Rugby league great Ben Elias and Perth Glory owner Tony Sage are fighting to save their interests in junior explorer Chameleon Mining after receivers were appointed to the company yesterday.
Chameleon was placed under the control of Armstrong Wily at the request of International Litigation Partners, which has been funding the company's claims against iron ore group Murchison Metals in the Federal Court.
ILP was removed from its role on Tuesday after Chameleon struck a $9 million funding deal with Mr Sage's company, Cape Lambert Resources. The deal effectively gives Cape Lambert control of Chameleon.
"The fund has put us in this position," Mr Elias, who chairs Chameleon, said yesterday. "Obviously, they are very upset, but we feel we have done everything right on behalf of the shareholders of the
company."
Mr Elias and Mr Sage are seeking a court order to void the appointment of the receivers and expect a judge to rule on the matter either today or tomorrow.
Mr Elias said there was "absolutely no question" that ILP, Chameleon's sole creditor, had taken the action - because it did not want to miss what could be a big payout from the Murchison case.
Chameleon has been pursuing Murchison over the ownership of two multibillion-dollar iron ore deposits in Western Australia's mid-west region for more than two years.
Closing submissions from both sides were heard in the Federal Court early this year. Speculation suggests that a decision could be only weeks away, with the possibility that Chameleon will be granted a portion of the assets or financial compensation.
Mr Sage said the amount owed to ILP was "a maximum of $5 million to $6 million" and could easily be repaid by Chameleon with the proceeds from its deal with Cape Lambert.
"Any judge worth his salt would not go ahead and put this into receivership because it's got a lot more cash than is necessary to pay off its debts," he said.
"If necessary, Cape Lambert can put in another letter of credit to make sure the company is never in a position of being insolvent."
Cape Lambert agreed on Tuesday to arrange a $6.5 million credit facility for Chameleon and subscribe to a share placement that would provide another $2.5 million in funding.
As part of the deal, Mr Sage, Jason Bontempo and Paul Kelly were given board seats as Cape Lambert representatives. Chameleon's other board members are Mr Elias, managing director Anthony Karam and Ahmed Hassan.
Mr Sage said his initial reasoning for seeking a deal with Chameleon was to build on the position Cape Lambert has in the mid-west. His ambition is to be the largest landholder in the region.
However, after receiving legal advice, he said he came to realise that there was a strong chance Chameleon would not come away from the Murchison case empty-handed.
"What seems to be fact is there has been an offer made by Murchison to resolve this case. It's a big number. If that's the case, the company will be in a very strong financial position."
CHM Price at posting:
9.2¢ Sentiment: Hold Disclosure: Held
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