Expanding coal miner Bathurst Resources Ltd (ASX: BRL) has to resolve a legal action case from private company L&M Coal Holdings Ltd (LMCH) over a claim of $US40 million ($NZ 57.49 M).
Bathurst’s company secretary Jason Hungerford said the company denies that it is in default under the relevant agreements as asserted by LMCH, and that this position was supported by legal advice.
“The dispute has arisen out of an agreement for the sale and purchase (and subsequent amendments) entered into between BR Coal Pty Ltd – whose rights and obligations under the agreement have been assumed by BRL – and LMCH in 2010, and a related royalty deed (and subsequent amendments) entered into between what is now Buller Coal Ltd and LMCH in 2010,” Bathurst said.
Hungerford said LMCH assets Bathurst is required to make a $US40 M performance payment under the sale and purchase agreement (SPA). He said the SPA provides that a failure by Bathurst as the purchaser to make a performance payment was not an actionable breach or a default, for so long as the relevant royalty payments continue to be made under the royalty deed.
“BRL’s view, supported by BRL’s legal advisers, is that BRL has continued to make the relevant royalty payments under the deed, that there has been no breach of the deed and therefore there is no actionable breach or default of the SPA,” Hungerford said.
The company said information on the performance payments under the SPA has been, and will continue to be, publicly available in the notes of Bathurst’s financial statements.
Bathurst will defend any legal action brought by LMCH.
Prior to Bathurst taking up coal permits in New Zealand, L&M held a significant number of coal permits on the West Coast.
The original agreements between the two companies would have involved Hamish Bohannan who had been Bathurst’s managing director before returning to Western Australia about two years ago and L&M principal Geoff Loudon who, in the past year, has been stepping out of some of his corporate roles.
The original deals would have been struck when the coking coal price was very high and the scope for coking coal deposits in the Buller coalfield was strong.