The future of a New South Wales Hunter Valley coal mine that has sat mothballed for over a decade appears set for a final legal showdown between a cash-strapped mining company, local horse breeders and planning authorities.

Key points:

  • Horse breeders have been waging a legal battle to block a proposed five-year extension to the mine’s approval
  • The LEC decision means the future of the mine could be decided within weeks
  • A new report reveals the mine’s owner to be $84 million in debt

The Land and Environment Court (LEC) has allowed, in a limited capacity, the involvement of the Hunter Thoroughbred Breeders Association (HTBA) which has been attempting to block a proposed extension to the planning approval for the Dartbrook underground coal mine.

The mine near Aberdeen has been sitting mothballed since 2006, however, the mine’s owner Australian Pacific Coal (AQC) applied for a five-year extension that would pave the way for operations to resume through until 2027.

After initially rejecting parts of the application, the Independent Planning Commission (IPC), as a delegate of the Minister for Planning, reached an agreement with AQC to grant the extension, but its validity has since been legally challenged multiple times by the Hunter Thoroughbred Breeders Association (HTBA).

HTBA was seeking substantial involvement in a conciliation conference that would allow them to submit written and oral arguments, cross-examine witnesses and put forward evidence.

AQC opposed this, arguing the Court had no power to make the order, and that it would result in unreasonable cost and delay.

Justice Duggan ruled that HTBA’s involvement be limited to purely written submissions on just two aspects of AQC’s extension proposal. 

She said the Senior Commissioner “may be assisted by a clear and concise statement of the submissions made by HTBA’s legal representatives that clearly take a divergent view of the power to impose such conditions”.

HTBA will have until July 23 to make its submissions.

AQC expect outcome ‘ASAP’

Some analysts say AQC is relying on securing the extension approval for a much-needed financial boost.

The company previously told the ASX it entered into a revised agreement with the Minister for Planning that addressed legal issues with the original proposal.

In its latest message to investors, the company said it hoped to resume negotiations with the IPC and Minister for Planning “as soon as possible” after July 23, and would ask the Court to ratify the five-year extension of development consent.

Coal trains and coal mining equipment on a property.

An earlier court decision saw HTBA removed as a party to proceedings and ordered to pay AQC’s legal fees.(

ABC News: Jake Lapham

)

Limited available options

A recent report from consultancy firm EY offered new insights into AQC’s financial status.

AQC has negative net assets of $44 million, debts of $84 million, no cashflows to service interest obligations and a market value of just $8.6 million.

A strategic review of the Dartbrook Project prompted a capital raising exercise including the sale of water rights and land surrounding the mine to its majority shareholder Trepang Services for $34 million.

EY’s report found the sale was “fair and reasonable” but otherwise painted a bleak picture of AQC’s financial outlook.

Besides selling land and water rights, it found AQC had “limited alternative options” to reduce debt and it was “unlikely that an alternative superior proposal” would emerge.

“AQC has no current operations, a significant debt burden and is heavily reliant on Trepang, its major shareholder, and its associates for funding,” the EY report found.

The report also revealed that AQC has made “some efforts” to sell the business but no offers have been received.

Horse breeders granted limited involvement over Hunter Valley coal mine extension
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