September 4, 2009 / 3:19 PM / 10 years ago

UPDATE 2-Chariot shareholders reelect incumbent board

* Shareholders reject dissident slate

* Shareholders reject motion to adjourn meeting

* Board to push forward on sale of the company

* Shares fall more than 17 percent (Adds CEO comments, sale plans, share price move)

By Euan Rocha

TORONTO, Sept 4 (Reuters) - Shareholders of Chariot Resources Ltd CHD.TO reelected the company’s incumbent board of directors on Friday, rejecting a slate nominated by Lundin Mining (LUN.TO) Chairman Lukas Lundin.

The shareholders also shot down a motion proposed by the dissident slate to adjourn the shareholder meeting.

Chariot had accused the Lundin nominees of attempting to seize control of Chariot without paying a control premium.

“This move (by Lundin) is nothing new. It’s just another way of practising the age-old ritual in mining, which is if someone else has it, you go out there and get it by any means possible,” said Chariot Chief Executive Ulli Rath.

“I can assure you, if Chariot had moose pasture out there, nice green trees with nothing underneath, this would never happen ... Projects that are valuable are inevitably surrounded by controversy.”

Speculation that Lundin Mining could try to acquire Chariot or its Mina Justa copper project in Peru has intensified since the proxy fight — led by Lukas Lundin and Lundin Mining Director Brian Edgar — was revealed last month. Lundin Mining owns more than 18 percent of Chariot Resources.

Lundin Mining has stated that it did not plan to acquire Chariot Resources, or its key project in Peru. The company said it was not directly involved in the proxy fight led by its chairman to remove Chariot’s board.

However, Lundin Chief Executive Phil Wright has said the company supported the alternative slate of directors.

At the beginning of the shareholder meeting, the dissident slate moved to adjourn the meeting, alleging that it had not been given the opportunity to review all the proxies.

But roughly 106 million shares, or 52 percent of the votes cast, rejected the motion to adjourn, while about 96 million shares, or 48 percent, voted in favor of adjournment.

The reelected board won by a similar margin. Total votes cast were about 62 percent of Chariot’s 328 million shares outstanding.

Representatives of the dissident slate protested the results of the shareholder vote and marched out of the meeting, after requesting the opportunity to examine all the proxies provided.

Chariot said the dissident slate will have the opportunity to review all the proxies submitted.

SHARES FALL

Shares of the company, which were down slightly in early trade, fell 17 percent to 36 Canadian cents, when the outcome of the vote was known.

Blackmont Capital analyst George Topping said the share reaction was not surprising.

“We expected the immediate impact would be a weaker share price for Chariot as some of the losing side tend to sell on the ballot results,” Topping said in a note to clients.

Topping argued that the dissident action has had the positive effect of expediting the sale of the company.

Chariot said it has begun the necessary permitting processes for the Mina Justa project and that it intends to push forward with the sale of the company in the next few months.

Rath said the company’s financial advisors have recommended waiting for better market conditions before pursuing a sale of the company, but shareholders have pushed for the sale process to begin.

“We are going to be sitting down now and reviewing the timetable. Obviously we are going to listen to the shareholders,” Rath said.

Topping noted that Chariot’s easy-to-develop asset in Peru would fit well with most mid-tier copper producers.

“This is a reasonable time to sell the company as copper is at almost $3/lb, competitor share prices are high, and credit markets are almost back to normal,” Topping said.

$1=$1.09 Canadian Reporting by Euan Rocha; Editing by Peter Galloway

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