27th Jun 2016 12:03
LONDON (Alliance News) - The troubles at Hunter Resources PLC continued on Monday as the company said it faces being suspended from AIM yet again due to its lengthy dispute over the Pampamali project and needs cash quickly to avoid becoming broke.
Hunter Resources has been embroiled in a long battle to try to secure the 51% stake in the Pampamali project in Peru since 2014 - which is still ongoing as Hunter has still failed to resolve the matter.
With GBP53,000 in the bank as of Monday and the threat of being suspended at the start of next week, the company continues to find itself facing significant adversity and may have to pull out of the project that it has been battling to secure for such a long time.
The dispute has been significant for Hunter as the company had its shares suspended in December 2013 after failing to make a significant investment within the required timeframe under AIM rules for investment companies, but was re-admitted in June 2014 after acquiring Gold Hunter SAC, which had an option to acquire up to 100% of the project.
Hunter then amended the option with the owners of the project in December 2014 to acquire up to a 51% stake in the project rather than the original 100%. The idea was to acquire that stake for a lower price and sooner than it was previously expecting - but Hunter has still not secured that stake 18 months later.
Hunter exercised the option to acquire that 51% stake in July 2015, a necessary move to satisfy AIM rules following its re-admission to AIM and to avoid being suspended yet again, but the owners of the project have been refusing to transfer the stake to the designated holding company that would form the joint venture.
Hunter claims the owners "continued to obstruct the legal process" of responding to the company's exercise of the option, which led the company to take more drastic action to try to secure its stake.
Hunter's frustration prompted the company to launch formal arbitration proceedings in March of this year through the American Chamber of Commerce of Peru whilst continuing to negotiate with the owners in an attempt to reach a settlement.
"The board has been working towards reaching an agreement with the vendors in connection with the exercise of the option but the Vendors have been delaying the legal process. The company and the vendors currently have a draft agreement in hand to consider but there is no guarantee that the draft agreement will be finalised and the board stresses that there can be no certainty that an agreement will be executed as a binding contract, nor that any agreement will be executed," said Hunter.
If the dispute is not settled by July 4, then Hunter will find itself suspended from AIM once again, which in turn would place further pressure on the company as it would only have six months to find a resolution or strike another deal before facing the prospect of having its shares cancelled from trading on AIM.
"Shareholders should be aware that if no significant progress is made with the vendors in the near future the board may conclude that it is in the best interests of shareholders to withdraw from the Pampamali project and the company is considering its legal options in this regard," said Hunter.
The company's woes do not stop there. Hunter is relying on shareholders approving GBP50,000 worth of funding at an upcoming annual general meeting, but even if that is supported, the cash will not last long.
"This funding is sufficient for the immediate needs of the company and group, but will be insufficient to fund the ongoing development of the group's existing projects, or to acquire interests in new prospects. The company is currently in discussion with its major shareholders and other investors on bringing in new funding through either equity or convertible debt instruments," said Hunter.
The investment company involved within the mining and natural resource sector reported a pretax loss of GBP210,000 in 2015, narrowing from the GBP476,000 loss a year earlier as administrative costs declined to GBP213,000 from GBP320,000 and because a GBP148,000 share-based payment made in 2014 did not repeat itself.
Shares in Hunter Resources were down 10% at 0.170 pence Monday afternoon.
By Joshua Warner; [email protected]; @JoshAlliance
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