PERTH (miningweekly.com) – The founder and MD of ASX-listed Kidman Resources, Martin Donohue, has appealed to shareholders of fellow-listed KBL Mining to support a board spill, after revealing that Kidman would not consider extending A$12.6-million in debt if there were no board changes at KBL.

Kidman earlier this month called for the removal of the KBL board, including chairperson Jim Wall and nonexecutive director Greg Starr, as well as MD Brian Wesson and nonexecutive director Bob Besley.

Kidman suggested that the current KBL board be replaced by Tony Davis, Melanie Leydin and Mark Muzzin.

In a letter to KBL shareholders, Donahue said that KBL’s current debt of A$24-million was about two-and-a-half times the size of the company’s total market capitalisation, and called into question the wisdom of KBL’s plans to seek another debt arrangement.

At the end of November, KBL had about A$1.8-million cash on hand.

KBL has also approached Kidman in the hopes of extending the A$12.6-million debt, obtained by way of a transaction with Capri Trading earlier in November, past its March 2015 due date, but Kidman has opted not to grant this request.

“Kidman informed KBL Mining yesterday that it will not consider any possible extension for the A$12.6-million debt beyond the March 15 deadline unless there are board changes at KBL as Kidman will not incur the risk of extending the loan with current management,” Donohue said in his letter to KBL shareholders.

“The only solution offered to date is to retain the present board, to defer the repayment of the existing secured and unsecured debt and, relevantly, borrow even more money to fund the installation of the carbon-in-leach gold circuit, which the board of KBL promised to do more than 18 months ago and borrowed A$10-million in March 2013 for that purpose.”

Donohue said that it was in the best interest of KBL shareholders to not re-appoint the current board at KBL’s annual general meeting, which was scheduled for Friday.

“It is time for KBL to benefit from the appointment of new directors who have the skills and the experience to restore the company’s financial health and devise and implement a strategy that will create wealth for all shareholders,” Donohue said.

KBL had previously questioned the motives behind Kidman’s move to spill the board, warning that the debt holder and shareholder might be better served if KBL was unable to repay its debts.

The A$12.6-million debt now owed to Kidman was secured against all of KBL’s assets, including its operating Mineral Hill base metals mine and its Sorby Hills lead/silver deposit, in Western Australia.