Chariot Resources Ltd urged its shareholders on Tuesday to vote for its management's nominees and reject a slate of four directors nominated by Lundin Mining Chairman Lukas Lundin.
Speculation that Lundin Mining could try to acquire Chariot or its Mina Justa copper project in Peru has intensified since the proxy fight -- led by Lukas Lundin and Lundin Mining Director Brian Edgar -- was revealed last month.
Lundin Mining already owns more than 18 percent of Chariot Resources.
Lundin Mining has stated that it does not plan to acquire Chariot Resources, or its key project in Peru. The company said it was not directly involved in the proxy fight led by its chairman to remove Chariot's board.
However, Lundin Chief Executive Phil Wright said the company would support the alternative slate of directors.
Chariot has accused the Lundin nominees of attempting to seize control of Chariot without paying a control premium.
Our plan is to initiate a formal sale process for the company in the very near future, which is consistent with our objective to maximize value for all shareholders, Chariot Chief Executive Ulli Rath said in a statement.
Chariot's stock, which dropped to 10 Canadian cents at the end of 2008, has soared 325 percent year to date. The shares gained a penny to 42.5 Canadian cents in early trading on the Toronto Stock Exchange on Tuesday.
The dissident slate that has been proposed includes Lundin, Edgar, Colin Benner and Donald Charter, all of whom sit on Lundin Mining's board.
Lukas Lundin said last month that Chariot's current board has failed to make progress on the $750 million Mina Justa project, which is expected to produce about 1.3 million tonnes of copper over its 11-1/2 year life once it begins production.
It argues that Chariot's management has had sufficient funds, plenty of time and offers of technical assistance offers from Lundin to proceed with Mina Justa, the company's flagship asset.
The dissident slate has accused Chariot of having misinformed shareholders and the market about its well advanced strategic review process to sell the company.
Chariot points out that independent shareholder advisory firms RiskMetrics Group and Glass, Lewis & Co have both advised shareholders to re-elect Chariot's slate of nominees.
All six of Chariot's current directors are standing for re-election at the meeting on Sept. 4.
(Reporting by Euan Rocha, editing by Peter Galloway)