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After talking to Dunedin City and Otago Regional Councils on Thursday, the Otago Daily Times understood Clutha may have discussed an application to the Government's Provincial Growth Fund with Plaman Resources.
Plaman wants to mine up to 500,000 tonnes of diatomite a year from its Foulden Hill site, but is awaiting approval from the Overseas Investment Office (OIO) to buy a neighbouring farm.
Part of the mining proposal includes a $36.8 million processing plant near Milton, in Clutha.
Mr Cadogan confirmed yesterday that Clutha had provided a letter of support for Plaman's application to the OIO late last year, but said any discussions about applying to the PGF for funding had been only "conceptual, initial talks".
Those talks had taken place with fellow mayors during an Otago mayoral forum meeting, also "late last year".
"This is a very frustrating situation, for several reasons.
"First, any initial, informal conversation on this subject would only have been raised as the forum operates under a `no surprises' PGF guideline, where we ensure any bids to the fund are co-operative and cohesive.
"Second, it's quite clear that any forum discussions - potentially of a commercially sensitive nature - are treated with respect and confidentiality.
"Much of a confidential nature is discussed by all participating authorities during forum meetings.
"I'd just like to reassure others I'll continue to maintain that confidentiality in line with my responsibilities."
Mr Cadogan was adamant no formal presentations had been made to DCC or ORC regarding the situation, and no PGF application had been lodged.
However, he would not close the door on providing future support for Plaman.
"If the OIO application ever comes unglued from [Minister of Conservation and Land Information] Eugenie Sage's desk, we might start to give the whole subject a bit more attention.
"But since providing that initial letter of support, we've taken no further action."
Plaman did not respond to a request for comment yesterday.