Strategic Minerals (AIM:SML) said its subsidiary, Southern Minerals Group, has been awarded US$21.9 million in damages and costs, exclusive of additional interest.
The decision of the arbitrator relates to an ongoing dispute with a major client involved with the company’s Cobre magnetite operation in New Mexico.
The arbitrator will award $4.2m in liquidated damages and $14.0m in lost profits, punitive damages of $3.6m and arbitration costs of $23,660, the group detailed this morning.
Strategic said it is now proceeding to confirm the decision in the United States District Court in the client's local jurisdiction, where the arbitration technically took place.
Assets have now been seized as part of a US Securities and Exchange Commission's investigation with the court likely to appoint a receiver to manage the assets of the client mid-June 2020.
Shares in Strategic Minerals were trading 11.11% lower at 0.6p on Monday morning.
The AIM-listed mineral producer said this successful arbitration outcome puts it in the best possible case to seek recovery of this award.
However, the company said it remains cautious on the ultimate outcome, as the case now moves, pro forma, to the US District Court.
"Whilst heartened by the arbitrator's decision, the Board continues to advise a precautionary view be adopted in relation to the amount, if any, Southern Minerals Group may receive,” said John Peters, Managing Director of Strategic Minerals.
“However, the Board is pleased with the manner in which it has been able to crystalize the amount of the claim and to have put the Company in the best position to maximise any payment it may be able to realise over the coming year,” he added.
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