Transcription of The Stock Network Interview with Far East Gold (ASX:FEG), CEO Shane Menere
Izaac Ronay: Far East Gold is defending its board and its flagship Idenburg Gold project in Indonesia ahead of a shareholder vote next Wednesday, with proxies closing on Monday. Its largest shareholder, Xingye, failed with a takeover offer earlier this year and is now asking shareholders to remove four directors. And this week, the company went to the market to correct Xingye’s latest letter to shareholders.
Far East Gold Managing Director and CEO Shane Menere joins the Stock Network to discuss the claims being made against the company and what is at stake in the vote. Shane, Xingye says it’s protecting its investment. Isn’t this simply a major shareholder holding management accountable?
Shane Menere: Hi Isaac, thanks for having me.
Accountability is an entirely reasonable position to take, but it works both ways. So, Xingye has requested shareholder registers from three other companies associated with our chairman and myself. And a register request is not inherently improper.
But how does attaining those registers protect its investment in FEG? I ask the question. How does it fund our projects or advanced development? And I’m prepared to answer hard questions about FEG, and Shen Yeh should explain its own conduct just as clearly. So, protecting our investment, in quotations, is not a complete answer to every question.
Izaac Ronay: I see. So, they say your team hasn’t delivered. So, what evidence do you offer shareholders?
Shane Menere: Well, look, while I’ve been at the helm, Isaac, our team’s delivered Idenburg made in York, 780,000 ounces resource, and got the first drilling underway in the project’s history.
Now, these projects have been around for 30-odd years, and they’ve never advanced. And Far East Gold acquired these projects and taken them a long way. So, it’s not just the end result that you see, the drilling.
There’s those milestones that require permits, community engagement, technical work, persistent effort on the ground. These projects had very long histories, as I’ve mentioned, and we moved them forward. So, we still have to turn that progress into shareholder returns.
I accept that responsibility. But dismissing the work does not erase those achievements. So, anyone seeking to replace this team should present a better funded plan, not simply an argument for moving people.
Izaac Ronay: Okay. And so, you welcomed the company as a strategic investor. So, why has the relationship deteriorated?
Shane Menere: We expected complementary strengths.
So, we brought the project’s Indonesian relationships and local delivery capability. Xingye brought financial capability and operational experience. The intention was to combine those strengths and accelerate development.
That was a sensible commercial position. In my view, the collaboration has fallen well short of what was anticipated. Instead, we faced a takeover campaign, board disputes, contested allegations.
Shareholders are entitled to ask how that helps raise the value of these assets. That certainly sounds like a lot of headaches. So, what relevance do Xingye’s Hong Kong listing intentions have to do with this dispute? So, I’m glad you asked that because, you know, in pursuit of a Hong Kong listing for Xingye is public knowledge.
That’s a relevant context when assessing its wider growth ambitions and continued interest in FEG. Xingye should explain clearly how FEG and our assets fit into those ambitions. My assessment is that it sees substantial strategic value in these projects.
And look, I can’t speak for its internal motives, but shareholders are entitled to examine the commercial connection. The question is straightforward. If Xingye wants to acquire the assets, put forward a fair, funded offer that recognises their value to shareholders.
Izaac Ronay: Excellent. So, the company is also criticising your progress or lack of progress, rather, on asset sales. Do you think that’s fair?
Shane Menere: Look, it’s fair to ask about progress. It’s also fair to examine Xingye’s own position. Now, we’ve faced threats to block transactions. We’ve been working to progress those transactions and in parallel facing those threats to block.
We’re then criticised over the transaction progress. So, they can’t have it both ways. If they oppose a transaction, explain the commercial reasons.
If they support asset sales, identify the terms they would support. We remain accountable for negotiations. Xingye should be accountable for its role too.
Shareholders deserve the complete picture. Okay. And what about governance concerns and the company’s right to seek audit changes? Yeah.
So, specific governance concerns should be examined properly. We’re in regular contact with the ASX and been through a particularly demanding audit as a result of all of this. Neither is a blanket clearance.
Equally, allegations are not findings. Identify the issue. Produce the evidence and explain what has actually been established if that’s the case.
Xingye is entitled to seek board changes, but shareholders are entitled to know what comes next. Who leads the company? What funding is committed? What is the development timetable? What specific Indonesian delivery capabilities does the new proposed team bring? So, removing directors is not by itself a development plan.
Izaac Ronay: Okay. And is there a genuine commercial solution or are you simply just trying to push Xingye out?
Shane Menere: No, not at all. We proposed a negotiated commercial framework and it involves Xingye acquiring assets and FEG buying back its entire shareholding, allowing Xingye to exit the register completely. So, that remains a proposal subject to negotiation, funding arrangements and all those necessary approvals, I should say.
It’s not an agreed transaction, but it’s been put on the table. So, we believe it offers a constructive way forward. A good fair offer that recognises the assets value is all FEG is asking for.
If Xingye’s objective is protecting its investment, as they say, then, you know, engage with that proposal on its merits and explain what works and what doesn’t in terms of what would achieve an agreement.
Izaac Ronay: Okay. So, obviously, this is a very messy situation and a bit confusing for a lot of shareholders who haven’t had to deal with this kind of thing before. So, what would you like shareholders to take away from this and what do you want them to focus on?
Shane Menere: Judge both sides of the evidence. You know, our team has delivered tangible project milestones. You know, we’ve proposed a commercial way forward, which I think is a win for all parties involved.
We remain accountable for funding and the company and realising value. So, apply that same scrutiny to Xingye, its conduct, its funding commitments and the practical consequences of its proposed board changes. I’ve had enough of the broad allegations and inconsistent arguments consuming the company’s attention and shareholders deserve a clear answer, a fair value and a credible path forward.
So, read the materials, vote at both meetings. There are separate votes. Make sure your voice is counted for.
Izaac Ronay: Excellent. Shane, thank you so much for taking the time to join the Stock Network and explain your position. We really appreciate it and we wish you all the best over the next couple of months.
Shane Menere: Thank you, Isaac. Really appreciate it. Thank you for the support. Thank you to all our shareholders.
Ends