Shares in Australian iron ore miner Sundance Resources were frozen Tuesday after the corporate regulator revealed it was investigating insider trading by executives at Chinese suitor Hanlong Mining.
The move could revive fresh tensions between Canberra and Beijing over China's interest in trying to purchase Australian resources companies.
Sundance shares were put in a trading halt after plunging more than 15 percent on news the Australian Securities and Investments Commission obtained court orders against Hanlong director Steven Hui Xiao and others.
"ASIC obtained these orders in connection with its investigation into suspected insider trading activities in relation to Bannerman Resources Ltd and Sundance Resources," the corporate watchdog said. Bannerman is a Perth-based miner that Hanlong made a bid for in July.
"The court found that ASIC had shown a solid basis for investigating whether Mr. Xiao may have contravened the Corporations Act insider trading provisions."
Under the orders, issued by the New South Wales Supreme Court, Xiao's assets were frozen and he was banned from leaving Australia until September 22, except for a visit to Hong Kong for visa purposes on Tuesday and Wednesday.
Similar travel bans and asset freezes were obtained for Hanlong vice-president Calvin Zhu and another company employee Fan Zhang.
Xiao's wife Xike Hu, another woman, FanFan Chen and a company associated with Zhang, Wingatta Pty Ltd, also had their assets frozen, ASIC said.
"ASIC's investigation is at an early stage and ASIC does not propose to comment further at this time as to the status of its investigation," it added.
Sundance requested a 24-hour halt in trading of its shares following the announcement, and issued a brief statement noting that "the investigation does not relate to the conduct of Sundance or its personnel".
It last traded at 37.5 Australian cents.
"This investigation represents no change to the company's previously stated strategy," the miner said.
"Sundance continues to progress its advanced negotiations with Hanlong Mining as well as with a number of other interested parties in regards to the development of the Mbalam iron ore project in the republics of Cameroon and Congo."
Hanlong, a division of China's Sichuan Hanlong, made a Aus$1.2 billion (US$1.24 billion) bid in July to take over Sundance, an iron ore, copper and gold miner with projects in central Africa, which it already holds an 18.6 percent stake in.
The Chinese firm also made a $143.4 million play for miner Bannerman in July, hoping to bag its Namibian uranium assets.
Bannerman's shares continued trading and were down 8.7 percent at 31.5 cents as it issued a statement to investors noting the ASIC investigation "into suspected insider trading" by certain Hanlong executives in its shares.
"Bannerman advises that it continues to engage in discussions with Hanlong regarding the acquisition proposal made by Hanlong," it said.
"Further updates will be provided in due course."
Beijing's interest in Australia's mining firms has sparked intense debate in the country over whether to allow Chinese state-owned entities to increase their control over its resources.
Relations between Canberra and Beijing were also strained when Australian Rio Tinto executive Stern Hu was arrested in July 2009 and jailed last year for bribery and stealing state secrets.