THE Independent Commission Against Corruption in New South Wales will investigate dealings between goldmining company Newcrest and the NSW Department of Mineral Resources.
The investigation follows claims by a private exploration company, Gold & Copper Resources, that a licence over tenements surrounding Newcrest’s Cadia mine, near Orange, was obtained fraudulently.
The chairman of Gold & Copper, Brian Locke, confirmed on Friday that the ICAC would begin an investigation.
But a Newcrest spokeswoman, Kerrina Watson, told BusinessDay: ”We are not aware of any extension to the ICAC inquiry.”
Cadia is Australia’s largest underground mine, containing about $240 billion worth of gold at present prices. It is scheduled to begin production this month.
The transaction in the cross-hairs of ICAC’s inquiry is a ”page swap”, which enabled Newcrest to extend an exploration lease near Cadia to five years, from the original two-year lease. On May 20, 2009, Newcrest sent the Department of Primary Industries, as it was then called, a replacement front page to serve as an application for renewal of its exploration licence (EL 3856).
The difference between this page and the page it replaced was that the renewal application was for five years rather than two years.
Between the time that the original application was lodged on March 24 that year, and the time of the page swap on May 20, eight weeks had elapsed, and Newcrest’s licence renewal was by then ”out of time” and therefore invalid due to misleading information, according to Gold & Copper.
Newcrest is subject to five legal claims by Gold & Copper, including a claim for roughly a third of the underground mine itself, on which it has already spent $2 billion in development. It is the first of these claims, due to be heard in the Land and Environment Court on Monday, that has attracted the interest of ICAC.
Newcrest has issued two statements to the Australian Securities Exchange, saying that Gold & Copper’s claims are without merit and will be vigorously defended.
Gold & Copper earlier tried to amend its pleadings in the ”page swap” case to bring a claim of fraud against Newcrest and the department when it found evidence of the page swap in discussions with Newcrest.
Now Gold & Copper alleges that Newcrest submitted false and misleading information in the application for EL 3856 and that the lease renewal was therefore invalid.
In his findings on the earlier application to amend pleadings to fraud, Justice Malcolm Craig did not dispute that there had been a page swap, or that Newcrest’s renewal application was out of time. He struck out fraud claims on technical grounds, ruling that the applicant had not sufficiently ”pleaded nexus between the fraudulent conduct that is alleged and the decision by (a department employee) to renew the licence”.
Mr Locke said he welcomed the ICAC’s involvement, although he said it was disappointing that Newcrest and the Department of Mineral Resources had not themselves moved to ”clear the air” by making their own investigation into the matter.
”This is not just an ordinary commercial dispute between Gold & Copper and Newcrest,” he said. ”What is at the core of this dispute is the very administration of NSW state mineral resources. It is the department’s role to protect the integrity of these resources as custodians for the citizens of NSW.” The minority shareholders in Gold & Copper include influential mining people, such as former Rio Tinto chief Leigh Clifford, founder of Barlow Jonker Jeremy Barlow, former Glencore and Xstrata chairman Willy Strothotte and venture capitalist Mark Carnegie.
In its earlier claims, Gold & Copper alleges that Newcrest had been mining in the Cadia-Ridgeway area without a mining licence.
In its fifth, and most explosive, lawsuit served on Newcrest last month it contests the validity of the mining licence itself – and over the leases that cover the Cadia underground mine.
Newcrest obtained some Cadia approvals from two former ministers, Eddie Obeid and Ian Macdonald.