A key cornerstone investor has pulled out of talks with Nigeria-focused iron ore play Kogi Iron due to concerns over a potential board spill.

A rebel shareholder group plans to move a resolution at a general meeting to have chief Martin Wood and non-executive directors Don Carroll and Michael Tilley removed from the board.

Kogi had been in discussions with an international resource investment fund for potential financing to complete the studies needed to advance the Agbaja project to the point it could be debt funded.

The company wants to build a cast steel plant on the Agbaja Plateau in Kogi State, Nigeria that would be supplied from its nearby iron ore deposits.

The potential investor, however, has now decided that the disruptive risks associated with the potential spill action are “material”, according to Kogi, and has halted talks until it knows the outcome of the July 2 meeting.

The news sent shares down as much as 26 per cent to an intra-day low of 14c on Thursday morning.

Kogi Iron (ASX:KFE) shares over the past three months.
Kogi Iron (ASX:KFE) shares over the past three months.

“The board is collectively disappointed by this action but hopes to be in a position to resume discussions immediately after the shareholder vote,” the company told investors.

Mr Wood only took on the role of CEO in January.

The company spent around $809,000 in the March quarter and $273,000 of that was on admin and corporate costs.

Kogi now estimates its admin and corporate costs for the June quarter will rise to $510,000 and that it will spend roughly $1.4 million, including exploration.

Stockhead is seeking comment.