As well, the non-binding letters of intent were subject to 45 days of due diligence, were structured as an “option” for the Chinese mining company to increase its interest (meaning it was their choice whether to proceed and they would not have been obliged to further subscribe), required negotiation of the significant terms (including a full joint venture, rights of board representation, project cooperation including in management, design, construction, and finance, and a pre-emptive right and standstill obligations) and would only have led to a further non-binding letter of intent. The Titan transaction is a legally agreed and binding agreement, which had no due diligence condition, and already in progress. The fact is the proposed investment from the Chinese mining company was only a non-binding and highly conditional expression of interest that could not have been actioned by Core Gold without absorbing vastly more risk of non-completion than the Titan transaction provides.
5. Mr. Piggott Negotiated Non-Binding Letters of Intent without Board Authority
Mr. Piggott, acting without Board authority, negotiated two non-binding letters of intent with the previously mentioned Chinese mining company. These were negotiated with only limited notification to the Board and without any oversight from the Board or its special committee of independent directors, and were only ever seen by the Board in executed form. Mr. Piggott gave the Board and its special committee no opportunity to review what he was negotiating. The resulting non-binding letters of intent paid no regard to Core Gold’s contractual agreement with Titan, which Mr. Piggott had originally approved and pre-dated these negotiations. As well, Mr. Piggott determined to negotiate these non-binding letters of intent without the benefit of any legal advice, or financial analysis, or assistance from Core Gold’s management or its special committee of independent directors and its advisors. It was a Keith Piggott one-man effort with no regard for proper Board governance, process, legal requirements, financial analysis or the best interest of any other stakeholder, other than Mr. Piggott.