Mining firm wins legal battle after 10-year struggle
It's taken 10 long years but Brisbane resources player Macarthur Minerals has finally triumphed in a legal battle with a trio of aggrieved former investors.
The company revealed Tuesday that the Queensland Court of Appeal had dismissed a case brought by Hong Kong jewellery tycoon Charles Chan, his son, Victor, and their associate, Wai Tak Kwok.
They had sued the company, as well as former executive director Alan Phillips and his son, current boss Joe Phillips, over allegations of misleading and deceptive conduct.
These gents sought more than $2.7 million in damages in the case, which spun out of a 2009 iron ore project in WA and the failure the following year of a company, First Strategic, tied in with the deal.
That was despite the fact that Jonathan McLeod, the Brisbane liquidator appointed over First Strategic, later sued the three men and won a judgment that they were personally liable for First Strategic's debts since they all served as directors.
They were ordered to pay nearly $2.7 million and lost an appeal against that decision too.
In the latest ruling, the Court of Appeal judges tore strips of the legal challenge, notably writing that there had been "a failure to plead a coherent case''.
While the losing side can still seek leave to have the matter heard before the High Court, it seems highly unlikely that will occur.
Not surprisingly, Joe Phillips is relieved the matter is over and his side has been awarded costs.
"Court cases are draining, both emotionally and resource-wise,'' he told City Beat. "We didn't believe the case had any basis but you can't say the other side hasn't been persistent.''
With the dispute over, Phillips can now squarely focus on the numerous other challenges facing the iron ore, gold and lithium explorer originally founded by late mining baron Ken Talbot.
The company, which listed on the Toronto stock exchange more than a decade ago, just floated on the ASX last December, raising $5 million.
Since 2008, it has rustled up more than $US100 million in North American markets and it's now chasing a debt funding package in New York of about $US230 million to kickstart the Lake Giles iron ore project in WA.
Macarthur, which has tipped more than $62 million into that initiative since 2006, could sure use the dough as it aims to shift into production mode at some point in the next 24 months.
It has a nearly unbroken record of piling up annual losses, including $4.31 million of red ink in the year to March 31.
The annual report released last week said continuing operations remain dependent on additional funding and, as a result, "these conditions may cast significant doubt about the group's ability to continue as a going concern''.
Auditors, pointing to just $4 million of net working capital on hand, reiterated that point, flagging a "material uncertainty'' about its future.
NICE LITTLE EARNER
Yet, despite this obvious cash squeeze, the annual report reveals that the board more than doubled its collective remuneration to $1.63 million.
Phillips was the biggest winner, more than tripling his salary package to $632,452.
That's likely to raise a few eyebrows among Australian investors, who shelled out 25¢ per share in the IPO last year. They last closed at 15¢.
But Phillips defended the post-listing pay hike as overdue compensation for the hardworking troops, including a few new senior figures.
"We've been living on a shoestring while the iron ore market was down and there was catch up to be played,'' he said.
Since COVID-19 flared up, Phillips noted that cutbacks have been put in place, including an $18,000 per month salary cut for top execs such as himself.
"It's been a complicated year but we're achieving all the milestones we set for ourselves at the listing last year,'' he said.
Originally published as Brisbane mining firm wins legal battle after 10-year struggle