marathon links surge with leak

http://www.theaustralian.news.com.au/story/0,25197,23286736-5005200,00.html

Kevin Andrusiak | February 28, 2008

ADELAIDE-based uranium hopeful Marathon Resources has again found itself at the centre of controversy after revealing that it thought confidential negotiations regarding a possible multi-million-dollar investment in the company may have been leaked to the market.

Marathon told the Australian Securities Exchange yesterday the reason its share price had surged 47 per cent since Monday was that it had talked to an unnamed third party about a possible placement.

Marathon said the negotiations were for a possible placement of 13 per cent of the company's issued capital -- worth nearly $16million based on the current share price -- and "other commercial arrangements".

The company told the ASX that "if known" by investors, it would explain why the share price had surged back closer to $2.

Earlier this month the stock was punished by investors after Marathon was caught dumping sample bags from its Mt Gee project into the pristine Flinders Ranges National Park.

That prompted a crackdown by authorities, who forced Marathon to suspend its drilling program at Mt Gee, and the company also launched its own internal review.

It was a disappointing blunder by Marathon and it angered environmentalists in one of the few states in Australia that welcome uranium mining.

The revelations that the company had also been in confidential discussions with an outside party may also cruel its bid to strike a deal at a premium to its share price.

Marathon chairman Peter Williams was not available for comment late last night.

In its statement to the ASX, Marathon said it could not release details of the negotiations because the current volatility in the share market, and the issues surrounding Mt Gee, would mean that disclosure would be "premature and potentially misleading".

"There remains a risk that no binding agreement will be reached, and even if any binding agreement is reached the placement price may not be at a premium," Marathon said.

Marathon shares gained 2c to $1.97 yesterday.