RANGE Resources has used a loophole in the Australian Securities Exchange's rules to offload its Forrestania tenements to a former managing director.
Michael Povey, who ran the Perth-based explorer until July last year and remained a director until October last year, acquired the company's WA assets in March for an undisclosed sum.
The divestment, which formed part of a settlement after Mr Povey's contract was terminated early, was not disclosed to the market at the time. Neither was it presented to shareholders for approval.
A spokesman from the ASX said the regulator had previously contacted the company regarding the transaction.
"The company assured us they were in compliance with their obligations," the ASX spokesman said. "It said it was not a significant asset."
According to the ASX listing rules, shareholder approval is required when a company sells a substantial asset to a related party, including a director.
End of sidebar. Return to start of sidebar. Sign up to the PerthNow Business newsletter An asset is considered to be substantial if its value - or the consideration paid for it - is 5 per cent or more of the equity interest of a company. Prior to the divestment, Range's equity was valued at $84.2 million, meaning the tenements would need to be valued at about $4.2m to warrant a shareholder vote.
A spokesman for Range said the company did not consider Mr Povey as a related party because he resigned before the settlement was reached.
"In terms of recording the value of the tenements that were part of the Povey settlement, the tenements were firstly written down to market value, which in the economic climate ... were worth next to nothing," he said.
Range yesterday declined to disclose the terms of the sale of the tenements, some of which were acquired in 2003 from billionaire tenement dealer Mick Shemesian.
The first reference to the sale was in the company's interim report released 10 days later. However, no price was mentioned.
Range's recent annual report reveals that Mr Povey received $324,000 in termination benefits. And while the report makes no mention of the consideration paid for the tenements, it does reveal that the assets of the group fell by $3.4m to $80.8m last financial year, largely due to the divestment.
Eight months before the divestment, Range issued a statement advising of its strategy to "realise value" from its "significant West Australian tenement portfolio". Mr Povey was to oversee that process.
Range paid Mr Shemesian $1.75m plus 2.5 million shares in 2003 for the Forrestania tenements. Further tenements were later acquired from an unidentified party in return for 50 million shares and 50 million options.
Mining records show that Mr Povey has severed ties with Temby Minerals, which now owns the tenements.
He is currently involved in a deal to offload exploration licences in the Kimberley to Astro Resources for a combination of cash and shares. Mr Povey could not be contacted
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