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PanAust speaks out on HPL

Admin | 1:06 PM |
MINER PanAust Limited has broken its silence on the rift that has developed with its joint venture partner-Highlands Pacific Limited (HPL).

Responding in a market report managing director Dr Fred Hess clarified the proposal was to reinvigorate its (HPL) board and that it had omitted material information to the proposal.

"PanAust also wishes to note that in its view each nominee would meet the test of independence as set out in the Australian Stock Exchange (ASX) Corporate Governance Principles and Recommendations." he said.

"PanAust also wishes to clarify that the proposal to reinvigorate the Highlands board is unrelated to the ongoing dispute in relation to the Frieda River project and the proposed independent directors have no involvement in the Frieda River joint venture.

"In particular, the announcement failed to disclose that PanAust views each nominee as independent from PanAust, and that there is no arrangement or understanding that the proposed independent directors will act at the direction of, or report to PanAust."

Dr Hess said the reasons for PanAust seeking to change the composition of the Highlands board include to implement a new strategy and direction for Highlands.

Dr Hess said this is with a view to increasing shareholder value in circumstances where the HPL share price has decreased significantly over the last five years.

"PanAust notes that voting patterns at the last annual general meeting reflect substantial shareholder discontent with the current board following the US$68 million loss in 2015 which included the payment of short term incentives to senior management.

"Sentiment is unlikely to have improved following the 2016 half year loss of US$23.5 million which has been exacerbated by the board’s delayed and ineffective response to implement austerity measures and also in the absence of any disclosure in respect of strategy to create shareholder value.

"Clearly, change is overdue with barely US$10.5 million cash left in the bank at year end after spending US$3 million on staff costs for the year," Dr Hess said.

He said PanAust disagreed with the comments that had been made by Highlands that, should the proposal be implemented, it would result in a "PanAust-dominated board" which "would be at risk of operating in the interests of GRAM, rather than in the interests of all its collective shareholders."

"PanAust considers that the appointment of a new, independent board is an important step towards a strategic reinvigoration of Highlands with a view to stemming ongoing value destruction.

"PanAust notes that it is still waiting on a response from Highlands on the date of the shareholders meeting to consider Highlands board composition," he said.

He urged investors to consider the resolutions being proposed by PanAust carefully, together with the information and reasons put forward by PanAust.

Further, that they vote in favour of the resolutions at the special meeting, which will be held in May, 2017.