Eastern hits back at GR Engineering

Michael Fotios-led Eastern Goldfields says it will counterclaim GR Engineering Services over work at its Davyhurst gold operation, after the contractor began Supreme Court proceedings yesterday.

Eastern said this morning that it had disputed GR Engineering’s $9.9 million payment claim and would vigorously defend the proceedings, and would counterclaim its rights to damages and costs from GR Engineering’s breach of contract.

It dismissed allegations by GR Engineering that the contract value had risen from $12.5 million to $18.5 million, and said it had already paid $10.4 million.

“GR Engineering made further payment claims in April that do not comply with the contract and have been disputed by the company,” Eastern said.

Eastern claims GR Engineering wrongfully suspended work at the Davyhurst mill in May, and in June told Eastern it would immediately and unconditionally recommence work towards commissioning the mill – work Eastern says GR Engineering has failed to do.

That’s despite GR Engineering telling the market yesterday it had completed work under the contract, after the scope of work had grown by $6 million.

Eastern said it had taken steps to complete the refurbishment of the Davyhurst mill, having allegedly found a number of defects and omissions by GR Engineering.

“Rectifying those defects, GR Engineering’s wrongful suspension and its failure to assist the company to complete the refurbishment has delayed the recommencement of production,” Eastern said.

Eastern shares were locked in a trading halt today after falling 15.1 per cent yesterday, while GR Engineering shares were down 1 per cent to $1.44 each, at 1:20pm.