- Iron ore miner Carpentaria Resources (CAP) has called a trading halt until after the weekend as it gears up to tap investors for some fresh funds
- The company is yet to reveal the details of the capital raise, including how much it plans to raise and for what it plans to use the funds
- While nothing has been confirmed just yet, the raise may have something to do with a potential legal battle between Carpentaria and joint venture partner Pure Metals
- In November 2020, Carpentaria and Pure Metals struck a deal under which CAP would buy 24 per cent of Pure Metals’ stake in the flagship Hawsons Iron project in New South Wales
- This would bolster Carpentaria’s holding of the project to 94 per cent, and, in return, the company would issue Pure Metals 90.8 million shares
- However, Carpentaria said in March 2021 that Pure Metals was not upholding its end of the deal and was in breach of its obligations under the agreement
- With no legal response from Pure Metals over several weeks, Carpentaria said it was taking action to enforce its contractual rights against Pure Metals
- Shares in Carpentaria last traded on Wednesday, April 14, for 4.2 cents each
Iron ore miner Carpentaria Resources (CAP) has called a trading halt until after the weekend as it gears up to tap investors for some fresh funds.
The company is yet to reveal the details of the capital raise, but CAP shares went into a two-day trading halt today after the company revealed intentions to launch a fundraising plan.
As it stands, Carpentaria shares will remain in the trading halt until Monday, April 19, unless the company releases the details of the raise before then.
While nothing has been confirmed just yet, the capital raise may have something to do with a potential legal battle Carpentaria has found itself in against longstanding joint venture (JV) partner Pure Metals.
Soured partnership
Carpentaria first struck a joint venture deal with Pure Metals back in 2013 over CAP’s flagship Hawsons Iron Project near Broken Hill in New South Wales. Under the deal, Carpentaria retained a 60 per cent interest in the project and Pure Metals nabbed the remaining 40 per cent.
Since then, the company’s respective interests in the project have been amended over the years, with Carpentaria owning 69.8 per cent of the project and Pure Metals 30.2 per cent as of November 2020.
Then, on November 2 last year, Carpentaria and Pure Metals struck a deal under which Carpentaria would bolster its stake in the project to 94 per cent and, in return, would issue 90.8 million shares to Pure Metals.
Pure Metals would then divest the rest of its holding to Starlight Investment Company, which would become Carpentaria’s new JV partner for the Hawsons project. Shareholders voted overwhelmingly in favour of the deal.
Yet, in March 2021, Carpentaria said Pure Metals had failed to uphold its end of the deal and was in breach of the sale and purchase agreement around the Hawson project.
While the specifics behind the case have not been disclosed, Carpentaria said on March 19 it had served notice to Pure Metals of its breaches under the terms of both the purchase deal and the Hawsons JV agreement.
On March 29, Carpentaria said it had not received any legal response from Pure Metals, and as such would be taking all necessary steps to enforce its contractual rights against Pure Metals.
“As you might expect, the breaches by Pure Metals have caused CAP delays in respect of progressing the Hawsons Iron Project,” company management said.
“Despite this, CAP is now clear as to how and when it will proceed, starting with holding Pure Metals accountable for all of the obligations that Pure Metals owes to CAP.”
In light of this, it’s uncertain whether the timing of the upcoming capital raise is simply coincidental or whether the fresh funding will be used to help CAP take action against Pure Metals. The company will shed light on the reasons for the raise once its trading halt is lifted next week.
Shares in Carpentaria last traded on Wednesday, April 14, for 4.2 cents each.