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IMX faces legal claim over subsidiary’s liquidation

21st September 2015

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – The share price of ASX-listed IMX Resources tumbled nearly 30% on Monday after the company announced that it was facing a potential A$75-million claim regarding the liquidation of its joint venture (JV) company Termite Resources.

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 reported on Monday that both the company and its CEO Phil Hoskins had 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.

Outback Iron is 51% held by IMX and 49% by Taifeng Yuanchuang International Development Company.

Taifeng had not been named in the claim.

The claim had been quantified at A$75-million, comprising the A$46-million repaid by Termite to Outback plus interest.

IMX said the claim ignored the fact that the JV loans were repaid well before the appointment of administrators to Termite, when iron-ore prices still significantly exceeded the cost of production and sale.

Further, at the time of the appointment of the administrators, Termite had available to it cash reserves, stockpiled and unprocessed ore and the value of the tenement itself to pay creditors.

IMX said on Monday there was little merit in the claim against both IMX and Hoskins, but added that the claim would be discussed with the Termite liquidators and, if needed, IMX would “vigorously” defend itself against the claim.

The Termite directors and officers were expected to be insured against any claims.

Edited by Chanel de Bruyn
Creamer Media Online Managing Editor

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