Rutile miner hangs on for appeal outcome

Iluka Resources spin-off Sierra Rutile could be up to $A6.4 million out of pocket after attempts to appeal a 2021 Sierra Leone High Court decision that found the ASX-lister allegedly damaged logistics equipment proved unsuccessful thus far.

Sierra Rutile told the ASX this morning that it could prove ‘very difficult’ to recover any of the penalty it has been ordered to pay as part of a judgement handed down by the Sierra Leone High Court in August 2021.

At that time, the court determined Sierra Rutile was to pay Hong Kong-headquartered mining business Transcend International Resources $US3.2 million ($US4.8 million) for allegedly damaging logistics equipment belonging to Transcend.

That bill has escalated to about $US4.3 million ($A6.4 million) inclusive of costs and interests.

Sierra Rutile estimated it had already paid $US1.6 million ($A2.4 million) to Transcend and is now expecting the balance of the penalty, about $US2.7 million ($A4 million), to be paid following a garnishee it says has been ordered over its bank accounts in the country.

According to the company, the fees had been held in an account pending the outcome of an appeal, which is yet to be heard by the Sierra Leone High Court.

Sierra Rutile, which was spun out of mineral sands and aspiring rare earths miner Iluka Resources in 2022, said that it had already provided for the bulk of the expected costs arising from the dispute in its 2021 accounts.

“SRL has made numerous representations to the high court and to the government of Sierra Leone to avoid the garnishee order being made until such time as the appeal has been heard but these representations appear to have been unsuccessful,” Sierra said in a statement.

Further, Sierra flagged that even if it were to be successful in an appeal, recovering any funds paid to Transcend as a result of the judgement would prove a challenge.

“As Transcend is a Chinese entity with no substantial assets in Sierra Leone, recovery of any funds paid to Transcend if the appeal is ultimately successful may prove very difficult although SRL would take all reasonable steps to recover the amount in that event," the company said.

“The SRX board will consider the implications of these developments and will keep the market informed of material developments in accordance with its continuous disclosure requirements.”

Sierra Rutile shares last changed hands at 26 cents.