Dolphin Tungsten Mine owners Group 6 Metals breach ASX rules

Shareholders of miner Group 6 Metals will be asked next month to retrospectively approve a series of mining equipment, rental and spare parts transactions after the company acknowledged breaches of ASX Listing Rule 10.1 involving businesses associated with director Dale Elphinstone.

The company disclosed the issue in an ASX announcement on June 2, stating that ASX had directed G6M to undertake remedial action as part of the process of seeking a reinstatement of the company’s suspended shares.

The transactions relate to equipment, spare parts and services supplied to the Dolphin Tungsten Mine by William Adams Pty Ltd and United Equipment Pty Ltd, businesses controlled by Mr Elphinstone.

G6M said the issue arose after the company lodged accounts showing negative equity of about $57.4 million.

Under ASX Listing Rule 10.1, a company with negative equity must obtain shareholder approval before acquiring assets from related parties.

The company said it failed to identify the effect of that requirement through its internal compliance processes and continued existing commercial arrangements without obtaining prior shareholder approval.

The transactions subject to shareholder approval include more than 5000 machinery spare parts purchases valued at about $390,000, rental extensions for Caterpillar wheel loaders and articulated trucks, equipment purchases and elevated work platform hire arrangements used in the operation of the Dolphin Mine.

In its notice of meeting, G6M said the transactions cannot realistically be unwound because they have already been completed and the equipment has been used in mining operations.

While the company maintains that the transactions were conducted on arm’s length commercial terms and were operationally necessary, it acknowledged that shareholder approval should have been obtained before the transactions proceeded.

“The board acknowledges that in these circumstances, the transactions continued in breach of ASX Listing Rule 10.1 and regrets that the requirement for prior shareholder approval was not identified at the relevant time,” the company said.

The company said shareholder approval forms part of the remedial action required to address the Listing Rule issue and support its efforts to pursue reinstatement to trading.

In the notice of meeting, G6M said failure to obtain shareholder approval would leave the company without an effective remedy for the breaches and could affect its pathway back to the ASX.

Neither the ASX announcement nor the notice of meeting contains any allegation of fraud, dishonesty, inflated pricing or improper conduct by directors or suppliers.