The directors of Perth-based gold explorer Echo Resources have come out swinging after dissident shareholder Michael Ruane forced the company to convene a general meeting, where he will seek a board spill.
The directors of Perth-based gold explorer Echo Resources have come out swinging after dissident shareholder Michael Ruane forced the company to convene a general meeting, where he will seek a board spill.
As a substantial shareholder in the company, Mr Ruane sent two 'notices of request' to Echo seeking a general meeting to vote on the removal of all of its directors and have them replaced with Metaliko Resources directors Peter Hunt, Robin Dean and himself.
The first request was rejected by Echo as being invalid but the second was accepted.
They were sent in the name of Kesli Chemicals; a company in which Mr Ruane is a director.
Echo said today the company would convene a general meeting but went on the attack of Mr Ruane's plans.
The boardroom battle revolves around Metaliko's strategy of reopening its Bronzewing gold plant as a processing hub for mines in the Yandal gold province, including Echo's Julius gold discovery.
Metaliko purchased Bronzewing in June last year from failed goldminer Navigator Resources for a cash and scrip payment of $4 million.
Mr Ruane said combining Bronzewing’s existing infrastructure with Julius’ potential resource would be a good outcome for both companies, and in pursuit of this goal he had made joint venture proposals.
However, according to Echo’s statement today, the proposals were rejected because they “were not in the best interests of Echo shareholders”.
“Echo has undertaken reviews of Bronzewing for a potential purchase by Echo of a 100 per cent interest in the project and tenements,” the company said.
“The board of Echo took the view that Bronzewing was an unacceptably high risk project.”
It noted today that two previous owners of Bronzewing, View Resources and Navigator, have fallen into the hands of administrators as a result of mining problems at Bronzewing.
Mr Ruane argued that making use of the Bronzewing plant was the best outcome for Echo.
“What are they going to do if they find a resource? Are they going to sell it? Or are they going to mine it? They announced that discovery eight years ago and they still haven’t put a resource figure out yet,” Mr Ruane told Business News.
“We think that the cobbling of the resource and the plant would make absolute sense.
“(Echo’s) running short of money and it doesn’t have enough to push the project forward.”
Mr Ruane, through certain entities, became a substantial shareholder in Echo in November last year after increasing his stake to 15.4 per cent.
The directors of Echo hold a relevant interest of 18.8 per cent.
Shares in Echo were unchanged at 11 cents at the close of trade.
