Murchison Metals Limited (ASX:MMX) Quarterly Activities Report For June 2009
Perth, July 28, 2009 AEST (ABN Newswire) - As at 30 June 2009 Murchison Metals Limited (ASX:MMX)(PINK:MUMTF) was debt free and had cash and liquid investments of A$126 million, a decrease of A$17.7 million from the previous quarter. Included in this cash outflow are amounts paid to Crosslands and OPR of A$15.3 million to finance feasibility studies and exploration costs. Interest earned on investments for the quarter amounted to A$1.3 million.
During the quarter, work has continued on studies for both the Crosslands Stage 2 expansion and the OPR Port and Rail project. Murchison is pleased with the progress of both projects to date and expects the feasibility studies to be completed during the first half of 2010.
Market Outlook
At the onset of the global financial crisis, Chinese steelmakers idled production capacity in line with the declining market. However since the start of calendar 2009 many of the small and medium mills have restarted production and many are running close to full capacity. It is reported that in May, Chinese total steel output was recorded at 57 million tonnes, up 7.4% year on year or 8.3% month on month. The cumulative steel output for the first five months reached 254 million tonnes, up 9 million tonnes or + 3% from last years output for the same period.
The Chinese government's 4 trillion Yuan investments are being mainly directed into infrastructure projects while the domestic housing construction market is showing some early signs of recovery. The stronger market demand for long products has helped the small and medium mills increase production, while major steel mills still face a tough market and oversupply.
Many small and medium mills that used to primarily purchase domestic ore have turned to cheaper imports. This in turn has helped push up iron ore import prices. Chinese company officials have stated that China's reliance on imported iron ore may climb from 50% to 70%. Many of the domestic ores are difficult to mine and are inferior in both quality and price than that of imported ore.
Settlement of Evans and Koh Litigation
Subsequent to quarter end, the Company settled the legal proceedings brought against the Company by David Evans and SH Koh, former directors of Chameleon Mining NL ("Chameleon").
The litigation, which commenced in March 2005, concerned an agreement made in 2004 between the plaintiffs and Nicu Metals Ltd (now Murchison) before the current Murchison Board and senior management group were appointed. The plaintiffs had claimed a 5% interest in the Jack Hills iron ore project and a quantity of Murchison shares.
Chameleon, which claimed to have an interest in the litigation under an agreement with the plaintiffs(1), had estimated the value of the claim to be in the order of A$150 million - A$250 million(2).
Under the terms of the settlement, Murchison agreed to issue 3.5 million shares, make a payment of A$350,000 and pay the plaintiff's costs (to be assessed).
Chameleon Litigation
On 29 November 2007, Chameleon Mining NL ("Chameleon") commenced legal proceedings in the Federal Court against Murchison, Crosslands and several other parties. Chameleon is claiming an interest in the Jack Hills and Weld Range projects and / or Murchison's shares in Crosslands, arising out of a series of transactions that occurred in 2004 before the current Board and management of Murchison were appointed.
At a directions hearing held in the Federal Court on 3 July 2009, the Court listed the matter for a four week hearing commencing on 28 September 2009. The Court also ordered the parties to attend mediation prior to the hearing.
Based on work undertaken since the claim was received and having reviewed the evidence that has been filed by Chameleon to date, Murchison maintains its previously announced view that there is no sustainable, factual basis for the Chameleon claim so far as it constitutes a claim for a substantial interest in the Jack Hills or Weld Range tenements and/or Murchison's shares in Crosslands.
(1) Chameleon ASX Announcement dated 28 February 2008.
(2) Chameleon ASX Announcement dated 26 September 2008.
For the complete Murchison Metals Quarterly Activities Report for June 2009, please click the link below:
http://www.abnnewswire.net/media/en/docs/61127-ASX-MMX-454168.pdf
Contact
Paul Kopejtka
Executive Chairman
Murchison Metals Ltd
Tel: +61-8-9492-2600
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