One day after being praised by chairman Geoff Hill at the company’s annual meeting, iron ore miner Mount Gibson Iron has announced that managing director Luke Tonkin will step down from the role.
His shock exit comes amidst continuing controversy over control of the company’s board and the independence of Mr Hill.
It also follows revelations today that the Foreign Investment Review Board has written to Mt Gibson raising concerns about its board composition.
“The letter expresses concern that the composition of the company’s board has developed in a manner inconsistent with information provided to the Treasurer, shareholders and the market at the time when approval was given for the recapitalisation of the company in 2008,” Mt Gibson said in a statement.
"The principal point of concern identified in the letter is that .... the company does not have a majority of independent directors."
The recapitalisation involved two Chinese groups, Shougang Group and APAC Resources, each acquiring about a 20 per cent shareholding in Mt Gibson.
Ever since then, concerns have been raised about control of the company, particularly with Shougang and APAC each having two representatives on the board.
Neil Hamilton resigned as chairman at last year’s annual meeting, and in August this year, his replacement, Perth lawyer Craig Readhead, was replaced by Mr Hill.
The appointment of Mr Hill was supported by Shougang and APAC but opposed by Mr Readhead, Mr Tonkin, and another Perth-based director, Ian Macliver, who retired from the board at yesterday’s annual meeting.
The board has been in the extraordinary position of not agreeing on whether Mr Hill is independent, despite Mr Hill taking the highly unusual step of signing a statutory declaration to declare his independence.
The stat dec did not sway Messrs Readhead, Tonkin and Macliver, who “do not consider that Mr Hill can be classified as independent”, according to a note in Mt Gibson’s annual report.
Mr Hill told yesterday’s annual meeting that the company was working towards having a majority of independent directors.
It has made some progress on that front, with the appointment of two new directors - experienced mining executive Russell Barwick and former SKM managing director Paul Dougas.
Mr Hill said the company was continuing to search for a further independent director, to replace Mr Macliver.
Assuming Mr Readhead stays on the board, that would give the company four independent directors, equal to the number of Shougang and APAC representatives.
The question of board independence would, therefore, hinge on whether Mr Hill was considered independent.
Mr Readhead declined to comment today when asked about his board tenure. However he will be obliged to retire next year, upon reaching the maximum allowable term of 10 years, and would need to seek re-election at the 2012 annual meeting if he wanted to continue as a director.
In today's statement, the company said Mr Tonkin would step down after a transtion period of up to six months to allow the board to identify and appoint a successor.
At yesterday' annual meeting, Mr Hill commended Mr Tonkin, following a presentation that highlighted the company's strong financial position and solid operational performance.
