Why is the Hawsons Iron share price slumping 9% today?

The Hawsons Iron Ltd (ASX: HIO) share price is sliding today.

Hawsons Iron shares closed yesterday trading for 32 cents and are currently trading at 29 cents, down 9.4%.

Part of the slump looks to relate to a modest decline in iron ore price, down 0.3% to US$140.05 per tonne. Investors may also be concerned about the mid-term demand outlook for the crucial steel-making metal from China, as the Middle Kingdom faces a slowing economy and fresh rounds of pandemic lockdowns.

Similar concerns could explain the 1% slump in the Fortescue Metals Group Limited (ASX: FMG) share price today.

There’s no new price-sensitive news out in regards to the Hawsons Iron share price today.

However, the company did issue a release rejecting court claims against it from Pure Metals.

What court claims were made?

According to the release, the claims came to light in an article published by an Australian newspaper.

Hawsons Iron confirms it has been made a party to proceedings by Pure Metals. It adds that it considers the claims “entirely baseless and without any foundation”.

For some background, Hawsons Iron completed its acquisition of Pure Metals’ 24.15% interest in the Hawsons Iron Project in May 2021 in exchange for Hawsons issuing 90.8 million of its shares to Pure Metals.

Following shareholder approval in November 2020, a liquidator was appointed to Pure Metals’ majority shareholder. This effectively gave it a controlling interest in Pure Metals.

With that in mind, Hawsons states, both parties agreed to issue the Hawsons Iron shares in two tranches rather than one. That was to prevent the liquidator from gaining a relevant interest in more than 20% of the company’s shares.

Further, Hawsons Iron says:

Pure Metals claims that it has suffered loss resulting from the sale of the HIO Shares. The company considers that the issue of the HIO Shares to Pure Metals, an obligation of the company under the transaction, could not conceivably cause loss to Pure Metals, and that any claim by Pure Metals against the company is without merit and misplaced.

The miner says it will “vigorously defend the action”.

Hawsons Iron share price snapshot

Despite today’s slump, the Hawsons Iron share price remains a standout performer, up 161% over the past 12 months. That compares to a full-year loss of 5% posted by the All Ordinaries Index (ASX: XAO).

The post Why is the Hawsons Iron share price slumping 9% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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