Datt Capital sets in motion Koonenberry Gold board spill

Datt Capital is attempting to spill the board of ASX-listed Koonenberry Gold (KNB), saying it is not satisfied with its governance and shareholder value preservation.

The boutique investment manager, which has a 12% stake in Koonenberry Gold, wants to eject two non-executive directors: Darren Glover and George Rogers.

It wants to replace them with Tim Kennedy, as an independent non-executive director, and Tony Gu, as a non-independent non-executive director.

Datt Capital had previously submitted confidential requests for board changes, but after being rebuffed by Koonenberry, formally moved resolutions under section 203D of the Corporations Act to remove the two directors. Koonenberry also did not disclose these developments to the market via an ASX announcement and instead put forward a "controversial" incentive package for these directors.

The fund manager also criticised the proposed performance rights incentive package announced by Koonenberry on April 10, arguing the package represents an "egregious transfer of value from shareholders to the board," estimating a potential $5.4 million dilution to shareholder value, assuming a 20-cent share price.

The package could dilute existing shareholders by almost 6% without delivering tangible benefits.

"The vesting terms are inappropriate for a company with a confirmed, significant gold discovery and pending drill program results," Datt Capital chief investment officer Emanuel Datt said.

"Rather than being linked to fundamental value creation, the conditions are tied to short-term share price movements."

A "well-structured incentive package" instead should include vesting conditions based on tangible metrics, such as gold resource quantities verified under the JORC Code, which sets the minimum standards for Public Reporting of Minerals Exploration Results, combined with a 30-day volume-weighted average share price metric.

"The board's new proposal departs from past practice and represents poor governance. Our proposed board candidates have the skills and proven track record to build and maximise value for all shareholders," Datt said.