PERTH (miningweekly.com) – ASX-listed Highlands Pacific has told shareholders it is still mulling the divestment of its interest in the Frieda River project, in Papua New Guinea, amid board spill attempts from joint venture (JV) partner PanAust.

Highlands in December 2016 initiated a process to explore options to maximise the value of its 20% interest in Frieda River, including a potential sale. The company has engaged consultants to assist in this process.

The ASX-listed junior said that while the process remains at an early stage, progress has been “positive”.

PanAust, through its subsidiary Guandong Rising Assets Management Company (Gram) has a pre-emptive right on the sale of Highland’s 20% interest in the project.

PanAust, which holds a 13.9% interest in Highlands Pacific, has called for the removal four of the company’s five nonexecutive directors and the appointment of three of its own nominees.

Highlands has urged its other shareholders not to take any action, saying the PanAust proposal effectively amounts to a takeover offer without the JV partner offering to acquire any shares, let alone at an appropriate premium.

A special meeting of shareholders has been called for May 18, coinciding with the company’s annual general meeting, to vote on the proposed board spill.

Highlands and PanAust have been in dispute regarding the funding and methods to progress the Frieda River project, with Highlands maintaining that its JV partner’s approach to the project was “suboptimal”.

PanAust, through Gram, on Friday released an addendum to the Frieda River feasibility study, which was completed in May 2016, which increased the project’s internal rate of return from 10.8% to 11.4% and its post-tax net present value form $820-million to $1.13-billion.

“We are pleased to receive this additional information from Gram that has seemingly improved the quality and completeness of the study and its economics,” said Highlands MD Craig Lennon.

“However, the addendum does not address certain fundamental deficiencies in the initial study, particularly regarding the proposed integrated storage facility and hydropower dam.

“No further information has been provided on these key elements of the project.”

Lennon noted that the provision of the addendum vindicated Highland’s view that the initial study was not complete, adding that the company believed further work was required to complete the feasibility study.