Australian Mines Limited (ASX: AUZ) has been handed a $450,000 penalty by the Federal Court for breaching its continuous disclosure obligations on three occasions.
The penalty comes after Australian Mines sought early resolution of ASIC’s proceedings and admitted that it failed in its obligation to disclose material information to the market when it:
- failed to disclose in its 19 February 2018 announcement that the term sheet for an offtake agreement with SK Innovation to purchase the expected cobalt and nickel product from Australian Mines’ Sconi Project included a buyer’s discount of 15% upon SK Innovation acquiring Australian Mines shares at a fixed price,
- failed to disclose the true status of funding for the Sconi Project after its managing director, Benjamin Bell, falsely claimed at investor conferences in Hong Kong and London that Australian Mines had secured funding from SK Innovation to construct a plant for the Sconi Project, expected to cost $500 million or more, when in fact no funding had been secured, and
- failed to disclose the true value of the offtake agreement with SK Innovations after Benjamin Bell misleadingly stated at the same two investor conferences that the value of the agreement with SK Innovation was $5 billion, despite the agreement including a potential buyers discount of 15%.
ASIC Commissioner Sean Hughes said, ‘Today’s outcome reinforces how fundamental the continuous disclosure regime is in ensuring that Australia’s financial markets are well-informed and fair. The outcome is a timely reminder for ASX listed companies attending overseas conferences that compliance with the law is expected and enforceable.
A contravention of continuous disclosure laws has the potential to undermine investor confidence and the integrity of the market. ASIC will continue to take enforcement action to ensure that Australia’s markets operate fairly and are transparent.’
Justice Colvin found that Australian Mines’ misconduct was serious and that the statements made at the investor conferences were ‘false’ and ‘materially misleading’. His Honour said that Australian Mines’ continuous disclosure breaches ‘concerned matters of considerable significance’ and that the false and misleading statements ‘concerned matters of evident importance for shareholders’ which Australian Mines did not take steps to disclose ‘for some time’.
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In reaching the penalty amount, Justice Colvin took into account Australian Mines’ admission that it contravened the law and its efforts to remediate its conduct
Australian Mines has been ordered to contribute to ASIC’s legal costs.
ASIC’s proceedings against Mr Benjamin Bell are ongoing.