LONDON (Alliance News) - Nyota Minerals shares soared Thursday after its biggest shareholder, Centamin PLC, launched an attempt to oust Nyota Chief Executive Richard Chase as it tried to salvage a potential deal to create a joint venture to progress Nyota's single asset.
Centamin, which has a 19.4% stake in Nyota, has requested a shareholder meeting to consider removing Chase.
Nyota, a gold exploration company with one large license area in Western Ethiopia, said Centamin is attempting to oust Chase ahead of a development decision on its Tulu Kapi site. Centamin and Nyota had been working together on potential ways to progress Tulu Kapi, including a possible joint venture, but the discussions have stalled and Nyota has begun looking at other options. Centamin's call for the removal of Chase is an attempt to salvage a deal.
Nyota decided to seek a partnership to develop a mine at Tuli Kapi after deciding it wasn't viable to do it alone. At the end of June it had AUD2.4 million in cash, but liabilities of AUD0.4 million and said in July it expected to spend AUD1.7 million in the current quarter.
The company had said it would run out of cash by the end of this month, but in a statement said cost cutting and careful management of its spending means it has enough to get it through until at least the end of October. Its cost cutting has included cutting fees paid to its directors by half.
Nyota said it fully supported its Chief Executive. "As (the company's) only executive director, the board considers his removal at this critical time as being against the interests of all shareholders."
"This action by Centamin comes at a challenging time for the company when it is looking to raise new capital and find a supportive partner to help develop its assets," it said in the statement. "Pursuant to the review initiated earlier this year, the board is in discussions with a number of parties in respect of different strategic options."
It said it hopes to be able to make a definitive announcement on those talks within the next few weeks.
Nyota said it would let shareholders know when it will hold the extraordinary meeting to consider Centamin's proposal. Under UK listing rules, it has to comply with a valid request.
Nyota shares soared up 110% to 1.25 pence Thursday after a gradual decline in share price from 5.385 pence a year ago. It had earlier risen to a high of 1.468 pence.
By Tom McIvor; tommcivor@alliancenews.com; @TomMcIvor1
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Centamin PLC (CEY)