ASIC sues Australian Mines, managing director

Exploration company Australian Mines and its managing director Benjamin Bell are facing allegations of breaching disclosure obligations about the Sconi Project.

The Australian Securities and Investments Commission lodged an application in the Federal Court against Australian Mines for allegedly breaching its continuous disclosure obligations.

Australian Mines is an ASX-listed mining and exploration company originally based in WA and now headquartered in Queensland, where its major asset, the Sconi scandium, cobalt and nickel project, is located.

In the statement lodged to the court, ASIC alleges Australian Mines announced to the ASX it had entered a term sheet for an offtake agreement with SK Innovation for the expected cobalt and nickel product from the Sconi Project on February 19, 2018.

ASIC alleges that Mr Bell falsely claimed Australian Mines had secured funding from SK Innovation for construction of a plant for the Sconi Project, with an expected cost of at least $500 million.

ASIC further alleges that Mr Bell misleadingly stated the value of the offtake agreement was $5 billion, which did not comply with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves.

Mr Bell allegedly made the statements at mining investment conferences in Hong Kong and London between April and May 2018, with his London presentation subsequently uploaded to Youtube.

According to ASIC, Australian Mines publicly retracted claims made by Mr Bell at the London conference on June 27, 2018.

ASIC claims that Australian Mines failed in its obligation to disclose material information to the market, and that Mr Bell failed to discharge his director’s duties with requisite care and diligence a reasonable person in his position would have exercised.

“The making of the representations and the failure to disclose the material information had the effect that the market was misinformed about the true state of funding of the Sconi Project and the value of the offtake agreement,” ASIC’s statement to the court said.

“These matters constituted information that may have influenced investors to buy or sell (Australian Mines) shares.”

ASIC is seeking orders for Australian Mines and Mr Bell to pay pecuniary penalties, and that Mr Bell be disqualified from managing a corporation.

The company said it would defend the proceedings.