"Please explain". Picture: Getty Images

Iron ore explorer Havilah Resources is facing more pressure from the ASX to explain why two of its directors sold their “top-up” shares off-market.

At the end of last year, Chairman Mark Stewart and technical director Chris Giles sold shares and listed options they acquired from the shortfall remaining from Havilah’s rights issue completed in early 2018.

The ASX told Havilah in December that the issue of the shares and options was a “technical breach” of its listing rules because the two directors were related parties and shareholder approval was required before the shares and options were issued.

The bourse gave Havilah until December 31 to dispose of the shares and options and donate any profits to charity.

The ASX now wants to know why the shares and options were sold off-market instead of on-market as required.

Havilah said in its response to the bourse that it had to “act quickly” so the matter didn’t continue into 2019 when directors would have a limited opportunity to trade.

“The company notes that the trading volume since the beginning of 2019 has been very low, as was anticipated by the company,” company secretary Claire Redman said in the letter to the ASX.

“The company believed that the two large parcels from the relevant directors would have placed significant undue pressure on the company’s share price if executed via on-market trades on 31 December 2018.”

Havilah Resources (ASX:HAV) shares over the past year.
Havilah Resources (ASX:HAV) shares over the past year.

The off-market trades were done at an effective price of 14.5c per share, while the market traded between 15.5c and 18c that day, Ms Redman explained.

The sales resulted in a loss of $2412.45 for Dr Giles and $4113 for Mr Stewart.

The latest ASX grilling comes close on the heels of a shareholder push to have two directors removed.

‘Unwanted distraction’

In early December, Havilah received a “249D” notice calling for a meeting to vote on the removal of then chairman Ken Williams and Mr Stewart.

The notice was received on the same day Havilah announced it had made a major new iron ore discovery in the Grants iron ore basin of South Australia — the same place BHP (ASX:BHP) had once mined.

Mr Williams, however, had previously publicly stated his intention to step down at the 2018 AGM.

“Ken Williams, our chairman, said he has been in the job for quite some years now and it’s time for a new guy,” Dr Giles told Stockhead ahead of Havilah’s AGM in December last year.

“We’ve had a process that Ken’s been running of locating another suitable replacement director — someone with a high profile, someone with metallurgical skills that can help us deliver a project.”

Dr Giles this week asked shareholders to give new chairman Mark Stewart a fair go and that the push to have him removed was an “unwanted distraction”.

“There is no compelling reason to remove Mark Stewart as an independent non-executive director at this time,” he said in a letter to shareholders.

“This will simply cause further instability and wasted management time. Just let us get on with the job.”