Tony Sage’s one-time market darling European Lithium is behind a $125 million last-ditch bid for the Avebury nickel mine in Tasmania.
European Lithium’s involvement was revealed in the WA Supreme Court as a backer of Mr Sage’s bid battled the supporters of a creditor-approved restructure for the failed Dundas Mining group.
If successful, the flagged $125m cash offer will represent a major change of direction for European Lithium given it has been trying for more than a decade to develop a mine in Austria.
Lawyers for Junyu Su, son of bankrupt Dundas Mining director Wenwu Zu, claims the European Lithium offer will provided a much better return than a deed of company arrangement approved in March.
That $109m DOCA is designed to deliver Avebury to West Perth-based Mallee Resources and secured creditor Hartree Metals.
Mr Su is seeking leave in the Supreme Court to intervene in an application by administrators at KordaMentha to transfer shares in Avebury operating company Allegiance Mining.
To give legal effect to the $109m DOCA, shares in Allegiance have to be transferred from Dundas to Mallee. The Corporations Act requires court approval for such transfers.
Lawyers for KordaMentha, Mallee and Hartree are opposing Mr Su’s application to be heard at the Corporations Act hearing scheduled for June 9.
Mallee lawyer Jeremy Giles said Mr Su had no standing as a shareholder of Dundas to oppose the transfer.
Mr Giles said there was no evidence that Mr Su and Dundas would receive any money from the offer by Mr Sage and European Lithium.
KordaMentha lawyer Paul Edgar said the group had $153m of related party debts that had to be dealt with before anything from the highly conditional offer might flow to Dundas.
“There is a significant value between the current proposal and value in Dundas,” he said.
But Mr Su’s lawyer Martin Cuerden said there was a real prospect his interests could be affected by the proposed transfer of Allegiance shares.
He said there were clear issues to be considered about whether Dundas would be better off under the $125m cash proposal or the restructure involving Mallee and Hartree.
Evidence had not been provided by KordaMentha to back the DOCA value of $109m, he said. The deed involved $70.5m in cash and equity and the settling of around $38m of debt claims by Hartree linked to off-take and funding agreements.
“The DOCA provides for payment of $70.5m, not $109m,” Mr Cuerden said.
Master Sanderson reserved his decision, saying he had hoped to hand down a judgment on Thursday.
European Lithium shares closed down 0.4¢ at 8.4¢ on Thursday. They had been trading as high at $4 in 2011 before plunging to repeated trade below 30¢.
