A junior miner’s chief executive says he has voluntarily submitted to ASIC the contents of an internal investigation into a failed project expansion in India.
Shareholders in Osborne Park-based IndiOre are seeking answers as to why an expansion at the company’s flagship project was approved, then cancelled in January, after $10 million had been raised to fund the works.
The company is now planning to change its name to Elmore and undertake a fresh $5 million capital raising to fund its strategic shift to iron ore processing in Western Australia and the Northern Territory.
IndiOre was previously involved in iron ore production and processing in India for several years, and its share price experienced a strong rise in late 2016 as it edged closer to commissioning phase two of its Kurnool wet beneficiation plant and struck a joint venture agreement with a large Chinese firm to develop a steel mill. But since then, its share price has spiraled downwards as the wet plant sales consistently failed to meet investor expectations and the JV did not materialise.
In May last year, it tapped the market for $10 million, predominately to fund the phase three expansion of the Kurnool plant and surrounding tenements.
Less than a month later, the company told the ASX work on the phase three expansion was in “full flow”.
In September 2018, it said it had ordered equipment for the expansion that was being manufactured and fabricated by a Chinese supplier, and ongoing detailed engineering and design works undertaken by Essar Projects was set to be complete by the end of that month.
It also appointed a project manager and announced on the ASX several times that the project was scheduled to be commissioned by the first half of 2019.
But in the same September ASX announcement in which it said work on the phase three expansion was “on track”, it also said managing director Cedric Goode and chairman Jock Muir would leave the company due to personal reasons.
David Mendelawitz was appointed as the new managing director in mid-October, with updates about phase three less frequent after this time.
In December, IndiOre was placed into a trading halt, and has remained suspended to the date of publication.
In early January 2019, the company said it immediately cancelled the phase three expansion after completing a drilling program aimed at “providing confidence in the resources available to underpin the mine plan” associated with the expansion.
“Disappointingly, the drilling did not intersect any mineralisation of adequate grade or thickness to justify mining on any of the project areas,” IndiOre said.
“The company has initiated an independent review in both Australia and India into the history that has led to the decision to build the project, in particular the phase expansion, without sufficient defined resources.
“The review will be made available to the relevant regulators if necessary.”
In March, non-executive directors Peter Linford and Ray Betros resigned.
Last month, a spokesperson for IndiOre told Business News the conclusion of the independent review was still some months away.
“It is well advanced, but no conclusions have yet been reached,” they said.
The spokesperson said IndiOre’s own solicitors and senior counsel would conduct the review, although they would not disclose the law firm’s name.
Steinepreis Paganin had appeared as solicitors on the IndiOre website, but the spokesperson confirmed to Business News that this relationship no longer existed.
IndiOre shareholder Ben Pauley believes the company’s investigation into the phase three expansion is lacking independence.
“The company’s own lawyers are doing the review and some of the board and management that approved the works associated with phase three are still at IndiOre,” he said.
Remaining on the board since IndiOre announced it had secured capital for the phase three expansion in May 2018 are Peter Richards (now as chair) and Sean Henbury, who is still the company secretary.
“With those factors, I think it is pathetic that this investigation can be classified by the company as independent,” Mr Pauley said.
“An independent authority like the Australian Securities and Investments Commission should be the ones conducting the investigation.”
Several other shareholders Business News has spoken to also wanted ASIC to intervene.
Business News understands related complaints have also been made to the ASX by IndiOre shareholder Joe Korczynski.
In regards to conducting its own investigation into IndiOre, an ASIC spokesperson told Business News last month it was too early to comment on the matter.
“As to whether we are investigating it, that is something open to us, or other authorities, depending on what the company, in the first instance at least, might discover,” the ASIC spokesperson said.
But a spokesperson for IndiOre did not guarantee the review would be made public to anyone outside of the company.
“Until the review is completed, the company does not presume to know whether there is anything material to report to anyone,” they told Business News.
“Advice will be taken at the time of conclusion of the review, as to whom disclosure ought properly be made.”
However, less than a month after Business News’ initial inquiries, IndiOre chief executive David Mendelawitz told Business News on July 5 that he voluntarily submitted documents relating to the company’s investigation into the phase three expansion to ASIC on July 4.
ASIC did not respond to Business News’s inquiries in relation to Mr Mendelawitz’s statement.
