murchison settled a seperate action against it after stating the...

murchison settled a seperate action against it after stating the applicants' claims were "baseless".

wabusinessnews
Round two for Murchison, Chameleon
6-July-09 by Rebecca Lawson


Another legal showdown is looming between Murchison Metals and Sydney-based Chameleon Mining, which is claiming it is entitled to half of the the iron ore miner's Jack Hills tenements, valued at $1.5 billion.

Both parties wrapped up round one of proceedings late on Friday on a separate case with a settlement reached minutes before deadline.

Under the settlement deal, Murchison agreed to issue 3.5 million shares, a cash payment of $350,000 and payment of legal costs. Chameleon, which has accepted the offer, said the total value of the settlement is more than $7 million.

The litigation, funded by Chameleon, was brought by former directors David Evans and Siew Hong Koh against Murchison.

The directors claimed both had a 5 per cent interest in the Jack Hills iron ore tenements in the Mid West and were owed a quantity of shares in a deal done five years ago with the then Murchison board, which did not contain any of the present members.

Chameleon has previously said that the "value of the direct interest claimed in the Koh & Evans proceedings ranges between $150,000,000 and $250,000,000".

The matter was due to be heard in the Supreme Court of New South Wales on August 10. It has not been disclosed how much Messrs Evans and Koh received.

Chameleon chairman Ben Elias told WA Business News the company quite surprised by the settlement offer considering Murchison had continued to uphold the claims were baseless.

He added the company could have tried to get a larger amount from Murchison however due to the uncertain nature of litigation decided to accept the offer.

Murchison managing director Trevor Matthews said the company made the settlement offer as part of a legal tactic to keep risks to a minimum.

"We didn't think that they [Chameleon] were going to accept given that it took them a month to respond back," Mr Matthews said.

"We wouldn't have made that offer if it wasn't a fair reduction in our risk across our shareholders."

Meantime, both parties are preparing for another legal battle in the Federal Court over the Jack Hills tenements, scheduled for September 28 should mediation not be successful.

Chameleon is claiming up to $1.5 billion over the tenements, which contain an iron ore operation, on the alleged premise that past Murchison director Phillip Grimaldi had used money from Chameleon to buy the tenements in 2004.

Gregory Barnes, a former Chameleon director, has also been named as a defendant in the legal action.

Mr Elias said Chameleon is alleging that both Messrs Grimaldi and Barnes had breached their duties in 2004 when Murchison, used around $500,000 of Chameleon's cash and assets to help pay for the tenements, then valued at $1.1 million.

The tenements have become more valuable as a result of Murchison's mine operation, which is operated by half-owned subsidiary Crosslands Resources.

Mr Elias said the sizeable claim figure stems from the $1.5 billion Japan's Mitsubishi Corp paid for its 50 per cent stake in the tenements. Mitsubishi also own the balance of Crosslands.

"All we're going for is what's legally ours," Mr Elias said.

"This is arguably the largest constructive trust litigation case in the history of Australian mining."

Mr Matthews said the claim amount is "extremely optimistic".

"There is no basis for any sort of material claim on the Chameleon matter," he said.

"That will surface when we go through this process."

Mr Matthews added that Chameleon first had to prove that Messrs Grimaldi and Barnes had breached their duties before any claim could be made against Murchison.

He added that Murchison was not taking any action against Mr Grimaldi and Mr Barnes.

The trial has been set down for four weeks.



Could this decision have set a PRECEDENT?

Even though ILF has funded CHm, mmX did use an amount of $400K that had been lodged by Chameleon for purchase of the Jack Hills tenements...

Could be a case of history repeats?