- Iron ore miner Carpentaria Resources (CAP) has seen a major spike on the ASX today after resolving legal issues with partner company Pure Metals
- The issues came to light when Carpentaria revealed earlier this year that Pure Metals had not upheld its end of a sale and purchase deal from November 2020
- Under the deal, Pure Metals had agreed to sell 24.15 per cent of its interest in the Hawsons Iron Project in New South Wales for 90.8 million CAP shares
- This would bolster Carpentaria's interest in the Hawsons projects to 94 per cent, with Pure Metals to divest its remaining 6 per cent interest to Starlight Investment Company
- However, Carpentaria said in March Pure Metals had not upheld its end of the deal, and as such Carpentaria was taking legal action
- Today, Carpentaria said the dispute has been resolved and the purchase deal is set to go ahead once more
- Shares in Carpentaria are up 32.61 per cent this morning to trade at 6.1 cents each
Iron ore miner Carpentaria Resources (CAP) has seen a major spike on the ASX today after resolving legal issues with partner company Pure Metals.
Carpentaria is now set to pay 90.8 million shares to Pure Metals to buy up an extra 24.15 per cent interest in the Hawsons Iron Project in New South Wales, as per an agreement from September last year.
The conditions under the companies' sales and purchase agreement have been met, with the transaction to be completed by May 19, 2021.
Liquidations and legal concerns
Carpentaria and Pure Metals have been joint venture (JV) partners over the project, which lies near Broken Hill, since 2013.
However, Carpentaria ran into some issues over the project last November after inking up a JV restructuring deal with Pure Metals, which held roughly 30 per cent of the Hawsons project at the time.
Under the plan, Pure Metals would sell 24 per cent of its Hawsons interest to Carpentaria and would receive 90.8 million CAP shares in return. Pure Metals would then divest the rest of its holding to Starlight Investment Company, which would become Carpentaria's new JV partner for the project.
However, things started to go south when Carpentaria revealed Ample Source International, a principal shareholder in Pure Metals, was placed into liquidation in January 2021.
In March, Carpentaria told shareholders Pure Metals had not upheld its end of the restructuring deal and was in breach of its obligations under the sale and purchase agreement. Carpentaria took legal action over the issue, with an April capital raise planned to potentially help fund legal costs.
Today, Carpentaria said the issues have been resolved and the Pure Metals transaction is once again set to go ahead.
Executive Chairman Bryan Granzien said the Pure Metals deal is "clearing the path" of obstacles to unlock the full values of the Hawsons project.
"We now expect to be able to do justice to the Hawsons Project and raise the funds necessary to complete the bankable feasibility study then proceed to development of the project," Bryan said.
"CAP will look to take advantage of the huge demand for the highest-quality iron ore products worldwide, and do so for the benefit of CAP shareholders, the community of Broken Hill and other stakeholders," he said.
Carpentaria also announced today that it is looking for sophisticated investors to buy the 90.8 million fresh shares from Pure Metals after they have been issued. The company said the plan is for the shares to be sold by Pure Metals in off-market transfers.
News of the legal resolution has been received well by shareholders, with Carpentaria shares soaring 32.61 per cent higher in early action, worth 6.1 cents each at 10:58 am AEST. The company has a $21 million market cap.