flagship KCGM operation in Kalgoorlie last week.
“From the outset, Elliott has made demands to which no responsible board would agree,” Chaney said.
“Elliott has also been unable to suggest any tangible actions which were not already being taken by the board.”
Board renewal
Elliott has been vocal on the composition of Northern Star’s board, but Chaney said the renewal process was already well underway before its public calls.
Chaney added that Elliott was informed that if it had any candidates for the CEO or board roles, Northern Star would include them in processes, but he said no names were provided.
“They told us they would not provide names of nominee directors unless we first agreed to a ‘framework agreement’,” he said.
“That ‘framework’ involved Elliott nominating four individuals without discussion with us and those individuals simply being appointed to the board by us (or another director they would propose if we had a genuine objection to any of the four that they nominated).
“We explained to Elliott that their proposed ‘framework agreement’ was unacceptable and would be at odds with appropriate governance. No shareholder or proxy adviser we have spoken to subsequently has suggested that we should have taken a different approach.”
Chaney said Elliott only provided names during a call on Tuesday, while Elliott was informed of Bowen’s impending appointment.
The company is currently in discussions with an additional candidate who has deep experience in the gold industry.
At a subsequent meeting between Northern Star and Elliott on Wednesday, Chaney said Elliott was thanked for its suggestions and was told the individuals would be considered under the normal processes applied to board appointments.
“Among other things, Elliott told us that their additional requirements included that we agree to a minimum of three of their suggested nominees joining the board,” Chaney said.
“We advised Elliott that we could not commit to this in the absence of a proper evaluation.”
It was after that meeting that Elliott sent its letter to the press.
Chaney noted the letter included a statement that Elliott was unable to agree a path forward with Northern Star.
“That is true, given the demands they have made,” he said.
“One thing we and Elliott are completely aligned on is the determination to provide shareholders with strong returns going forward.”
Elliott released a further statement on Friday, accusing the Northern Star board of “entrenchment”.
“Northern Star’s August 13 letter asks investors to trust the very directors who presided over years of profound underperformance to oversee a board ‘renewal’ process on terms they alone control, consisting of directors appointed solely at their discretion,” Elliott said.
“This is not renewal. It is entrenchment.
“Elliott remains willing to work constructively with Northern Star toward a genuinely strengthened board equipped to realise the company’s full potential – for investors, employees and all who depend on its success.”
Northern Star will release full-year results and 2027 financial year guidance next week.