In a stunning decision, a NSW court has quashed an exploration licence held by Australia’s largest goldminer Newcrest.
The licence application in question was made during the stewardship of disgraced mining minister Ian Macdonald in 2008 and renewal was granted in 2011.
We walked out with the decision quashed. End of story.
Amid the revelations of mates-deals by the Independent Commission Against Corruption, this judgement by Justice Nicola Pain in the Land and Environment Court – which was released today – sends a message that the judiciary is prepared to go one step further than ICAC, and the government for that matter, and determine who should hold mining and exploration leases.
Newcrest shares slumped on the news, falling 83 cents, or 5.3 per cent, to $14.80, after earlier trading only slightly lower.
The decision represents a blow to Newcrest. Justice Pain has found in favour of Gold and Copper Resources, a small exploration company run by Brian Locke, and quashed the Mining Minister’s decision to renew Newcrest’s exploration licence 3856 (EL3856).
This licence, EL3856, encompasses some 70 per cent of Newcrest’s wholly-owned exploration area in NSW and it surrounds its Cadia Valley Operations mining leases. Cadia is the biggest underground mine in Australia. It contains some $200 billion worth of gold. Newcrest has spent $2 billion in its development.
A spokesperson for Newcrest said only one of Gold and Copper’s four claims was established in the judgement. “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.”
At 1.30pm, Newcrest was considering putting out a statement.
Gold and Copper’s managing director Brian Locke said, “We walked out with the decision quashed. End of story”.
The lease EL3856 has already been the subject of other proceedings in the NSW Supreme Court where Gold and Copper had been pursuing Newcrest for breach of confidentiality. In that case, following the breakdown of joint venture talks between the two parties, Newcrest made false statements in its renewal application that it had access to technology which was the exclusive right of Gold and Copper.
Justice James Stevenson found in that case that Newcrest’s “making of the statements was a breach of the confidentiality agreement”. Although he concluded that no loss was suffered by Gold and Copper. Stevenson also found that Newcrest’s statements were “false, and thus misleading or deceptive, of Newcrest to so represent”.
Newcrest has been playing down the Gold and Copper actions as immaterial. That line no longer looks credible. Gold and Copper has another five legal actions in train. The next two are not over exploration leases however. They concern the Cadia ore body itself.
The next claim alleges that Newcrest continued to mine without a proper mining licence. For a Mining Licence to be awarded it should be preceded by an Exploration Licence.
As Newcrest has already spent $2 billion developing Cadia, and as Gold and Copper is winning in the courts, the actions may now be taken a little more seriously.
Newcrest told the ASX last October “none of the claims has merit” and “this exploration tenure is not material to Newcrest’s mining operations”.
Yet EL3856 runs straight through the Cadia East Zone of Influence identified in Newcrest’s Environmental Assessment and alongside the Cadia East Subsidence Zone (that is the area of the surface that caves in as the underground mine propagates).
Futher, EL3856 is the underlying authority needed by Newcrest to allow it to get its Cadia East Mining Lease Applications (MLAs) approved. Considering these MLAs were contemplated in the Cadia East Project Approval, without them it could be contended that Newcrest was not operating legally.
The broader implications for the mining industry are just as potent. As if the credibility of mining ministers and the NSW mines department was not already in tatters as a result of the explosive ICAC testimonies, now the courts have weighed in.
As yet, and while ICAC plays out, the government has been loath to commit to any remedy for this mess.
It is too early. And it may leave it to the courts even when ICAC’s report is handed down in coming weeks. In the meantime however the credibility of the NSW mines process is unlikely to be helped by the ensuing Gold and Copper claims, some of which concern licences which were granted when the mines minister was none other than Edward Moses Obeid OAM.