Global Lithium has upset its own board ahead of a property developer’s bid to roll it

Global Lithium Resources has spilled its own board and proposed a new director, getting ahead of a tilt by a Perth property developer to install himself as a director.

Global Lithium Resources has scaled back its feasibility study works.

Global Lithium Resources has spilled its own board and proposed a new director, getting ahead of a tilt by a Perth property developer to install himself on the board.

The lithium developer made a series of announcements on Tuesday which seek to both rein in costs at the company, which is developing the Manna project in Western Australia’s eastern goldfields, while also hoping to thwart a bid by Liaoliang (Leon) Zhu to roll the board.

Chris Ellison’s Mineral Resources holds a 10 per cent stake in Global Lithium and Gina Rinehart’s Hancock Prospecting is understood to have a holding somewhere below 5 per cent.

Mr Zhu’s Sincerity Development in August filed two requisition notices in a bid to remove independent non-executive directors Greg Lilleyman and Hayley Lawrance from the board and replace them with his own nominee.

The first notice was deemed invalid, however, the second was deemed valid and sought to have Mr Zhu himself, who does not appear to have any mining experience, added to the board.

The request also sought to reduce the number of board members from four to three, leaving Mr Zhu plus existing director Dianmin Chen and executive chair Ron Mitchell on the board.

Global Lithium Resources on Tuesday said it was going to proactively reduce the number of board members from four to three in a bid to reduce costs, while Mr Lilleyman and Ms Lawrance had agreed to step down at the upcoming annual meeting to be held in late November.

The company’s chief financial officer Matthew Allen has been appointed as an executive director to fill the board vacancy created by the proposed resignations of Mr Lilleyman and Ms Lawrance, and will stand for election at the AGM.

Global Lithium said it would also make an application to the Supreme Court to have the requisition notice dealt with at the AGM, avoiding the need to hold two meetings and setting up a potential battle for the one remaining board seat between Mr Allen and Mr Zhu.

Mr Zhu’s lawyer, Tim Houweling of Cornerstone Legal, disputed that Mr Zhu had no mining experience, saying he had been a shareholder of the company for some time.

He said Mr Zhu was “exceptionally experienced” as a company director and had a “careful eye for the bottom line’’.

Mr Houweling also said it wasn’t necessary for a board member to have experience “digging rocks out of the ground’’, with Mr Zhu able to bring significant financial acumen to the table.

Mr Houweling said there were “testimonials’’ to Mr Zhu’s expertise, however would not share them with media at this point.

He added Mr Zhu’s drive would be to cut back on expenditure in areas such as exploration.

It is understood Mr Zhu has supplied a statement to Global Lithium Resources’ shareholders which will be made public should the Section 249D matter progress.

Mr Zhu was contacted but would not comment, referring The Australian to Mr Houweling.

The company told the ASX on Tuesday, while it had a “strong” balance sheet with $25.2m in cash and listed investments and no debt, it would institute a range of measures to preserve capital given the current low lithium price environment.

This would involve immediately pausing several elements of the definitive feasibility study (DFS) into the Manna lithium project.

The company said the changes had been motivated by the “current and likely protracted downturn in the global lithium market’’.

“The company’s budgets and operations have been under constant review by the board for some time, with protection of the balance sheet and capital assets uppermost in mind,’’ the company told the ASX.

“As a result of the latest review, the board has resolved to implement several material changes to the company’s corporate structure and operations.’’

The changes would also include a material reduction in corporate overheads and operational spending, Mr Mitchell said.

“Our focus must remain on protecting and enhancing value for our shareholders, which is why these tough decisions are now unavoidable,’’ Mr Mitchell said.

“Nevertheless, the company is in a robust financial position and is well placed to weather the current market conditions.

“The proposed board changes have been put in place to facilitate the orderly transition at the upcoming AGM and to ensure the company can properly implement required cost reductions in the coming months.

“Both Greg and Hayley remain strong contributors to Global Lithium and their willingness to put the interests of shareholders at the forefront of their thinking is a testament to their commitment to the company.’’

Scaled back work on the Manna project would continue, the company said.

“Current work activities will be finalised, and further activities suspended pending future improvements in the lithium commodity markets,’’ the company said.

“The company will return to finalise the DFS when markets support the funding required to commence construction of the Manna lithium project, which at 51.6Mt at 1 per cent lithium oxide is currently positioned as the second largest lithium resource in the Kalgoorlie lithium province.’’

Global Lithium shares were 10.5 per cent lower at 17c.

Originally published as Global Lithium has upset its own board ahead of a property developer’s bid to roll it