Murchison Metals (MMX) has taken exception an announcement by its opponent, Chameleon Mining Ltd (CHM) yesterday concerning the settlement of the claim by Evans and Koh against Murchison and provides the following clarification (Air Monday).
In its statement Chameleon said
"The Company (including Koh & Evans) and their legal team were extremely surprised to receive an offer from Murchison to settle the claim before trial considering that since 2005 Murchison have repeatedly stated that the claim is ‘without merit’.
"Chameleon Mining chairman Ben Elias confirms that “the settlement was for 3,500,000 Murchison shares, a $350,000 cash payment plus costs. The offer was accepted after taking into consideration the inherently uncertain nature of litigation”.
“The Company is pleased to secure such a windfall (aggregate gross value in excess of $7.0m) in light of current economic times and given that Chameleon was only relatively recently reinstated to the official list with cash reserves of approximately $2.23m” continued Elias.
“We also note that despite being offered the opportunity, Murchison failed to secure any releases from the plaintiffs’ as part of the settlement structure. By failing to secure those releases, Murchison may have also left themselves open to an additional series of separate actions claiming more shares” concluded Elias."
That latter point was strongly rejected by Murchison, which said:
"In relation to potential further proceedings by the plaintiffs for additional shares, Murchison believes that such proceedings would invariably fall foul of the rule in Anshun’s case, be an abuse of process and would be liable to be struck out accordingly.
"Murchison confirms that the Evans and Koh proceedings are unrelated to the litigation commenced by Chameleon against Murchison, Crosslands Resources Ltd and others.
"The Chameleon litigation is entirely separate from the Evans & Koh matter in terms of pleadings and evidence and the settlement in the Evans and Koh proceedings should not be regarded as a precedent for a settlement in the Chameleon litigation.
"No inferences can be drawn from the Evans & Koh settlement as to the likely outcome of the Chameleon litigation as it is fundamentally different in nature and character."
Murchison revealed in its statement that the settlement terms of the Koh and Evans matter was less costly than it seemed and claimed in the Chameleon statement.
"In an ASX release dated 26 September 2008 CHM stated that the Evans and Koh claim was worth between $150m and $250m. The settlement represents 2.8% of the mid-point of that estimate.
"The Offer of Compromise that was accepted by the plaintiffs on 2 July was lodged by Murchison on 5 June 2009.
"Such offers are common in commercial litigation as a tactic to limit the defendant’s exposure to paying the plaintiff’s costs in the proceedings and reflect an assessment of the risk inherent in litigation.
"In the negotiations that preceded the plaintiff’s acceptance of Murchison’s offer, the plaintiffs made a number of verbal and written counter-offers including offers of 10m shares, 7m shares and 6 million shares, all of which were rejected."
In terms of the market, MMX shares fell 10.9%, or 17 cents to $1.39, after a big fall Friday. Chameleon shares rose 46% or 0.6 of a cent to 1.9 cents, but fell and closed up 26%, or 0.3 of a cent at 1.6 cents.
