6 July
2007
ANNOUNCEMENT
SUPREME
COURT PROCEEDINGS AGAINST NEWLAND AND FORMER DIRECTOR
Summit Resources Limited
and Summit Resources (Aust) Pty Ltd (Summit -
ASX:SMM) have today commenced proceedings in the Supreme Court of
Western Australia against its former managing director, Alan Eggers, and its
joint venture partner in the Georgina Basin uranium asset, Newland Resources
Limited (Newland).
The legal proceedings
seek to confirm Summit’s right to be the
manager and operational controller of the Georgina
Basin joint venture in Queensland for as long as Summit
holds a 30% interest in the Georgina
Basin joint venture.
The new board of Summit, appointed following the successful majority
acquisition of the company by Paladin on June 4 2007, discovered in early June
that a Heads of Agreement had been executed between Summit and Newland on April 13, 2007. That
agreement includes a provision which purports to give Newland the right to be
the manager and operational controller of the Georgina Basin Joint Venture in
the event that control of Summit passes to
another entity or if Mr Eggers ceases to be Summit’s Managing Director.
The Heads of Agreement
was executed, apparently without board approval, the day after Paladin
increased its offer to Summit and three days before (April 16) the then Summit Board recommended
Paladin’s revised offer to Summit shareholders.
The Heads of Agreement
purports to supplement a letter agreement executed by Summit and Newland on 3 August 2006 (and
which was announced to the market at that time).
The letter agreement of 3
August 2006 provided that Summit was to retain the management rights to the
Georgina Basin joint venture and would have a casting vote for as long as it
held a 30% or greater interest in the Georgina Basin joint venture.
Prior to the purported
Heads of Agreement recently coming to light, Summit’s
management rights in respect of the Georgina
Basin joint venture had been confirmed
in many unqualified public announcements by both Summit and Newland between August 2006 and
April 2007.
Summit’s
current Board has decided to commence legal proceedings against Newland seeking
an injunction permanently restraining Newland from exercising its purported
right to take over as manager of the Georgina Basin JV.
Summit
believes that its valuable rights to the management of the Georgina Basin
joint venture should not have been surrendered, via the Heads of Agreement, in circumstances
in which:
· the
letter agreement of 3 August 2006 conferred no right on Newland whatsoever to
assume management and control of the Georgina Basin joint venture in the event
of a change of control of Summit;
· there
does not appear to have been any minuted board discussion or resolution
authorising the execution of the Heads of Agreement; and
· Summit
does not appear to have received any corporate benefit or consideration for
having done so.
Summit also alleges that Mr
Eggers has breached various directors’ duties that he owed to Summit in the purported
execution of the Heads of Agreement. In this regard, Summit
is claiming compensation from Mr Eggers for the breaches of the
directors’ duties he owed to Summit
and from Newland, as a party involved in those breaches.
For further information, contact:
Brendan O’Hara
Executive Chairman
Summit
Resources
Tel. 08 9381 43 66
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