In a letter to shareholders released last night, Cape Lambert's directors - Tony Sage, Brian Maher and Timothy Turner - said Power's calls for a new board was an "inappropriate and divisive attack" and would destabilise the company.
Power has called for the Cape Lambert board to be sacked and a new executive team installed.
The shake-up will go to a shareholder meeting on October 15.
In early August, Power took an 11.49% stake in Cape Lambert. Power, controlled by Dubai-based mining investor Mick Shemesian, says Cape Lambert's planned $US45 million ($A55.8 million) investment in the Marampa iron ore project in Sierra Leone is a mistake and an attempt to deliver control of Cape Lambert to African Minerals, the seller of the Marampa stake.
African Minerals executive chairman is mining entrepreneur and convicted heroin trafficker Frank Timis.
Power's suggested replacements for the Cape Lambert board include Leo Khouri, a high-profile victim of the Opes Prime collapse with links to underworld figure Mick Gatto.
Another proposed replacement board member is Perth lawyer Martin Bennett, who has worked with Fortescue Metals Group.
Bennett, on behalf of Power, is rumoured to be taking Cape Lambert to court to as early as today to stop the acquisition of a share in the Marampa iron ore project in Sierra Leone.
In its letter to shareholders, Cape Lambert's board defended the decision to invest in the "exciting brownfields" play, saying the buy-in was a "moderate investment" in line with Cape Lambert's business objectives.
Complicating matters, however, is legal action over the Marampa project, with AIM-listed company London Mining claiming African Minerals is trespassing on its leases.
African Minerals claims the areas fall within its exploration license and it is this area that is subject to the deal with Cape Lambert.
Cape Lambert said it knew about the legal issue and was investigating London Mining's claims.
Meanwhile, Cape Lambert has also faced hostility from its largest shareholder, Russian steelmaker Evraz, which is looking for a board seat on the Australian play.
Shares in the company, which has so far received $A320 million of the $400 million proceeds from the sale of the Cape Lambert magnetite project in Western Australia to Chinese company China Metallurgical Group Corp (MCC), were last trading at 35.5c, down 0.5c.
