Investors will have noticed something is going on with junior explorer Tyranna Resources (ASX:TYX) after it copped a request from certain shareholders to vote on the removal of three directors.

Stockhead decided to see just what is going down.

To start, Tyranna has received a “249D” notice requesting the company call a meeting to vote out chairman Geoffrey Clifford, managing director Bruno Seneque and technical director Nick Revell.

The request has come from Central West Resources, a subsidiary of Central Iron Ore – the company that agreed to sell its Eureka gold mine to Tyranna for $3.2m in December 2017.

Central West wants Brett Hodgins, CEO of Central Iron Ore, and Malcolm Smartt appointed as directors instead.

The dissident shareholder group, which has a 10 per cent stake in Tyranna, has opted to allow non-executive director Joseph Pinto to keep his seat.

Pinto resigned his role as chairman of troubled gold explorer Orinoco Gold (ASX:OGX), which is now in administration, in February.

>>Read all about the Orinoco situation

Tyranna was a cornerstone investor in Orinoco at one point but sold down most of its shareholding prior to the company being placed in administration.

Seneque told Stockhead the stake Tyranna still holds is probably only worth about $20,000.

‘Cash grab’

Tyranna is of the view that the push for a board spill is basically a “blatant grab for cash” and control of the company.

While Tyranna’s half-year report shows it only has $213,644 in the bank, it actually just received a final $1m payment from the sale of its Wilcherry project in South Australia.

“We’ve got about $1m in the bank and about $500,000 worth of shares in other listed entities, the main one being Kairos,” Seneque explained.

“It is quite opportune because they lobbed it on us as soon as we got that last batch of cash from Alliance Resources.”

But Hodgins told Stockhead it wasn’t a cash grab, it was about stopping Tyranna from doing a dilutive capital raising.

“There is no cash to grab. It’s all been spent. What we’re trying to do is stop a raise,” he said.

“We’ve got concerns that Tyranna is going to require a capital raise at these very low share prices.”

In the past year, Tyranna’s share price has slid over 82 per cent to a 52-week low of 0.5c.

Tyranna Resources (ASX:TYX) shares over the past year.
Tyranna Resources (ASX:TYX) shares over the past year.

There is speculation of a heavy sell down of shares by parties who may be connected with Central Iron Ore, though Central Iron Ore’s shares are still tied up in escrow.

“We are definitely not selling because we can’t sell,” Hodgins told Stockhead.

Central Iron Ore can, however, use its escrowed shares to vote on the removal of the three directors.

According to Central Iron Ore, Tyranna has no clear strategy.

Hodgins said Central Iron Ore vended its Eureka project into Tyranna because it was sold on a strategy of moving into the Western Australian gold space, but then Tyranna went and bought a cobalt project in the US.

Tyranna announced the acquisition in August last year.

Although Central Iron Ore was on board with the move and voted in favour of the deal at the time, the shareholder claims nothing has been done on the new cobalt project.

“We’re still spending money in South Australia, Tyranna is still spending money in WA and we are yet to go spend money or drill in the US,” Hodgins said.

“We were sort of confused about what actually is the strategy for Tyranna – are we an explorer, are we a producer?

“We see that trying to do all three with such a micro-size company is that you die by a thousand cuts. We can’t do everything.

“So we believed we need a clear strategy on what Tyranna needs to be especially with the way finances are and the ability to raise money at this point in the market.”

Central Iron Ore believes Tyranna’s overheads are too high and wants the company to cut spending, undertake a review of its operations and work out which is the best project for the company.

“Our view since we’ve been on the register has been show us that you can do something, sell the investments, show that you can actually do something to look after shareholders.

“There was no action on what we needed, what the board needs to do to preserve some shareholder value.”

It’s really quite simple

But Seneque said Tyranna had quite a simple strategy.

“Our strategy is very simple actually, to generate cash out of Eureka and we want to drill the US property, we have to drill it,” he said.

“We want to mine Eureka and make money out of it and we’re trying to follow the model of, say, Intermin.

“If the Central Iron Ore guys get control of this company, will they want to go ahead and mine Eureka? If they do, well then why are they trying to roll the board?”

Tyranna expects to release a mining study in the next two or three weeks that is investigating a potential restart of the Eureka mine.

After that the company will seek mining approvals and thinks it could be mining by June or July this year.

At the same time, Tyranna is pursuing approvals to start drilling on the Goodsprings cobalt project in the US and hopes to also be drilling that by mid-year.

“We’re dead keen on that, we’re moving the approvals,” Seneque said.

“In the time we’ve had it we’ve been active on it.”

Tyranna believes it may also not need to undertake a capital raising because it has enough money in the bank and could then fund its exploration in the US with the cashflow from the Eureka project.

“To counter this dilutive concern they have, we can try to produce from the cash that we’ve got,” Seneque explained.

“There’s the potential for us to do this without raising money, so we want to knock that dilutive concern that they have on the head.”

Tyranna looks to have the backing of its major shareholder, billionaire Ian Gandel, and Pinto, who collectively hold a 13 per cent stake in the company.

“There are also other shareholders who actually bought Tyranna because they liked the Eureka story,” Seneque said.