Dundee Corp. (TSX: T.DC.A, Stock Forum) said Monday it will not support Formation Metals Inc.’s (TSX: T.FCO, Stock Forum) recently announced sale of its precious metals refinery in Idaho.
The move comes after Formation said Thursday it has signed a binding letter of agreement to sell for USS$9 million cash its Sunshine Precious Metals refinery, copper refinery and certain lands at the Big Creek Hydrometallurgical Complex in Shoshone County, Idaho, to certain entities that are associated with Waterton Global Resource Management Inc.
“This was a strategic decision that will provide significant additional cash to the company’s treasury,’’ stated Formation CEO Mari-Ann Green in a press release on June 6, 2013.
On Monday, Formation shares fell 6.2% to 7.5 cents, leaving the junior with a market cap of $6.8 million, based on 90.9 million shares outstanding. The 52-week range is 40 cents and 7.5 cents.
Dundee also said Monday it will commence legal proceedings to prevent the sale unless it receives requisite shareholder approval.
In light of Dundee’s significant concerns in respect of the governance of Formation, Dundee said in a press release it plans to withhold the vote of its substantial share interest in the company in respect of the election of the company’s board nominees at the upcoming annual meeting on June 21, 2013.
As Formation’s largest shareholder, Dundee said it is of the opinion that the proposed sale of the refinery and the sales price are improvident and not in the best interest of Formation and its shareholders.
Dundee shares rose 0.31% to $22.73 on Monday, leaving the company with a market cap of $1.16 billion, based on 50.9 million shares outstanding. The 52-week range is $37.88 and $21.16.
Formation has not yet responded to the Dundee announcement.