LMCH versus BRL & ors.

Good morning

I attended both full days of the closing statements in the matter between LMCH and BRL (and Buller Coal).

I would have to agree with the other poster on this forum who attended the Monday morning session that the defence argument did not appear compelling. I was perturbed that the previous BRL CEO/MD had been called as a material witness for LMCH and his testimony did not support the BRL position.

The session continued on Monday afternoon, after the other two posters left the court, in a similar manner to that which has been previously described.

My only positive impression of Monday was that the judge, who has earned a reputation as a very clear thinker who delivers sound judgement, was engaging with the BRL QC and helped develop the line of argument which was presented.

I must say that I returned home that night with thoughts rather more negative than that of the other poster of these proceedings.

However, Tuesday morning was a different day. The LMCH QC, who some regard as the best lawyer in NZ, presented his closing statements in the morning. However, even the best lawyers sometimes come second. His arguments were sound but I do not believe he trumped the defendants.

The defendants had right of rebuttal on Tuesday afternoon. The arguments presented by the BRL QC were excellent and were supported by the firm's barrister, who I also though was outstanding (I do have a little experience in specialised and higher courts in NZ). Some excellent case histories were examined relating to similar contractual disputes. The judge was always attentive and supportive of the arguments.

I left the court, which extended well after normal hours, with a renewed confidence. I believe there is an excellent chance that BRL may receive a judgement superior than I initially expected.

As all shareholders should know, the ASP ("sales agreement") records the initial payment of US$40M, a progress payment of US$40M after 25,000 tonnes of coal has been "SHIPPED" and a final payment of US$40M upon production of one million tonnes. LMCH also will receive 5% of BRL equity in shares at this final metric.

BRL gained mining/resource consents some 3-4 years after the sale of the coal assets from LMCH by which time coal prices had slumped from record highs to record lows. Mining had to commence at the new Escarpment Mine within a specified time upon granting of the consents, or the permits would lapse. Coal produced during this time ("construction" coal) was sold to the Holcim cement plant at Westport but at low thermal prices. The barrier of 25,000 tonnes was passed and BRL exercised its rights under variation 3.10 of the ASP to pay a royalty while deferring the second payment (US$40M). The Escarpment Mine is now on care-and-maintenance and LMCH believes that the chances of receiving the remaining two payments and agreed equity in BRL are low, especially after the BT Mining venture bought adjacent Stockton Mine.

Evidence presented to the court was contrary to this belief and the end game for BRL is production of Escarpment using BT synergies where possible. These plans have been clearly presented to the ASX in a timely manner the past 6 months.

I believe that both parties ran well-presented cases in a very professional manner without acrimony and are fortunate to have an excellent judge in attendance. He has a vast number of documents to peruse before releasing his judgement.