Photo by: Bloomberg
PERTH (miningweekly.com) – ASX-listed Highlands Pacific is facing a board spill after joint venture (JV) partner PanAust, which holds a 13.9% interest in the company, called for the removal of four of the company’s five nonexecutive directors and the appointment of three of its own nominees.
PanAust, which is a JV partner in the proposed Frieda River project, in Papua New Guinea, has called for the removal of Highlands chairperson Ken MacDonald, newly appointed director Ron Douglas, independent director Mike Carroll and independent director Dan Wood.
Highlands, which will be required to convene a shareholder meeting, has urged its other shareholders not to take any action, with MacDonald 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.
“It is clear that a PanAust dominated board will be at risk of operating in the interest of Guandong Rising Asset Management (Gram), rather than in the interest of all of our shareholders,” he said.
PanAust is a wholly-owned subsidiary of the Chinese State-owned Gram.
MacDonald pointed out that Highlands is in dispute with PanAust regarding the funding and methods to progress the Frieda River project, with Highlands maintaining that PanAust’s approach to the project is “suboptimal”.
MacDonald said Highlands has been urging its JV partner to adopt a different course of development that would generate better returns and reduce the risk for shareholders.
“It is also our view that PanAust has failed to complete the Frieda River feasibility study to the standard required under the JV agreement,” he added.
“PanAust’s actions are clearly related to this dispute.”
PanAust in 2016 completed a feasibility study for Frieda River, which showed that the project would cost $3.6-billion to develop and that an additional $2.3-billion would be required for development and sustaining capital over the life of the mine.
The feasibility study contemplated a large-scale, openpit mining operation producing 175 000 t/y of copper and 250 000 oz/y of gold over 17 years.