Gold explorer WPG Resources is not taking a legal challenge by Pybar Mining Services lying down, vowing to “vigorously” pursue the mining contractor for alleged losses and damages to the tune of $9 million.

Investors applauded the move, with shares rising 10 per cent to 2.2c by mid-afternoon on Monday before cooling slightly to 2.1c by the closing bell. WPG shares have come off a 52-week high of 8.3c in late January, marking a 74.7 per cent decline.

WPG shares over the past year. Source:
WPG shares over the past year. Source:

WPG (ASX:WPG) subsidiary Challenger Gold Operations terminated Pybar’s mining services agreement in August. Pybar subsequently filed a lawsuit to recoup $8.7 million in unpaid claims.

Challenger Gold Operations owns the Challenger gold mine in South Australia.

The mine was previously operated under a 50-50 joint venture between WPG and Diversified Minerals, an associated company of the Pybar group of companies.

WPG completed the acquisition of Diversified Minerals’ interest in the Challenger joint venture in August 2016.

The company has now launched its counterclaim in the Supreme Court of South Australia, strongly refuting Pybar’s claims.

WPG claims Pybar’s “various breaches of contract” resulted in “significant loss and damage” to the company’s operations.

The company wants the mining contractor to cough up $9 million for losses resulting from alleged cost over-runs, damage to property, improper mining practices and overcharges.

“We will be vigorously pursuing our recovery rights to ensure that shareholders are fully and properly compensated,” WPG chief Wayne Rossiter said.