The review also recommended that the company's board be trimmed to three members from the current four.
Given that non-executive director Peter Harley already intends to retire from the board at the forthcoming Shareholder's General Meeting on 24 May 2013, Gunson urged shareholder to reject the resolution to remove David Harley as a director.
The board plans to retain David Harley as a consultant for 12 months to ensure his institutional memory and knowledge of the Company is available to the new managing director and the Board once his service contract expires at the end of March 2014.
Gunson said that removing him as a director will result in the immediate loss of his services, hampering implementation of the company's strategy and could result in significant delays and disruptions of efforts to realise the greatest possible value for shareholders from its assets, particularly the Coburn Zircon Project.
Other measures to be taken by the board of Gunson will include:
- reducing Director's fees by 25% and suspending their payment until circumstances permit reinstatement
- reducing the ongoing remuneration of the managing director and the fees paid to the chief financial
officer and the Coburn project manager, both of whom are contractors; and
- ceasing or limiting to the greatest extent possible any payments to consultants and service providers
Perth-based corporate advisory firm Azure Capital, which carried out the review, endorsed the recommencement of discussions with parties that had previously shown interest in the project.
It added that sector mergers and acquisitions should also be considered.
However, it noted that the project's dependence on Zircon revenue reduced the universe of potential partners to those focused on zircon, rather than the much larger titanium dioxide industry, where more bankable offtake contracts can be negotiated.
This is aided by a recent research report by JP Morgan showing that the Coburn Project is currently the only unfinanced zircon development project in the world lying below the estimated $US1,807 per tonne average inducement price.
The only other project is World Titanium Resources' (ASX: WTR) Toliara project in Madagascar, which is under a joint venture offer from major Chinese titanium dioxide pigment producer Sichuan Lomon Titanium.
Mount Gunson project
Due to the short time available, the review did not address the company's other projects though Gunson noted that interest in the small 100% owned MG14 and Windabout copper-cobalt deposits at Mount Gunson has increased significantly in the past several weeks.
Gunson said the newly completed Strategic Review has provided the company with a plan and new corporate structure to realise the greatest possible value for shareholders.
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