PERTH (miningweekly.com) – Junior IMX Resources on Friday told shareholders that a potential A$75-million claim regarding the liquidation of its joint venture (JV) company Termite Resources was without merit.

IMX and its CEO Phil Hoskins in September received a letter of demand from the Termite liquidators providing notice of a potential claim, alleging that Termite should not have repaid loans to its parent company Outback Iron until the life-of-mine obligations under mining and logistics contracts were provisioned for.

Termite, which operated the Cairn Hill iron-ore mine, in South Australia, was placed under administration in June 2014, owing to the falling iron-ore price. The decision was taken in September 2014 to place the company into liquidation.

IMX chairperson Derek Fisher on Friday said the arrival of the letter from the liquidators had been completely unexpected, given that the liquidators had accepted the view of the voluntary administrators that Termite was not insolvent until it was placed in voluntary administration in June 2014.

“I can understand how the quantum of the potential claim included in the letter from the liquidators, being A$46-million or in the alternate A$75-million, may have caused alarm to investors, particularly in light of the company’s market capitalisation.

“However, I would like to reassure all investors that our initial legal advice supports the company’s view that any claim should not result in any negative economic outflow. It is the board’s view that the potential claim is weak. We are doing everything possible to resolve this matter as quickly as possible,” he added.

In fact, IMX believed its liability for the claim would be limited to legal costs incurred in defending the matter, which were expected to be a maximum of A$450 000 in the event that a trial took place.

The company has engaged a litigation firm to represent its interest in the matter. The firm has written to the liquidators, outlining facts that IMX said showed a claim should not be brought against the company.

If the liquidators still proceeded with the claim, and lost, IMX would rely upon this letter to seek costs from the liquidators.