Court ruling costs Newcrest a golden opportunity
The licence application was made during the stewardship of disgraced former mining minister Ian Macdonald in 2008 and the renewal was granted in 2011.
Amid the Independent Commission Against Corruption's revelations of mates' deals, the judgment by Justice Nicola Pain in the NSW Land and Environment Court sends a message that the judiciary is prepared to go one step further than the ICAC, and the government, in determining who should hold mining and exploration leases.
The decision represents a blow for Newcrest, Australia's biggest goldminer. Justice Pain found in favour of Gold and Copper Resources, a small exploration company run by Brian Locke, and quashed the government's decision to renew Newcrest's exploration licence. The licence, EL3856, covers about 70 per cent of Newcrest's exploration area in NSW and it surrounds its Cadia Valley mining leases. Cadia is the biggest underground mine in Australia. It contains about $200 billion in gold. Newcrest has spent $2 billion on its development.
A spokeswoman for Newcrest said only one of Gold and Copper's four claims was established in the judgment. "Overall, the ruling was positive for Newcrest," she said. "GCR was not able to establish its claim of false and misleading conduct in the renewal."
Analysts saw the judgment as posing little risk to Newcrest's other licences around the Cadia project and said there would be no impact on the group's earnings.
Gold and Copper has five legal actions in train. The next two concern the Cadia orebody. One alleges that Newcrest continued to mine without a proper licence.
Newcrest told the ASX in October "none of the claims has merit".
Frequently Asked Questions about this Article…
A judge in the NSW Land and Environment Court quashed the renewal of exploration licence EL3856 that covered about 70% of Newcrest's exploration area around the Cadia Valley. Justice Nicola Pain ruled in favour of small explorer Gold and Copper Resources, overturning the government's decision to renew that particular licence.
EL3856 surrounds Newcrest's Cadia mining leases, but analysts in the article said the judgment posed little risk to Newcrest's other licences around the Cadia project and that there would be no impact on the group's earnings.
The challenge was brought by Gold and Copper Resources, a small exploration company run by Brian Locke. They had four claims in the judgment (only one was established according to Newcrest), and Gold and Copper has five legal actions pending, including two further matters concerning the Cadia orebody.
According to analysts cited in the article, the ruling should have no impact on Newcrest's earnings and poses little risk to the company's other licences around Cadia. Newcrest also told the ASX that it believed none of the claims had merit.
A Newcrest spokeswoman said only one of Gold and Copper's four claims was established and described the overall ruling as positive for Newcrest. The company has stated publicly that it believes the claims lack merit.
The judgment signalled that the NSW judiciary is prepared to go further than the Independent Commission Against Corruption (ICAC) and government in deciding who should hold mining and exploration leases, following ICAC revelations about questionable deals during the period in question.
Yes. Gold and Copper Resources has five legal actions underway. The next two focus on the Cadia orebody; one of those alleges Newcrest continued to mine without a proper licence. Those cases are ongoing and could lead to further developments.
Investors should note that the court quashed EL3856 but analysts reported no expected hit to earnings. Key things to watch are the outcomes of the remaining legal actions by Gold and Copper Resources, any official updates from Newcrest to the ASX, and whether regulators or courts take further action that affects Newcrest's Cadia licences.
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