Gold mining juggernaut Newcrest Mining has been served with a lawsuit challenging its licence to Australia’s biggest underground gold mine, Cadia Far East, a licence granted by NSW power broker and former politician Eddie Obeid.

The lawsuit is likely to drag Newcrest into the ICAC corruption scandal where officers from the NSW mines department are scheduled to face questions this week.

Last month the Australian Financial Review ran a story which covered claims by a small explorer Gold and Copper Resources (GCR)* that Newcrest had been mining in the Cadia/Ridgeway area without a mining licence.

BusinessDay has obtained a claim served last week on Newcrest which contests the validity of the mining licence itself – and over the leases which cover the underground mine itself.

The problem for Newcrest is that even if its mining rights are legally defensible, there is likely to be a review of all approvals granted by Eddie Obeid, the mines minister Ian Macdonald and development approvals by former planning minister Tony Kelly.

Such is the stench surrounding the grant of mining leases in NSW now, as a result of explosive evidence tendered at the ICAC inquiry, that the government may be forced to act.

As revealed in BusinessDay this morning, an investigation of the Mines Department by solicitors Clayton Utz had found that there had been a lack of evidence supporting controversial mining approvals as department files had gone missing.

This is believed to be the case, not only for the Doyles Creek mine, now owned by NuCoal, but also for the controversial Mount Penny mine.

Validity of grant questioned

In its most recent action against Newcrest, GCR has challenged the validity of the grant of ML1472, which covers a third of the giant Cadia East deposit. Behind GCR is a cabal of influential mining identities including the former Rio Tinto chief Leigh Clifford, founder of Barlow Jonker Jeremy Barlow, former Glencore and Xstrata chairman Willy Strothotte, and venture capitalist Mark Carnegie.

Newcrest has already told the Australian Stock Exchange that the GCR claims are without foundation but it has not moved to strike out any of the four proceedings. This fifth action, the most dramatic of the lot, was served last week but there has been no response.

According to the Mining Act, a licence (ML) can only be granted with an “appropriate development consent”.  In 2000, the development consent for ML1472 only considered mining purposes. GCR contends that ML1472 should have only been granted for mining purposes yet it was granted for mining minerals and GCR claims this was beyond the powers of the minister at the time.

The minister who granted ML1472 on October 23, 2000, was Eddie Obeid.

A Newcrest spokeswoman said the company was vigorously defending all five sets of proceedings.

“We believe that none of the claims has merit. We take our permitting very seriously and are confident that the claims are without merit,” said Kerrina Watson yesterday.

The NSW government, incidentally, is named as a co-defendant in three of the five proceedings.

‘False and misleading information’

Newcrest’s major exploration licence (EL) 3856, surrounding its Cadia Valley operations, is the subject of one of the GCR proceedings. A central allegation in this suit is that Newcrest provided “false and misleading information” in the renewal submission for the licence.

The company claimed in its renewal application that it was to incorporate a proprietary technology exclusively available GCR across the entire prospect area in conjunction with GCR. GCR alleges that Newcrest never had access to this technology, and further that Newcrest had specifically withdrawn from any negotiation with GCR over the technology before it made its submission for renewal.

Under the Mining Act, a licence may be terminated or suspended if it can be shown a company “provided false and misleading information” to obtain it.

These are the same allegations brought into NSW Parliament this week by the Greens who intend to introduce a motion calling for the suspension of the Mount Penny coal licence. Mount Penny is now before ICAC. The Greens say the application document for this coal licence contained “false and misleading information”.

Fraud claims

Earlier in the year, GCR applied to the Land and Environment court for leave to plead fraud against Newcrest. It claimed that Newcrest swapped the front page of its EL3856 renewal document to show that it had been lodged in time. It was actually lodged a month late.

When the renewal period for EL3856 opened, Newcrest lodged a two-year renewal form. One month after the renewal period was up, however, it appears the company decided it wanted a five-year renewal as Newcrest’s tenement manager sent the Mines Department a new front page. That showed five years instead of the original two years.

Newcrest opposed GCR’s application for leave and won, so the judge knocked out the pleading of “fraud’’ but did not dispute the facts of the page swap.

In response to GCR’s allegations, Newcrest lodged two applications for parts of EL3856 to be converted into Mining Leases on September 21, 2012.  This is the same exploration licence it had claimed in a market release was “not material to Newcrest’s mining operations” 11 days later on October 1, 2012.

It further announced on April 9, 2010, that Cadia East had been approved for development after the “subsequent completion of other regulatory requirements in relation to the proposed development”.

In fact Newcrest was not to lodge its most critical regulatory requirements, Mining Lease Applications, until two and a half years later.

*Gold and Copper Resources is a private company and in no way related or involved with the listed Golden Cross Resources (ASX:GCR).