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Lynas Corporation Ltd (ASX:LYC) is facing legal action from shareholders over its proposed sale of a polymetallic resource to Forge Resources Ltd (ASX:FRG) because of conflict-of-interest concerns.
Lynas announced in March that it had inked a deal with Forge to sublease designated areas within Lynas’ Mt Weld mining leases in Western Australia for $20.7 million in cash and the option to acquire 7 million Forge shares.
According to Fairfax Media if the deal proceeds Nicholas Curtis, who is Lynas’ executive chairman as well as a non executive chairman of Forge Resources, could vest 24 million in Forge performance shares valued at $30 million.
Fairfax says it has obtained a letter from law firm Turner Freeman acting on behalf of Lynas shareholders who claim information made available to them has been misleading.
The letter reportedly says that Lynas did not not adequately convey the ''extra-ordinary'' financial benefit Mr Curtis stood to gain when an ordinary shareholder ''scans or reads the document quickly''.
The news adds to speculation that the deal may struggle to get shareholder approval, with Fairfax claiming momentum is gathering on online share forums against the proposed transaction.
Lynas Corporation booked a net loss of $20.5 million in the first half of the 2011 financial year.
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