Goldminers urged to avoid mutual devastation

Warring joint venture partners Northern Star Resources and Tribune Resources have been cautioned by a Supreme Court judge to avoid a 'Stalingrad' outcome of mutual commercial devastation.

In a ruling handed down in late January but only published today, Justice Kenneth Martin dismissed Tribune’s application for an interlocutory injunction.

ASX-listed companies Tribune and Rand Mining, both controlled by the reclusive Anton Billis, have taken legal action against EKJV Management and several other entities in the Northern Star Resources group.

They have alleged the Northern Star companies have breached the terms of their East Kundana joint venture in the Goldfields.

More specifically, they claim the Northern Star companies planned to cut the amount of ore to be processed from the East Kundana joint venture to just 35,000 dry metric tonnes (DMT) in the March quarter, down from 292,000 DMT in the December quarter.

This is commercially critical for Tribune and Rand, as all their production is from the EKJV.

Tribune and Rand, represented by law firm Quinn Emmanuel, asked the court to order that priority be given to ore from the East Kundana JV.

Justice Martin said his preliminary view, ahead of a full trial, was that the ore tolling agreement (OTA) granted a large amount of discretion to Northern Star (Kanowna) Pty Ltd, which runs the mill.

“The OTA provisions look to me at this time to be deliberately framed to be skewed towards the interests of the second defendant, rather than favouring the interests of the EKJV entities who seek to have their EKJV ore processed under that milling regime,” he said.

“I emphasise, of course, that these are only my provisional observations.”

Tribune and Rand also asked the court to compel the Northern Star companies to implement “elaborate stockpiling procedures” for all EKJV ore.

Justice Martin said Tribune and Rand appeared to believe they would be at risk of somehow not receiving their 49 per cent share of mined ore under the current stockpiling regime.

However, he said it seemed proper and sufficient records would be kept by EKJV Management “in terms of what is occurring with all future divisions of the EKJV ore”.

Tribune and Rand also sought restrictions on removing any minerals from the joint venture area.

However, Justice Martin said a “suspense scenario” inhibiting any of the parties dealing with the EKJV ore was not in the commercial interests of either camp.

“A 'Stalingrad' outcome of mutual commercial devastation is in no-one's interests," he said.

“Rather, it seems to me that a more economically sensible outcome is for a continued conversion of the mined ore by processing and milling ultimately into gold bullion and thereby to wealth for the parties, rather than sterilising all their EKJV ore at site.”