(Reuters) - Canada’s Cornerstone Capital Resources Inc (CGP.V) said on Wednesday it would urge SolGold Plc (SOLG.L) shareholders to replace the company’s entire board, a day after rejecting the UK-listed miner’s takeover offer for a second time.
“The current SolGold Board is incapable of managing the affairs of SolGold for the benefit of all shareholders in a prudent and transparent manner,” said Greg Chamandy, chairman of Cornerstone, in a statement.
At the centre of SolGold’s public spat with two of its largest shareholders are concerns it is raising money for its mammoth Ecuador copper-gold project using inefficient and expensive methods.
In May, SolGold announced a financing package of up to $150 million and a $15 million bridge loan with mining financiers Franco-Nevada Corp (FNV.TO) to develop its Alpala project.
Cornerstone’s Chamandy said the proposed royalty financing would destroy value for all SolGold shareholders, echoing comments by SolGold’s second largest investor Newcrest (NCM.AX)
Cornerstone said it expected a new SolGold board to review the terms of the Franco-Nevada financing package and possibly terminate the deal if it was not in the best interests of SolGold and its shareholders.
SolGold CEO Nick Mather said the call to remove the company’s board was “unnecessarily destabilising”, adding he was not sure of the motivation but was “confident of defending such an attack”.
He was speaking on a webinar to try to convince Cornerstone shareholders to take an all-stock offer made in late June of 11 SolGold ordinary shares for each Cornerstone share.
An earlier proposal was also rejected by Cornerstone in 2019 on the grounds that it undervalued the Canadian company.
Mather urged Cornerstone shareholders to “accept the premium bid”. He added the Franco-Nevada deal was on favourable terms and was fair for all shareholders. Franco-Nevada declined to comment.
Cornerstone said on Tuesday about 65% of its shareholders would not support SolGold’s second offer.
Shares in SolGold were up 4% by 1425 GMT.
Reporting by Shanti S Nair and Shanima A in Bengaluru, Zandi Shabalala in London and Jeff Lewis in Toronto; Editing by Amy Caren Daniel and Mark Potter