Bathurst Resources wins $60m court battle, shares surge
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Shares in coal company Bathurst Resources (ASX:BRL) rallied after winning an appeal in New Zealand’s courts that otherwise could’ve cost it US$40 million (approximately NZ$60 million).
In a nutshell, New Zealand’s Supreme Court has ruled that Bathurst did not owe a company L&M Coal Holdings the amount because the milestones specifying payment had not been met.
In 2010 Bathurst bought coal assets from L&M, which is chaired by prominent New Zealand resources investor Geoff Loudon.
Part of the deal involved partially deferred settlement based on coal production, specifically that it would pay $60 million at the 25,000 tonne mark.
After mothballing the mine in 2016 due to its main customer closing its cement plant, and consequently deferring payment, Bathurst Resources was sued leading to a legal battle of over four years.
It argued that the coal was sold locally rather than shipped overseas and this changed the deal as well as that subsequent alterations meant it could pay a higher royalty based on coal produced instead – a minimal amount since its assets were mothballed.
Bathurst Resources initially lost the case New Zealand’s High Court ruled in favour of L&M in 2018 and an initial appeal in the Court of Appeal in 2020 failing too.
Although it found sending the coal by truck instead of shipping abroad did not nullify the agreement, it found Bathurst was entitled to defer payment while operations were suspended.
The court also ordered L&M to pay Bathurst’s costs not only in respect of this judgement but previous costs re-determined in the lower to courts in light of the judgement.
In a brief statement to shareholders Bathurst said it “welcomes this decision, vindicating a nearly five year defence put forward by Bathurst”.
Shareholders evidently welcomed the news too, sending share up by nearly 50 per cent this morning.
Shares are up over 60 per cent in 2021.