1. STA still having to pay nearly $16 millions plus the court fee. Source: AFR
2. Coburn the most cost blowout area to run
3. Luke had no experience and created a series of design mistakes

Owner, contractor pitch legal battle over $260 million Mid West mine

ByJesinta Burton

December 27, 2022 — 1.17pm

Save

Share

Normal text sizeLarger text sizeVery large text size

It was a deal tipped to strengthen their relationship, but a legal battle between Strandline Resources and a contractor over work at its flagship $260 million Coburn Mineral Sands project in the Mid West indicates it did the opposite.

According to a writ lodged in the Supreme Court, Macmahon Holdings’ TMM Group is pursuing a $15.8 million damages claim against Coburn Resources, a subsidiary of the ASX-listed explorer.

Strandline Resources ramping up production at its Coburn mineral sands project.

Strandline has rejected the claim, labelling it “baseless” and telling WAtoday it intends to bring a lawsuit of its own.

The pair inked a $23 million contract in 2020 to lay the groundwork for Strandline’s flagship project about 240 kilometres north of Geraldton, which is mining zircon and titanium to make titanium metal, ceramic tiles and paint.

Under the deal, Macmahon’s TMM Group took control of the earthworks, constructing more than 43 kilometres of road, on-site drainage and establishing access pads ahead of the mine build.

When the contract was first issued in mid-2020, Strandline managing director Luke Graham told shareholders it was pleased to be furthering its relationship with Macmahon and looked forward to the construction works being delivered “on time and budget”.

But less than a year into the contract TMM Group claims it encountered a series of issues that hindered the works, including difficulties accessing water, finding workforce accommodation and getting into one of the mine pits.

TMM Group claims Coburn backed out of a promise to accommodate its workforce at the nearby Coburn Homestead, forcing it to organise alternate accommodation and transport to and from the site via a route that took significantly longer and added to cost and time pressures.

Further, TMM alleged Coburn made a series of design variations which impacted on when key project milestones could be achieved and led to cost blowouts.

TMM Group claims it lodged several notices alerting Coburn to the issues and pushing for a deadline extension as the January 2022 practical completion date approached.

In the writ, however, TMM said several senior staff at Coburn stopped the claims in their tracks and requested all future issues be discussed before being lodged in writing over fears Coburn would be subject to audits that might impact the budget and trigger concern from the project’s financiers.

TMM Group claims it complied with the requests and withdrew the notices.

But TMM Group said Coburn later used the lack of correspondence to refuse a contract price adjustment and a deadline extension, drawing on $2.3 million in surety bonds to cover $1.97 million in liquidated damages for the four-month delay.

TMM is now pleading with the court to intervene, pushing for an order that Coburn pay $13.4 million for loss and damage it suffered and return the bonds.

“Strandline rejects the basis of the claim, intends to defend the matter vigorously, and bring a counterclaim against TMM Group,” a Strandline spokesperson said.