Chameleon Mining shares have fallen 28 per cent in trading today after the junior miner and Mid West iron ore developer Murchison Metals each claimed partial victory in a Federal Court ruling.
Chameleon Mining shares have fallen 28 per cent in trading today after the junior miner and Mid West iron ore developer Murchison Metals each claimed partial victory in a Federal Court ruling.
At the close of trade Chameleon shares were down 0.8 cents to 2.1 cents while shares in Murchison were even at $1.52.
In a summary of the judgement, Justice Peter Jacobson said that Chameleon was entitled to a share of the income Murchison earned from the Iron Jack development and the profit former Murchison director Phillip Grimaldi and former Chameleon director Gregory Barnes earned having obtained 10 million Murchison shares.
Alternatively, he said Chameleon could be entitled to equitable compensation for the loss suffered.
"The effect of this will be that Chameleon is entitled to $152,750 plus compound interest at commercial rates compounded on monthly rests," the Judge's summary said.
Murchison estimates this to be $227,000 based on an interest rate of 5.86 per cent, which would be owed by Crosslands.
It is understood Murchison has made substantial losses on the project to date.
In a statement to the Australian Securities Exchange, Chameleon said it proposed to engage a forensic accountancy team to access the quantum of the account of profits it is entitled to from Murchison and Mr Grimaldi.
It was alleged the Murchison used money from Chameleon to help a third company called Winterfall make a $350,000 instalment payment for the Iron Jack Project.
Murchison claimed the money was a loan, but later purchased the company.
The court concludes that the cheques were not lent, but were an unauthorised diversion of funds from Chameleon to Murchison.
"The cheques were drawn by Mr Barnes who was a director of Chameleon, and procurrd by Mr Grimaldi," Justice Jacobson's summary said.
While the court ruled in Chameleon's favour on this claims, it rejected the claim for a constructive trust over the whole, or a proportion of Murchison's interest in the Iron Jack Project.
In his summary Justice Jacobson stated, "It did so because it found that Murchison's interest in the Project was not the profit or the benefit which Murchison received by reason of breaches of fiduciary duties."
Judge Jacobson said "Murchison is bound to account for the income it received from the Project by the use of Chameleon's fund which totalled only $277,840 of the total working capital."
Murchison has calculated this to be $407,000 based on an interest rate of 5.86 per cent.
In a statement to the ASX, Murchison said it was pleased with the decision.
"It is disappointing that the legal action and its defence have come at some cost, but our board had been resolute throughout in its desire to protect the interest of Murchison shareholders," said Murchison's executive chairman Paul Kopejtka.
"The judgment vindicates our long-standing position on this legal action and Chameleon's claim that it was entitled to a material share of the Jack Hills project of Murchison's shares in Crosslands.
