Miner Iluka Resources has denied any wrongdoing after it became the latest Australian company set to face a class action from disgruntled shareholders.
A 24 per cent fall in Iluka’s share price on July 9, 2012 is at the centre of the potential class action being planned by ACA Lawyers.
The law firm has secured third party funding for Federal Court action on behalf of shareholders hurt by the share price plunge, which wiped $1.1 billion from the company’s market value.
What spurred the fall was Iluka’s downgrade of its sales forecasts for its mineral sands products, only seven weeks after it had given an upbeat view at its annual general meeting.
Iluka produces zircon and rutile, which are used in ceramics and paints and the prices of which are tied to building activity, especially in China.
ACA lawyer Steven Lewis said Iluka had failed to comply with its continuous disclosure obligations and engaged in misleading or deceptive conduct.
“It will be alleged that Iluka’s zircon sales forecast in May 2012 was overly optimistic and not achievable,” he said.
“The company had information prior to July 2012 that it could not achieve its forecast and did not keep the market informed.”
London-based Harbour Litigation Funding is providing funding.
Harbour is also funding ACA’s multi-million-dollar class action launched last month against miner OZ Minerals for allegedly misleading shareholders.
The recently collapsed engineering group Forge is also facing a class action, while fellow construction group Leighton Holdings, Australia’s four major banks and gold miner Newcrest Mining have been targetted by lawyers.
Iluka said it had not received any legal claims, and would vigorously defend itself if the matter reaches court.
“Market conditions for mineral sands were extremely volatile in 2012 and, in the case of zircon, deteriorated markedly during the year,” it said in a statement.
“Iluka is of the view that it has at all times fulfilled its disclosure obligations.”
Iluka shares gained four cents to $9.66.