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A Western Australian court has sided with junior iron ore and coal player NSL Consolidated in a stoush over coal licences.

Coal Hub Pty Ltd launched a legal case against NSL in August 2016, alleging that NSL was obliged to spend at least $500,000 on drilling four coal tenements in Queensland but failed to do so.

Coal Hub was seeking $2.5 million worth of damages.

The Supreme Court of WA, however, has ordered NSL to stump up only nominal damages of $1000, ruling that although it did breach an implied term by certain delays on its part, it was not a “repudiatory breach”.

A repudiatory breach is a breach of an intermediate term that deprives the other party of substantially the whole benefit of the contract.

“Coal Hub’s claim is otherwise dismissed,” NSL said today.

Investors welcomed the news, pushing shares up 5.3 per cent to 2c by midday AEDT.

NSL shares over the past three months.
NSL shares over the past three months.

NSL has always maintained that as it did not obtain unfettered access to the tenements, it had no obligation to undertake drilling and would not have established inferred or indicated coal resources of 500 million or 250 million tonnes, respectively, which would have given rise to the further payments.

Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured.

NSL is now seeking a “contribution” to its legal costs from Coal Hub, Subiaco Capital and its two directors.

The company has been contacted for comment.