Shares in junior explorer Padbury Mining have plunged as the company resumed trade and revealed details of its short-lived $US6.47 billion ($6.89 billion) equity funding deal to construct a port and rail network at Oakajee.
Shares in junior explorer Padbury Mining have plunged as the company resumed trade and revealed details of its short-lived $US6.47 billion ($6.89 billion) equity funding deal to construct a port and rail network at Oakajee.
In its first day of trading after admitting the Oakajee funding deal was dead, Padbury shares fell by a massive 85 per cent to close at 0.5 cents after opening at 3.3 cents.
More than 165 million Padbury shares traded hands during the day as investors received their first opportunity to respond to the news that Padbury had terminated a funding agreeement with entities associated with hair regrowth entrepreneur Roland Bleyer.
The company also provided a response to enquiries from the ASX, which raised concerns about the company's compliance with disclosure rules and requested further details of the deal.
Padbury's original funding announcement last month did not contain any information on the identity of its backers or their capacity to provide the funds but the company did not immediately enter a trading halt, despite the market-sensitive nature of the announcement.
The company's shares skyrocketed in a brief window of trade following the announcement but the company entered a trading halt later that day as the ASX demanded more information.
Padbury today admitted the funding announcement had not been reviewed by external legal counsel, and said it would implement a review of its corporate governance policies and disclosure process.
The company maintained that it carried out due diligence enquiries on the capacity of the entities associated with Mr Bleyer to meet their funding obligations, and that those entities represented to Padbury that they had access to sufficient capital.
It remains unclear as to what specifically triggered Padbury to terminate the funding deal.
Padbury said it had been negotiating with the entities for about 18 months prior to the announcement.
A condition of the funding deal called for Padbury to arrange for a bank to issue a $US94 million demand guarantee to Superkite, an entity associated with Mr Bleyer, by June this year.
The company also had to procure the issue of a further two demand guarantees for the remaining tranches of funding over two years, valued at 20 per cent of the relevant tranche.
Padbury says it did not have the financial capacity to procure the demand guarantees at the time of the funding announcement but was in confidential discussions with a number of parties in order to satisfy this condition, and considered that it had a reasonable prospect of doing so.
The company also claims it corresponded "on numerous occasions" with the state government and held meetings with the staff of Premier Colin Barnett, as well as introducing the entitites associated with Mr Bleyer to the Department of State Development.
The premier publically dismissed the Oakajee funding deal on several occasions, saying he considered there to be little substance behind it.
Padbury says it provided the government with an indicative development agreement for the Oakajee project using a model agreement suggested by the premier's staff.
The company says it considered this to represent the commencement of formal discussions with the government on a development agreement.
Padbury also declined to say whether the company's directors considered the Oakajee funding announcement to be a material disclosure in accordance with its corporate governance statement, saying a response could deny the directors statutory protections with respect to self-incrimination that would be available in an ASIC investigation.
The termination of the deal with Mr Bleyer, who was also linked to a collapsed $260 million joint venture funding deal for junior explorer FairStar Resources last year, came after Padbury missed several self-imposed deadlines to reveal further details of the massive funding agreement.
Shares in the iron ore tiddler hovered just below the 1 cent mark for much of 2014 before shooting up in the days leading up to the Oakajee funding announcement.