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Lekoil shares fall on potential sanctions over Metallon's stake purchase

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JOHANNESBURG/LAGOS (Reuters) - Lekoil shares fell 26% on Thursday after the Nigeria-focused oil and gas company flagged the possibility of sanctions from Nigeria's petroleum ministry over a stake purchase by Metallon, which is now Lekoil's top investor.

By 1500 GMT, shares had rebounded to roughly 1.63 pence, according to the London Stock Exchange, roughly 7% below the previous day's close.

Lekoil said it received a letter from the minister of petroleum saying Metallon's stake build - which began in March 2020 and resulted in the Zimbabwe-focused gold miner holding 15.1% of Lekoil - must be compliant with ministerial guidelines.

"In the event that Metallon's acquisition... has not complied with Nigerian legislation and in the absence of any suitable remedial action, sanctions could be imposed directly on the company by the Ministry of Petroleum Resources," Lekoil said in a statement.

Metallon declined to comment on the statement.

On Friday, Lekoil shareholders will vote during an extraordinary general meeting on a Metallon request to appoint three board members. It said the appointments are an effort to improve the company's corporate governance.

Lekoil founder and chief executive, Lekan Akinyanmi, asked shareholders to reject the request, which he said could be an avenue for Metallon to gain control of the company. Metallon has said it has no plans to take control of Lekoil.

(Reporting by Helen Reid in Johannesburg and Libby George in Lagos; Editing by Jan Harvey, Kirsten Donovan and Sonya Hepinstall)