The Australian Securities and Investments Commission has started civil action against the company in the Federal Court relating to statements made by the company and its managing director Benjamin Bell.

The company announced today that Bell was no longer a director and Les Guthrie had been appointed interim chief executive. Bell has been moved to another unspecified role.

The Sconi project has long been touted as a potentially lucrative and strategic minerals nickel and cobalt project that would help the transition to electric vehicles.

But ASIC said that as long ago as February 19, 2018, Australian Mines had announced that it had entered into a term sheet for an offtake agreement with SK Innovation for nickel and cobalt from the mine.

Later that year, ASIC alleged Bell falsely claimed that funding had been secured from SK Innovation for construction of the $500 million Sconi mine “when in fact no one had offered or agreed (to) such funding”.

Further, ASIC claimed the company stated the value of the offtake agreement was $5 billion when the terms of the agreement included a potential buyer’s discount of 15 per cent.

“ASIC further contends that Mr Bell’s $5 billion valuation did not comply with the Australasian code for reporting exploration results, mineral resources and ore reserves,” ASIC said.

The corporate watchdog said the company failed in its obligation to disclose material information to the market and that Bell failed to discharge his duties as a director with the requisite care and diligence that a reasonable person in his position would have exercised.

ASIC is seeking declarations the company and Bell contravened provisions of the Corporations Act and for both to pay pecuniary penalties and that Bell be disqualified from managing a corporation.

Australian Mines said it and Bell would defend the charges. It said it had retracted statements referred to by ASIC in 2018 a week after the announcement.