bad day in court, page-8

Hi all, as a matter of interest, here's an article from the Sydney Morning Herald:

Tiddler's claim slows metals giant
Date: March 21 2008


Jamie Freed


MURCHISON Metals fears a legal claim from the tiddler Chameleon Mining over ownership of its flagship Jack Hills iron ore project could block it from raising funds and launching mergers and acquisitions. The company's lawyer, Steven Penglis, told the Federal Court yesterday: "We are very concerned. We want to get this matter to trial as quickly as possible."

The uncertainty surrounding the ownership of Jack Hills could also lessen Murchison's chances of receiving a lucrative takeover bid, possibly from Chinese interests.

Murchison, which last year made an unsuccessful scrip bid for the rival West Australian iron ore miner Midwest, has raised no funds since a $113 million placement to institutional investors in August, which left it with $135 million cash at the end of December.

In September the Sydney explorer Chameleon relisted and began trading for the first time since it entered liquidation in late 2004. On the day of its relisting, Chameleon warned it might make a claim against Murchison over a share of the Jack Hills project, which could produce 25 million tonnes a year of iron ore at a time of record prices. Chameleon has a market value of just $33 million, while Murchison is worth $1.6 billion. Murchison said the accusation was baseless, but it was forced to include reference to the claim under a section detailing "material litigation and claims" in its bidder's statement for Midwest.

Murchison could be an attractive takeover target for Midwest or for Sinosteel, which launched a $1.2 billion bid for Midwest last week. But the chief executive of Midwest, Bryan Oliver, and sources close to Sinosteel have told the Herald the companies would not bid for Murchison until it proved up enough reserves to support its Jack Hills project and until the Chameleon matter was resolved.

Murchison has been looking to acquire iron ore, coal and manganese projects since August, but has yet to make an acquisition.

Chameleon has said it is entitled to a portion of the project in return for helping fund the buyer of the tenements by Murchison's predecessor, NiCu, in 2004. The former directors of NiCu are not directors of Murchison.

Murchison has asked the court to force Chameleon to hand over copies of compulsory interviews several of its directors gave the corporate regulator in 2005. Last year two of those former Chameleon directors, Landan Roberts and Gregory Barnes, were charged with providing false and misleading information in relation to Chameleon's float in 2003.