THE Australian Securities and Investment Commission has launched proceedings against Mining Projects directors Bryan Frost and Richard Revelins, in relation to alleged misleading or deceptive comments made during the company's brief exploration stint on the tiny Pacific island of Niue.
In addition, ASIC is seeking declarations that Frost and Revelins engaged in insider trading and misused information available to them as directors, with the corporate watchdog seeking to disqualify the pair from managing corporations.
The allegations relate to statements made by Frost and Revelins in 2005, when Mining Projects was trading under the moniker of Yamarna Goldfields.
When announcing its proposed Niue initiative on August 15, 2005, Yamarna claimed that historical exploration work had shown Niue to be prospective for gold, silver, copper, zinc and uranium mineralisation, and that the conceptual geological model being explored there had the potential to host uranium mineralisation of equal or greater quantity than BHP Billiton's massive Olympic dam copper-gold-uranium mine, the world's largest source of uranium production.
In addition, the company said it was proposing an exploration program that would lead to drilling in areas where concentrations of mineralisation were expected. The company also said the intersection of economic grades would be a key step towards both proving up tonnage and grades, and initiating a mine impact statement and converting the prospecting licence into a mining one.
Less than three months later, Yamarna announced it had elected to withdraw from its option over the project.
In a far-reaching attack on Yamarna's claims, ASIC said Yamarna did not have reasonable grounds for representing that uranium could be expected to have formed ore deposits on Niue.
"ASIC is alleging that the August 15, 2005 announcement was misleading or deceptive as historical exploration work available to the company did not support the presence of uranium mineralisation.
"There is no geological association between the Olympic Dam deposit and its exploration model and the model proposed for Niue Island; they reflect different styles of mineralisation."
ASIC is also alleging that Yamarna did not have a proposal in place to carry out an exploration program that would lead to drilling, but rather had formed no view about whether such a program would be carried out.
On top of that, ASIC also alleged Yamarna did not have any information to support an expectation of concentrated mineralisation on the island.
"By describing intersection of economic grades as a key step towards, amongst other things, initiating preparation of a statement of impact of mining; and referring to 'the current prospecting licence' possibly being converted to a mining lease, the announcement represented a greater level of certainty and advancement in the development of the project than in fact was the case," ASIC said.
In addition to the civil penalties being sought, a ban on the pair could affect several other listed companies on whose boards the two serve.
Both Frost and Revelins are also directors of gold tailings retreatment play MinTails – formerly known as Gaming and Entertainment – while Revelins is chairman of Atlas Iron and a director of Prana Biotech.
The Federal Court in Melbourne will hear the matter in late February.
It is not the first time Frost and Revelins have caught the attentions of the corporate regulator.
In June 2004, the pair pleaded guilty to five charges of insider trading after failing to notify the Australian Stock Exchange of changes in their director interests within the required 14 days.
On that occasion, the pair was fined $1500 each.
ASIC said the investigation into Mining Projects had stemmed from a referral from the ASX.
Any findings against Mining Projects could have ramifications for the way junior exploration companies report on the prospectivity of their tenements, with analogies to Olympic Dam a particularly common one among junior explorers.
Shares in Mining Projects were steady at 0.9c in afternoon trade, while MinTails shares were also unchanged at 34c.
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Question is, if they get banned what effect will that have on MLI... positive or negative... who will take their spot...
MLI Price at posting:
0.0¢ Sentiment: Buy Disclosure: Held
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