Court scuffle breaks out at Davyhurst

PERTH (miningweekly.com) – Project house GR Engineering Services has started legal proceedings in the Supreme Court of Western Australia against gold miner Eastern Goldfields.

GR Engineering in September last year awarded a contract to refurbish the 1.2-million-tonne-a-year Davyhurst gold processing plant, in Western Australia.

The ASX-listed company said on Tuesday that work on the contract had been completed, with the contract price at around A$18.5-million.

GR Engineering, however, is now claiming A$9.9-million plus interest and costs in the Supreme Court after commercial discussions with the project house and Eastern Goldfields broke down, with GR Engineering claiming that the gold miner had failed to meet its commitments to pay the majority of the claimed amounts over the course of the proceeding months.

Eastern Goldfields for its part has alleged the existence of minor defects and omissions in the work completed by GR Engineering, which the project house considered "immaterial’" and the issue of which were first raised following Eastern Goldfield’s most recent failure to pay A$5-million towards the contract payment arrears at the end of June.

As a result of the payment default, GR Engineering suspended work at Davyhurst in May this year, after work on the contract had substantially been completed.

The project house said that the suspension was initiated concurrently with the issuance of a statutory demand for around A$6.6-million. Eastern Goldfields has claimed the wrongful suspension of work, and has offset a claim for delay costs of around A$6.8-million in seeking to set aside the statutory demand.

GR Engineering said that it would "vigorously defend" the offsetting claim in the course of court proceedings.