By: AllPennyStocks.com News

Wednesday, February 6, 2013

Lawsuits can be a source of great joy or unfathomable misery for companies and shareholders. In certain circumstances, investors will wage big bets that a firm is going to win a legal battle and the stock price will steadily climb until news about the litigation is delivered. Of course, there’s the other side of the suit as well, with the defendant’s stock sometimes plunging because of news of being sued. To the company, it’s a headache and a situation that can sap precious resources. In the case of EMC Metals Corp. (TSX:EMC), just getting the litigation settled and out of the courts was enough to send shares sailing on Wednesday. In February 2012, the Sparks, Nevada-based company was met with its Joint Venture partner, Jervois Mining Limited, contesting that EMC had not met all of the terms of a 50 percent earn-in agreement for the Nyngan Scandium Project in New South Wales, Australia.

Since that time, shares have fallen from around 17 cents to find a base at 3.5 cents.

Just last month it looked like the dispute was headed to the Supreme Court of Victoria, in Melbourne, Australia as EMC said it had indeed completed its requirements and would “vigorously prosecute its defense and counterclaim,” seeking not only its claims to the project, but up to $100 million in damages as well. EMC advised at that time that the two partners were entering into negotiations to try and find a resolution.

Today, investors got the news that they wanted to hear, sending shares straight upward to make-up some of the lost ground over the past year. EMC reported that the dispute has been settled with a binding agreement between Jervois and EMC that terminates all court actions, claims and counterclaims.

In the agreement, EMC takes 100 percent control of the Nyngan project in exchange for $2.6 million in cash and royalty payments of 1.7 percent to Jervois upon sales of product from Nyngan for 12 years after the first production.

“We are truly excited to resolve this dispute over Nyngan, to establish full control over the project, and to get back to the business of developing this scandium project,” said George Putnam, chief executive of EMC. Putnam said he realizes that the company has work to do to re-establish the company’s position in the market and update a technical report with SEDAR, but garnering complete control of the scandium project “delivers the opportunity to fast track this project to serve waiting markets.”

The property will join EMC’s portfolio that contains a 100 percent interest in the Springer tungsten mine in Nevada, a 100 percent interest in the Carlin Vanadium property near Carlin, Nevada and a 100 percent interest in the Tordal Scandium and Hogtuva Beryllium properties in Norway.

Shares have run today as high as 9 cents from Tuesday’s closing price of 3.5 cents, representing gains of 157 percent on record volume of more than 6 million shares. With the lawsuit now behind them, EMC will be able to get back to its business of extracting metals from the earth and perhaps building back its shareholder value. Proper due diligence is, as always, encouraged.

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