The almost-completed takeover of Summit Resources Ltd by Subiaco-based Paladin Resources Ltd was sweetened today by the settlement of legal action between the two companies.
The almost-completed takeover of Summit Resources Ltd by Subiaco-based Paladin Resources Ltd was sweetened today by the settlement of legal action between the two companies.
The case was brought about when Paladin acquired Resolute Mining Ltd subsidiary Valhalla Uranium Ltd in 2006, and with it Valhalla subsidiary Mt Isa Uranium Ltd, which held a stake in the Isa Uranium Joint Venture Agreement, along with a Summit subsidiary.
The JV, which mines the Valhalla/Skal deposit in Mt Isa, is now held 50-50 by Paladin and Summit
Summit had launched legal action in September last year against Resolute and Valhalla, claiming the companies had breached the joint venture agreement through disclosure of information relating to the joint venture in Valhalla's initial public offer prospectus. Summit alleged that the companies had done this to facilitate the Valhalla takeover by Paladin.
Summit had earlier claimed that an existing condition of the JV gave one partner the option to fully acquire the project should the other pull out, and sought to use this condition to fully acquire the project at Paladin's expense.
Summit announced today that it would drop the action after deciding the project acquisition, were it to occur, would not be a satisfactory commercial outcome, givenr the agreement had Summit acquiring the interest for 85 per cent of its value.
The full text of a Summit announcement is pasted below
Summit Resources (Aust) Pty Ltd ("Summit") (a wholly owned subsidiary of Summit Resources Limited) has agreed with Resolute Limited and Mt Isa Uranium Pty Ltd ("Defendants") to settle the Supreme Court proceedings commenced by Summit.
As previously announced to the market, Summit commenced proceedings against the Defendants in respect of alleged breaches of confidentiality provisions in the Joint Venture Agreement governing the Mt Isa Uranium Project.
Summit sought a declaration that based on those breaches it would be entitled to exercise an option to acquire the Defendants' interest in the Joint Venture. Summit's objective in pursuing the litigation was to seek to gain control of all of the Isa Uranium Project.
Following the acquisition of 81.82% of Summit's shares by Paladin, a Committee of the Board of Summit Resources Limited chaired by independent director Mr Mal Randall and comprising Mr Randal and Mr David Berrie, was constituted to oversee the litigation.
The Committee after taking legal advice, and reviewing the commercial rationale for litigation, determined that it was in the best interests of Summit that the litigation be discontinued. In particular, the Committee took into account the following:
Accordingly, a Consent Order has been agreed to that the proceedings be dismissed and that there be no order as to costs. (It being agreed by the Parties that each Party will bear its own costs).
