Bathurst Resources sued for US$40m by L&M Coal Holdings

L&M said the $US40m related to a 2010 deal in which Bathurst bought the shares in Buller Coal, which debt was triggered at 25,000 tonnes of coal product. Photo / File

Coalminer Bathurst Resources Ltd (BRL) is being sued for US$40 million (NZ$53.7m) by L&M Coal Holdings Ltd (LMCH).

L&M today filed legal proceedings in the Wellington High Court against Bathurst and its subsidiary Buller Coal Limited.

L&M said the $US40m related to a 2010 deal in which Bathurst bought the shares in Buller Coal, which held coal permits in Buller.

L&M said the debt was triggered at 25,000 tonnes of coal product. Bathurst, which is listed on the Australian Securities Exchange (ASX), had publicly reported the trigger had been reached.

However, Bathurst had contended that for other reasons the debt had not yet become payable.

"LMCH does not agree. It has determined to pursue recovery of the debt by court proceedings only after unsuccessful direct discussions with Bathurst," the L&M media release said.

Asked to respond, Bathurst chief executive Richard Tacon said: "We have had no papers served on us at this time, we will make an announcement once we have had an opportunity to see proceedings indicated in the media release."

In a statement to the ASX last week, Bathurst secretary Jason Hungerford denied the L&M claim and said Bathurst would fight any legal action.

Mr Hungerford said the dispute had arisen from a sale and purchase agreement between Bathurst and L&M, and a related royalty deed between what was now Buller Coal, and L&M, in 2010.

Under the agreement, Bathurst's failure to make a performance payment when the payment was due was not a breach, as long as Bathurst made relevant royalty payments, he said.

Bathurst had made the royalty payments, so had not breached the agreement or the deed. Bathurst's legal advisers agreed.

Bathurst was committed to defending any legal action brought by L&M, Mr Hungerford's statement said.

Bathurst recently formed Phoenix Coal with the Talley's Group. Phoenix has agreed to pay NZ$46m for Solid Energy's Stockton Mine and two Waikato mines. Bathurst will contribute NZ$26m and Talley's NZ$14m.

The deal is subject to Overseas Investment Office approval. A decision is expected by the end of June next year.

Bathurst also owns Buller's Cascade and Escarpment mines, both of which are in care and maintenance. Bathurst has said Escarpment could reopen next year, if the international hard coking coal price stabilises above US$100 a tonne.

Last month the price rose to US$310/tonne, but it has fallen for four consecutive weeks and was US$248/tonne on Tuesday.

- Westport News