Update | BlackRock fails to block Hong Kong’s G-Resources from selling ‘attractive’ gold mine at near book value

BlackRock, the world’s largest asset manager, has failed in its campaign to stop G-Resources from selling its crown-jewel gold mine in Indonesia at near book value to a consortium led by a fund partly owned by G-Resources vice-chairman Owen Hegarty.

Some 58.82 per cent of shareholders who voted in Tuesday’s special shareholders’ meeting were in favour of selling the mine, compared to 41.18 per cent against the sale of its main profit generator, the firm said in a filing to Hong Kong’s stock exchange late on Tuesday. It needed at least a 50 per cent “yes” vote for the sale to go through.

“It is a sad day for shareholders, the purchasers of the mine are getting it for a song and the share price will fall on expectation that BlackRock will sell its shares,” said a former shareholder who recently sold all his G-Resources shares at a loss after its share price recovered from a steep sell-off following the announcement of the sale in late November.

Its shares are worth less than half what they were when the mine began production in mid-2012.

BlackRock, which owns around 8 per cent of the firm, called last week on fellow minority investors to vote against the proposal to sell the Martabe mine for US$775 million, saying it made little sense. The fund said the mine was highly attractive and opposed the sale, saying the board had not adequately clarified how the proceeds would be deployed.

Glass Lewis and ISS, which provide corporate governance advice to fund managers, both recommended votes against the sale, saying the board had not made a compelling case to justify it.

The board had earlier said the proceeds would be invested in “financial products and other security investments”. These include money lending and securities dealing businesses, and real estate. Executive director Richard Hui Rui said on Tuesday the board “believes the current plan is the best use of the proceeds”.