GAM shareholder trying to sue over cheap Wodgina sale Myriam RobinColumnist
Nov 5, 2019 — 12.00am
Mineral Resources has suffered delays in construction of its processing plant at the Wodgina lithium mine in WA. But first, it sold most of the thing for $1.9 billion. Supplied
The Chris Ellison-led Mineral Resources made the deal of the boom buying lithium project Wodgina for a pittance and selling most of it for $1.9 billion three years later. So it's not surprising that some of the shareholders whose company sold Wodgina in the first place are seeing red.
Offshore investor Metallurg owns 14 per cent of Global Advanced Metals. And it wants to use a rarely invoked legal process known as a derivative action to sue five Global Advanced Metals directors on behalf of the company for letting Wodgina, so extraordinarily profitable in Ellison's hands, slip so cheaply through their fingers.
Mettalurg's application to do so (such actions have to be allowed by the court) will be heard over two days beginning Tuesday in the NSW Supreme Court. In Metallurg's sights are most of GAM's directors at the time of the deal, including chairman Mark Comerford, CEO Andrew O’Donovan, ex-chief Bryan Ellis, ex-Macquarie high-flyer John Prendiville and Mason Hills.
Not being sued are wealthy sandgroper Jamie Clements and ex-Goldman Sachs operative Kelvin Flynn. That's because, as directors of both GAM and Mineral Resources at the time of the sale, they're presumed to have recused themselves from decisions about Wodgina.
Mineral Resources never disclosed exactly how much it paid for the lithium project. The whole purchase was so immaterial to its accounts it didn't bother. We've previously suggested $80 million, while Mettalurg's lawyers (drawing on GAM's accounts) reckon $US51 million ($73 million).
Beginning two and a half years later, MinRes progressively sold 60 per cent of Wodgina to US-based chemicals giant Albemarle, for a decidedly material $1.9 billion. The agreement was finalised last week, on the very same day Albemarle and Mineral Resources mothballed Wodgina, citing falling lithium prices.
Bad luck Albemarle, which now owns the lion's share. But again, you can't fault Ellison's timing.
