Beleaguered exploration minnow Capital Mining has fired back at queries raised by the ASX, saying the exchange's probe into its finances are outside the scope of its original inquiry.
The Perth-based explorer has been suspended from trading on the stock exchange since August 14 and is under the ASX's spotlight regarding the remuneration of its directors and consultancy payments made to venture capital firm Chapmans.
In the year to the end of March, the directors were entitled to receive a total of almost $1 million in directors fees, according to an ASX statement.
They also oversaw the payment of almost $2 million in consultancy fees and other payments to Chapmans, which is also listed on the ASX. Two directors of Capital Mining are also directors of Chapmans.
Capital mining slashed its directors fees by 50 per cent in July following an initial probe by the ASX.
In the June quarter, Capital Mining spent $175,000 on exploration and a sizeable $637,000 in administration and corporate costs.
The company, market cap $4 million, has since hurriedly rearranged director remuneration to non-executive directors Peter Torney, a former stockbroker, and corporate advisers Peter Dykes and Anthony Dunlop.
Mr Dykes and Mr Dunlop, in addition to being Capital Mining directors, are also directors of Chapmans.
On September 6 the ASX requested a breakdown of the company's exploration and administration costs, questioning who approved the consulting arrangement and whether there were appropriate steps taken to keep the consultancy agreement "on arms' length terms".
In documents filed to the ASX, Capital Mining replied: "This is a matter in relation to the internal processes of Capital Mining and does not consider that this request is within the scope of ASX's enquiry."
The company then states Mr Torney was an appropriate person to approve the deal, thanks to 14 years of financial services industry experience.
The ASX also asked Capital Mining to reveal whether any other consultants, other than Chapmans, had relationships with the directors. It turns out LT Consulting and GT Consulting, which provided $32,000 worth of work during the September quarter of 2016, are managed by Peter Torney's brother.
And Jake Torney, who provided office administration support worth $11,000, is Peter Torney's son.
Three days before the company's response to the ASX, Capital Mining announced it had terminated its dealings with Chapmans and had rearranged the board.
Mr Torney has terminated his consultancy agreement with the company but will stay on as a non-executive director. Mr Dunlop will stay on as a non-executive director, but Mr Dykes has ended his consultancy agreement and directorship and appears set to leave the business entirely.
Following Capital Mining's revelations to the ASX this week, Chapmans has announced a one-for-two rights issue to shareholders in a bid to drum up capital to use "in respect of new investment which have not been identified as at the date of this document".
Capital Mining, the shares of which remain frozen at 0.5??, has morphed from a gold and rare earths explorer. It ventured into the medical marijuana industry in 2015 and now bills itself as a junior explorer again, holding cobalt and lithium assets in Western Australia and the Republic or Ireland.
Correction: An earlier version of this story incorrectly stated that Capital Mining directors had shared in $4 million in directors fees.