Gina Rinehart's Hancock Prospecting must face trial in a mine ownership dispute with the family of her father's former partner, a judge has ruled.
Supreme Court of Western Australia Justice Rene Le Miere in Perth has rejected Hancock's request to dismiss without trial the lawsuit claiming ownership of half of the company's stake in a mine being built in Western Australia.
"I am unable to reach the required level of certainty that the defence will succeed," Justice Le Miere wrote in his decision on Tuesday.
Wright Prospecting is seeking 50 per cent of Hancock Prospecting's stake in three tenements, known as Hope Downs 4, 5 and 6, according to a copy of the writ filed on September 24 in Perth.
Hancock Prospecting and Rio Tinto jointly own the Hope Downs assets under a 2005 agreement.
"Wright Prospecting welcomes the judge's decision," the company said on Tuesday. "Wright Prospecting now intends to resume proceedings in this matter."
Hancock Prospecting chief financial officer Jay Newby was not immediately available for comment.
The $1.6 billion Hope Downs 4 project, owned 50 per cent by Rio, will have annual capacity of 15 million metric tonnes of iron ore when it starts production this year. It will be Mrs Rinehart's second operating mine after the $1 billion Hope Downs 1.
Wright Prospecting was founded by Peter Wright, who discovered the iron ore deposits with Mrs Rinehart's father, Lang Hancock. Mrs Rinehart inherited the mining assets and is chairman of the company Hancock founded.
Wright Prospecting's lawsuit was "curious" because Mrs Rinehart announced a mining partnership for the properties with Rio Tinto more than seven years ago, Mr Newby said after the lawsuit was filed.
Wright Prospecting "waited until now, when construction of the Hope 4 mine is nearing completion, and has provided none of the significant funding required for such, to lodge such an unusual bid for unearned late participation," Mr Newby had said.
Wright Prospecting, in its lawsuit over Hope Downs 4, 5 and 6, accused Hancock Prospecting of breach of trust for selling the property without its consent and breaches of fiduciary obligations, according to the writ.
Wright Prospecting sought an accounting of all profits earned by Hancock Prospecting from those assets and compensation for the breaches. It also asked the court to declare Hancock Prospecting held half the property in trust for Wright Prospecting, and to award it any proceeds from the sale and royalties Hancock Prospecting received.