11th Nov 2015 10:19
LONDON (Alliance News) - A former subsidiary of Mineral IRL Ltd on Wednesday said a group of shareholders have requested a meeting to put forward proposals to help address "serious concerns about the governance" of the company, including a complete overhaul of the board.
The news was released by Minera IRL SA, the company's former Peruvian subsidiary which it lost control of earlier this year. The announcement comes only two days after Minera IRL Ltd requested a shareholder meeting of its subsidiary to try to take away its powers and replace its manager.
On Monday, Minera IRL Ltd said it sent a notarised letter to the subsidiary requesting an EGM so it could put forward proposals to remove the subsidiary's general manager, appoint a new general manager and to "repeal powers of attorney" that the subsidiary holds.
On Wednesday, the subsidiary hit back by requesting its own meeting to try to overhaul the entire board of London-listed Minera IRL Ltd, sparking a battle for control over the entire company and its assets.
A spokesperson for Minera IRL Ltd told Alliance News that Minera IRL Ltd can only try to regain control of the subsidiary through an EGM following a lengthy court battle, and said Minera IRL Ltd will respond to the subsidiary's announcement in due course.
The subsidiary on Wednesday said the group of shareholders hold just under an 11% stake in Minera IRL and have put forward proposals on which all of the company's shareholders can vote at the EGM due to be held on November 26.
"These shareholders have chosen to intervene in Minera IRL Ltd to help address serious concerns about the governance of the company, which are seen as affecting financial and key stakeholder relationships," said the subsidiary in a statement.
The group of shareholders have recommended overhauling the entire board by appointing six new directors and removing the current board, which is comprised of three members.
The board is currently made-up of Independent Non-Executive Chairman Jaime Pinto and Independent Non-Executives Robin Fryer and Douglas Jones, which the shareholder group believes is too small and unable to "tackle the company's problems".
The shareholders believe the company needs a new "winning business plan to repair the company's value", but said a new independent board will be needed to implement that change and to improve the governance of the company.
Minera IRL SA has proposed appointing Jorge Luis Ramos, Julian Bavin, Leonard Harris, Frank O'Kelly, Armando Lema and Diego Benavides to the board.
Significantly, Benavides was one of the Minera IRL's founders and is currently president of the subsidiary.
Ramos is the chief executive of COFIDE, Peru's state-owned development bank, which will provide a substantial debt facility to the company should shareholders vote in favour of the changes.
Minera's Corihuarmi gold mine in Peru currently has a mine life until the middle of 2017, with the potential to extend this into 2019 through a "minor investment" in a drilling programme, a move which the new board would support.
The shareholder group also accuses former Executive Chairman Daryl Hodges of "jeopardising" the development of the Ollachea project in Peru, and said current Chairman Pinto has made recent comments that have also jeopardised the project.
Pinto was appointed to the board "within hours" of the company's last annual general meeting after Hodges was removed after failing to win re-election, and the shareholder group is not satisfied that Pinto was not voted into his role.
"A new board is required to repair links with the Ollachea community and provide continuity and effective management going forward," said the shareholder group.
If the new board is elected, Ramos will be an executive in an otherwise "predominantly independent board", and will structure a debt facility from COFIDE worth USD240.0 million.
The new board will also restart the process of sourcing financing to develop the Ollachea project and to conduct that minor investment to extend the mine life of Corihuarmi.
The shareholder group has also said the new board will bring a halt to "costly remuneration practices", claiming former Chairman Hodges could potentially receive over USD1.0 million for the seven month period he was at the company, including USD500,000 as a termination fee. They also claim that Hodges is receiving around USD15,000 per month since he was removed from the board.
"A new board will: be more independent; help improve corporate governance at the company; and mean a reduction in the reputational risk profile of the company," said the shareholder group.
Minera shares were untraded at 3.30 pence per share on Wednesday morning.
By Joshua Warner; [email protected]; @JoshAlliance
Copyright 2015 Alliance News Limited. All Rights Reserved.
Related Shares:
MIRL.L