PanAust in bid to control Highlands

PANAUST is trying to take control of its Frieda River joint venture partner Highlands Pacific.
PanAust in bid to control Highlands PanAust in bid to control Highlands PanAust in bid to control Highlands PanAust in bid to control Highlands PanAust in bid to control Highlands
Brisbane-based Highlands received a requisition notice from PanAust, seeking to remove four of its five non-executive directors, including chairman Ken MacDonald and newly appointed director Ron Douglas.
PanAust is seeking to replace the directors with three representatives from its Chinese state-owned parent, Guangdong Rising Assets Management Co.
PanAust has a 13.9% stake in Highlands, while Highlands owns the 20% of the massive Frieda River deposit in Papua New Guinea's Sandaun Province with PanAust as the majority partner.
The two have disagreed on the project in the past, with Highlands most recently saying that it believed more work was required on the feasibility study to achieve the required standard for a project of that size.
MacDonald said the actions were clearly related to the ongoing dispute.
"Highlands remains of the view that the PanAust approach to the project is suboptimal, and we have been urging it to adopt a different course of development that would generate better returns and reduced risks for our 7500 shareholders," he said. 
"It also is our view that PanAust has failed to complete the Frieda River feasibility study to the standard required under the joint venture agreement." 
Highlands shareholders have been told to take no action and MacDonald said PanAust's actions effectively amounted to a takeover, without actually acquiring the company.
"It is clear that a PanAust-dominated board would be at risk of operating in the interests of GRAM, rather than in the interests of all of our shareholders," MacDonald said. 
Frieda River is one of the world's largest undeveloped copper resources and has capital costs of $US3.6 billion for a 40 million tonne per annum open pit operation to produce an average 175,000 tonnes of copper and 250,000 ounces of gold per annum over an initial 17-year life.
The companies are currently progressing the project through the permitting process, with first production not expected before 2024.