GR Engineering has seen a counterclaim of $25 million lodged against it as it pursues legal action against Gold Ridge Mining.
The contractor initially lodged a claim against Gold Ridge in June last year, seeking "to recover outstanding costs and associated damages of around $4.5 million relating to a lump sum engineering, procurement and construction contract," it said.
It related to the expansion and refurbishment of the Gold Ridge mine in the Solomon Islands.
GR initially let out that it would be pursuing legal action in its 2011 full year results, and half yearly report in 2012.
Soon after it released its 2011 results, Gold Ridge made a counterclaim against GR, seeking damages relating to alleged defects from its EPC contract.
In late May this year, the miner also served GR with additional amended defence and counterclaims, including one for gold losses due to the alleged defects and representations regarding its performance.
The miner sought approximately $25 million.
Full details of the basis of the claim, however, are yet to be released.
According to GR, these allegations "are inconsistent with previous public announcements made by Allied Gold (of which Gold Ridge is a subsidiary) in relation to the Gold Ridge plant.
"Given that Allied Gold has made no public announcements to the contrary (of its success) and certainly no public statements of any substantial loss of gold from the Gold Ridge plant, [GR] is surprised by these fresh allegations," the contractor said.
It went on to say there is no basis at all from the massive counterclaim.
The two are set to go to court in November this year.