The Australian Securities and Investment Commission (ASIC) has commenced civil penalty proceedings in the Federal Court against Australian Mines for allegedly breaching its continuous disclosure obligations, as well as its (former) managing director and chief executive officer Benjamin Bell for allegedly breaching his directors’ duties.
Australian Mines is a listed mining and exploration company which is principally based in Western Australia. Its major asset is a scandium, cobalt and nickel deposit near Greenvale, Queensland, called the Sconi Project.
ASIC noted that on February 19, 2018, Australian Mines announced to the Australian Stock Exchange that it had entered a term sheet for an offtake agreement with SK Innovation for the expected cobalt and nickel product from Sconi.
ASIC alleges that when Bell presented at mining investment conferences in Hong Kong and London between April and May 2018, he:
- falsely claimed that Australian Mines had secured funding from SK Innovation for its construction of a plant for the Sconi Project, expected to cost $500 million or more, when in fact no one had offered or agreed such funding
- misleadingly stated that the value of the offtake agreement was $5 billion when the terms of the agreement included a potential buyer’s discount of 15 per cent.
ASIC further contends that Bell’s $5 billion valuation did not comply with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code).
On June 27, 2018, Australian Mines publicly retracted claims Bell made at a London mining investment conference.
ASIC contends that Australian Mines failed in its obligation to disclose material information to the market. ASIC also contends that Bell failed to discharge his duties as a director with the requisite care and diligence that a reasonable person in his position would have exercised.
Australian Mines chairman Michael Ramsden said the company would “defend the proceedings”.
Bell has resigned as a director of the company, but has been assigned a new role, which includes assisting with the transition to the incoming CEO.
Les Guthrie will serve as interim CEO to lead the company while it continues its search for a permanent appointment with large scale project delivery experience in the mining and infrastructure sectors.