Court case, page-46

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xmanrocks

3,201 Posts.

444

07/04/20

13:45

Post #: 43928143
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Originally posted by JDudley: ↑

The thing is, i don't believe for a second that L & M wrote that contract, nor BRL signed that contract, with anything other than export coking coal in mind. That was the resource they were selling/buying after all... An absolute oversight on both parts. But only on reflection...

There was clear acknowledgement by L & M that subsequent 'performance' payments were not guaranteed. Again a contractual oversight on their part. Not that I believe they neglected to ascertain risk that mining could become uneconomic or discontinuous; more so they neglected to consider the mine could be mothballed due to other assets being more viable.

"The fools are going to pay us $40m for a few truck loads of thermal coal ha ha ha ha" (Laughed L&M when they saw BRLs statement in the annual report)... BRLs about face on how they viewed the thermal coal that was sold domestically was very damning. None the less, that re-evaluation should've held no relevance to the contract itself and thus to their case.

Fella buys a Mercedes but was delivered a Lada. The salesman was like "A car's a car mate, what's the problem?!?"

So.. defining the word 'shipped' now determines the intent of the contract. L&M scratch up a technicality that basically enables them to change the intent of a contract because coal happens to have the same name as coal, and shipped could be contorted to have the same broader, all encompassing meaning as transported.
BRL lease the port storage and thus likely to own coal until it leaves that facility. Might it be a tad odd to trigger payment for coal transported from mine to port when the coal that has been transported to the port facility is still owned by BRL and may not even have a buyer? Of course not. Hence 'shipped' is FOB coal aboard a vessel meandering across the seas. Shipped is shipped, exactly as it states. If L&M had chosen to prescribe 'shipped' to mean 'sold' in their contortion of the term then I'd probably give them more kudos. But they didn't, they chose transported. In the mining industry that would be a ridiculous trigger point.

So yes I guess BRL could have supplied the domestic market and not ever triggered the performance payments. One thing I can say for sure is $120 million and 5% of your company would be an absolute lunacy value to be placed on the resource that served only to produce domestic thermal coal. In fact it would make a lot of sense to sell a thermal coal asset for $40m then if it turned out to produce quality export coking coal you could add a caveat to the contract that enabled you to receive a royalty or performance payment on the higher value coking coal asset... Just a thought...

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a poorly worded contract for sure......lawyers love them.
Seems that the judge had to take into consideration the ex CEO's understanding of some grey areas formed by the contract agreed to whilst he was at the helm.
Very damning to have the ex CEO go into bat for those pursuing BRL for non performance of contract.
I believe his evidence was pivotal in the outcome.

Did not BRL build a $5m shed to store coal in on the hope that the port authorities would dredge the river mouth so ships could come in to load.
That never happened and now they own a $5m shed used for fark all.
Perhaps another example of BRL managements business sense

BRL Price at posting: 7.7¢ Sentiment: None Disclosure: Not Held
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