Chariot Board Fends Off Lundin Dissidents

If Lukas Lundin still wants Chariot Resources(CHD-T) he’ll have to pay for it now.

Chariot shareholders rejected Lundin and fellow Lundin Mining board member Brian Edgar’s dissident shareholder motion to throw out the current lineup of Chariot directors and replace them with Lundin, Edgar and four other men with ties to the Lundin Group.

At a shareholders meeting in Toronto on Sept. 4, roughly 105 million Chariot shareholders voted to re-instate the current Chariot board, while the Lundin-friendly group managed to win close to 96 million votes — much of which came from Lundin Mining (LUN-T), which holds an 18% stake in Chariot.

Chariot has roughly 328 million shares outstanding and 62% of all shares were voted in the standoff.

The meeting got off to a testy start as a lawyer representing the dissidents called for a vote to have the meeting adjourned. The group of six — made up of lawyers, Edgar and two of the other dissident choices for the board, but not Lukas Lundin himself — argued that because dissident supporters entered close to 96 million voting shares, but only 95 million were counted, the meeting should be adjourned until the group had a chance to investigate the discrepancy.

But there was little mystery behind the missing votes, and the move amounted to little more than fruitless legal manoeuvering.

The dissident votes, and many votes in favour of Chariot as well, were dismissed by a third party overseeing the voting process for irregularities on the proxy forums.

According to Chariot’s president and chief executive Ulli Rath, the pro-incumbent-directors’ side actually had more votes disallowed than the dissidents did.

Once the results of the vote were announced, the representatives of the dissidents — who had been occupying the front two rows of the conference room — got up and made a hasty exit.

A lawyer for Chariot, who was presiding over the meeting, then motioned to proceed with a presentation on the developments at Chariot’s flagship project, Mina Justa in Peru.

When the lawyer asked if anyone was contrary to the motion, Rath, seated amongst the shareholders, quipped: “All the contraries just left.”

And with shareholders still laughing over the remark, Rath bounded out of his seat and took the podium to thank shareholders for their support and give an update on Mina Justa.

As he went over the project’s key metrics — laid out in a feasibility study released early this year — it became evident why Lundin was interested.

The project is slated to be one of the world’s lower cost copper mines, with total cash costs estimated at US90¢ per lb. copper.

“This baby can make money in a very difficult price environment as well,” Rath said.

The project would cost $578 million to build and would turn out 244.5 million lbs. copper per year — some of that as copper cathode, some as a premium concentrate with a grade of 37.8% copper.

Numbers, that Rath believes, will bring in a serious offer for the company.

“The combination of the feasibility study, ESIA and permits (the latter two are expected by the end of this year) makes a compelling package that other companies will be interested in,” he said. “It allows us to try to get the best possible price for you in an eventual sale.”

Of course, Lukas Lundin had argued that it was his team, and not Rath’s, that was best positioned to sell the company. Lundin even issued a detailed press release making just that point so shareholders would not see his coming in as an attempt to capture the Mina Justa asset for the Lundin Group umbrella without paying for it.

From his words on the podium, Rath was prepared to take Lundin at his word with regard to the dissidents’ motives.

“I don’t think at the end there was much of a difference (between the two groups positions). They thought they could perhaps sell it better than we could, but we know the mine and we have a plan to sell it,” Rath said.

If Rath is correct, and the project is, as he puts it, “shovel ready” by the end of the year, and copper prices remain strong, offers for the company should follow shortly thereafter.

It now seems assured that the group who has brought the project to the advanced stage, will now be the ones who will secure a sale in the coming year or two.

“If it hadn’t been for our shareholders’ support someone might have sneaked in through the back door and taken this away from us,” Rath said.