Ann: ASIC Determination-BMZ.AX, page-3

The corporate watchdog has banned Black Mountain Resources from raising money without issuing a full prospectus as the fallout from an investigation of the business dealings of former executive director Peter Landau continues.


Mr Landau quit as a director of Black Mountain earlier this month, but the Australian Securities and Investments Commission is investigating a series of transactions in a closely aligned group of companies he has run over the past two years, including Black Mountain and Continental Coal.


ASIC said today it had banned Black Mountain from raising capital under a short-form prospectus for a year due to its failure to disclose details of $2.24 million worth convertible notes issued in mid-2015, when Mr Landau was the company’s executive director.


Court documents seen by WestBusiness show ASIC is also investigating the company over allegations it misled the market last November, when it announced shareholders had committed $2.7 million to a rights issue, when only $1.2 million had in fact been received.


The rights issue was targeting a $6.8 million raising to support Black Mountain’s now abandoned plan to buy 20 per cent of a salvage operation targeting gold in vessels sunk by German U-boats in World War I.


ASIC’s move on Black Mountain means the company must release a full prospectus for any attempt to raise money before April 2017.


The company has now transferred its attention to the Namakera vermiculite and Busumbu project in Uganda, once owned by Gulf Minerals.


ASIC this morning said it had taken action against the company because it failed to tell the market key details of the convertible notes, including the identity of the lenders, the face value of the notes, and the terms of conversion.


ASIC alleged Black Mountain has also failed to comply with accounting standards in relation to its disclosure of the convertible notes in its annual report for 2014-2015.


ASIC Commissioner John Price said a company’s ability to use reduced disclosure rules was “predicated upon them meeting their ongoing disclosure and financial reporting obligations”.


“If this doesn’t happen, ASIC will intervene so that companies seeking to raise funds from retail investors are required to issue a full prospectus. This ensures that current and potential future shareholders are in a better position to assess a company’s prospects and financial position,” Mr Price said.


Black Mountain has the right to appeal to the Administrative Appeals Tribunal for a review of ASIC's decision.


Mr Landau was Black Mountain’s executive director when the convertible notes were issued.


The broader investigation has seen ASIC win Federal Court orders freezing Mr Landau’s personal assets - a move he has consented to on an interim basis, while reserving his position that he did not accept that ASIC had a proper basis to make the request.


ASIC has also successfully applied for court orders appointing provisional liquidators at Continental Coal.