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Mining company Bathurst Resources says it will appeal against an ``unfavourable judgement'' from the High Court which would require it to pay $US40million ($NZ60.4million) to L&M Coal Holdings Ltd.
The High Court ruled last week in favour of L&M's $US40million action against Bathurst and its subsidiary Buller Coal Ltd.
L&M successfully argued further payment for West Coast coal assets it sold to Buller in 2010 in a deferred settlement agreement was due because Buller had triggered agreed production levels.
In a statement, L&M said it sought to resolve the matter amicably before taking court action, but was not able to negotiate an acceptable agreement with Bathurst.
L&M would continue to press Bathurst to fully comply with other outstanding contractural obligations in connection with the permits for mining on the Denniston Plateau which it sold to Bathurst eight years ago, the company said.
In response, Bathurst chairman Toko Kapea said the company was disappointed by the High Court's judgement in the matter.
``After considering the reasons given in the judgement and taking legal advice, it has resolved to appeal the High Court's decision to the Court of Appeal.''
The deadline for filing its notice of appeal was September 14, but Bathurst expected to have the next step in the litigation completed this week, he said.
Additionally, as was usual and also on advice, Bathurst might take interim steps in relation to the judgement pending the hearing of its appeal.
Mr Kapea said disputes arose between the parties over the interpretation of the June 2010 agreement for sale and purchase of the rights to mine at the Escarpment mine site, and subsequent contractual amendments.
L&M asserted that, from the point at which the Escarpment site was placed on care and maintenance, Bathurst was then required to make a performance payment of $US40million.
``The intended mine under construction at Escarpment is an export coking coal mine,'' Mr Kapea said.
``At no time has any coking coal from Escarpment been exported for sale.''
For that reason, Bathurst denied the threshold for the performance payment had been reached, he said.
Royalties had been, and continued to be, paid to L&M on all thermal coal won during construction activity at Escarpment which had been sold into the domestic market, he said.
``For this reason, too, Bathurst denied that the performance payment was due to L&M.''
The High Court held the performance trigger had been reached because more than 25,000 tonnes of coal had been transported from the Escarpment mine permit areas - irrespective of the type of coal, and whether it had been exported.
L&M said it would oppose any appeal and invited Bathurst to focus constructively on taking active steps to start exploiting the valuable coal resources on the Denniston Plateau, from which it was entitled to be paid royalties.
When the next production threshold was met, Bathurst would be require to pay L&M the next $US40million of the deferred sale arrangements.
The performance shares were also required to be issued upon Bathurst receiving notice of a third party proposal to acquire more than 50% of Bathurst shares.