Reference no: EM132533267

NT Gold Resources Ltd ("company") was incorporated on 1 January 2018 and was listed on the Australian Stock Exchange in March 2018, having raised $20 million from public investors.

The company was primarily involved in mining exploration activities in the Northern Territory. The company has three directors, Vincent, Steve and Paul. Vincent is the company's chief executive officer. Steve is the chairman of the company. Paul is the director and company secretary. The management team also includes Jack who is the company's chief financial officer.

The company began exploration activities in April 2018. 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. The company had by then already spent $5 million.

At a board meeting in January 2019, the directors considered whether to abandon its mining activities and return the company's remaining capital back to its shareholders. Vincent 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 major discovery and should continue with its exploration activities. Steve and Jack 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 Vincent, they agreed with him that the company would continue with its drilling program.

At the end of 2019, the drilling activities were completed and all of the company's capital has been exhausted without any material mineral discoveries. The shareholders are annoyed and upset amount losing all their investments.

What might be an arguable defence for 3 directors, that breached their duty of diligence and fiduciary duty?