Hancock mine dispute goes to trial
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.
Frequently Asked Questions about this Article…
The lawsuit, brought by Wright Prospecting, claims ownership of 50% of Hancock Prospecting's stake in three Hope Downs tenements (Hope Downs 4, 5 and 6). Wright alleges breach of trust and breaches of fiduciary obligations, and is seeking an accounting of profits, compensation, a declaration that Hancock held half the property in trust for Wright, and any proceeds or royalties from the assets.
Key parties named in the article are Hancock Prospecting (led by Gina Rinehart), Wright Prospecting (founded by Peter Wright), and mining giant Rio Tinto, which jointly owns the Hope Downs assets with Hancock under a 2005 agreement. The legal matter is before the Supreme Court of Western Australia in Perth.
Justice Rene Le Miere of the Supreme Court of Western Australia refused Hancock Prospecting’s application to have the case dismissed without a trial. He said he could not reach the required level of certainty that Hancock’s defence would succeed, so the matter will proceed to trial.
Hope Downs 4, 5 and 6 are tenements that form part of the Hope Downs iron ore assets. Hope Downs 4 is highlighted as a $1.6 billion project that is 50% owned by Rio Tinto, expected to start production this year with annual capacity of about 15 million metric tonnes of iron ore. These assets are significant because they are near or entering production and generate revenues and royalties.
Wright Prospecting is asking the court to declare Hancock Prospecting held half of the relevant property in trust for Wright, to award Wright any proceeds from sales and royalties, to provide an accounting of all profits Hancock earned from the assets, and to order compensation for the alleged breaches of trust and fiduciary obligations.
Hancock Prospecting’s chief financial officer Jay Newby was not immediately available for comment. After the lawsuit was filed, Mr. Newby described the action as “curious,” noting Gina Rinehart had announced a mining partnership with Rio Tinto for these properties more than seven years ago and criticizing Wright Prospecting’s timing and lack of contribution to construction funding.
Peter Wright, the founder of Wright Prospecting, discovered the iron ore deposits together with Lang Hancock, Gina Rinehart’s father. The article notes that Mrs Rinehart later inherited the mining assets and is chairman of the company her father founded.
The judge has ordered the dispute to go to trial after rejecting Hancock’s bid to dismiss the case, so legal uncertainty over ownership and profit claims will continue while proceedings move forward in Perth. Because the contested Hope Downs assets are nearing production and generate significant revenues, the outcome could affect ownership and any proceeds tied to those tenements, so investors may want to monitor court updates and company statements.
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