Mining company faces $5 million legal action

WA mining exploration company Cockatoo Iron is facing legal action for allegedly failing to repay almost $5 million in loans.

According to a writ lodged with the state’s Supreme Court on Monday, British Virgin Islands-based investment company Marvel Solution loaned Cockatoo Iron more than $4.89 million over a five-month period in 2017.

Marvel Solution claims the payments were made on the grounds that the funds would be repaid and that the parties would reach an agreement for Marvel Solution to acquire a stake in Cockatoo Iron. No such agreement was made.

In a letter dated March 5, 2020, lawyers for Marvel allegedly demanded that Cockatoo Iron repay the loans.

The company's lawyer Aaron McDonald said Cockatoo Iron had denied liability.

Marvel alleged in its writ that the money had not been repaid. It is seeking to have the loans repaid in full, and to be paid interest by way of restitution or damages.

In January last year, Subiaco-based exploration company Carbine Resources announced it planned to buy Cockatoo Iron for $12 million and to progress its iron ore program on Cockatoo Island, near Derby.

But Cockatoo Iron withdrew from the transaction just weeks ago after Carbine Resources identified “areas of concern” that it was reportedly attempting to work through.

After 18 months of negotiations, which included significant legal expenses, Carbine Resources said it was disappointed by Cockatoo Iron's decision to cancel the deal.