PERTH (miningweekly.com) – The Australian Stock Exchange (ASX) has warned Molopo Energy that it had turned to the Australian Securities and Investment Commission (ASIC) to determine if the company is in breach of the Corporations Act.

The move comes after Aurora Funds Management raised concerns with both the ASX and ASIC over actions taken by Molopo Energy, after that company informed shareholders that not only had it taken full ownership of the Orient oil and gas project, in the US, but it had also transferred ownership of the project over to Drawbridge Holdings in return for a 30% interest in that company.

Molopo obtained full ownership of the Orient project after redeeming its joint venture partner’s shares in Orient, and committing to funding the project in full to the tune of some $21-million.

Molopo subsequently partnered with Drawbridge Energy Holdings, which saw Molopo transferring the entire Orient project into Orient RFC US, and transferring ownership of this newly minted vehicle to Drawbridge Holdings in return for a 30% interest in Drawbridge Holdings.

Molopo told shareholders in its quarterly report that the Drawbridge transaction reduced the company’s interest in the Orient project, while giving it an indirect interest in additional oil and gas projects in the US.

The ASX on Friday said that despite numerous communications with Molopo Energy between January and May, the company failed to advise the ASX of the Orient redemption or of its assumption of full funding responsibility for the project, even though these matters were directly relevant to the matters being discussed between the ASX and Molopo.

Furthermore, the ASX said that Molopo also failed to advise the bourse of the fact that it was now wholly-owned subsidiary Orient that had entered into the contribution agreement.

The ASX has determined that it would exercise its discretion under its listing rules, requiring that the transaction be approved by Molopo’s shareholders, and that Molopo should again satisfy the requirements of chapters 1 and 2 of the listing rules, as if it were applying for admission to the official list.

Furthermore, the ASX found that Molopo has committed serious breaches of the listing rules, including failing to notify the ASX of the original Orient transaction, which saw the company acquire an initial 50% interest in the Orient project in September last year through an A$8.75-million acquisition, as well as the assumption of full funding responsibility for the project, and the Orient redemption, before they were completed.

The bourse noted that Molopo could also be in breach of the Corporations Act for making misleading disclosures to the ASX.

In addition to referring the matter to the ASIC, Molopo’s shares will also remain suspended until ASIC has completed its deliberations.

Furthermore, the ASX told Molopo that should it receive shareholder approval for the Orient transaction and proceed to apply for re-admission, the ASX would have the right to refuse the application. It would also have regard to the involvement of the current directors of Molopo in the events to determine whether the company satisfied the requirement for re-admission to the ASX.

Molopo in July last year suspended share trading on the ASX, and in August disclosed that it had completed the purchase of the initial 50% interest in the Orient project.

Molopo at the time was also subject to a takeover offer from suitor Aurora Funds Management, which in September amended its takeover offer for Molopo from the original 18c a share to 13.5c a share, which Molopo shareholders could elect to receive in either cash or the equivalent value in Aurora shares.

The cash offer was capped at A$5-million.