The CEO of a Canadian company with a small stake in a Papua New Guinea (PNG) nickel-cobalt mine is repaying about C$3.2 million ($2.3 million) in shares and resigning from the board after a probe said it found serious misconduct.
Former Nickel 28 Capital (TSXV: NKL) CEO Anthony Milewski agreed to return nearly 5 million shares to the Toronto-based company, it said on Tuesday. The stock closed at C$0.65 apiece on Monday. The board had fired Milewski, president Justin Cochrane and chief financial officer Conor Kearns on May 6. The trio founded the company.
“The settlement (with Milewski) was determined to be and approved by the board, on the recommendation of the special committee, as being in the best interests of the company in order to allow Nickel 28 to focus its time and resources on pursuing its strategic vision and plans,” interim CEO Christopher Wallace said in a release. There has been no similar settlement absolving any legal action with Cochrane and Kearns, Wallace said.
The company said May 6 the special committee reported the founders had violated their duties and frequently lacked judgment concerning company policy on insider trading, expenses and ethics.
The founders have blamed the probe’s findings on a New York-based hedge fund’s attempts to seize control of Nickel 28.
“We categorically deny these allegations and assert that they are unfounded and highly misleading,” the founders said on May 6. “These terminations are part of the year-long contest for control of Nickel 28 launched by Ned Collery of Pelham Investments. This contest saw Brett Richards along with Collery join the board of directors of Nickel 28 and work together to take control.”
The turmoil at Nickel 28 comes as prices for the metal suffer from cheap Chinese-fostered production in Indonesia that’s led to mines shuttering in Australia. Automakers such as Tesla are developing batteries using less cobalt. Leading entrepreneurs such as Robert Friedland have been arguing that new technology will replace nickel, cobalt and graphite in batteries, a move he says is needed if electric vehicles are ever going to be universally adopted.
Nickel 28 said it would take an extra month to meet its May 30 deadline to file its annual financial statement and sought a management cease-trade order. On June 3, the Ontario Securities Commission barred management from trading the stock, which closed at 76¢ apiece the day before.
Pelham said last year it was concerned with “independent oversight and what we view as excessive executive compensation” at Nickel 28.
The special committee began in December to probe “historical compensation arrangements, including grants made under the company’s omnibus long-term incentive plan,” the miner said.
Nickel 28, with a market value of C$62.7 million, owns an 8.56% interest in the China-held Ramu nickel-cobalt mine in Papua New Guinea. It also holds 10 nickel and cobalt royalties on development, pre-feasibility and exploration projects in Canada, Australia and PNG.
