Perth-based uranium company Newland Resources Ltd has rejected allegations by Subiaco-based Summit Resources Ltd that it knowingly breached duties to it by signing a deal with former Summit chair Alan Eggers.
Summit, now controlled by Paladin Resources Ltd, last week mounted legal action against the company and Mr Eggers over a heads of agreement executed between the Eggers-controlled Summit and Newland during the takeover battle.
The agreement gave Newland the right to be operational controller and manager of a Queensland uranium joint venture between the two companies, should control of Summit pass to another entity.
Summit's current board will seek an injuction against Newland taking control of the joint venture, arguing its management rights should not be suspended under the agreement because, among other reasons, the move will not provide any clear benefit to Summit.
In an announcement to the ASX, Newland Resources chairman Lindsay Colless rejected the Summit allegations, and pointed out that his company had not attempted to exercise any management rights over the project.
He also called upon Summit to provide information on the progress of the project, which he said had not been forthcoming since the new board took control at the company.
"Newland has satisfied the minimum $1 million expenditure requirement in contributions to the joint venture and is awaiting the reports to evaluate whether it will exercise its option to sole fund the next $4 million expenditure to earn its interest," the announcement said.
The full text of the announcement is pasted below
This announcement is made by Newland Resources Limited (Newland - ASX:NRL) in response to a market release by Summit Resources Limited (Summit - ASX:SMM) on Friday, 6 July 2007.
Summit and Summit Resources (Aust) Pty Ltd (SRAPL) are the joint venture partners of Newland in the Georgina Basin uranium exploration project. The terms on which the joint venture is to operate are set out in a Farmin and Joint Venture Heads of Agreement made by the parties on or about 13 April 2007 (Heads of Agreement).
In proceedings commenced in the Supreme Court, Summit and SRAPL allege that Mr Alan Eggers (the former managing director of Summit) breached duties owed to them, and that Newland was knowingly involved in those breaches, in entering into the Heads of Agreement. Summit and SRAPL claim that despite a clause in the Heads of Agreement that confers on Newland the right to become the manager of the joint venture, Newland should not be entitled to rely on that clause and should be permanently restrained from doing so.
Newland denies the allegations made against it and has engaged solicitors to defend the proceedings. Whilst reserving its rights, Newland has not actually attempted to exercise its right to be the manager of the joint venture. At present, Summit still remains as manager.
Newland considers that Summit, as manager, has obligations under the Heads of Agreement to provide reports to Newland. Newland has requested Summit to provide it with information and reports relating to work done on the joint venture so far. At the time of this release, and since the new board of directors of Summit has been in place, Summit has failed to provide the information requested or any information to Newland regarding the progress of the joint venture. Newland has satisfied the minimum $1m expenditure requirement in contributions to the joint venture and is awaiting the reports to evaluate whether it will exercise its option to sole fund the next $4m expenditure to earn its interest.
Yours faithfully, for NEWLAND RESOURCES LTD,
L A Colless, Director
