Arbitrator Richard Chesterman QC has made a first stage decision in the dispute between Papua New Guinea-focused Highlands Pacific and PanAust over the former’s 20 per cent interest in the Frieda River joint venture.
PanAust, a subsidiary of China’s Guangdong Rising Assets Management (GRAM), entered into a JV agreement with Highlands over the Frieda River copper-gold project under the condition that PanAust would fund all project expenditures up until a special mining lease would be submitted to the PNG Government, at which point Highlands’ free carry would end.
Highlands objected at this point that the feasibility study was not complete and that the free carry should continue. This dispute eventually went to arbitration and the first stage result from the QC has determined that Highlands free carry did end on this date.
The arbitration is now moving into its second stage, with Highlands contending that PanAust should now pay for the full cost of the feasibility study work carried out after June 23, with Highlands able to pay its share at a later date subject to the project proceeding.
If Highlands is unsuccessful, it will have to pay $US12.4 million ($16 million) as its share of project expenditure for the period from June 24, 2016 to May 31, 2018.