Do they have arguable defence

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Reference no: EM133798986

Great NT Resources Ltd ("company") was incorporated on 1 January 2019. It was listed on the Australian Stock Exchange and raised $50 million from public investors.

The company was primarily involved in mining exploration activities in the Northern Territory. The company has three directors, Kim, Sam and Paul. Kim is the company's chief executive officer. Sam is the chair. Paul is the director and company secretary. The management team also includes Jim, the company's chief financial officer.

The company began gold exploration activities in April 2023. After drilling a number of potential mining sites, a geological survey was commissioned, and the samples of the mineral extracts were tested. The results from the test indicated that the mining sites had extremely low levels of gold deposits that were considered to be uncommercial. By then, the company had already spent $35 million.

At a board meeting in January 2024, the directors considered whether to abandon its mining activities and return the company's remaining capital back to its shareholders. Kim is optimistic and over-confident and wants to pursue the exploration project in the Northern Territory. He argued that the company could be on the verge of a significant discovery and should continue with its exploration activities. Sam and Jim were less optimistic and suggested they cease exploration, given the test results, and return all the remaining capital to the company shareholders. To avoid another confrontation with Kim, they agreed with him that the company would continue with its drilling program.

By July 2024, the drilling activities were completed, and all of the company's capital had been exhausted without any material mineral discoveries. The shareholders are annoyed and upset about losing all their investments.

Required:

1. Have Kim, Jim and Sam breached any directors' duties?

2. Do they have an arguable defence?

3. Advise whether the same standard will be applied to Jim as the company's chief financial officer.

Reference no: EM133798986

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