Newcrest licence to Australia's largest gold mine challenged

Newcrest Mining (ASX:NCM) (TSX:NM), one of the world’s top five gold miners by production, reserves and market capitalization, is facing a lawsuit that challenges its licence to Australia’s largest underground gold mine, Cadia Far East.

According to The Land, the permit was granted by New South Wales power broker and former politician, Edward Obeid, and it is likely to drag Newcrest into a high-profile corruption scandal, involving authorities from the NSW mines department.

Australia’s Independent Commission Against Corruption (ICAC) is investigating the circumstances surrounding a decision made in 2008, by the then Minister for Primary Industries and Minister for Mineral Resources, Ian Macdonald, to open a mining area in the Bylong Valley for coal exploration. The probe aims to also unveil whether Obeid influenced the verdict, dubbed “Operation Jasper.”

In October the Australian Financial Review ran a story that covered claims by a small exploration company, Gold and Copper Resources, that Newcrest had been mining in the Cadia/Ridgeway area without a mining licence, which the firm denied in a statement.

This morning, the Sydney Morning Herald said it has actually obtained a claim served to Newcrest on the issue. The lawsuit questions the legality of the mining licence itself as well as the leases covering the underground mine.

Even if those mining rights are lawfully justifiable, the ongoing ICAC investigation is likely to include a review of all approvals granted by Obeid, Macdonald as well as those by former planning minister Tony Kelly.

Newcrest operates mines in four countries, and has a global workforce exceeding 19,000 employees.

Image: Making a tackle in a game of Rugby, Brisbane. By State Library of Queensland, Australia.