AVZ forced to hand over email access amid battle for the board

AVZ Minerals (ASX:AVZ) will be forced to hand over email addresses from its share register to Fat Tail Holdings, an entity that has nominated three directors to AVZ’s board which the company does not endorse.

On 2 October 2023, the embattled lithium miner filed an action in the Supreme Court of Western Australia against Fat Tail, attempting to prevent access to email addresses from AVZ’s share register.

Fat Tail is an AVZ shareholder that has nominated Peter Huljich, Ty Ludbrook, and Michael Carrick to AVZ’s board. The group has created the slogan ‘Make Manono Great Again’ (MMGA) and was formed to help nominate the three aforementioned directors.

Mining.com.au previously reported that AVZ Minerals is recommending shareholders vote against electing Huljich, Carrick, and Ludbrook as it does not believe it’s in the best interests of all shareholders.

In denying access to these emails, Fat Tail said it would hinder its ability to communicate with investors ahead of the AGM on scheduled for 23 November, in which shareholders will vote on the nominations.

Yesterday (26 October 2023), Justice Howard found in favour of Fat Tail, meaning AVZ will have to provide email access and also pay legal costs.

“The company continues to receive tremendous support from its shareholders and my team and I will continue to fight for the best interests of our shareholders.”

On 23 October, AVZ released a statement regarding its position on the nomination of the three directors. AVZ said “it is unfortunate that the Fat Tail nominees have, without securing the mandate of the shareholders at the AGM, already engaged with persons whose interests are adverse to the interests of shareholders”.

However, a few days later the Supreme Court of Western Australia found in favour of Fat Tail gaining access to AVZ’s share registry.

Justice Howard acknowledged that on 11 September 2023 AVZ supplied what has been described as a ‘soft copy’ of its share register, which did not contain any shareholders’ email addresses. This matter was taken up by Fat Tail and its solicitors in correspondence, including on 14 September 2023.

“There is some urgency attached to the determination of these applications. AVZ Minerals sent out the notice convening its annual general meeting on 24 October 2023 – the meeting being called for 23 November 2023

Justice Howard also noted the potential significance of the issue may be seen from the fact that about 28% of AVZ Minerals shareholders have nominated email as their preferred means of communication.

“There is some urgency attached to the determination of these applications. AVZ Minerals sent out the notice convening its annual general meeting on 24 October 2023 – the meeting being called for 23 November 2023.

Fat Tail Holdings wishes to communicate with the members of AVZ Minerals as close in time as possible to the calling of the annual general meeting.”

Fat Tail have labelled AVZ’s actions as “obstructive, detrimental to shareholders, not in their best interests, and incurred unnecessary and wasteful legal costs for both parties, hindering the company’s ability to achieve any of its positive strategic objectives for project advancement”.

Nominee Michael Carrick told Mining.com.au following the court’s decision in favour of Fat Tail that recent events “expose the AVZ board’s lack of awareness”.

“Their misleading press release on 23 October highlights a critical need for an informed and capable leadership. Our due diligence reveals not just an uninformed AVZ board but underscores that a new board is vital for DCR government cooperation.

Immediate, substantial board changes and urgent negotiations are prerequisites for securing the balance of the Manono Project. Unlike the current board, we have the capability to resolve disputes with Dathcom shareholders in Dathomire and Cominiere. The DRC government refuses negotiation with AVZ’s existing board, intensifying the urgency for a transformative change.”

AVZ Minerals Managing Director Nigel Ferguson told Mining.com.au the company rejects any assertion from MMGA (Fat Tail) that AVZ’s present litigation strategy regarding its Manono project in Democratic Republic of Congo (DRC) is not in the best interests of the company and its shareholders.

“MMGA do not have a thorough and complete understanding of the issues at hand, especially the complex legal basis of the disputes and actions of opponents of the company.

The more recent discussions with the DRC Government for a memorandum of understanding for settlement involves an alternative resolution which is more favourable and is in the best interests of all stakeholders, including AVZ.”

AVZ engaged global law firm DLA Piper to conduct an independent review of the company’s corporate governance framework in June 2022. This news service understands the firm continues to assist the company.

AVZ has not traded for more than 530 days on the ASX. When the company was first suspended from trade in May 2022, it had a market capitalisation of about $2.6 billion.

The suspension is amid a series of legal stoushes and disputes surrounding its Manono Lithium and Tin Project in the DRC. At the centre of one issue is a claim over pre-emptive rights.

Presently, AVZ owns a 75% stake in Manono and La Congolaise D’Exploitation Miniere (Cominiere), which is majority owned by the DRC government, holds the remaining 25% stake. A key legal stoush centres on Cominiere and entity Dathomir not recognising and seeking to overturn a transaction in which AVZ acquired 15% of a Dathcom joint venture under pre-emptive rights.

The dispute over the 15% stake in Dathcom has led to action in the International Chamber of Commerce. Huljich is a former AVZ board member but resigned in August 2022. Carrick is a Chartered Accountant, while Ludbrook is the Managing Director and founder of Allegiance Capital.

Write to Adam Orlando at Mining.com.au

Images: AVZ Minerals
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Written By Adam Orlando
Mining.com.au Editor-in-Chief Adam Orlando has more than 20 years’ experience in the media having held senior roles at various publications, including as Asia-Pacific Sector Head (Mining) at global newswire Acuris (formerly Mergermarket). Orlando has worked in newsrooms around the world including Hong Kong, Singapore, London, and Sydney.