Cazaly Resources Ltd will consider taking its fight with Rio Tinto Ltd over the Shovelanna iron-ore tenement to the High Court of Australia after the Supreme Court of Western Australia dismissed Cazaly's appeal to wrest back control of the tenement.
Cazaly Resources Ltd will consider taking its fight with Rio Tinto Ltd over the Shovelanna iron-ore tenement to the High Court of Australia after the Supreme Court of Western Australia dismissed Cazaly's appeal to wrest back control of the tenement.
Cazaly could apply for special leave to appeal to the High Court of Australia.
In a statement today Cazaly said it had instructed its lawyers to review the judgement with a view to bringing an application before the High Court of Australia, which it said must be made by September 25 2007.
Rio Tinto Iron Ore chief executive Sam Walsh said the decision "endorses the need to develop our
assets in the Pilbara according to an orderly, logical timeline".
"It also supports our strategy of substantial, long-term investment in this state," Mr Walsh said.
Cazaly now faces a multi-million-dollar legal bill after three Supreme Court judges rejected its appeal to overturn a state decision to terminate the junior's claim to the lucrative iron ore tenement in the Pilbara region of Western Australia.
Cazaly pegged the tenement two years ago tomorrow.
After the court hearing Cazaly joint managing director Nathan McMahon told reporters he was appalled at the court's decision.
"What really upsets me, being a long term industry player, is that we've done everything right, we followed the rules is this decision," he said.
The Association of Mining and Exploration Companies hit-out at the decision, labelling it "un-Australian".
AMEC policy and public affairs manager Ian Loftus said Cazaly had acted in the spirit of the Mining Act and the decision was disappointing.
"It is simply un-Australian to have different sets of rules for different players," Mr Loftus said.
"I'd expect that sort of behaviour in Zimbabwe or Venezuela but not here in Australia. Cazaly clearly acted in the spirit and letter of the Mining Act, yet comes out as the loser. The people of this State deserve better."
Mr Loftus said the decision had potentially dire consequences for business investment in WA.
"There is an increasingly uncertain investment climate here in Western Australia, and many companies are thinking long and hard about whether they invest their shareholders' funds here," Mr Loftus said.
"More and more companies are choosing to go the places like South Australia and the Northern Territory, or further away to Africa, South America and Central Asia."
"Add this to Government moves to include many hundreds of mining tenements in the conservation estate, seemingly shifting environmental goalposts, and this State's ongoing decline in its share of Australian exploration expenditure, and a very dark picture starts to emerge. It's a real blow for investors and potential investors in the State."
Cazaly was ordered to pay the legal costs of Rio Tinto and the state government - with a specific figure unclear at this stage - but the total is expected to be a multi-million-dollar bill.
Mr McMahon said the legal bill would not sink the company.
"It won't send Cazaly to the wall, we're well funded. We have a great shareholder base (and) you'll notice that the board of Cazaly continues to exercise options and keep the company well funded," Mr McMahon said.
"We did everything right and we're in a position where we have to pay for that and our shareholders have to pay for that."
The junior snared Shovelanna in 2005 after Rio Tinto's licence over the tenement expired after a courier failed to deliver renewal documents on time.
Shovelanna has sat in the portfolio of Rio Tinto and its partners - Gina Rinehart's Hancock Prospecting and Michael Wright's Wright Prospecting - since 1981.
Little work was conducted on the tenement after a 130 million tonne resource was defined early.
Cazaly quickly arranged financial backing and inked an agreement with BHP Billiton Ltd, which is mining the adjoining Orebody 18 deposit, to process the Shovelanna ore.
However, Rio Tinto appealed to the Western Australia government to invoke its power to refuse certain tenement applications, as allowed under the state's Mining Act, on the grounds of public interest.
The tenement was handed back to Rio Tinto in April 2006 after then WA resources minister John Bowler used his discretion under the act.
Cazaly shares remain in a trading halt.
A copy of Cazaly's ASX announcement is below foolowed by Rio Tinto Iron Ore's media statement.
Cazaly receives judgement on Supreme Court Appeal
The Western Australian Court of Appeal has today delivered its judgment in relation to Cazaly
Iron Pty Ltd's application to quash the decision of the former Minister for Resources to terminate
Cazaly's application for Exploration Licence 46/678 (Shovelanna).
The Court of Appeal has refused Cazaly's application to quash the decision and has specifically
ordered that:
1 the order nisi made on 11 August 2006 be discharged;
2 Cazaly's application for declaratory and other relief be dismissed;
3 Cazaly pay the costs of the first and second respondents, to be taxed; and
4 The limits provided for in relevant items of the Legal Practitioners (Supreme Court)
(Contentious Business) Determination be removed.
Cazaly is disappointed with the judgment and has instructed its lawyers to review the judgment
with a view to bringing an application for special leave to appeal to the High Court of Australia.
The Company would like to make clear that the judgment related only to the legal issues raised
by the decision made by former Minister Bowler. It was neither a review of the commercial nor
policy merits of the Minister's decision. The Company continues to contend that the former
Minister's decision is fundamentally flawed.
Cazaly believes this judgment has jeopardised the future development of the Western
Australian resources industry and in particular the iron ore industry. It is clear from this
judgment that iron ore has, and is, being treated differently to any other commodity under the
WA Mining Act - it has its own set of rules. This may have been a tenable situation 40 years
ago in the infancy of the industry's development but it has no place in today's robust mining
environment.
Despite today's ruling and extensive public and industry debate, the "secretive" unpublished
Iron Ore policy in Western Australia, which was used as a basis for the Ministers decision in this
case, has yet to be explained to the industry. This should be of major concern to all participants
in the industry - companies need to know the basis on which major investments in the industry
are to be made.
The exploration and development of Iron ore projects in Western Australia are governed by the
relevant minister, who delegates authority to make many decisions under the Act to public
servants. This gives the Department of Industry and Resources (DoIR) unparalleled decision
making powers in regards to the development of iron ore projects. In this instance the court has
acknowledged that DoIR provided incorrect advice to the Minister, something with should cause
serious alarm to investors in and the Western Australian iron ore industry generally.
The State's iron ore industry is underpinned by significant off-shore investment, investment that
must be seriously shaken by this decision. Cazaly believes the state's sovereign risk profile will
be severely affected by this decision and in particular the lack of transparency used throughout
the process.
Any application to appeal to the High Court of Australia must be made by 25 September 2007.
Rio Tinto Iron Ore welcomes Shovelanna decision
Rio Tinto Iron Ore chief executive Sam Walsh today welcomed the decision of the Western Australian Court of Appeal to endorse the retention of its interest in the Shovelanna deposit in the Pilbara.
The Court this morning upheld the then Minister for Mines' decision in April 2006 to terminate Cazaly Iron P/L's exploration licence application for the deposit.
"This is a good outcome for Rio Tinto Iron Ore, one that endorses the need to develop our assets in the Pilbara according to an orderly, logical timeline," Mr Walsh said.
"It also supports our strategy of substantial, long-term investment in this state.
"Tomorrow (29 August 2007) marks the second anniversary since this issue arose, and we trust that this decision will now bring the matter to a close."
An application will now be made to the Wardens Court for the stay of proceedings on the mining lease applications to be lifted, and for the applications to proceed.
