Coretrack has begun legal action against Strange Investments over the IP of the GT3000 drill rig, and has been forced to downsizing of its Globe Drill subsidiary.
It comes after the drilling company received notice from licensor Strange Investments that its IP licence agreement regarding the manufacture and use of the drill rig has been terminated.
Strange stated that the driller had breached its IP licence by "fitting improvements or accessories to the GT3000 drill rig for the Newcrest Telfer contract without seeking permission, and using the rig at Telfer without agreement from Strange.
Coretrack reportedly had to end its drilling work at Telfer early due to a number of issues at the site.
Unconsolidated and cavernous ground as well massive water flows of up to 250 litres a second slowed down work significantly at the site.
Bernie Kelly, Coretrack’s CEO, said "while we had hoped to drill more using our faster air drilling system the massive water inflows meant we had to do the majority of the job using our mud drilling system which is slower in certain ground conditions.
"On one occasion the ground was so cavernous that it sucked up our entire mud system inventory of 18 000 litres of mud drilling fluid within just minutes…necessitating regular drilling stoppages and a time delay of two to three hours each time to formulate replacement mud.
Kelly went on to say that "equipment reliability in the very wet conditions experienced at Telfer presented new challenges to the drill and its ancillary equipment
"Some parts were commissioned for the first time at Telfer and some time delays were also due to minor equipment failures, some of which were due to insufficient waterproofing – most of which were fixed on site."
According to Strange it was at this point that Coretrack fitted the "improvements" to the rig.
However Coretrack refuted this, stating that many of the items fitted to the drill rig (which Strange has used to terminate the IP agreement) were either repairs and maintenance items or necessary to fix a problem or overcome a lack of capacity, power, or capability
"Some of the items that were relied upon for the termination of the IP licence agreement were nothing more than minor items such as the installation of a safety handrail that was fitted for the safety of the rig staff and the replacement of the a small worn hydraulic fitting and worn air hose."
Regarding Strange’s second claim over using the rig at Telfer with a prior agreement, Coretrack stated it was "unaware of the use of the rig for that contract as being contrary to any ‘agreement’ ", and disputed the need to consult Strange in regards to undertaking work.
The drilling company said that a review of the rig’s performance at Telfer has highlighted its shortcomings, and that technical advice states that the GT3000 rig will not meets its technical and functional specifications without undergoing a number of modifications, upgrades, and re-design work.
Due to the extensive work needed to fix the drill rig, and the termination of the IP licence agreement, Coretrack states that it will not spend any funds on the GT3000.
"Our employees and shareholders, who have invested millions of dollars, will no doubt be extremely disappointed by (owner of Strange Investment’s) Warren Strange’s actions at this stage of development," Kelly said.
He stated that Corerack will "pursue Strange Investments for loss of earning and damages through the courts.
"As a result of these actions we now have to immediately downsize Globe Drill and commence hiring out (either directly or by way of joint venture) or selling of our drilling and workshop equipment."
At 31 January, Globe Drill had approximately $16.3 million in assets.
This is not the first battle Strange and Coretrack have had over the rig.
Strange had previously offered to dry hire the GT3000 rig for a drilling contract he was working on in Slovakia.
Coretrack agreed to dry hire the rig to Strange, but did voice its disappointment that Strange had not sought the contract on its behalf.
However, the drilling company soon discovered that the company Strange was hiring the rig to had only just set up, paid only $2 for the rig, and had only one director and shareholder – Strange’s son.
Coretrack stated that it required a guarantee to protect its asset, and claims that Strange reused to provide one.
The drilling company recently acquired a new CEO, after previous chief Nanne van’t Riet was sacked in August last year.