murchison's $7m chameleon settlement

Murchison's $7m Chameleon settlement
6-July-09 by Rebecca Lawson


Murchison Metals has done a u-turn in its legal fight with Sydney-based Chameleon Mining, offering a settlement valued at around $7 million.

The Mid West miner announced late last week that it had reached a settlement in legal proceedings brought by former Chameleon directors David Evans and Siew Hong Koh, funded by Chameleon.

Under the terms of the settlement, Murchison agreed to issue 3.5 million shares, a cash payment of $350,000 and payment of legal costs.

Chameleon said in a statement today they were "extremely surprised" to receive a settlement offer.

Chameleon has accepted the offer, which it said was valued at more than $7 million.

The legal battle, one of several between both companies, started four years ago over a 2004 deal made between Messrs Evans and Koh and the then board at Murchison, which did not contain any of the current board members.

Messrs Evans and Koh had claimed a 5 per cent interest in the Jack Hills iron ore project in the Mid West and a quantity of Murchison's shares.

The matter was due to be heard in the Supreme Court of New South Wales on August 10.

Murchison had until now been stating it would fight the claims, which were "without merit".

Murchison executive chairman Paul Kopejtka said the board believed a settlement was in the best interests of shareholders.

"This is a legacy of the people who were running the company before the current team became involved," he said.

"We have settled this matter for an amount that is far less than what was sought by the plaintiffs and given the inherently uncertain nature of litigation, the settlement was appropriate and in the best interests of our investors."

Separate proceedings started by Chameleon against Murchison and its subsidiary Crossland Resources and other parties have been listed for a four week hearing starting on September 28.



Below is Chameleon's announcement:


The Company confirms that the claim by Koh & Evans against Murchison (in which the Company holds an 80% interest) has settled.

The Company (including Koh & Evans) and their legal team were extremely surprised to receive an offer from Murchison to settle the claim before trial considering that since 2005 Murchison have repeatedly stated that the claim is 'without merit'.

Chameleon Mining chairman Ben Elias confirms that "the settlement was for 3,500,000 Murchison shares, a $350,000 cash payment plus costs. The offer was accepted after taking into consideration the inherently uncertain nature of litigation".

"The Company is pleased to secure such a windfall (aggregate gross value in excess of $7.0m) in light of current economic times and given that Chameleon was only relatively recently reinstated to the official list with cash reserves of approximately $2.23m" continued Elias.

"We also note that despite being offered the opportunity, Murchison failed to secure any releases from the plaintiffs' as part of the settlement structure. By failing to secure those releases, Murchison may have also left themselves open to an additional series of separate actions claiming more shares" concluded Elias.

Chameleon v Murchison & Ors

In looking forward to the trial commencing 28 September 2009, Chameleon is extremely encouraged by the comments of Murchison's Executive Chairman, Paul Kopejtka who acknowledges that the Koh & Evans claim ".... is a legacy of the people who were running the Company before the current team became involved".

Chameleon's claim against Murchison and Others in the upcoming trial is for in excess of a 50% interest in Murchison. Substantial elements of the claims against Murchison also arise directly out of a legacy of the people who were running Murchison before the current team became involved.

This situation is further enforced by Murchison's own submissions in the Federal Court confirming that Murchison are, at least in part, in the position of being forced to rely on the evidence provided by Phillip Grimaldi (the former Managing Director of Murchison) and Gregory Barnes.

The Company confirms that preparations for the hearing, which is scheduled to commence within three months, are right on schedule.


http://www.wabusinessnews.com.au/en-story/1/73586/Murchison-s-7m-Chameleon-settlement