Sierra receives 249D notice

Sierra Rutile has received a section 249D notice from major shareholder PRM Services, under US-based investment entity Gerald Group.

Within the document, the potential bidder is calling for a general shareholders meeting and has recommended Gregory Martin, Graham Davidson, Patrick O'Connor and Joanne Palmer be removed from Sierra's board - to be replaced by Craig Dean, Wara Serry-Kamal, Stephen Palmer and Zhuoying Jing.

Through its relationship with Gerald Group, PRM holds an 11.46 per cent stake in Sierra.

"If Sierra considers the section 249D notice to be valid, it will comply with its relevant obligations under the corporations act and will undertake the necessary steps to convene a general meeting," the company said. 

Yesterday, the mineral sands producer told the market it had received an on-market takeover offer from PRM, to acquire all Sierra's shares not presently owned by the company at a price of 0.095 cash per share.

Sierra's shares rose by 34 per cent in the hours following the announcement, closing the day on 10 cents per share.

Theuns de Bruyn-led Sierra also provided an update regarding its ongoing discussions with the Sierra Leone government, after suspending its Area 1 operations on March 11, due to the SLG's desire to amend the fiscal regime between both parties. 

The SLG is keen to amend its third amendment agreement with Sierra, and revert back to a fiscal model which was enforced back on November 20 2001. If this was enforced, Sierra would be required to pay a substantial amount of money to the SLG for the 2023 financial year - which could further impact the company's finances.

During its recent half year report, Sierra reported a $20.7 net loss after tax for the first six months of the 2024 financial year, after recording a $75.6 million profit during the prior corresponding period. 

The position of the company remains that the third amendment agreement cannot be amended without the mutual agreement of Sierra," the company said.

"Reverting to the previous fiscal arrangements would make any remaining operations in Area 1 uneconomic.

"The SLG has now advised that the notice of suspension did not comply with the relevant requirements under the applicable law and regulations, and therefore the suspension is in breach of those laws and regulations.

"Although Sierra does not agree with the SLG's position, it is engaging with the SLG to seek to resolve the issue in conjunction with the broader overall negotiations. 

"Sierra confirms its previously stated position that it will consider a restart of Area 1 operations if agreement can be reached with the SLG on an appropriate fiscal regime that would again support production, alongside supportive market conditions."