In a letter directly to Timmins Gold (TMM:TSX) shareholders this morning, Sentry Investments precious metals portfolio manager, Kevin MacLean proposed a slate of six new directors which would replace six of the current eight directors. Proxy battles are usually a ‘last case scenario’ for unhappy investors due to the costs associated with them.

Sentry is a 17% shareholder in Timmins and manages roughly $14 billion in assets.

This marks the latest in what has been an active two years of shareholder activism in the mining space amid the bear market which has strangled the industry over the same period. The down times have led to the blame-game, some justified and others not.

Sherritt International, the base metals producer, recently won a proxy battle against a group of dissident shareholders. Typically, proxy battles are difficult for the dissident group to win and hence their relative rarity.

According to Sentry, Timmins’ board hasn’t been acting in the best interest of shareholders and have not been open to M&A activity.

Timmins shares have underperformed both the GDX and GDXJ indexes (gold miners and junior gold miners indices, respectively). Timmins is down 43.5% over the past 12 months versus the GDX and GDXJ which are down 24% and 30%, respectively, over the same period.

“It is time to transform the current board from one that lacks independence and depth of mining industry experience to an independent board of industry veterans that can deliver results and ultimately enhance the value of Timmins for shareholders,” said Kevin MacLean, senior vice-president and senior portfolio manager at Sentry.

Mr. MacLean manages the Sentry Precious Metals Growth Fund which is the winner of 9 Canadian Lipper Fund Awards for best risk-adjusted returns in the precious metals category and other awards.

His new slate of directors is made up of:

• Tony Hawkshaw (founder of Rio Alto, former CFO of Pan American Silver)
• Oliver Lennox-King (chairman of Roxgold Inc and was chairman of Fronteer prior to its acquisition by Newmont)
• Richard Hall (former President/CEO of Metallica Resources which was part of a $1.6 billion three-way merger between Peak Gold and New Gold which is now New Gold)
• Marc Prefontaine (former President/CEO of Grayd when it was acquired by Agnico Eagle for $275 million)
• Troy Fierro (mining engineer and part of Fronteer and Metallica teams)
• Dr. Tony Harwood (geologist and director of Endeavour Mining and former VP of Placer Dome)

Timmins operates the San Francisco heap leach gold mine in Sonora Mexico. The company has consistently traded at a discount to peers due to its one-asset structure. When investors can’t see the growth potential, either internally or externally, then valuations are easy because you are simply dealing with one asset which has depleting reserves.

Sentry is looking for the TSX to force Timmins to hold their AGM prior to June 30, 2014.

Timmins hasn’t provided a full response yet, but did say that they are confident that they can resolve this matter in a manner that is in the best interests of the company and shareholders