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Last month, the Supreme Court ordered Sundance to pay geologist David Porter more than $5 million in damages and while no order has been made in relation to interest or costs, those are expected to reach around $3 million.
Sundance is also locked in a separate legal battle with Porter and Absolute Analogue over the issue of options.
The company won the case in 2014, and the subsequent appeal, but a retrial was ordered and is expected to proceed later this year.
The Sundance board said settling with Porter and Absolute Analogue was in the best interests of shareholders given that the failure to reach a settlement would have left the company unable to pay the damages.
The settlement with Porter and Absolute Analogue totals $11.5 million, comprising a $500,000 cash payment on the lodgement of a prospectus for a pro-rata renounceable rights issue to raise $16.5 million.
Porter has agreed to sub-underwrite $11 million of the issue, which will be managed by Patersons Securities.
Patersons and its associated parties will underwrite a further $3 million of the issue.
The one-for-one offer has an issue price of half a cent per share, with each new share coming with a free option, exercisable at 0.6c before August next year.
Last week, Sundance informed the market that the Chinese contractor signed up by the Cameroon government to build the port and rail infrastructure for the company’s Mbalam-Nabeba iron ore project had delayed the signing of the EPC contract.
As a result, to conserve cash, Sundance will take action to cut costs by 80%.
The company will scale back the six-member board and cut remuneration, as well as make “significant” cuts to staff.
It comes after Sundance cut a director and staff in Perth a little over a year ago in response to the drop in iron ore prices.
Sundance managing director Giulio Casello said the Mbalam-Nabeba project remained an outstanding asset and the Chinese contractor was keen to move ahead, though timing remained unclear.
“Therefore, given the pathway to construct the port and rail infrastructure is currently postponed, Sundance’s ability to find an equity partner and complete the required funding of the mine and associated infrastructure is also delayed,” he said.
“Consequently, it is important that the company take swift action to protect its assets and place itself in the best position to advance the project as and when conditions allow.”
Shares in Sundance fell as low as 0.5c this morning but partially recovered to 0.7c, still a hefty 41.6% drop.
